<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 2000
REGISTRATION NO. 333-91473
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
(ISSUER OF CERTIFICATES)
AMERICAN EXPRESS AMERICAN EXPRESS RECEIVABLES
CENTURION BANK FINANCING CORPORATION II
(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 M. 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. / /
------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE(1)
- ---------------------------------------------- ------------ ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Asset Backed Certificates..................... $8,000,000,000 100% $8,000,000,000 $2,111,722
</TABLE>
(1) Fee of $278 was paid in connection with the original Registration Statement
filed on November 22, 1999.
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 $1,596,000,000 of unissued Asset Backed
Certificates registered under Registration Statement No. 333-67567. A filing fee
of $443,688.00 was paid with Registration Statement No. 333-67567 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 prohibited.
SUBJECT TO COMPLETION, DATED , 2000
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 2000
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 2000-
$ FLOATING RATE ASSET BACKED CERTIFICATES
THE TRUST WILL ISSUE--
<TABLE>
<CAPTION>
CLASS A CLASS B
CERTIFICATES CERTIFICATES
----------------- -----------------
<S> <C> <C> <C>
Principal amount $ $
CONSIDER CAREFULLY THE RISK
FACTORS BEGINNING ON PAGE 8 Certificate rate One-Month LIBOR One-Month LIBOR
IN THE PROSPECTUS. plus % plus %
annually annually
A CERTIFICATE IS NOT A
DEPOSIT AND NEITHER THE Interest paid Monthly Monthly
CERTIFICATES NOR THE
UNDERLYING ACCOUNTS OR First interest payment date [ , 200 ] [ , 200 ]
RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL Expected final payment date [ , 200 ] [ , 200 ]
DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL Legal final maturity [ , 200 ] [ , 200 ]
AGENCY.
Price to public per certificate $( %) $( %)
THE CERTIFICATES WILL
REPRESENT INTERESTS IN THE Underwriting discount per certificate $( %) $( %)
TRUST ONLY AND WILL NOT
REPRESENT INTERESTS IN OR Proceeds to transferors per $( %) $( %)
OBLIGATIONS OF AMERICAN certificate
EXPRESS COMPANY OR ANY OF ITS
AFFILIATES. CREDIT ENHANCEMENT--
THIS PROSPECTUS SUPPLEMENT The Class B certificates are subordinated to the Class A certificates.
MAY BE USED TO OFFER AND SELL Subordination of the Class B certificates provides credit enhancement for the
THE CERTIFICATES ONLY IF Class A certificates.
ACCOMPANIED BY THE
PROSPECTUS. The trust is also issuing a collateral interest in the amount of $
that is subordinated to the Class A certificates and the Class B certificates.
Subordination of the collateral interest provides credit enhancement for both
the Class A certificates and the Class B certificates.
</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
, 2000
<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: (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.
Parts of this prospectus supplement and the accompanying prospectus use
defined terms. You can find a listing of the pages where definitions can be
found under the caption "Index of Defined Terms" beginning on page S- in this
document and under the caption "Index of Defined Terms" beginning on page in
the accompanying prospectus.
--------------------------------
S-2
<PAGE>
TABLE OF CONTENTS
PAGE
----
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-5
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-8
Excess Finance Charge Collections............ S-8
Optional Repurchase.......................... S-8
Registration................................. S-8
Tax status................................... S-9
Erisa considerations......................... S-9
Certificate ratings.......................... S-9
Exchange listing............................. S-9
INTRODUCTION................................... S-10
MATURITY CONSIDERATIONS........................ S-10
THE TOTAL PORTFOLIO............................ S-12
PAGE
----
General...................................... S-12
Loss and Delinquency Experience.............. S-12
Revenue Experience........................... S-13
Payment Rates................................ S-14
Account Holder Monthly Payment Rates of the
Total Portfolio........................... S-14
THE RECEIVABLES................................ S-14
RFC II, CENTURION AND CREDCO................... S-17
RFC II....................................... S-17
Centurion.................................... S-17
Credco....................................... S-17
THE SERVICER................................... S-17
SERIES PROVISIONS.............................. S-17
Interest Payments............................ S-18
Principal Payments........................... S-19
Subordination of the Class B certificates and
the Collateral Interest................... S-21
Allocation Percentages....................... S-21
Principal Funding Account.................... S-24
Reserve Account.............................. S-25
Reallocation of Cash Flows................... S-26
Application of Collections................... S-28
Required Collateral Invested Amount.......... S-32
Defaulted Receivables; Investor Charge-
Offs...................................... S-32
Paired Series................................ S-33
Pay-Out Events............................... S-34
Servicing Compensation and Payment of
Expenses.................................. S-35
Optional Repurchase.......................... S-35
Series Termination........................... S-36
Reports...................................... S-36
ERISA CONSIDERATIONS........................... S-37
Class A Certificates......................... S-37
Class B Certificates......................... S-37
Consultation with Counsel.................... S-38
UNDERWRITING................................... S-38
INDEX OF DEFINED TERMS......................... S-40
ANNEX I........................................ A-1
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
2000- certificates.
To understand all of the terms of the offering of the Series 2000- certificates,
read carefully this entire document and the accompanying prospectus.
THE TRUST
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 2000- certificates include both Class A
and Class B certificates.
Beneficial interests in the Series 2000- certificates may be purchased in
minimum denominations of $1,000 and integral multiples of $1,000.
The Series 2000- certificates are expected to be issued on , 2000.
DISTRIBUTION DATES
Distribution dates for the Series 2000- certificates will be , 200
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 2000- 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
, 2000 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 2000- 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 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 2000- 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
S-4
<PAGE>
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 2000- certificates called the collateral interest.
The initial size of the collateral interest is $ , representing % of
the initial aggregate principal amount of the Series 2000- 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 2000- certificates.
THE COLLATERAL INTEREST IS NOT BEING OFFERED THROUGH THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS.
CREDIT ENHANCEMENT
Credit enhancement for the Series 2000- certificates is for the benefit of
Series 2000- 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 2000- 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 American
Express(Registered)* credit card, Optima(Registered)* Line of Credit and Sign &
Travel(Registered)*/Special Purchase Account revolving credit accounts or
features and, in the future, may include other charge or credit accounts or
features 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.
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.
- ----------
* American Express(Registered), Optima(Registered) and Sign &
Travel(Registered) are federally registered servicemarks of American Express
Company and its affiliates.
S-5
<PAGE>
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 2000- 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 2000- 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 2000- 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 2000- 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 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
S-6
<PAGE>
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
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.
S-7
<PAGE>
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 and the end of the revolving period or controlled
accumulation period.
The pay-out events for your series are described in "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 for a discussion of the consequences of an insolvency or receivership
of either transferor.
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.
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. However, there can be no assurance that the trust will issue additional
principal sharing series designated to share principal receivables with your
series.
See "The Pooling and Servicing Agreement Generally--Sharing of Principal
Collections Among Principal Sharing Series" in the accompanying prospectus.
EXCESS FINANCE CHARGE COLLECTIONS
This series will be included in a group of series designated as "excess
allocation series." To the extent that collections of finance charge receivables
allocable to this series exceed the amount necessary to make required payments
for this series payable from collections of finance charge receivables, such
excess collections may be applied to cover shortfalls of collections of finance
charge receivables allocable to other excess allocation series. In addition, you
may receive the benefits of collections of finance charge receivables allocated
to other excess allocation series designated to share collections of finance
charge receivables with your series. However, there can be no assurance that the
trust will issue additional excess allocation series designated to share
collections of finance charge receivables with your 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 2000- 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 2000- 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 2000- certificates through DTC, in the United
States, or Cedelbank, or the Euroclear System in Europe. See "Description of the
Certificates--Book-Entry Registration" in the accompanying prospectus.
S-8
<PAGE>
We expect that the Series 2000- certificates will be delivered in book-entry
form through the facilities of DTC, Cedelbank and Euroclear on or about
, 2000.
TAX STATUS
Orrick, Herrington & Sutcliffe LLP, as special tax counsel to the transferors,
is of the opinion that under existing law your 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.
Subject to important considerations described in "ERISA Considerations" in this
prospectus supplement and the accompanying prospectus, the Class B certificates
may be 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. 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
An application has been made to list the Series 2000- 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 2000- certificates, 50
J.F.Kennedy, L-2951, Luxembourg, phone number 352-4242-3175, to determine
whether or not the Series 1999- certificates are listed on the Luxembourg Stock
Exchange.
S-9
<PAGE>
INTRODUCTION
The following provisions of this prospectus supplement contain more
detailed information concerning the asset backed certificates offered hereby.
The certificates will be issued by 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, American Express Centurion Bank
("CENTURION") and American Express Receivables Financing Corporation II ("RFC
II"), as transferors and The Bank of New York, as trustee.
On or about , 2000 (the "CLOSING DATE"), the trust will issue
$ of its Class A Series 2000- Floating Rate Asset Backed
Certificates (the "CLASS A CERTIFICATES") and $ of its Class B
Series 2000- Floating Rate Asset Backed Certificates (the "CLASS B
CERTIFICATES") and, together with the Class A certificates, (the "SERIES
2000 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 2000- 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
2000- certificates for all purposes under the accompanying prospectus.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement and the Series 2000- Supplement for
this series 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 2000- 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 2000- 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 2000- , 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 2000- 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 2000- . 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 2000- 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 2000- 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
2000- 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 event or Reinvestment Event does occur with respect to any such Paired
Series prior to the payment in full of the Series 2000- certificates, the final
payment of principal to the Series 2000- certificateholders may be delayed.
S-10
<PAGE>
Should a pay-out event occur with respect to the Series 2000- certificates
and the early amortization period commence, any amount on deposit (a) in the
principal funding account will be paid to the Series 2000- certificateholders on
the first Special Payment Date and the Series 2000- 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 2000- 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 2000- , 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 2000- 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 2000- 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 2000- certificateholders could expect to receive payments of
principal on their Series 2000- 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 2000- 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-11
<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
American Express (whether branded Optima Card or otherwise), Optima Line of
Credit and Sign & Travel/Special Purchase Account revolving credit accounts or
features 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 American Express
credit card, Optima Line of Credit and Sign & Travel/Special Purchase Account
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 , 1999, 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 -----------------------------
, 1999 1998 1997 1996
----------------- ------- ------- -------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1)..........................
Total Gross Charge-Offs(2)..................................
Total Recoveries............................................
------- ------- ------- -------
Total Net Charge-Offs(3)....................................
------- ------- ------- -------
------- ------- ------- -------
Total Gross Charge-Offs as a Percentage of Average
Receivables Outstanding................................... % % % %
</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-12
<PAGE>
AVERAGE RECEIVABLES DELINQUENT AS A PERCENTAGE OF THE TOTAL PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
[ ] MONTHS ENDED
, 1999 1998 1997 1996
------------------------ ------------------------ ------------------------ ------------------------
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.
REVENUE EXPERIENCE OF THE TOTAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
[ ] MONTHS ENDED -----------------------------
, 1999 1998 1997 1996
----------------- ------- ------- -------
<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...........................
</TABLE>
S-13
<PAGE>
- ------------------
(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 -----------------------------
, 1999 1998 1997 1996
----------------- ------- ------- -------
<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 , 1999, 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 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 , 1999. 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 , 1999.
S-14
<PAGE>
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 DELIQUENCY 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-15
<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 , 1999, 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.
S-16
<PAGE>
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 that
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.
As of , 1999, 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 , 1999.
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 , 1999, 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
, 1999.
THE SERVICER
As of , 1999, 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 2000- certificates will be issued pursuant to the Pooling and
Servicing Agreement and the Series 2000- Supplement specifying the principal
terms of the certificates, 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 2000- certificates. Reference should be made to the prospectus for
additional information concerning the Series 2000- certificates and the Pooling
and Servicing Agreement. See "The Pooling and Servicing Agreement Generally" in
the accompanying prospectus.
S-17
<PAGE>
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
, 2000, 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 1999- certificateholders in whose names the
Series 1999- 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.
The Class A certificates will bear interest from the closing date through
, 2000, 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 2000- 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 2000- 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 2000- in accordance with the Pooling and Servicing Agreement and the
Series 2000- 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 2000- 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 , 2000 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.
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The Class B certificates will bear interest from the closing date through
, 2000, 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 2000- 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 2000- 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 2000-
certificates on the second business day prior to the closing date for the period
from the closing date through , 2000 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 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
2000- certificateholders. Unless a pay-out event has occurred, the controlled
accumulation period (the "CONTROLLED ACCUMULATION
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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 2000- 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 2000- 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 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 2000- 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) 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 2000- , and (3) certain other amounts which pursuant to the Series
2000- 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 2000- ; 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
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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 for each 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 2000-
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 2000- termination
date. After payment in full of the Class B Invested Amount, the holder of the
Collateral Interest 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 2000- termination date.
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 2000- 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 2000- specifically, as described below.
Pursuant to the Pooling and Servicing Agreement, during each monthly
period, the servicer will allocate to Series 2000- 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 2000- and for any monthly period, the product of (a) the Series
Allocation Percentage for Series 2000- and (b) the amount of collections of
finance charge
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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 2000- 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 2000- 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 2000- and
for any monthly period, the Initial Invested Amount for Series 2000- , less the
excess, if any, of all reductions in the Invested Amount (other than any
reductions occasioned by payments of principal to the Series
2000- 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 2000- with respect to any monthly period will be
allocated to the Series 2000- 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 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 2000- 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 2000- will be allocated
to the Series 2000- 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
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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 2000- 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 2000- 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 2000- as of the last day of the immediately
preceding monthly period; provided, however, that because the Series 2000-
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 2000- , 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 2000- Supplement (each, with respect to
Series 2000- , 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 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 2000- .
Such amounts so allocated to the Series 2000- 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.
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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 2000- 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.
"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 2000- 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 2000-
certificateholders. During
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the controlled accumulation period, the servicer will transfer collections in
respect of principal receivables, Shared Principal Collections allocated to
Series 2000- 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 "Principal Funding
Account--Application of Collections."
Unless a pay-out event has occurred with respect to the Series 2000-
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 e 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.
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 2000- (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 % 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
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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 2000- .
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 2000- 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 2000- certificates or, if the
controlled accumulation period has commenced, the earlier of 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
2000- Supplement. If the Class A Required Amount is greater than zero, Excess
Spread and Excess Finance Charge Collections allocated to Series 2000- 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 2000- , 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
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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
2000- 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 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.
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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
(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.
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"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 2000- in accordance with the Pooling and Servicing Agreement
and the Series 2000- 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 2000-
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 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 (I) 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;
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(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.
"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;
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(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), (B) and
(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
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 2000- 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.
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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 2000- 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 2000- 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 2000- 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."
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 2000- 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
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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 2000- 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 2000- 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
2000- 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 2000- 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 2000- allocated and available for that purpose as described above under
"--Application of Collections--Excess Spread; Excess Finance Charge
Collections."
PAIRED SERIES
The Series 2000- 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 2000- 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 2000- certificateholders after the
Series 2000- 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 2000-
certificateholders. See "Risk Factors--Effect of the Issuance of New Series" and
"The Pooling and Servicing Agreement Generally--Paired Series" in the
accompanying prospectus.
S-33
<PAGE>
PAY-OUT EVENTS
The "PAY-OUT EVENTS" with respect to the Series 2000- 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
2000- 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 2000- Supplement, which failure has a
material adverse effect on the Series 2000- 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 2000- 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 2000- 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 2000- 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 2000- Supplement.
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 2000- certificates evidencing more
than % of the aggregate unpaid principal amount of Series 2000- certificates
by notice then given in writing to the transferors and the servicer (and to the
trustee if given by the Series 2000- certificateholders) may declare that a
pay-out event has occurred with respect to Series 2000- as of the date of such
notice, and, in the case of any event described in subparagraph (a), (b), (e),
(g), (h) or (i), a pay-out event shall occur with respect to Series 2000-
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 2000- 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 2000-
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.
S-34
<PAGE>
"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 2000- 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 2000- , 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 2000-
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 , 2000, 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 2000- 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 2000- 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.
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
S-35
<PAGE>
(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
2000- 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 2000- 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 2000-
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 2000-
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 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.
S-36
<PAGE>
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, and Section 4975 of the Internal Revenue 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 Internal Revenue Code (collectively, "PARTIES IN INTEREST")
with respect to the Plan. A violation of these "prohibited transaction" rules
may generate excise tax and other liabilities under ERISA and the Internal
Revenue 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. 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 Internal Revenue 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 of 1934, as amended and then will be timely registered
under the Securities Exchange Act of 1934, as amended.
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 Internal Revenue Code and result
in excise tax and other liabilities under ERISA and Section 4975 of the Internal
Revenue Code unless an exemption were available. The five Department of Labor
class exemptions described in the accompanying prospectus may not provide relief
for all transactions involving the assets of the trust even if they would
otherwise apply to the purchase of a Class A certificate by a Plan.
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
S-37
<PAGE>
individual retirement account or Keogh Plan) that is subject to Section 4975 of
the Internal Revenue Code, or (c) any entity whose underlying assets include
"plan assets" under the 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 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 and the underwriters of the Class B
certificates named below, 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...................................................................
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B
UNDERWRITERS OF THE CLASS B CERTIFICATES CERTIFICATES
- ---------------------------------------- -------------------
<S> <C>
-------------
Total...................................................................
</TABLE>
S-38
<PAGE>
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 conditions. All of the Series
2000- certificates offered hereby 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 2000-
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
2000- 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 2000- 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 2000- certificates in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended. 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
2000- certificates so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the Series
2000- 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 2000- 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 2000- certificates to be higher than they would
be in the absence of such transactions. Neither the transferors 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 of 1933, as amended,
or contribute to payments the underwriters may be required to make in respect
thereof.
S-39
<PAGE>
INDEX OF DEFINED TERMS
TERM PAGE
- ---- ----
Accounts..................................... S-12
Adjusted Invested Amount..................... S-24
American Express............................. S-17
Available Final Distribution Amount.......... S-36
Available Principal Collections.............. S-20
Available Reserve Account Amount............. S-26
Base Rate.................................... S-34
business day................................. S-18
Centurion.................................... S-17
Class A Additional Interest.................. S-28
Class A Adjusted Invested Amount............. S-24
Class A Available Funds...................... S-18
Class A Certificate Rate..................... S-18
Class A Certificateholders' Interest......... S-18
Class A Floating Percentage.................. S-22
Class A Initial Invested Amount.............. S-24
Class A Invested Amount...................... S-24
Class A Investor Charge-Off.................. S-32
Class A Investor Default Amount.............. S-32
Class A Monthly Interest..................... S-28
Class A Outstanding Monthly Interest......... S-29
Class A Principal Percentage................. S-23
Class A Required Amount...................... S-26
Class A Servicing Fee........................ S-35
Class B Additional Interest.................. S-28
Class B Adjusted Invested Amount............. S-24
Class B Available Funds...................... S-19
Class B Certificate Rate..................... S-19
Class B Certificateholders' Interest......... S-19
Class B Floating Percentage.................. S-22
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-23
Class B Required Amount...................... S-27
Class B Servicing Fee........................ S-35
Collateral Additional Interest............... S-30
Collateral Available Funds................... S-29
Collateral Charge-Off........................ S-33
Collateral Default Amount.................... S-33
Collateral Floating Percentage............... S-22
Collateral Initial Invested Amount........... S-24
Collateral Interest Servicing Fee............ S-35
Collateral Invested Amount................... S-10
Collateral Monthly Interest.................. S-30
Collateral Principal Percentage.............. S-23
Collateral Rate.............................. S-30
TERM PAGE
- ---- ----
Controlled Accumulation Amount............... S-31
Controlled Accumulation Period............... S-19
Controlled Accumulation Period Length........ S-20
Controlled Deposit Amount.................... S-31
Covered Amount............................... S-25
Deficit Controlled Accumulation Amount....... S-31
Distribution Date............................ S-18
Early Amortization Period.................... S-20
Eligible Deposit Account..................... S-24
Excess Spread................................ S-29
Expected Final Payment Date.................. S-10
Floating Allocation Percentage............... S-22
Group .................................. S-22
Highest Bid.................................. S-36
Initial Invested Amount...................... S-22
Interest Funding Investment Proceeds......... S-26
Invested Amount.............................. S-24
Investor Default Amount...................... S-32
LIBOR........................................ S-19
LIBOR Determination Date..................... S-19
Loan Agreement............................... S-30
Monthly Report............................... S-36
Monthly Servicing Fee........................ S-35
Paired Series................................ S-33
Parties in Interest.......................... S-37
Pay-Out Events............................... S-34
period length determination date............. S-20
Plan......................................... S-37
Plan Asset Regulation........................ S-37
Principal Allocation Percentage.............. S-22
Principal Funding Account.................... S-10
Principal Funding Account Balance............ S-25
Principal Funding Investment Proceeds........ S-25
Reallocated Principal Collections............ S-26
Receivables.................................. S-12
Record Date.................................. S-18
Reference Banks.............................. S-19
Required Amount.............................. S-20
Required Collateral Invested Amount.......... S-32
Required Reserve Account Amount.............. S-25
Reserve Account.............................. S-25
Reserve Account Funding Date................. S-25
Revolving Period............................. S-19
RFC II....................................... S-17
Series 2000- Termination Date............... S-20
Series Adjusted Invested Amount.............. S-22
Series Adjusted Portfolio Yield.............. S-35
Series Allocable Defaulted Amount............ S-21
Series Allocable Finance Charge
Collections................................ S-21
S-40
<PAGE>
TERM PAGE
- ---- ----
Series Allocable Principal Collections....... S-21
Series Allocation Percentage................. S-22
Series Required Transferor Amount............ S-24
Servicing Base Amount........................ S-35
Servicing Fee Rate........................... S-35
Special Payment Date......................... S-10
TERM PAGE
- ---- ----
[S] [C]
Telerate Page 3750........................... S-19
Total Portfolio.............................. S-12
Transferors' Interest........................ S-22
TRS.......................................... S-17
Trust Portfolio.............................. S-12
Underwriting Agreement....................... S-38
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 2000- 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
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
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
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
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
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group ................................................................. Group II
A-1
<PAGE>
SERIES 1999-1
Initial Invested Amounts ........................................ $1,000,000,000
Class A Initial Invested Amount ................................... $865,000,000
Class A Certificate Rate ....................................... 5.60% per annum
Class B Initial Invested Amount .................................... $60,000,000
Class B Certificate Rate ....................................... 5.85% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $77,083,333.34
Commencement of Controlled Accumulation Period (subject to
adjustment) ...................................................... April 1, 2003
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 ....................... April 2004 Distribution Date
Series Issuance Date ............................................ April 21, 1999
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group .................................................................. Group I
SERIES 1999-2
Initial Invested Amounts .......................................... $500,000,000
Class A Initial Invested Amount ................................... $432,500,000
Class A Certificate Rate ....................................... 5.95% per annum
Class B Initial Invested Amount .................................... $30,000,000
Class B Certificate Rate ....................................... 6.10% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $38,541,666.67
Commencement of controlled accumulation period (subject to
adjustment) ........................................................ May 1, 2003
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $37,500,000
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 2004 Distribution Date
Series Issuance Date .............................................. May 19, 1999
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group .................................................................. Group I
SERIES 1999-3
Initial Invested Amounts ........................................ $1,000,000,000
Class A Initial Invested Amount ................................... $825,000,000
Class A Certificate Rate .................. One-Month LIBOR plus 0.14% per annum
Class B Initial Invested Amount .................................... $80,000,000
Class B Certificate Rate .................. One-Month LIBOR plus 0.34% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $75,416,666.67
Commencement of Controlled Accumulation Period (subject to
adjustment) ........................................................ May 1, 2003
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 ......................... May 2004 Distribution Date
Series Issuance Date .............................................. May 19, 1999
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group ................................................................. Group II
A-2
<PAGE>
SERIES 1999-4
Initial Invested Amounts .......................................... $500,000,000
Class A Initial Invested Amount ................................... $412,500,000
Class A Certificate Rate .................. One-Month LIBOR plus 0.17% per annum
Class B Initial Invested Amount .................................... $40,000,000
Class B Certificate Rate .................. One-Month LIBOR plus 0.42% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $37,708,333.33
Commencement of Controlled Accumulation Period (subject to
adjustment) ....................................................... July 1, 2001
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $47,500,000
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 ........................ July 2002 Distribution Date
Series Issuance Date ........................................... August 17, 1999
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group ................................................................. Group II
SERIES 1999-5
Initial Invested Amounts .......................................... $500,000,000
Class A Initial Invested Amount ................................... $412,500,000
Class A Certificate Rate .................. One-Month LIBOR plus 0.24% per annum
Class B Initial Invested Amount .................................... $40,000,000
Class B Certificate Rate .................. One-Month LIBOR plus 0.48% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $37,708,333.33
Commencement of Controlled Accumulation Period (subject to
adjustment) ....................................................... July 1, 2003
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $47,500,000
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 ........................ July 2004 Distribution Date
Series Issuance Date ........................................... August 17, 1999
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group ................................................................. Group II
SERIES 1999-6
Initial Invested Amounts .......................................... $500,000,000
Class A Initial Invested Amount ................................... $412,500,000
Class A Certificate Rate .................. One-Month LIBOR plus 0.20% per annum
Class B Initial Invested Amount .................................... $40,000,000
Class B Certificate Rate .................. One-Month LIBOR plus 0.43% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $37,708,333.33
Commencement of Controlled Accumulation Period (subject to
adjustment) ..................................................... August 1, 2002
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $47,500,000
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 ...................... August 2002 Distribution Date
Series Issuance Date ........................................ September 16, 1999
Principal Sharing Series ................................................... Yes
Excess Allocation Series ................................................... Yes
Group ................................................................. Group II
A-3
<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 , 2000
Prospectus
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
The Trust--
o may periodically issue asset backed certificates
in one or more series with one or more classes;
and
o will own--
o receivables in a portfolio of consumer charge
or revolving credit accounts;
o payments due on those receivables; and
o other property described in this prospectus
and in the accompanying prospectus supplement.
The Certificates--
o will represent interests in the trust and will be
paid only from the trust assets;
o offered with this prospectus will be rated in one
of the four highest rating categories by at least
one nationally recognized rating organization;
o may have one or more forms of enhancement; and
o will be issued as part of a designated series
which may include one or more classes of
certificates and enhancement.
The Certificateholders--
o will receive interest and principal payments from
a varying percentage of credit card account
collections.
Neither the Securities and Exchange Commission nor any state securities
commission has approved these certificates or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
, 2000
Consider carefully the risk
factors beginning on page 8
in this prospectus and page
S- in the accompanying
prospectus supplement.
A certificate is not a
deposit and neither the
certificates nor the
underlying accounts or
receivables are insured or
guaranteed by the Federal
Deposit Insurance Corporation
or any other governmental
agency.
The certificates will
represent interests in the
trust only and will not
represent interests in or
obligations of American
Express Company or any of its
affiliates.
This prospectus may be used
to offer and sell any series
of certificates only if
accompanied by the prospectus
supplement for that series.
<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 credit 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 are not offering the certificates in any state where the offer is
not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and in the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
Parts of this prospectus contain defined terms. You can find a listing of
the pages where defined terms in this prospectus are defined under the caption
"Index of Defined Terms" beginning on page 72 in this prospectus.
---------------------------
2
<PAGE>
TABLE OF CONTENTS
PAGE
----
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...................................... 9
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........................... 13
Effect of Subordination...................... 13
Basis Risk................................... 13
Limited Nature of Rating..................... 13
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
Billing and Payments......................... 19
PAGE
----
Collection Efforts........................... 20
Year 2000.................................... 21
RFC II, CREDCO, CENTURION AND TRS.............. 22
RFC II....................................... 22
Credco....................................... 22
Centurion.................................... 22
TRS.......................................... 23
MERGER OR CONSOLIDATION OF A TRANSFEROR OR THE
SERVICER .................................... 23
ASSUMPTION OF A TRANSFEROR'S OBLIGATIONS....... 24
THE ACCOUNTS................................... 24
DESCRIPTION OF THE CERTIFICATES ............... 26
General...................................... 26
Book-Entry Registration...................... 26
DTC Year 2000 Issues......................... 29
Definitive Certificates...................... 29
Interest..................................... 30
Principal.................................... 30
Pay-Out Events and Reinvestment Events ...... 32
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........................... 43
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
Defaulted Receivables; Rebates and Fraudulent
Charges................................... 52
3
<PAGE>
PAGE
----
Credit Enhancement........................... 53
Servicer Covenants........................... 54
Certain Matters Regarding the Servicer ...... 55
Servicer Default............................. 55
Evidence as to Compliance.................... 56
Amendments................................... 57
Defeasance................................... 57
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.................................... 63
Federal Income Tax Consequences--General..... 63
PAGE
----
Treatment of the Certificates as Debt........ 64
Treatment of the Trust....................... 64
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..................... 68
ERISA CONSIDERATIONS........................... 68
PLAN OF DISTRIBUTION........................... 70
LEGAL MATTERS.................................. 71
REPORTS TO CERTIFICATEHOLDERS ................. 71
WHERE YOU CAN FIND MORE INFORMATION............ 71
INDEX OF DEFINED TERMS......................... 72
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.
TRUST ASSETS
The transferors have transferred to the trust the receivables from designated
American Express(Registered)* credit card, Optima(Registered) Line of Credit and
Sign & Travel(Registered)*/Special Purchase Account revolving credit accounts or
features 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.
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
- ------------------
* American Express(Registered), Optima(Registered) and Sign & Travel(Registered)
are federally registered servicemarks of American Express Company and its
affiliates.
5
<PAGE>
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 interests 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" 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" 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 class 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 classes.
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 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
6
<PAGE>
"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 in 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 any 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
collections 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 It May Not be Possible to Find an Investor to Purchase Your
Certificates: The underwriters may assist in resales of the
certificates but they are not required to do so. A secondary market
for any certificates may not develop. If a secondary market does
develop, it might not continue or it might not be sufficiently liquid
to allow you to resell any of your certificates
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 a Debtor in a Bankruptcy Case, Assets Could be Sold at
HOLDER OF THE ORIGINAL TRANSFEROR a 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--
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
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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, or if RFC II or TRS
became a debtor in a bankruptcy case, 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 servicer default occurs solely because the servicer
is insolvent or 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.
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
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the Portfolio and Lead to a Pay-Out Event or the 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 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 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.
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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. 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.
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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(Registered),
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 Witter's 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. In addition, many United States
banks issue credit cards which have an annual fee in addition to
interest charges where permitted by state law 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 and credit card portfolio acquisitions by major issuers
have produced larger card issuers which compete with greater
resources, economies of scale and potential brand recognition, and a
smaller number of dominant issuers has emerged. 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 and products, including rewards
programs, provided to cardmembers;
o the number, spending habits and credit performance of cardmembers;
o the quantity and quality of businesses that accept the card;
o the cost of cards to cardmembers;
o the payment terms available to cardmembers;
o the number and quality of other payment instruments available to
cardmembers;
o the nature and quality of expense management data capture and
reporting capability;
o the success of targeted marketing and promotion programs;
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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 reputation and brand recognition; and
o the ability of issuers to implement operational and cost
efficiencies.
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 Amount or Timing of Collections and May Cause an Early Payment of
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 Which May Result in Reduced Payments to
You: 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 be reduced
without a corresponding reduction in the amounts payable as interest
on the certificates and other amounts paid from collections of
finance charge receivables. This could result in delayed or reduced
principal and interest payments to you.
LIMITED NATURE OF RATING Credit Ratings Assigned to Your Certificates Are Limited In
Nature: Each credit rating assigned to your certificates reflects
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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 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.
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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 of any
series offered hereby, before the deduction of expenses, will be paid to the
transferors. Unless otherwise specified in the related 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, American Express Centurion Bank and American Express
Receivables Financing Corporation II ("RFC II"), as transferors, and The Bank of
New York, as 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 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 conveyed 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 have conveyed and may, in
the future, 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 Accounts included as accounts
confirming the creation and perfection of a security interest in respect of each
transfer of such receivables. If such opinion of counsel with respect to
receivables in any New Accounts is not so
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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 of 1933, as
amended, 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, Optima Line of Credit accounts and Sign &
Travel/Special Purchase Account revolving credit accounts or features. Cards
issued by Centurion are currently accepted worldwide, and may be used for the
purchase of merchandise and services. The Sign & Travel/Special Purchase 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 American
Express credit card Accounts, Optima Line of Credit Accounts and the Sign &
Travel/Special Purchase Accounts (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.
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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.
American Express Credit Card Accounts. The American Express credit card
accounts are accessed primarily by use of the credit cards 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 American Express
credit card account was first offered in early 1987 and branded as the "Optima
Card". All American Express credit 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 American
Express credit 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 American Express credit 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 Purchase Accounts. The Sign & Travel/Special
Purchase 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 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/Special Purchase Accounts are owned by
Centurion.
Over a period of time, beginning in the later half of 1998 and continuing
through 2001, Sign & Travel/Special Purchase 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 features including the Sign & Travel/Special
Purchase Account. It is anticipated that, in addition to the receivables
generated by the Sign & Travel/Special Purchase Accounts, the receivables
generated by such other revolving credit features may, in the future, be
conveyed to the trust.
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UNDERWRITING AND AUTHORIZATION PROCEDURES
American Express Credit Card Accounts. Centurion uses two types of
approval processes in determining whether to open an American Express credit
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 American Express credit 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 American Express credit card account utilizations. Utilizations of
such American Express credit 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 American Express credit card accounts generally range from
$500 to $15,000, although the credit limits applicable to certain American
Express credit 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 American Express credit card accounts. Authorization based
on Account holders' past spending and payment behavior and personal resources
occurs at the time of utilization.
Sign & Travel/Special Purchase Accounts. Centurion extends the right to
access a Sign & Travel/Special Purchase 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/Special Purchase Account are subject to approval through a credit
authorization process similar to credit authorization procedures applicable to
the American Express credit 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 American Express credit card account, the Optima Line of Credit Account and
the Sign & Travel/Special Purchase Account, as applicable. Pursuant to each such
agreement, Centurion reserves the right to change or terminate any terms,
conditions, services 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 annual percentage rate ("APR") or other change making the terms of
an account more stringent, generally becomes effective on a designated future
date.
Optima Card Accounts. Generally, an American Express credit card account
holder is charged (i) an annual fee for the Optima Card of $0.00 to $80.00,
(ii) finance charges on merchandise and services purchased and on cash advances
based on variable APRs 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,
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spending and payment patterns and type of product (and a fixed default rate of
23.99%) (some products have fixed standard APRs currently ranging from 9.99% -
15.99%), (iii) amounts payable for certain uses of the American Express credit
card, including the standard network fee of 3% on cash advances obtained through
an automated teller machine, with a $3.00 minimum 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. American
Express credit card accounts are billed by Centurion on a cycle basis.
Generally, American Express credit 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 American Express credit 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/Special Purchase Accounts. There are no annual fee or other
fees imposed for the use of the Sign & Travel/Special Purchase Account except
for a monthly finance charge, based on an APR, on the outstanding balance on the
Sign & Travel/Special Purchase Account. The APR for the Sign & Travel/Special
Purchase Account balances is a variable rate equal to the Prime Rate plus 9.9%.
Sign & Travel/Special Purchase Accounts not in good standing are assessed
interest at an APR equal to the Prime Rate plus 13.99%. The Sign &
Travel/Special Purchase Account is billed by Centurion on a cycle basis at the
same time as the obligor's Charge Card Account. Generally, Sign & Travel/Special
Purchase 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/Special Purchase Accounts are
generally applied first, to past due Sign & Travel/Special Purchase Account
balances, second, to past due charge card account balances, third, to current
Sign & Travel/Special Purchase Account minimum payments, fourth, to current
charge card account balances, and finally, to outstanding Sign & Travel/Special
Purchase 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/Special Purchase
Account into the multifunctional product referred to under "General--Sign &
Travel/Special Purchase 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 American Express credit card accounts, Optima
Line of Credit Accounts and Sign & Travel/Special Purchase 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. The
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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 February 10,
1999, adopted a revised policy statement on the classification of retail credit.
The proposal contains guidance that standardizes the methodology for
implementing the existing 180 day charge-off policy requirement for open-end
credit. The revised policy statement also provides guidance for loans affected
by bankruptcy, fraudulent activity and death; establishes standards for
re-aging, extending, deferring or rewriting of past due accounts; and broadens
the circumstances under which partial payments are recognized as full payments
for purposes of determining that a loan is no longer delinquent.
YEAR 2000
American Express' Year 2000 ("Y2K") compliance effort is divided into two
initiatives. The first, known as "MILLENNIAX," 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 and staff units. American Express' plans for remediation of
the Y2K issue 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. With respect
to Millenniax systems and Business T assets, as of June 30, 1999 all of the
program phases referred to above are at least 99 percent complete.
American Express' cumulative costs since inception of the Y2K initiatives
were $471 million through June 30, 1999 and, as of that time, were estimated to
be in the range of $46 - $72 million for the remainder through 2000.* 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.* Y2K
costs related to Millenniax represent 6% and 1% of the AET budget for the years
1999 and 2000, respectively.*
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 American Express of Y2K. As part of its 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
American Express in writing that they are addressing their own Y2K issues on a
timely basis, the readiness of third parties overall varies across the spectrum.
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.
At this point, with remediation and testing of individual internal systems
substantially complete, American Express' primary focus is on testing of systems
on an integrated basis, independent validation of such testing and completing
Y2K contingency plans. The contingency planning effort is a full-scale
initiative that includes both internal and external experts under the guidance
of a company-wide steering committee. American Express' contingency plans, which
are based in part on an assessment of the magnitude and probability of potential
risks, primarily focus on proactive steps to prevent Y2K-related failures from
occurring, or if they should occur, detecting them quickly, minimizing their
impact and expediting their repair. The Y2K contingency plans supplement
disaster recovery and business continuity plans already in place, and 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.
Such plans encompass the creation of both remediation and business
resumption contingency plans, generally in accordance with guidelines
established by the Federal Financial Institutions Examination Council. For
American Express' critical systems that are not yet Y2K compliant, American
Express achieved remediation for critical systems that were not Y2K compliant
prior to the end of the second quarter of 1999; to the extent that unforeseen
circumstances arise that result in non-compliance of any such systems,
remediation contingency plans are also being developed to mitigate such risk.
American Express business resumption contingency planning effort is divided into
four phases: (i) establishing organizational planning guidelines,
(ii) completing a business
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impact analysis, (iii) developing the business resumption contingency plans and
(iv) validating and verifying the business resumption contingency plans. The
first two of these phases have essentially been completed, and have identified
and assessed the need for Y2K business resumption contingency plans for American
Express' most critical core business processes. Such processes include, but are
not limited to, credit authorization, Cardmember billing, merchant payment,
client investments, funds transfer, securities settlement, and travel
reservations. The contingency plans also address third party systems that
American Express' businesses interface with and rely upon, such as international
telecommunications networks, global financial payment and clearing systems, and
airline and other travel systems. The development phase of American Express'
business resumption contingency were substantially completed prior to the end of
the second quarter of 1999. The final phase, which will include independent
validation and verification of these plans are taking place. American Express
will continue to refine its contingency planning activities throughout 1999 as
additional information related to its' exposures is gathered.* To the extent
that there are Y2K failures that affect major internal processes or third party
systems that American Express relies upon, including but not limited to those
described above, such failures could have a material impact on American Express
through business interruption or shutdown, financial loss, reputational damage
and legal liability to third parties. Because American Express' Y2K compliance
is dependent on key third parties being compliant on a timely basis, there can
be no assurances that American Express' efforts alone will resolve all Y2K
issues.
- ------------------
* Statements in this Y2K discussion marked with an asterisk 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 all 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.
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 World Financial Center, 200 Vesey Street, Mail Stop
4607B, 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 One
Christina Center, 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.
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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 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 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.
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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.
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
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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 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,
recoveries, 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
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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.
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 DTC, called 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. 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, and all references herein to 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
Certificateholders may hold their certificates through DTC (in the United
States), Cedelbank or the 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 certificates. Cedelbank and
Euroclear will hold omnibus positions on behalf of their participants through
customers' securities accounts in Cedelbank's and Euroclear's names on the books
of their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC in effect in the State of New York
and a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participants and 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,
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dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Transfers between participants will occur in accordance with DTC rules.
Transfers between Cedelbank participants and Euroclear participants 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 Cedelbank
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. Cedelbank participants and Euroclear
participants may not deliver instructions directly to the depositaries.
Because of time-zone differences, credits of securities received in
Cedelbank 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 Cedelbank participants on such business day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank 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 Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC. For 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.
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DTC has advised the transferors 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 transferors that it may take actions with respect to the interest in
the trust assets of the certificateholders, including credit enhancers holding
uncertificated subordinated interests of a particular series (the
"CERTIFICATEHOLDERS' INTEREST") that conflict with other of its actions with
respect thereto.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedelbank participants through electronic book-entry changes in accounts of
Cedelbank participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedelbank in any of 28 currencies,
including United States dollars. Cedelbank provides to Cedelbank participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedelbank interfaces with domestic markets in several countries. As a
professional depository, Cedelbank is subject to regulation by the Luxembourg
Monetary Institute. Cedelbank 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 Cedelbank is also available to others, such as banks, brokers, dealers
and trust companies, that clear through or maintain a custodial relationship
with a Cedelbank participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment, 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, 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 as the Euroclear operator, under contract with Euroclear Clearance Systems
S.C., a Belgian cooperative corporation. All operations are conducted by the
Euroclear operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear operator, not the
cooperative. The cooperative establishes policy for 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.
These rules and laws 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
these rules and laws only on behalf of Euroclear participants, and has no record
of or relationship with persons holding through Euroclear participants.
Distributions with respect to certificates held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank 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.
Cedelbank or the Euroclear operator, as the case may be, will take any other
action permitted to be taken by a certificateholder under the Pooling and
Servicing Agreement and the related supplement on behalf of a Cedelbank
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.
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Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among participants
of DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform 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 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 that
it has developed and is implementing a program so that these 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, 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 its participants and other members of the
financial community 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 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 its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
DEFINITIVE CERTIFICATES
We refer to certificantes issued in fully registered certificates form as
"DEFINITIVE CERTIFICATES". The certificates of each series will be issued as
definitive certificates, to 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 these events, 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.
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.
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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 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 interest
funding accounts 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 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, 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, 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 or on a date prior thereto specified in the related supplement and, for a
series offered hereby, in the related prospectus supplement 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
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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. 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 principal funding account established for the benefit of
the certificateholders of such series 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 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 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
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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 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
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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 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.
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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 Accounts,
as applicable, is an eligible receivable and (c) on the date of creation of any
new receivable, such
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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 total aggregate amount of principal receivables in the trust and
(ii) the amount on deposit in the Special Funding
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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 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 will convey to the trust, and, to the extent that
Credco owns any receivables arising in such accounts, Credco 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 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.
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
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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, or materially beneficial 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 eight 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 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
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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 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 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.
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.
"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
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Series Allocable Finance Charge Collections for all series during the
immediately preceding monthly period calculated on a cash basis after
subtracting therefrom the Series Allocable Defaulted Amount 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 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 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 remarketed 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.
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 the
public under a prospectus supplement or other disclosure document, in
transactions either registered under the Securities Act of 1933, as amended or
exempt from registration thereunder, directly, through one or more underwriters
or placement agents, in fixed-price offerings or in negotiated transactions or
otherwise in the manner discussed under "Plan of Distribution" in this
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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.
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, a 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
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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 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 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), 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
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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 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.
45
<PAGE>
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
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 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.
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<PAGE>
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 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;
(ii) Group Investor Default Amount;
(iii) Group Investor Monthly Fees;
(iv) Group Investor Additional Amounts; 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 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.
"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.
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<PAGE>
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 with respect to such series. The excess is allocated pro
rata among the series in such group based on each series' respective Invested
Amounts.
48
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
-----------------------------------------
American Express Credit Account
Master Trust
Finance Charge
Collections
-----------------------------------------
|
--------------------------------------------------------------------------------------------
| | |
------------------------- -------------------------- --------------------------
Series 1 Series 2 Series 3
Series Allocable Finance Series Allocable Finance Series Allocable Finance
Step Charge Collections (based Charge Collections (based Charge Collections (based
1 upon the Series Allocation upon the Series Allocation upon the Series Allocation
Percentage) Percentage) Percentage)
------------------------- -------------------------- --------------------------
| | |
--------------------- ------------------- ----------------------
| | | | | |
-------------- ------------------ -------------- ------------------- -------------- --------------------
Investor Finance Investor Finance Investor Finance
Transferors' Charge Collections Transferors' Charge Collections Transferors' Charge Collections
Step Finance Charge (based upon the Finance Charge (based upon the Finance Charge (based upon the
2 Collection Floating Allocation Collections Floating Allocation Collections Floating Allocation
Percentage) Percentage) Percentage)
-------------- ------------------ -------------- ------------------- -------------- --------------------
|____________________________________________|___________________________________________|
|
-----------------------------------------------------------------------------------------
Step ----------------- Group
3 | Investor Finance Charge Collection
| -----------------------------------------------------------------------------------------
|
----------------------------------------------------------
| |
| ---------------------------------------------------------------------
| | | |
| ------------------------- ------------------------- --------------------------
Step | Series 1 Series 2 Series 3
4 | Investor Monthly Interest Investor Monthly Interest Investor Monthly Interest
| ------------------------- ------------------------- --------------------------
|
|----------------------------------------------------------
| |
| ---------------------------------------------------------------------
| | | |
| ------------------------- ------------------------- --------------------------
| Series 1 Series 2 Series 3
| Investor Default Amount Investor Default Amount Investor Default Amount
| ------------------------- ------------------------- --------------------------
|
|----------------------------------------------------------
| |
| ---------------------------------------------------------------------
| | | |
| ------------------------- ------------------------- --------------------------
| Series 1 Series 2 Series 3
| Investor Monthly Fees Investor Monthly Fees Investor Monthly Fees
| ------------------------- ------------------------- --------------------------
|
|----------------------------------------------------------
| |
| ---------------------------------------------------------------------
| | | |
| --------------------------- --------------------------- ---------------------------
| Series 1 Series 2 Series 3
| Investor Additional Amounts Investor Additional Amounts Investor Additional Amounts
| --------------------------- --------------------------- ---------------------------
|
|----------------------------------------------------------
|
---------------------------------------------------------------------
| | |
------------------------- ------------------------- --------------------------
Series 1 Series 2 Series 3
Balance based upon Balance based upon Balance based upon
Investor Amount Investor Amount Investor Amount
------------------------- ------------------------- --------------------------
</TABLE>
49
<PAGE>
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
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 can be no assurance that there will be any Shared Principal
50
<PAGE>
Collections with respect to any monthly period or that any other series will be
designated as Principal Sharing Series.
PAIRED SERIES
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 amount of the
certificates of such series and an amount equal to the amount of such deficiency
(the "PRE-
51
<PAGE>
FUNDING AMOUNT") will be held in a pre-funding account established with the
trustee for the benefit of certificateholders of such series 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.
52
<PAGE>
CREDIT ENHANCEMENT
General. For any series, credit enhancement may be provided with respect
to one or more classes thereof. 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. 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, 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 offered hereby may be subordinated to one or
more other classes of 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.
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
53
<PAGE>
related prospectus supplement. Subject to the terms and conditions specified in
the related prospectus supplement, the letter of credit 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 cash collateral guaranty secured by the deposit of
cash or certain permitted investments in a 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.
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
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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 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.
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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.
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.
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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 any
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 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
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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 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.
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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 sold to RFC II all of its
right, title and interest in and to (i) all of the receivables existing in the
initial accounts as of the initial cut-off date and in the Additional Accounts
as of the Addition 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
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
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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.
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
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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, or
the lapse of specified time periods, 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 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 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 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 the Pooling
and Servicing Agreement, including secured contracts of Centurion. The FDIA
provides that a claim for damages arising from repudiation of a contract is
limited to "actual direct compensatory damages." In the event the FDIC were to
be appointed as conservator or receiver of Centurion and were to repudiate the
Pooling and Servicing Agreement, then the amount payable out of available
collateral to the trustee and certificateholders could be lower than the
outstanding principal and accrued interest on the certificates.
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 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
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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 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
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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, such transferor as a debtor-
in-possession, 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 Truth-in-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 rights 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.
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
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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 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, 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.
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, special federal income 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, special federal income tax counsel
is of the opinion that the certificates will properly be treated
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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 special federal income tax counsel is of
the opinion that the certificates will be characterized as debt for federal
income tax purposes and because any holder of 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 Internal Revenue Code of 1986 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 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
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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 federal income tax 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, the provisions of sections 1271 through 1273 and 1275 of the
Internal Revenue 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 original issue discount on its interest in a Certificate
in income for federal income tax purposes on a constant yield basis, resulting
in the inclusion of original issue discount in income somewhat in advance of the
receipt of cash attributable to that income. In general, a certificate will be
treated as having original issue discount to the extent that its "stated
redemption price" exceeds its "issue price," if such excess equals or exceeds
0.25 percent multiplied by the weighted average life of the certificate
(determined by taking into account only the number of complete years following
issuance until payment is made for any partial principal payments). Under
section 1272(a)(6) of the Internal Revenue Code, special provisions apply to
debt instruments on which payments may be accelerated due to prepayments of
other obligations securing those debt instruments. However, no regulations have
been issued interpreting those provisions, and the manner in which those
provisions would apply to the certificates is unclear. Additionally, the 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 original issue discount
may be subject to the "market discount" rules of sections 1276 through 1278 of
the Internal Revenue Code. These rules provide, in part, that gain on the sale
or other disposition of a certificate and partial principal payments on a
certificate are treated as ordinary income to the extent of
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accrued market discount. The market discount rules also provide for deferral of
interest deductions with respect to debt incurred to purchase or carry a
certificate that has market discount.
Market Premium. A U.S. certificate owner who purchases an interest in a
certificate at a premium may elect to offset the premium against interest income
over the remaining term of the certificate in accordance with the provisions of
section 171 of the Internal Revenue Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a disposition of an interest in a certificate, a U.S. certificate
owner generally will recognize gain or loss equal to the difference between the
amount realized on the disposition and the U.S. certificate owner's adjusted
basis in its interest in the certificate. 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 original issue discount) 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 Internal Revenue 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, the organization or institution may
provide a signed statement to the Withholding Agent. However, in that case, the
signed statement generally 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, 2001;
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.
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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
Internal Revenue 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.
Recently issued final Treasury regulations will revise some of the
foregoing information reporting and backup withholding procedures generally
beginning January 1, 2001; certificate owners should consult their tax advisors
concerning the impact to them, if any, of 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, and Section 4975 of the Internal Revenue 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 Internal Revenue Code (collectively, "PARTIES IN INTEREST")
with respect to the Plan. A violation of these "prohibited transaction" rules
may generate
68
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excise tax and other liabilities under ERISA and the Internal Revenue 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 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 Internal Revenue 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 Securities Exchange Act of 1934,
as amended, 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 and the class of securities of which such
security is a part is registered under the Securities Exchange Act within
120 days (or such later time as may be allowed by the Securities and Exchange
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. 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
transferors 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.
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 Internal Revenue 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 Department
of Labor 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.
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Moreover, as discussed above, while (unless provided otherwise in the
applicable prospectus supplement) special federal income 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 Internal Revenue
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.
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 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
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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
Securities and Exchange Commission. This prospectus is part of the registration
statement, but the registration statement includes additional information.
The Servicer will file with the Securities and Exchange Commission all
required annual, monthly and special SEC reports and other information about the
trust.
You may read and copy any reports, statements or other information we file
at the Securities and Exchange 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 Securities and Exchange Commission. Please call the
Securities and Exchange Commission at (800) SEC-0330 for further information on
the operation of the public reference rooms. Our Securities and Exchange
Commission filings are also available to the public on the Securities and
Exchange Commission Internet site (http://www.sec.gov).
The Securities and Exchange 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 Securities and Exchange
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 SEC reports and
proxy materials filed by or on behalf of the trust until we terminate our
offering of the certificates.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: 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
TERMS PAGE(S)
- ----- -------
account owner................................ 41
accounts..................................... 24
Additional Accounts.......................... 17
additional transferors....................... 38
adverse effect............................... 36
AET.......................................... 21
Aggregate Addition........................... 17
Aggregate Addition Accounts.................. 16
American Express............................. 22
APR.......................................... 19
assigned assets.............................. 24
assumed obligations.......................... 24
assuming entity.............................. 24
Average Rate................................. 42
Bankruptcy Code.............................. 23
Bill......................................... 66
business day................................. 45
Business T................................... 21
cardmember................................... 17
CEBA......................................... 10
Centurion.................................... 8
Certificate Owners........................... 29
Certificateholders' Interest................. 28
Certificates................................. 16
Charge Card Account.......................... 17
Class........................................ 30
Code......................................... 66
Collateral Interest.......................... 54
Collateral Invested Amount................... 53
controlled accumulation amount............... 31
controlled accumulation period............... 31
controlled amortization amount............... 31
controlled amortization period............... 31
controlled deposit amount.................... 31
controlled distribution amount............... 31
Credco....................................... 22
Credco Purchase Agreement.................... 59
date of processing........................... 44
Defaulted Amount............................. 52
Defaulted Receivables........................ 52
defeased series.............................. 57
depository................................... 26
determination date........................... 45
discount percentage.......................... 39
discount receivables......................... 39
distribution date............................ 45
early accumulation period.................... 31
early amortization period.................... 32
eligible account............................. 24
eligible institution......................... 43
eligible investments......................... 44
eligible receivable.......................... 36
Excess Allocation Series..................... 50
TERMS PAGE(S)
- ----- -------
excess finance charge collections............ 50
FASIT........................................ 66
FDIA......................................... 61
finance charge receivables................... 25
FIRREA....................................... 61
floating allocation percentage............... 46
full invested amount......................... 52
funding period............................... 51
group........................................ 46
Group Investor Additional Amounts............ 47
Group Investor Default Amount................ 47
Group Investor Finance Charge Collections.... 47
Group Investor Monthly Fees.................. 47
Group Investor Monthly Interest.............. 47
ineligible receivables....................... 36
initial accounts............................. 16
initial cut-off date......................... 16, 35
initial selection date....................... 16
insolvency event............................. 33
Invested Amount.............................. 42
Investor Default Amount...................... 47
investor finance charge collections.......... 48
monthly period............................... 45
Monthly Servicing Fee........................ 34
New Accounts................................. 16
Original Transferor Certificate.............. 16
Paired Series................................ 51
participation interests...................... 17
Parties in Interest.......................... 68
pay-out event................................ 32
permitted liens.............................. 36
Plan......................................... 68
Plan Asset Regulation........................ 69
Pooling and Servicing Agreement.............. 16
Portfolio Yield.............................. 41
pre-funding amount........................... 51
Premium Percentage........................... 40
Premium Receivables.......................... 40
prime rate................................... 19
principal allocation percentage.............. 46
principal receivables........................ 25
Principal Sharing Series..................... 50
Principal Shortfalls......................... 50
prior series................................. 51
PTCE......................................... 69
rating agency................................ 23
Rating Agency Condition...................... 23
Reallocated Investor Finance Charge
Collections................................ 47
Reallocation Group........................... 46
receivables.................................. 17
Receivables Purchase Agreement............... 41
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TERMS PAGE(S)
- ----- -------
record date.................................. 26
recoveries................................... 17
regulations.................................. 65
Reinvestment Events.......................... 33
removed accounts............................. 25
Required Minimum Principal Balance........... 38
Required Transferor Amount................... 37
revolving credit accounts.................... 17
revolving period............................. 30
RFC II....................................... 9, 16
RFC II Purchase Agreement.................... 59
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 enhancement........................... 16
Series Invested Amount....................... 38
Series Required Transferor Amount............ 46
service transfer............................. 55
servicer default............................. 56
Servicing Fee................................ 34
Shared Principal Collections................. 50
TERMS PAGE(S)
- ----- -------
Special Funding Account...................... 51
Special Payment Date......................... 32
Supplement................................... 26
Supplemental Certificate..................... 16, 38
surviving servicer company................... 23
surviving transferor company................. 23
tax opinion.................................. 43
termination notice........................... 55
total portfolio.............................. 24
transfer date................................ 45
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.............................. 24
U.S. certificate owner....................... 64
U.S. person.................................. 64
UCC.......................................... 23
Withholding Agent............................ 67
Y2K.......................................... 21
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AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
ISSUER
SERIES 2000-[ ]
$[ ]
CLASS A FLOATING RATE ASSET BACKED CERTIFICATES
$[ ]
CLASS B FLOATING RATE ASSET BACKED CERTIFICATES
AMERICAN EXPRESS CENTURION BANK
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
[LOGO] American Express
-----------------------------------
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 [ ], 2000.
DATED [ ], 2000
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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................................................................ $2,112,000*
Printing and Engraving.......................................................... 375,000
Trustee's Fees.................................................................. 50,000
Legal Fees and Expenses......................................................... 500,000
Blue Sky Fees and Expenses...................................................... 75,000
Accountants' Fees and Expenses.................................................. 250,000
Rating Agency Fees.............................................................. 850,000
Miscellaneous Fees.............................................................. 50,000
----------
Total......................................................................... $4,262,000
----------
----------
</TABLE>
- ------------------------
* Actual
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 and regulations may be amended from time to time, and shall so
indemnify to the full extent permitted by such laws and regulations, 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 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
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<PAGE>
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>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to the Registrants'
Registration Statement on Form S-3, Registration 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, Registration 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.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
10.1 -- RFC II Purchase Agreement dated May 16, 1996. (incorporated by reference to Exhibit 10.1 to the
Registrants' Registration Statement on Form S-3, Registration No. 333-67567).
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>
- ------------------
* Previously filed.
(b) Financial Statements
All financial statements, schedules and historical information have been
omitted as they are not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants on behalf of 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,
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
II-3
<PAGE>
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 Amendment No. 1 to the 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 January 3, 2000.
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 Amendment No. 1 to the Registration Statement has been signed on
January 3, 2000 by the following persons in the capacities indicated.
SIGNATURE
---------
/s/ David E. Poulsen*
- -------------------------------------------------------
Name: David E. Poulsen
Title: Director, President and Chief Executive Officer
/s/ Frank L. Skillern*
- -------------------------------------------------------
Name: Frank L. Skillern
Title: Director
/s/ Gilbert E. Ahye*
- -------------------------------------------------------
Name: Gilbert E. Ahye
Title: Director
/s/ Maria J. Garciaz*
- -------------------------------------------------------
Name: Maria J. Garciaz
Title: Director
/s/ Ash Gupta*
- -------------------------------------------------------
Name: Ash Gupta
Title: Director
/s/ Peter A. Lefferts*
- -------------------------------------------------------
Name: Peter A. Lefferts
Title: Director
II-5
<PAGE>
SIGNATURE
---------
/s/ Raymond F. Pettit*
- -------------------------------------------------------
Name: Raymond F. Pettit
Title: Director
/s/ Roslyn M. Watson*
- -------------------------------------------------------
Name: Roslyn M. Watson
Title: Director
/s/ Jim F. Welch*
- -------------------------------------------------------
Name: Jim F. Welch
Title: Director
/s/ Rhonda M. Halpern*
- -------------------------------------------------------
Name: Rhonda M. Halpern
Title: Chief Financial Officer, Treasurer and Chief
Compliance Officer(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 Amendment No. 1 to the 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 January 3, 2000.
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 R. Scharfstein
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed on
January 3, 2000 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)
/s/ Leslie R. Scharfstein
- -------------------------------------------------------
* By: Leslie R. Scharfstein--Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to the Registrants'
Registration Statement on Form S-3, Registration 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, Registration 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. (incorporated by reference to Exhibit 10.1 to the
Registrants' Registration Statement on Form S-3, Registration No. 333-67567).
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>
- ------------------
* Previously filed.
<PAGE>
American Express Centurion Bank
6985 Union Park Center
Midvale, Utah 84047
January 3, 2000
American Express Centurion Bank
6985 Union Park Center
Midvale, Utah 84047
Re: Registration Statement on Form S-3
Registration No. 333-91473
----------------------------------
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.
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
<PAGE>
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
<PAGE>
American Express Receivables Financing Corporation II
World Financial Center
200 Vesey Street
New York, New York 10285
January 3, 2000
American Express Receivables Financing Corporation II
World Financial Center
200 Vesey Street
New York, New York 10285
Re: Registration Statement on Form S-3
Registration No. 333-91473
----------------------------------
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.
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
<PAGE>
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
<PAGE>
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, NY 10103-0001
January 3, 2000
American Express Receivables Financing Corporation II
World Financial Center
200 Vesey Street
New York, NY 10285
American Express Centurion Bank
6985 Union Park Center
Midvale, Utah 84047
Re: Registration Statement on Form S-3
Registration No. 333-91473
----------------------------------
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 above-referenced
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>
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
