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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
American Express American Express Receivables
Centurion Bank Financing Corporation II
(Exact name of registrants as specified in its charter)
United States United States
(State of incorporation (State of incorporation
or organization) or organization)
13-3256118 13-3854638
(IRS Employer (IRS Employer
Identification No.) Identification No.)
301 N. Walnut Street World Financial Center
Wilmington, Delaware 200 Vesey Street
(Address of principal New York, New York
executive offices) (Address of principal
executive offices)
19801
(Zip Code) 10285
(Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
American Express Credit Account Master Trust
Class A Series 1996-1 6.80% Asset Backed Certificates
Class B Series 1996-1 6.95% Asset Backed Certificates
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Registrant's Securities to be Registered.
The description of the Class A Series 1996-1 6.80% Asset Backed Certificates
and Class B Series 1996-1 6.95% Asset Backed Certificates appears under the
captions entitled: "Prospectus Summary"; "Risk Factors"; "Description of the
Certificates"; "Certain Legal Aspects of the Receivables"; "Tax Matters"; and
"ERISA Considerations" in the Prospectus, dated May 9, 1996, and "Summary of
Series Terms" and "Maturity Considerations" in the Prospectus Supplement, dated
May 9, 1996 (the Prospectus and the Prospectus Supplement are attached hereto
as Exhibit 4.3).
Item 2. Exhibits.
Exhibit 4.1-- Pooling and Servicing Agreement, dated as of
May 16, 1996.
Exhibit 4.2-- Series 1996-1 Supplement to the Pooling and
Servicing Agreement, dated as of May 16, 1996.
Exhibit 4.3-- Prospectus dated May 9, 1996 and Prospectus
Supplement, dated May 9, 1996, as filed with the
Securities and Exchange Commission on May 13, 1996
pursuant to Rule 424(b)(5).
Exhibit 5.1-- Form of specimens of certificates representing
the Class A Series 1996-1 6.80% Asset Backed
Certificates and the Class B Series 1996-1 6.95%
Asset Backed Certificates.
2
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the Registrants have duly caused this Form 8-A to be
signed on their behalf by the undersigned, thereunto duly authorized.
AMERICAN EXPRESS
CENTURION BANK
By: /s/ Frank L. Skillern
--------------------------------
Name: Frank L. Skillern
Title: Chief Executive Officer
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
By: /s/ Leslie R. Scharfstein
--------------------------------
Name: Leslie R. Scharfstein
Title: President
Date: May 16, 1996
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
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Exhibit 4.1-- Pooling and Servicing Agreement, dated as of May 16, 1996.
Exhibit 4.2-- Series 1996-1 Supplement to the Pooling and Servicing
Agreement, dated as of May 16, 1996.
Exhibit 4.3-- Prospectus dated May 9, 1996 and Prospectus Supplement, dated
May 9, 1996, as filed with the Securities and Exchange
Commission on May 13, 1996 pursuant to Rule 424(b)(5).
Exhibit 5.1-- Form of specimens of certificates representing the Class A
Series 1996-1 6.80% Asset Backed Certificates and the Class B
Series 1996-1 6.95% Asset Backed Certificates.
4
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EXHIBIT 4.1
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EXECUTION COPY
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AMERICAN EXPRESS CENTURION BANK
and
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II,
as Transferors,
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
as Servicer,
and
THE BANK OF NEW YORK,
as Trustee
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of May 16, 1996
==============================================================================
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................. 1
Section 1.02. Other Definitional Provisions............................ 21
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables................................ 22
Section 2.02. Acceptance by Trustee.................................... 23
Section 2.03. Representations and Warranties of Each Transferor
Relating to Such Transferor.............................. 24
Section 2.04. Representations and Warranties of each Transferor
Relating to the Agreement and Any Supplement and the
Receivables.............................................. 25
Section 2.05. Reassignment of Ineligible Receivables................... 26
Section 2.06. Reassignment of Certificateholders' Interest in Trust
Portfolio................................................ 27
Section 2.07. Covenants of each Transferor............................. 28
Section 2.08. Additional Covenants of Each Transferor Regarding the
Terms of the Accounts.................................... 30
Section 2.09. Addition of Accounts..................................... 31
Section 2.10. Removal of Accounts and Participation Interests.......... 35
Section 2.11. Account Allocations...................................... 36
Section 2.12. Discount Option.......................................... 36
Section 2.13. Premium Option........................................... 37
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating
to the Servicer.......................................... 39
Section 3.02 Servicing Compensation................................... 40
Section 3.03. Representations, Warranties and Covenants of the
Servicer ................................................ 40
Section 3.04. Reports and Records for the Trustee...................... 42
Section 3.05. Annual Certificate of Servicer........................... 42
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available................. 42
Section 3.07. Tax Treatment............................................ 43
Section 3.08. Notices to Centurion Bank................................ 43
Section 3.09. Adjustments.............................................. 43
Section 3.10. Recoveries............................................... 44
Section 3.11. Reports to the Commission................................ 44
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Page
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01. Rights of Certificateholders............................. 45
Section 4.02. Establishment of Collection Account and Special Funding
Account.................................................. 45
Section 4.03. Collections and Allocations.............................. 47
Section 4.04. Shared Principal Collections............................. 48
Section 4.05. Allocation of Trust Assets to Series or Groups........... 48
Section 4.06. Interchange.............................................. 49
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates......................................... 51
Section 6.02. Authentication of Certificates........................... 51
Section 6.03. New Issuances............................................ 51
Section 6.04. Registration of Transfer and Exchange of Certificates.... 53
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates........ 55
Section 6.06. Persons Deemed Owners.................................... 55
Section 6.07. Appointment of Paying Agent.............................. 56
Section 6.08. Access to List of Registered Certificateholders' Names
and Addresses............................................ 56
Section 6.09. Authenticating Agent..................................... 57
Section 6.10. Book-Entry Certificates.................................. 58
Section 6.11. Notices to Clearing Agency............................... 58
Section 6.12. Definitive Certificates.................................. 59
Section 6.13. Global Certificate; Exchange Date........................ 59
Section 6.14. Meetings of Certificateholders........................... 60
Section 6.15. Uncertificated Classes................................... 62
ARTICLE VII
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 7.01. Liability of each Transferor............................. 63
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor............................. 63
Section 7.03. Limitations on Liability of each Transferor.............. 64
Section 7.04. Liabilities.............................................. 64
Section 7.05. Assumption of a Transferor's Obligations................. 64
ARTICLE VIII
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Page
OTHER MATTERS RELATING TO THE SERVICER
Section 8.01. Liability of the Servicer................................ 66
Section 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer............................. 66
Section 8.03. Limitation on Liability of the Servicer and Others....... 66
Section 8.04. Servicer Indemnification of the Trust and the Trustee.... 67
Section 8.05. Resignation of the Servicer.............................. 67
Section 8.06. Access to Certain Documentation and Information
Regarding the Receivables................................ 67
Section 8.07. Delegation of Duties..................................... 68
Section 8.08. Examination of Records................................... 68
ARTICLE IX
INSOLVENCY EVENTS
Section 9.01. Rights upon the Occurrence of an Insolvency Event........ 69
ARTICLE X
SERVICER DEFAULTS
Section 10.01. Servicer Defaults...................................... 71
Section 10.02. Trustee To Act; Appointment of Successor............... 73
Section 10.03. Notification to Certificateholders..................... 74
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee...................................... 75
Section 11.02. Certain Matters Affecting the Trustee.................. 76
Section 11.03. Trustee Not Liable for Recitals in Certificates........ 77
Section 11.04. Trustee May Own Certificates........................... 78
Section 11.05. The Servicer To Pay Trustee's Fees and Expenses........ 78
Section 11.06. Eligibility Requirements for Trustee................... 78
Section 11.07. Resignation or Removal of Trustee...................... 78
Section 11.08. Successor Trustee...................................... 79
Section 11.09. Merger or Consolidation of Trustee..................... 79
Section 11.10. Appointment of Co-Trustee or Separate Trustee.......... 79
Section 11.11. Tax Returns............................................ 80
Section 11.12. Trustee May Enforce Claims Without Possession of
Certificates........................................... 81
Section 11.13. Suits for Enforcement.................................. 81
Section 11.14. Rights of Certificateholders To Direct Trustee......... 81
Section 11.15. Representations and Warranties of Trustee.............. 81
Section 11.16. Maintenance of Office or Agency........................ 82
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ARTICLE XII
TERMINATION
Section 12.01. Termination of Trust..................................... 83
Section 12.02. Final Distribution....................................... 83
Section 12.03. Transferor's Termination Rights.......................... 84
Section 12.04. Defeasance............................................... 84
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment; Waiver of Past Defaults........................ 86
Section 13.02. Protection of Right, Title and Interest to Trust.......... 88
Section 13.03. Limitation on Rights of Certificateholders................ 89
Section 13.04. Governing Law............................................. 89
Section 13.05. Notices; Payments......................................... 90
Section 13.06. Severability of Provisions................................ 90
Section 13.07. Certificates Nonassessable and Fully Paid................. 90
Section 13.08. Further Assurances........................................ 90
Section 13.09. Nonpetition Covenant...................................... 91
Section 13.10. No Waiver; Cumulative Remedies............................ 91
Section 13.11. Counterparts.............................................. 91
Section 13.12. Third-Party Beneficiaries................................. 91
Section 13.13. Actions by Certificateholders............................. 91
Section 13.14. Rule 144A Information..................................... 91
Section 13.15. Merger and Integration.................................... 92
Section 13.16. Headings.................................................. 92
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EXHIBITS
Exhibit A Form of Transferor Certificate
Exhibit B Form of Assignment of Receivables in
Additional Accounts
Exhibit C Form of Reassignment of Receivables in Removed
Accounts
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Form of Opinion of Counsel with respect to
Amendments
Exhibit E-2 Form of Opinion of Counsel with respect to
Accounts
Exhibit E-3 Form of Annual Opinion of Counsel
Exhibit F-1 Form of Certificate of Foreign Clearing Agency
Exhibit F-2 Form of Alternate Certificate to be delivered to Foreign
Clearing Agency
Exhibit F-3 Form of Certificate to be delivered to Foreign Clearing Agency
Exhibit G-1 Private Placement Legend
Exhibit G-2 Representation Letter
Exhibit G-3 ERISA Legend
SCHEDULES
Schedule 1 List of Accounts [Deemed Incorporated]
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POOLING AND SERVICING AGREEMENT dated as of May 16, 1996,
among (i) AMERICAN EXPRESS CENTURION BANK, a Delaware banking institution, and
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II, a Delaware corporation,
as Transferors; (ii) AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., a
New York corporation, as Servicer; and (iii) THE BANK OF NEW YORK, a New York
banking corporation, as Trustee.
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties, the
Certificateholders and any Series Enhancer (as defined below) to the extent
provided herein and in any Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"Account" shall mean (a) each Initial Account, (b) each
Additional Account (but only from and after the Addition Date with respect
thereto), (c) each Related Account and (d) each Transferred Account, but shall
exclude (e) any Account, all the Receivables of which are either (i) after the
Removal Date, removed by a Transferor pursuant to Section 2.10, (ii) reassigned
to a Transferor pursuant to Section 2.05 or (iii) assigned and transferred to
the Servicer pursuant to Section 3.03.
"Account Agreement" shall mean, with respect to an Account,
the agreement between an Account Owner and the Obligor governing the terms and
conditions of such Account, as such agreement may be amended, modified or
otherwise changed from time to time.
"Account Owner" shall mean, with respect to an Account,
Centurion Bank or any other entity that, pursuant to the Account Agreement
related to such Account, is the issuer of the credit or charge cards related to,
or the obligee entitled to receive payments from account obligors under, such
Account.
"Accumulation Period" shall mean, with respect to any Series,
or any Class within a Series, a period following the Revolving Period, which
shall be the controlled accumulation period, the principal accumulation period,
the rapid accumulation period, the optional accumulation period, the limited
accumulation period or other accumulation period, in each case as defined with
respect to such Series in the related Supplement.
"Act" shall mean the Securities Act of 1933, as amended.
"Addition Cut-Off Date" shall mean (a) with respect to
Aggregate Addition Accounts or Participation Interests, the date specified as
such in the notice delivered with respect thereto pursuant to subsection 2.09(c)
and (b) with respect to New Accounts, the later of the dates on which such New
Accounts are originated or designated pursuant to subsection 2.09(d).
"Addition Date" shall mean (a) with respect to Aggregate
Addition Accounts, the date from and after which such Aggregate Addition
Accounts are to be included as Accounts pursuant to subsection 2.09(a) or (b),
(b) with respect to Participation Interests, the date from and after which such
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Participation Interests are to be included as assets of the Trust pursuant to
subsection 2.09(a) or (b), and (c) with respect to New Accounts, the first
Distribution Date following the calendar month in which such New Accounts are
originated or designated pursuant to subsection 2.09(a) or (b).
"Additional Account" shall mean each New Account and each
Aggregate Addition Account.
"Addition Selection Date" shall mean, for each Aggregate
Addition the date specified as such in the notice delivered with respect thereto
pursuant to subsection 2.09(c).
"Additional Transferor" shall have the meaning specified in
subsection 2.09(g).
"Adjusted Invested Amount" shall mean, with respect to any
Series and for any date, an amount equal to the "Adjusted Invested Amount" as
specified in the related Supplement.
"Adverse Effect" shall mean, with respect to any action, that
such action will (a) result in the occurrence of a Pay-Out Event or a
Reinvestment Event or (b) materially adversely affect the amount or timing of
distributions to be made to the Investor Certificateholders of any Series or
Class pursuant to this Agreement and the related Supplement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" shall mean the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Addition" shall mean the designation of additional
Eligible Accounts, other than New Accounts, to be included as Accounts or of
Participation Interests to be included as Trust Assets pursuant to subsection
2.09(a) or (b).
"Aggregate Addition Account" shall mean each Eligible Account
designated pursuant to subsection 2.09(a) or (b) to be included as an Account
and identified in the computer file or microfiche list delivered to the Trustee
by the Transferors pursuant to Section 2.01 and subsection 2.09(h).
"Aggregate Invested Amount" shall mean, as of any date of
determination, the aggregate Adjusted Invested Amounts of all Series of
Certificates issued and outstanding on such date of determination.
"Agreement" shall mean this Pooling and Servicing Agreement
and all amendments hereof and supplements hereto, including, with respect to any
Series or Class, the related Supplement.
"American Express Credco" shall mean American Express Credit
Corporation, a Delaware corporation, and its successors and permitted assigns.
"Amortization Period" shall mean, with respect to any Series,
or any Class within a Series, a period following the Revolving Period, which
shall be the controlled amortization period, the principal amortization period,
the early amortization period, the optional amortization period, the limited
amortization period or other amortization period, in each case as defined with
respect to such Series in the related Supplement.
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"Applicants" shall have the meaning specified in Section 6.08.
"Appointment Date" shall have the meaning specified in
subsection 9.02(a).
"Assignment" shall have the meaning specified in subsection
2.09(h).
"Authorized Newspaper" shall mean any newspaper or newspapers
of general circulation in the Borough of Manhattan, The City of New York,
printed in the English language (and, with respect to any Series or Class, if
and so long as the Investor Certificates of such Series are listed on the
Luxembourg Stock Exchange and such exchange shall so require, in Luxembourg,
printed in any language satisfying the requirements of such exchange) and
customarily published on each business day at such place, whether or not
published on Saturdays, Sundays or holidays.
"Average Rate", unless otherwise provided in any Supplement,
shall mean, as of any date of determination and 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 any Series consisting of more than one
Class) within such Group obtained by multiplying (a) the Certificate Rate
(reduced to take into account the payments received pursuant to any interest
rate agreements net of any amounts payable under such agreements, or, if such
agreements result in a net amount payable, increased by such net amount payable)
for such Series or Class, by (b) a fraction, the numerator of which is the
aggregate unpaid principal amount of the Investor Certificates of such Series or
Class and the denominator of which is the aggregate unpaid principal amount of
all Investor Certificates within such Group.
"Bankruptcy Code" shall have the meaning specified in
Section 7.02.
"Bearer Certificates" shall have the meaning specified in
Section 6.01.
"Benefit Plan" shall have the meaning specified in
subsection 6.04(c).
"Book-Entry Certificates" shall mean beneficial interests in
the Investor Certificates, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 6.10.
"Business Day" shall mean (i) any day other than (a) a
Saturday or Sunday or (b) any other day on which national banking associations
or state banking institutions in New York, New York, or any other State in which
the principal executive offices of Centurion Bank, the Trustee, or other Account
Owner, as the case may be, are located, are authorized or obligated by law,
executive order or governmental decree to be closed or (c) for purposes of any
particular Series, any other day specified in the applicable Series Supplement
and (ii) with respect to the determination of LIBOR, a London Business Day.
"Cash Advance Fees" shall mean cash advance transaction fees
and cash advance late fees, if any, as specified in any Account Agreement
applicable to an Account.
"Cedel" shall mean Cedel societe anonyme, a professional
depository incorporated under the laws of Luxembourg, and its successors.
"Centurion Bank" shall mean American Express Centurion Bank,
incorporated under the banking laws of the State of Delaware, and its successors
and permitted assigns.
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"Certificate" shall mean any one of the Investor
Certificates or the Transferor Certificates.
"Certificateholder" or "Holder" shall mean an Investor
Certificateholder or a Person in whose name any one of the Transferor
Certificates is registered.
"Certificateholders' Interest" shall have the meaning
specified in Section 4.01. For purposes of determining whether Holders of
Investor Certificates evidencing a specified percentage of the
Certificateholders' Interest have approved, consented or otherwise agreed to any
action hereunder, such determination shall be made based on the percentage of
the Invested Amount or Adjusted Invested Amount, as specified in the related
Supplement, represented by such Investor Certificates.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in accordance with the rules of such
Clearing Agency).
"Certificate Rate" shall mean, as of any particular date of
determination and with respect to any Series or Class, the certificate rate as
of such date specified therefor in the related Supplement.
"Certificate Register" shall mean the register maintained
pursuant to Section 6.04, providing for the registration of the Registered
Certificates and transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the
classes of Investor Certificates of that Series.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended, and serving as clearing agency for a Series or Class of
Book-Entry Certificates.
"Clearing Agency Participant" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the
closing date specified in the related Supplement.
"Code" shall mean the Internal Revenue Code of 1986.
"Collection Account" shall have the meaning specified in
Section 4.02.
"Collections" shall mean all payments by or on behalf of
Obligors (including Insurance Proceeds) received in respect of the Receivables,
in the form of cash, checks, wire transfers, electronic transfers, ATM transfers
or any other form of payment in accordance with the Account Agreement in effect
from time to time and all other amounts specified by this Agreement or any
Supplement as constituting Collections. As specified in any Participation
Interest Supplement, Collections shall include amounts received with respect to
Participation Interests. All Recoveries with respect to Receivables previously
charged-off as uncollectible will be treated as Collections of Finance Charge
Receivables.
"Commission" shall have the meaning specified in subsection
3.01(b).
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"Companion Series" shall mean (i) each Series which has been
paired with another Series (which Series may be prefunded or partially
prefunded), such that the reduction of the Invested Amount or Adjusted Invested
Amount of such Series results in the increase of the Invested Amount or Adjusted
Invested Amount, respectively, of such other Series, as described in the related
Supplements, and (ii) such other Series.
"Corporate Trust Office" shall have the meaning specified in
Section 11.16.
"Coupon" shall have the meaning specified in Section 6.01.
"Credco-Centurion Bank Purchase Agreement" shall mean,
collectively, the Receivables Purchase Agreements, each dated as of October 1,
1987, between Centurion Bank and American Express Credco, as the same may be, or
may have been, amended, supplemented or otherwise modified from time to time.
"Credco-RFC II Purchase Agreement" shall mean that certain
Receivables Purchase Agreement dated as of May 16, 1996, between American
Express Credco and RFC II, as the same may be, or may have been, amended,
supplemented or otherwise modified from time to time.
"Credit Guidelines" shall mean the respective policies and
procedures of Centurion Bank or any other Account Owner, as the case may be, as
such policies and procedures may be amended from time to time, (a) relating to
the operation of its credit or charge business, as the case may be, which
generally are applicable to its portfolio of similar accounts, including the
policies and procedures for determining the creditworthiness of customers and
the extension of credit or charge privileges to customers, and (b) relating to
the maintenance of accounts and collection of related receivables.
"Date of Processing" shall mean, with respect to any
transaction or receipt of Collections, the Business Day after such transaction
is first output, in written form under the Servicer's customary and usual
practices, from the Servicer's computer file of accounts comparable to the
Accounts (without regard to the effective date of recordation).
"Defaulted Account" shall mean any Account that has
Defaulted Receivables.
"Defaulted Amount" shall mean, with respect to any Monthly
Period, an amount (which shall not be less than zero) equal to (a) the amount of
Principal Receivables which became Defaulted Receivables in such Monthly Period,
minus (b) the amount of any Defaulted Receivables of which the Transferor or the
Servicer became obligated to accept reassignment or assignment in accordance
with the terms of this Agreement during such Monthly Period; provided, however,
that, if an Insolvency Event occurs with respect to a Transferor, the amount of
such Defaulted Receivables which are subject to reassignment to the Transferor
in accordance with the terms of this Agreement shall not be added to the sum so
subtracted and, if any of the events described in subsection 10.01(d) occur with
respect to the Servicer, the amount of such Defaulted Receivables which are
subject to reassignment or assignment to the Servicer in accordance with the
terms of this Agreement shall not be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any
Monthly Period, all Principal Receivables which are charged off as uncollectible
in such Monthly Period in accordance with the Credit Guidelines and the
Servicer's customary and usual servicing procedures for servicing accounts
comparable to the Accounts. A Principal Receivable shall become a Defaulted
Receivable on the Date of Processing on which such Principal Receivable is
recorded as charged-off on the Servicer's computer file of accounts.
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"Defeasance" shall have the meaning specified in subsection
12.04(a).
"Defeased Series" shall have the meaning specified in
subsection 12.04(a).
"Definitive Certificates" shall have the meaning specified
in Section 6.10.
"Definitive Euro-Certificates" shall have the meaning
specified in subsection 6.13(a).
"Deposit Date" shall mean each day on which the Servicer
deposits Collections in the Collection Account.
"Depository Agreement" shall mean, with respect to any Series
or Class of Book-Entry Certificates, the agreement among the Transferor, the
Trustee and the Clearing Agency substantially in the form attached to the
applicable Supplement.
"Determination Date" shall mean, unless otherwise specified in
the Supplement for a particular Series, the earlier of the third Business Day
and the fifth calendar day (or if the fifth calendar day is not a Business Day,
then the preceding Business Day) preceding each Distribution Date.
"Discount Option Date" shall mean each date on which a
Discount Percentage designated by the Transferors pursuant to Section 2.12 takes
effect.
"Discount Option Receivables" shall have the meaning specified
in Section 2.12. The aggregate amount of Discount Option Receivables outstanding
on any Date of Processing occurring on or after the Discount Option Date shall
equal the sum of (a) the aggregate Discount Option Receivables at the end of the
prior Date of Processing (which amount, prior to the Discount Option Date, shall
be zero) plus (b) any new Discount Option Receivables created on such Date of
Processing minus (c) any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables created on any Date of
Processing shall mean the product of the amount of any Principal Receivables
created on such Date of Processing (without giving effect to the proviso in the
definition of Principal Receivables) and the Discount Percentage.
"Discount Option Receivable Collections" shall mean on any
Date of Processing occurring in any Monthly Period succeeding the Monthly Period
in which the Discount Option Date occurs, the product of (a) the Discount
Percentage and (b) Collections of Principal Receivables on such Date of
Processing (without giving effect to the proviso in the definition of Principal
Receivables).
"Discount Percentage" shall mean the percentage, if any,
designated from time to time by the Transferors pursuant to Section 2.12.
"Distribution Date" shall mean, with respect to any Series,
the fifteenth day of each calendar month or, if such fifteenth day is not a
Business Day, the next succeeding Business Day, or the date otherwise specified
in the applicable Supplement for such Series.
"Document Delivery Date" shall have the meaning specified in
subsection 2.09(h).
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Eligible Account" shall mean a credit or other charge account
owned by Centurion Bank, in the case of the Initial Accounts on the Selection
Date, or Centurion Bank or any other Account Owner,
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in the case of Additional Accounts that, as of the Selection Date with respect
to an Initial Account or as of the Addition Selection Date with respect to an
Additional Account, meets the following requirements:
(a) is a credit or other charge account in existence and
maintained by Centurion Bank or such other Account Owner, as the case
may be;
(b) is payable in Dollars;
(c) has an account obligor that has not been confirmed by the
Servicer in its computer files as being involved in a voluntary or
involuntary bankruptcy proceeding;
(d) has an account obligor who has provided as his or her most
recent billing address an address located in the United States or its
territories or possessions or Canada or a United States military
address; provided, however, that as of any date of determination, up to
3% of the Accounts (calculated by number of Accounts) may have account
obligors who have provided as their billing addresses, addresses
located outside of such jurisdictions;
(e) if such account is a credit card or charge card account,
has not been identified as an account with respect to which a related
card has been lost or stolen;
(f) has not been sold or pledged to any other party except for
any other Account Owner that has either entered into (or, on or prior
to the Addition Date, will enter into) a Receivables Purchase Agreement
or that is (or, on or prior to the Addition Date, will be) a
Transferor;
(g) does not have receivables that have been sold or pledged
by Centurion Bank or any other Account Owner, as the case may be, to
any Person other than American Express Credco or any Transferor;
(h) does not have receivables that are Defaulted Receivables
or that have been identified by the Servicer as having been incurred as
a result of the fraudulent use of a related credit or charge card; and
(i) with respect to the Initial Accounts, is an account in
existence and maintained by Centurion Bank or any other Account Owner
as of the Selection Date.
Notwithstanding the above requirements, Eligible Accounts may include accounts,
the receivables of which have been written off, or with respect to which the
Servicer has confirmed the related Obligor is bankrupt, in each case as of the
Selection Date with respect to Initial Accounts, and as of the related Addition
Selection Date, with respect to Additional Accounts; provided that (a) the
balance of all receivables included in such accounts is reflected on the books
and records of the Account Owner (and is treated for purposes of this Agreement)
as "zero", and (b) borrowing and charging privileges with respect to all such
accounts have been canceled in accordance with the Credit Guidelines applicable
thereto and will not be reinstated by the Account Owner or the Servicer.
"Eligible Deposit Account" shall mean either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the unsecured, unguaranteed
senior debt securities of such depository
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institution shall have a credit rating from each Rating Agency in one of its
generic credit rating categories that signifies investment grade.
"Eligible Institution" shall mean the Trustee or any
depository institution organized under the laws of the United States, any one of
the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), which depository institution at all times (a) is a member of the
FDIC and (b) has (i) a long-term unsecured debt rating acceptable to each Rating
Agency or (ii) a certificate of deposit rating acceptable to the Rating Agency.
Notwithstanding the previous sentence any institution the appointment of which
satisfies the Rating Agency Condition shall be considered an Eligible
Institution. If so qualified, the Servicer or any Account Owner may be
considered an Eligible Institution for the purposes of this definition.
"Eligible Investments" shall mean negotiable instruments or
securities represented by instruments in bearer or registered form, or, in the
case of deposits described below, deposit accounts held in the name of the
Trustee in trust for the benefit of the Certificateholders, subject to the
exclusive custody and control of the Trustee and for which the Trustee has sole
signature authority, which evidence:
(a) direct obligations of, or obligations fully guaranteed
as to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depository
institutions or trust companies incorporated under the laws of the
United States of America, any state thereof or the District of Columbia
(or domestic branches of foreign banks) 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 or
contractual commitment to invest therein, the short-term debt of such
depository institution or trust company shall be rated at least "A-1+"
by Standard & Poor's (or any other rating from Standard & Poor's,
subject to receipt by the Transferors, the Servicer and the Trustee of
written notification from Standard & Poor's that investments of such
type at such other rating will not result in Standard & Poor's 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;
(c) commercial paper (having original or remaining maturities
of no more than 30 days), that shall be rated, at the time of the
Trust's investment or contractual commitment to invest therein, at
least "A-1+" by Standard & Poor's (or any other rating from Standard &
Poor's, subject to receipt by the Transferors, the Servicer and the
Trustee of written notification from Standard & Poor's that investments
of such type at such other rating will not result in Standard & Poor's
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;
(d) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC having, at the time of the Trust's
investment therein, a rating satisfactory to the Rating Agency;
(e) bankers' acceptances (having original maturities of no
more than 365 days) issued by any depository institution or trust
company referred to in clause (b) above;
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(f) time deposits (having maturities not later than the next
Transfer Date) other than as referred to in clause (b) above, with a
Person the commercial paper of which shall be rated at least "A-1+" by
Standard & Poor's (or any other rating from Standard & Poor's, subject
to receipt by the Transferors, the Servicer and the Trustee of written
notification from Standard & Poor's that investments of such type at
such other rating will not result in Standard & Poor's 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;
(g) only to the extent permitted by Rule 3a-7 under the
Investment Company Act, (i) money market funds that shall be rated, at
the time of the Trust's Investment therein, at least "AAA-m" or
"AAAm-G" by Standard & Poor's (or any other rating from Standard &
Poor's, subject to receipt by the Transferors, the Servicer and the
Trustee of written notification from Standard & Poor's that investments
of such type at such other rating will not result in Standard & Poor's
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 in the highest rating category of each other Rating Agency
(including any such fund for which the Trustee or any Affiliate of the
Trustee is investment manager or advisor) or (ii) any other investment
of a type or rating that satisfies the Rating Agency Condition; or
(h) any other investments permitted by Rule 3a-7 of the
Investment Company Act and approved in writing by each Rating Agency.
"Eligible Receivable" shall mean each Receivable:
(a) that has arisen in an Eligible Account;
(b) that was created in compliance in all material respects
with all Requirements of Law applicable to the Account Owner of such
Eligible Account and pursuant to an Account Agreement that complies in
all material respects with all Requirements of Law applicable to such
Account Owner, in either case, the failure to comply with which would
have 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 and performance by such Account Owner of the Account Agreement
pursuant to which such Receivable was created, have been duly obtained,
effected or given and are in full force and effect;
(d) as to which at the time of the transfer of such Receivable
to the Trust, a Transferor or the Trust will have good and marketable
title thereto, free and clear of all Liens (other than any Lien 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 on its books adequate
reserves with respect thereto);
(e) that 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 (including any 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;
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(f) that at all times will be the legal, valid and binding
payment obligation of the Obligor thereon, enforceable against such
Obligor in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(g) that, at the time of transfer to the Trust, has not been
waived or modified except as permitted in accordance with the Credit
Guidelines and which waiver or modification is reflected in the
Servicer's computer file of accounts;
(h) that, at the time of transfer to the Trust, is not subject
to any right of rescission, setoff, counterclaim or any other defense
(including defenses arising out of violations of usury laws) of the
Obligor, other than defenses arising out of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights in general;
(i) as to which, at the time of transfer to the Trust, the
Transferor thereof has satisfied all its obligations required to be
satisfied by such time;
(j) as to which, at the time of transfer to the Trust, none of
the Transferor, Centurion Bank, any other Account Owner or American
Express Credco, as the case may be, has taken any action which would
impair, or omitted to take any action the omission of which would
impair, the rights of the Trust or the Certificateholders therein; and
(k) that constitutes either an "account" or a "general
intangible" under and as defined in Article 9 of the UCC as then in
effect in any state where the filing of a financing statement is then
required to perfect the Trust's interest in the Receivables and the
proceeds thereof.
"Eligible Servicer" shall mean the Trustee or Centurion Bank
or, if the Trustee or Centurion Bank is not acting as Servicer, an entity, the
appointment of which shall satisfy the Rating Agency Condition, or an entity
that, at the time of its appointment as Servicer, (a) is servicing a portfolio
of credit accounts, (b) is legally qualified and has the capacity to service the
Accounts, (c) in the sole determination of the Trustee, which determination
shall be conclusive and binding, has demonstrated the ability to service
professionally and competently a portfolio of similar accounts in accordance
with high standards of skill and care, (d) is qualified to use the software that
is then being used to service the Accounts or obtains the right to use or has
its own software which is adequate to perform its duties under this Agreement
and (e) has a net worth of at least $50,000,000 as of the end of its most recent
fiscal quarter.
"Enhancement Agreement" shall mean any agreement, instrument
or document governing the terms of any Series Enhancement or pursuant to which
any Series Enhancement is issued or outstanding.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Euroclear Operator" shall mean Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear System.
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"Excess Allocation Series" shall mean any Series that,
pursuant to the Supplement related to such Series, is entitled to receive
certain excess Collections of Finance Charge Receivables as more fully described
in such Supplement.
"Exchange Date" shall mean, with respect to any Series, any
date that is after the related Closing Date, in the case of Definitive
Euro-Certificates in registered form, or upon presentation of certification of
non-United States beneficial ownership (as described in Section 6.13), in the
case of Definitive Euro-Certificates in bearer form.
"FDIC" shall mean the Federal Deposit Insurance Corporation
or any successor.
"Finance Charge Receivables" shall mean all amounts billed to
the Obligors on any Account in respect of (i) all Periodic Rate Finance Charges,
(ii) Cash Advance Fees (iii) annual membership fees and annual service charges,
(iv) Late Fees, (v) Overlimit Fees, (vi) Discount Option Receivables, if any,
and (vii) any other fees with respect to the Accounts designated by the
Transferors at any time and from time to time to be included as Finance Charge
Receivables; provided, however that after the Premium Option Date, Finance
Charge Receivables on any Date of Processing shall mean the amount of Finance
Charge Receivables as otherwise determined pursuant to this definition less the
amount of Premium Option Receivables. Finance Charge Receivables shall also
include (a) the interest portion of Participation Interests as shall be
determined pursuant to, and only if so provided in, the applicable Participation
Interest Supplement or Series Supplement, (b) any amounts designated to be
Finance Charge Receivables pursuant to Section 4.05 and (c) all Recoveries with
respect to Receivables previously charged off as uncollectible.
"FIRREA" shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear
Operator.
"Global Certificate" shall have the meaning specified in
subsection 6.13(a).
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Group" shall mean, with respect to any Series, the group of
Series, if any, in which the related Supplement specifies such Series is to be
included.
"Independent Director" shall have the meaning specified in
subsection 2.07(h)(vii).
"Ineligible Receivables" shall have the meaning specified in
subsection 2.05(a).
"Initial Account" shall mean each Optima(Registered) Card,
Optima Line of Credit and Sign and Travel(Registered) credit account established
pursuant to an Account Agreement between Centurion Bank or other Account Owner
and any Person, which account is identified in the computer file or microfiche
list delivered to the Trustee by the Transferors pursuant to Section 2.01 on the
Initial Issuance Date.
"Initial Cut-Off Date" shall mean April 25, 1996.
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"Initial Issuance Date" shall mean May 16, 1996, the date the
Original Transferor Certificate was issued by the Trust and delivered to the
Transferor.
"Insolvency Event" shall have the meaning specified in
subsection 9.01(a).
"Insolvency Proceeds" shall have the meaning specified in
subsection 9.01(b).
"Insurance Proceeds" shall mean any amounts received pursuant
to the payment of benefits under any credit life insurance policies, credit
disability or unemployment insurance policies covering any Obligor with respect
to Receivables under such Obligor's Account.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the "Invested Amount", as specified in the
related Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.
"Investor Certificateholder" shall mean the Person in whose
name a Registered Certificate is registered in the Certificate Register or the
bearer of any Bearer Certificate (or the Global Certificate, as the case may be)
or Coupon.
"Investor Certificates" shall mean any certificated or
uncertificated interest in the Trust designated as, or deemed to be, an
"Investor Certificate" in the related Supplement.
"Late Fees" shall have the meaning specified in the Account
Agreement applicable to each Account for late fees or similar terms.
"LIBOR" for any Series shall have the meaning specified in the
Supplement related to such Series.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, equity interest, encumbrance,
lien (statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
assignment permitted by Section 7.02 or 7.05 and the lien created by this
Agreement or any Receivables Purchase Agreement shall not be deemed to
constitute a Lien.
"Manager" shall mean the lead manager, manager or co-manager
or Person performing a similar function with respect to an offering of
Definitive Euro-Certificates.
"Monthly Period" shall mean, with respect to each Distribution
Date, unless otherwise provided in a Supplement, the period (i) from and
including the day following the last day of the seventh billing cycle applicable
to the Accounts ending during the second preceding calendar month and (ii) to
and including the last day of the seventh billing cycle applicable to the
Accounts ending in the calendar month immediately preceding the calendar month
in which such Distribution Date shall occur; provided, however, that the initial
Monthly Period with respect to any Series will commence on the Closing Date with
respect to such Series.
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"Moody's" shall mean Moody's Investors Service, Inc., or its
successor.
"New Account" shall mean each Optima Card(Registered),
Optima Line of
Credit and Sign & Travel(Registered) account or other credit or charge account
established pursuant to an Account Agreement, which account is designated
pursuant to subsection 2.09(d) to be included as an Account and is identified in
the computer file or microfiche list delivered to the Trustee by the Transferors
pursuant to Section 2.01 and subsection 2.09(h).
"Notices" shall have the meaning specified in subsection
13.05(a).
"Obligor" shall mean, with respect to any Account, the Person
or Persons obligated to make payments with respect to such Account, including
any guarantor thereof, but excluding any merchant.
"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President or
the Treasurer of a Transferor or the Servicer, as the case may be, or by the
President, any Vice President or the financial controller (or an officer holding
an office with equivalent or more senior responsibilities) of a Successor
Servicer.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall be reasonably acceptable to the Trustee.
"Original Transferor Certificate" shall mean the certificate
executed by Centurion Bank and RFC II and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A, as the same may be modified in
accordance with Exhibit A.
"Overlimit Fees" shall have the meaning specified in the
Account Agreement applicable to each Account for overlimit fees or similar terms
if such fees are provided for with respect to such Account.
"Partial Amortization SFA Amounts" shall mean the amounts
specified by the Servicer or the Transferors pursuant to Section 4.02 which are
to be applied to the partial amortization of each Series as specified in the
related Supplement.
"Participation Interest Supplement" shall mean a Supplement
entered into pursuant to subsection 2.09(a)(ii) or (b) in connection with the
conveyance of Participation Interests to the Trust.
"Participation Interests" shall have the meaning specified
in subsection 2.09(a)(ii).
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.07 and shall initially be the Trustee; provided, that if the
Supplement for a Series so provides, a separate or additional Paying Agent may
be appointed with respect to such Series.
"Pay-Out Event" shall mean, with respect to any Series, any
Pay-Out Event specified in the Supplement related to such Series.
"Periodic Rate Finance Charges" shall have the meaning
specified in the Account Agreement applicable to each Account for finance
charges (due to periodic rate) or any similar term.
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"Person" shall mean any legal person, including any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Portfolio Yield" shall mean with respect to the Trust as a
whole and, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction (a) the numerator of which is the aggregate of the sum
of the Series Allocable Finance Charge Collections for all Series during the
immediately preceding Monthly Period calculated on a cash basis, after
subtracting therefrom the Series Allocable Defaulted Amounts for all Series with
respect to such Monthly Period and (b) the denominator of which is the total
amount of Principal Receivables plus (without duplication) the then outstanding
principal amount of any Participation Interests conveyed to the Trust, plus the
amount of funds on deposit in the Special Funding Account, in each case, as of
the last day of the immediately preceding Monthly Period; provided that, with
respect to any Monthly Period in which an Aggregate Addition occurs or a removal
of Accounts pursuant to Section 2.10 occurs, the amount of Principal Receivables
and Participation Interests referred to in clause (b) shall be the average
amount of Principal Receivables and Participation Interests in the Trust on each
Business Day during such Monthly Period based upon the assumptions that (1) the
aggregate amount of Principal Receivables in the Trust plus the then outstanding
principal amount of any Participation Interests conveyed to the Trust at the end
of the day on the last day of the prior Monthly Period is the aggregate amount
of Principal Receivables and Participation Interests in the Trust on each
Business Day of the period from and including the first day of such Monthly
Period to but excluding the related Addition Date or Removal Date and (2) the
aggregate amount of Principal Receivables in the Trust plus the then outstanding
principal amount of any Participation Interests conveyed to the Trust at the end
of the day on the related Addition Date or Removal Date is the aggregate amount
of Principal Receivables and Participation Interests in the Trust on each
Business Day of the period from and including the related Addition Date or
Removal Date to and including the last day of such Monthly Period.
"Premium Option Date" shall mean each date on which a Premium
Percentage designated by the Transferors pursuant to Section 2.13 takes effect.
"Premium Option Receivables" shall have the meaning specified
in Section 2.13. The aggregate amount of Premium Option Receivables outstanding
on any Date of Processing occurring on or after the Premium Option Date shall
equal the sum of (a) the aggregate Premium Option Receivables at the end of the
prior Date of Processing (which amount, prior to the Premium Option Date, shall
be zero) plus (b) any new Premium Option Receivables created on such Date of
Processing minus (c) any Premium Option Receivable Collections received on such
Date of Processing. Premium Option Receivables created on any Date of Processing
shall mean the product of the amount of any Finance Charge Receivables created
on such Date of Processing (without giving effect to the proviso in the
definition of Finance Charge Receivables) and the Premium Percentage.
"Premium Option Receivable Collections" shall mean on any Date
of Processing occurring in any Monthly Period succeeding the Monthly Period in
which the Premium Option Date occurs, the product of (a) the Premium Percentage
and (b) Collections of Finance Charge Receivables on such Date of Processing
(without giving effect to the proviso in the definition of Finance Charge
Receivables).
"Premium Percentage" shall mean the percentage, if any,
designated from time to time by the Transferors pursuant to Section 2.13.
"Principal Receivables" shall mean (i) all amounts charged by
Obligors for merchandise and services and cash advances or otherwise borrowed by
such Obligors under any line of credit existing
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under an Account, but shall not include Finance Charge Receivables or Defaulted
Receivables plus (ii) Premium Option Receivables, if any; provided, however,
that after the Discount Option Date, Principal Receivables on any Date of
Processing thereafter shall mean Principal Receivables as otherwise determined
pursuant to this definition minus the amount of any Discount Option Receivables.
Principal Receivables shall also include the principal portion of Participation
Interests as shall be determined pursuant to, and only if so provided in, the
applicable Participation Interest Supplement or Series Supplement. In
calculating the aggregate amount of Principal Receivables on any day, the amount
of Principal Receivables shall be reduced by the aggregate amount of credit
balances in the Accounts on such day. Any Principal Receivables which a
Transferor is unable to transfer as provided in Section 2.11 shall not be
included in calculating the amount of Principal Receivables.
"Principal Shortfalls" shall have the meaning specified in
Section 4.04.
"Principal Sharing Series" shall mean a Series that, pursuant
to the Supplement therefor, is entitled to receive Shared Principal Collections.
"Principal Terms" shall mean, with respect to any Series, (i)
the name or designation; (ii) the initial principal amount (or method for
calculating such amount), the Invested Amount, the Series Invested Amount and
the Required Series Transferor Amount, (iii) the Certificate Rate (or method for
the determination thereof); (iv) the payment date or dates and the date or dates
from which interest shall accrue; (v) the method for allocating Collections to
Investor Certificateholders; (vi) the designation of any Series Accounts and the
terms governing the operation of any such Series Accounts; (vii) the Servicing
Fee; (viii) the issuer and terms of any form of Series Enhancements with respect
thereto; (ix) the terms on which the Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series, repurchased by the
Transferor or remarketed to other investors; (x) the Series Termination Date;
(xi) the number of Classes of Investor Certificates of such Series and, if more
than one Class, the rights and priorities of each such Class; (xii) the extent
to which the Investor 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 may be exchanged, in whole or in part, for Definitive
Certificates, and the manner in which any interest payable on a temporary or
global certificate will be paid); (xiii) whether the Investor Certificates of
such Series may be issued in bearer form and any limitations imposed thereon;
(xiv) the priority of such Series with respect to any other Series; (xv) whether
such Series will be part of a Group; (xvi) whether such Series will be a
Principal Sharing Series; (xvii) whether such Series will be an Excess
Allocation Series; (xviii) the Distribution Date and (xix) any other terms of
such Series.
"Rating Agency" shall mean, with respect to any outstanding
Series or Class, each rating agency, as specified in the applicable Supplement,
selected by the Transferors to rate the Investor Certificates of such Series or
Class.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified the Transferors, the
Servicer and the Trustee in writing that such action will not result in a
reduction or withdrawal of the then existing rating of any outstanding Series or
Class with respect to which it is a Rating Agency.
"Reassignment" shall have the meaning specified in Section
2.10.
"Receivables" shall mean all amounts shown on the Servicer's
records as amounts payable by Obligors on any Account from time to time,
including amounts payable for Principal Receivables and
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Finance Charge Receivables. Receivables that become Defaulted Receivables
will cease to be included as Receivables as of the day on which they become
Defaulted Receivables.
"Receivables Purchase Agreements" shall mean (i) the
Credco-RFC II Receivables Purchase Agreement and (ii) any other receivables
purchase agreement substantially in the form of such agreement that may be
entered into by RFC II, Centurion Bank or an Additional Transferor and an
Account Owner in the future, pursuant to which RFC II, Centurion Bank or such
Additional Transferor will acquire from such Account Owner Receivables for
transfer, directly or indirectly, to the Trust, in each case, as the same may be
amended, supplemented or otherwise modified from time to time.
"Record Date" shall mean, with respect to any Distribution
Date, the last day of the calendar month immediately preceding such Distribution
Date unless otherwise specified for a Series in the applicable Supplement.
"Recoveries" shall mean all amounts received (net of expenses
of collection), including Insurance Proceeds, with respect to Defaulted
Receivables, including the net proceeds of any sale of such Defaulted
Receivables.
"Registered Certificateholder" shall mean the Holder of a
Registered Certificate.
"Registered Certificates" shall have the meaning specified
in Section 6.01.
"Reinvestment Event" shall mean, with respect to any Series,
the meaning specified in the Supplement related to such Series.
"Reinvestment Period" shall mean, if applicable, with respect
to any Series, any Reinvestment Event specified in the Supplement related to
such Series.
"Related Account" shall mean an Account with respect to which
a new account number has been issued by the applicable Account Owner or the
Servicer (i) resulting from a lost or stolen credit or charge card relating to
such Account (if such Account is a credit or charge card account) and/or (ii)
under circumstances not requiring the standard application and credit evaluation
procedures under the Credit Guidelines applicable to such Account.
"Removal Date" shall have the meaning specified in Section
2.10.
"Removed Accounts" shall have the meaning specified in
Section 2.10.
"Removed Participation Interests" shall have the meaning
specified in Section 2.10.
"Required Designation Date" shall have the meaning specified
in subsection 2.09(a).
"Required Minimum Principal Balance" shall mean, with respect
to any date (a) the sum of the Series Invested Amounts for each Series
outstanding on such date plus the sum of the Series Required Transferor Amounts
for each Series outstanding on such date, minus (b) the Special Funding Amount.
"Required Transferor Amount" shall mean, with respect to any
date, an amount equal to the product of (A) the Required Transferor Percentage
and (B) the aggregate amount of Principal Receivables.
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"Required Transferor Percentage" shall mean 7% or any other
percentage specified in any Supplement; provided, however, that the Transferors
may reduce the Required Transferor Percentage upon (x) 30 days' prior notice to
the Trustee and each Rating Agency, (y) satisfaction of the Rating Agency
Condition with respect thereto and (z) delivery to the Trustee of a certificate
of a Vice President or more senior officer of each Transferor stating that such
Transferor reasonably believes that such reduction will not, based on the facts
known to such officer at the time of such certification, then or thereafter have
an Adverse Effect; provided further, that the Required Transferor Percentage
shall not at any time be less than 2%.
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or Governmental Authority, whether
Federal, state or local (including, without limitation, usury laws, the Federal
Truth in Lending Act and Regulation B and Regulation Z of the Board of Governors
of the Federal Reserve System), and, when used with respect to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person.
"Responsible Officer" shall mean, when used with respect to
the Trustee, any officer within the Corporate Trust Administration Department
(or any successor group) of the Trustee including any vice president, assistant
vice president, trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall be such officers or to whom any corporate trust matter is referred at the
Corporate Trust Office because of such officer's knowledge of and familiarity
with the particular subject.
"Revolving Period" shall mean, with respect to any Series, the
period specified as such in the Supplement related to such Series.
"RFC II" shall mean American Express Receivables Financing
Corporation II, a Delaware corporation, and its successors and permitted
assigns.
"Selection Date" shall mean, for each Initial Account, the
close of business on the cycle billing date for such Account occurring in the
monthly period beginning on the close of business on September 1, 1995 and
ending at the close of business on September 30, 1995.
"Series" shall mean any series of Investor Certificates
issued pursuant to Section 6.03.
"Series Account" shall mean any deposit, trust, escrow or
similar account maintained for the benefit of the Investor Certificateholders of
any Series or Class, as specified in any Supplement.
"Series Adjusted Invested Amount" shall mean, with respect to
any Series and for any Monthly Period, the Series Invested Amount of such
Series, after subtracting therefrom the excess, if any, of the cumulative amount
(calculated in accordance with the terms of the related Supplement) of investor
charge-offs, subordination of principal collections and funding of the investor
default amount for any other Class of Investor Certificates of such Series or
another Series 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, subordination of principal collections and funding
of the investor default amount for any other Class of Investor Certificates of
such Series or another Series as of such last day, or such lesser amount as may
be provided in the Supplement for such Series.
"Series Allocable Defaulted Amount" shall mean, with respect
to any Series and for any Monthly Period, the product of the Series Allocation
Percentage and the Defaulted Amount with respect to such Monthly Period.
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"Series Allocable Finance Charge Collections" shall mean, with
respect to any Series and for any Monthly Period, the product of the Series
Allocation Percentage and the amount of Collections of Finance Charge
Receivables deposited in the Collection Account for such Monthly Period.
"Series Allocable Principal Collections" shall mean, with
respect to any Series and for any Monthly Period, the product of the Series
Allocation Percentage and the amount of Collections of Principal Receivables
deposited in the Collection Account for such Monthly Period.
"Series Allocation Percentage" shall mean, 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 and the denominator of
which is the Trust Adjusted Invested Amount.
"Series Enhancement" shall mean the rights and benefits
provided to the Trust or the Investor Certificateholders of any Series or Class
pursuant to any letter of credit, surety bond, insurance policy, cash collateral
guaranty, subordinated interest in the Trust Assets, cash collateral account,
collateral interest, spread account, guaranteed rate agreement, maturity
liquidity facility, tax protection agreement, interest rate swap agreement,
interest rate cap agreement or other similar arrangement. The subordination of
any Series or Class to another Series or Class shall be deemed to be a Series
Enhancement.
"Series Enhancer" shall mean the Person or Persons providing
any Series Enhancement, other than (except to the extent otherwise provided with
respect to any Series in the Supplement for such Series) the Investor
Certificateholders of any Series or Class which is subordinated to another
Series or Class.
"Series Invested Amount" shall have, with respect to any
Series, the meaning specified in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series,
the date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.03 and the related Supplement.
"Series Required Transferor Amount" shall have the meaning,
with respect to any Series, as specified in the related Supplement.
"Series Termination Date" shall mean, with respect to any
Series, the termination date for such Series specified in the related
Supplement.
"Service Transfer" shall have the meaning specified in
Section 10.01.
"Servicer" shall mean TRS, in its capacity as Servicer
pursuant to this Agreement, and, after any Service Transfer, the Successor
Servicer.
"Servicer Default" shall have the meaning specified in
Section 10.01.
"Servicing Fee" shall mean, with respect to any Series, the
servicing fee specified in the related Supplement.
"Servicing Officer" shall mean any officer of the Servicer or
an attorney-in-fact of the Servicer who in either case is involved in, or
responsible for, the administration and servicing of the
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Receivables and whose name appears on a list of servicing officers furnished to
the Trustee by the Servicer, as such list may from time to time be amended.
"Shared Principal Collections" shall have the meaning
specified in Section 4.04.
"Small Balances" shall have the meaning established in
accordance with the Credit Guidelines.
"Special Funding Account" shall have the meaning set forth
in Section 4.02.
"Special Funding Amount" shall mean the amount on deposit in
the Special Funding Account.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Services or its successor.
"Successor Servicer" shall have the meaning specified in
subsection 10.02(a).
"Supplement" shall mean, with respect to any Series, a
supplement to this Agreement, executed and delivered in connection with the
original issuance of the Investor Certificates of such Series pursuant to
Section 6.03, and, with respect to any Participation Interest, an amendment to
this Agreement executed pursuant to Section 13.01, and, in either case,
including all amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified
in Section 6.03.
"Tax Opinion" shall mean, with respect to any action, an
Opinion of Counsel to the effect that, for federal income tax purposes, (a) such
action will not adversely affect the tax characterization as debt of the
Investor Certificates of any outstanding Series or Class that was characterized
as debt at the time of its issuance, (b) following such action the Trust will
not be deemed to be an association (or publicly traded partnership) taxable as a
corporation, (c) such action will not cause or constitute an event in which gain
or loss would be recognized by any Investor Certificateholder and (d) except as
is otherwise provided in a Supplement, in the case of Section 6.03(b)(vi), the
Investor Certificates of the Series established pursuant to such Supplement will
be properly characterized as debt.
"Termination Notice" shall have the meaning specified in
Section 10.01.
"Termination Proceeds" shall have the meaning specified in
subsection 12.02(c).
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.04.
"Transfer Date" shall mean the Business Day immediately
preceding each Distribution Date.
"Transfer Restriction Event" shall have the meaning
specified in Section 2.11.
"Transferors" shall mean (a) RFC II and Centurion Bank and (b)
any Additional Transferor or Transferors. References to "each Transferor" shall
refer to each entity mentioned in the preceding sentence and, whenever the
context may so require, references to "the Transferor" shall refer,
collectively, to all of such entities.
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"Transferor Amount" shall mean on any date of determination an
amount equal to (I) the sum of (A) the aggregate balance of Principal
Receivables at the end of the day immediately prior to such date of
determination and (B) the Special Funding Amount at the end of the day
immediately prior to such date of determination minus (II) the Aggregate
Invested Amount at the end of such day.
"Transferor Certificates" shall mean, collectively, the
Original Transferor Certificate and any outstanding Supplemental Certificates.
"Transferors' Interest" shall have the meaning specified in
Section 4.01.
"Transferred Account" shall mean each account into which an
Account shall be transferred provided that (i) such transfer was made in
accordance with the Credit Guidelines and (ii) it can be traced or identified in
the applicable Transferor's or Account Owner's computer files with the code
identified in Article II or in the applicable Assignment as a Transferred
Account into which an Account has been transferred by reference to or by way of
the computer files or microfiche lists delivered to the Trustee pursuant to
Article II.
"TRS" shall mean American Express Travel Related Services
Company, Inc., a New York corporation, and its successors and permitted assigns.
"TRS Insolvency Event" shall mean any of the following events:
(i) the consent by TRS to, or the failure by TRS to object to, the appointment
of a bankruptcy trustee or conservator, receiver or liquidator in any bankruptcy
proceeding or other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to TRS or all or substantially
all of TRS' property; (ii) the entering of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of TRS' affairs,
which decree or order shall have remained in force undischarged or unstayed for
a period of 60 days; (iii) TRS' inability, or the admission by TRS in writing of
TRS' inability, to pay its debts generally as its debts become due; (iv) the
filing of any petition, the effect of which would cause TRS to take advantage of
any applicable bankruptcy, insolvency or reorganization, receivership or
conservatorship statute; (v) the making by TRS of an assignment for the benefit
of TRS' creditors; (vi) the voluntary suspension by TRS of the payment of TRS'
obligations; or (vii) the consent by TRS to, or the failure of TRS to object to,
the filing of any petition described in clause (iv) above, or, if TRS shall have
objected to the filing of any such petition, the failure of such petition to
have been dismissed within 60 days of the filing thereof.
"Trust" shall mean the American Express Credit Account Master
Trust, the trust created by this Agreement.
"Trust Adjusted Invested Amount" shall mean, with respect to
any Monthly Period, the aggregate Series Adjusted Invested Amounts as adjusted
in any Supplement for all outstanding Series for such Monthly Period.
"Trust Assets" shall have the meaning specified in Section
2.01.
"Trust Excess Principal Collections" shall have the meaning
specified in the applicable Supplement.
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"Trustee" shall mean The Bank of New York, a New York banking
corporation, in its capacity as trustee on behalf of the Trust, or its successor
in interest, or any successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any specified jurisdiction.
Section 1.02. Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and not
otherwise defined herein shall have meanings ascribed to them in the related
Supplement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles or regulatory
accounting principles, as applicable and as in effect on the date of this
Agreement. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles in the United States, the definitions contained
in this Agreement or in any such certificate or other document shall control.
(d) The agreements, representations and warranties of RFC II
and Centurion Bank in this Agreement in each of their respective capacities as
Transferor and Servicer shall be deemed to be the agreements, representations
and warranties of RFC II and Centurion Bank solely in each such capacity for so
long as RFC II and Centurion Bank shall act in each such capacity under this
Agreement.
(e) Any reference to each Rating Agency shall only apply to
any specific rating agency if such rating agency is then rating any outstanding
Series.
(f) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(g) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; references to any
Section, subsection, Schedule or Exhibit are references to Sections,
subsections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" means "including without limitation".
[END OF ARTICLE I]
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ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables. By execution of this
Agreement, each Transferor, and, in the case of Additional Accounts, each
Transferor or, if applicable, any Additional Transferor does hereby transfer,
assign, set over, sell and otherwise convey to the Trustee, on behalf of the
Trust, for the benefit of the Certificateholders, without recourse except as
provided herein, all of its right, title and interest in, to and under the
Receivables existing at the close of business on the Initial Cut-Off Date, in
the case of Receivables owned by such Transferor arising in the Initial
Accounts, and on each Additional Cut-Off Date, in the case of Receivables
arising in the Additional Accounts, and in each case thereafter created from
time to time until the termination of the Trust, all Recoveries allocable to the
Trust as provided herein, all monies due and to become due and all amounts
received with respect thereto and all proceeds (including "proceeds" as defined
in the UCC) thereof. Such property, together with all monies and other property
on deposit in the Collection Account, the Series Accounts and the Special
Funding Account, the rights of the Trustee on behalf of the Trust under this
Agreement and any Supplement, the property conveyed to the Trustee on behalf of
the Trust under any Participation Interest Supplement, any Series Enhancement
and the right to receive Recoveries shall constitute the assets of the Trust
(the "Trust Assets"). The foregoing does not constitute and is not intended to
result in the creation or assumption by the Trust, the Trustee, any Investor
Certificateholder or any Series Enhancer of any obligation of Centurion Bank,
any other Account Owner, American Express Credco, any Transferor, any Additional
Transferor, the Servicer or any other Person in connection with the Accounts or
the Receivables or under any agreement or instrument relating thereto, including
any obligation to Obligors, merchants clearance systems or insurers. The
foregoing transfer, assignment, sale, set-over and conveyance to the Trust shall
be made to the Trustee, on behalf of the Trust, and each reference in this
Agreement to such transfer, assignment, set-over, sale and conveyance shall be
construed accordingly.
Each Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables conveyed by such Transferor now existing and hereafter
created meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary to perfect, and maintain the perfection of,
the transfer and assignment of its undivided interest in such Receivables to the
Trust, and to deliver a file-stamped copy of each such financing statement or
other evidence of such filing to the Trustee as soon as practicable after the
first Closing Date, in the case of Receivables arising in the Initial Accounts,
and (if any additional filing is so necessary) as soon as practicable after the
applicable Addition Date, in the case of Receivables arising in Additional
Accounts. The Trustee shall be under no obligation whatsoever to file such
financing or continuation statements or to make any other filing under the UCC
in connection with such transfer and assignment.
Each Transferor further agrees, at its own expense, (a) on or
prior to (i) the first Closing Date, in the case of the Initial Accounts, (ii)
the applicable Addition Date, in the case of Additional Accounts specified
herein or in a Receivables Purchase Agreement to which such Transferor is a
party, and (iii) the applicable Removal Date, in the case of Removed Accounts,
specified herein or in a Receivables Purchase Agreement to which such Transferor
is a party, to indicate in the appropriate computer files that Receivables
created (or reassigned, in the case of Removed Accounts) in connection with the
Accounts have been conveyed to the Trust pursuant to this Agreement for the
benefit of the Certificateholders (or conveyed to such Transferor or its
designee in accordance with Section 2.10, in the case of Removed Accounts) by
including (or deleting in the case of Removed Accounts) in the securitization
field of such computer files, in the case of the Initial Accounts, the code "F"
and, in the case of Additional Accounts, a similar code designation that shall
be specified in the Assignment related
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thereto, in each case, identifying each such account as an Account and (b) on or
prior to (w) the first Closing Date, in the case of the Initial Accounts, (x)
the date that is five Business Days after the applicable Addition Date, in the
case of Aggregate Additions, (y) the date that is 90 days after the applicable
Addition Date, in the case of New Accounts, and (z) the date that is five
business days after the applicable Removal Date, in the case of Removed
Accounts, to deliver to the Trustee a computer file or microfiche list
containing a true and complete list of all such Accounts specifying for each
such Account, as of the Initial Cut-Off Date, in the case of the Initial
Accounts, the applicable Addition Cut- Off Date, in the case of Additional
Accounts, and the applicable Removal Date, in the case of Removed Accounts, its
account number and, other than in the case of New Accounts, the aggregate amount
outstanding in such Account. Each such file or list, as supplemented, from time
to time, to reflect Related Accounts, Additional Accounts and Removed Accounts,
shall be marked as Schedule 1 to this Agreement and is hereby incorporated into
and made a part of this Agreement. Each Transferor further agrees not to alter
the code referenced in this paragraph with respect to any Account during the
term of this Agreement unless and until such Account becomes a Removed Account.
It is the intention of the parties hereto that the
arrangements with respect to the Receivables shall constitute a purchase and
sale of such Receivables and not a loan. In the event, however, that a court of
competent jurisdiction were to hold that the transactions evidenced hereby
constitute a loan and not a purchase and sale, it is the intention of the
parties hereto that this Agreement shall constitute a security agreement under
applicable law, and that each Transferor shall be deemed to have granted to the
Trust a first-priority perfected security interest in all of such Transferor's
right, title and interest in, to and under the Receivables and the other Trust
Assets, whether now owned or hereafter acquired, conveyed by such Transferor in
order to secure its obligations hereunder.
Section 2.02. Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance on behalf
of the Trust of all right, title and interest to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.01 and declares
that it shall maintain such right, title and interest, upon the trust herein set
forth, for the benefit of all Certificateholders. The Trustee further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Agreement, the Transferors delivered to the Trustee the computer file or
microfiche list relating to the Initial Accounts described in the penultimate
paragraph of Section 2.01. The Trustee shall maintain a copy of Schedule 1, as
delivered from time to time, at the Corporate Trust Office.
(b) The Trustee hereby agrees not to disclose to any Person
any of the account numbers or other information contained in the computer files
or microfiche lists marked as Schedule 1 delivered to the Trustee, from time to
time, except (i) to a Successor Servicer or as required by a Requirement of Law
applicable to the Trustee, (ii) in connection with the performance of the
Trustee's duties hereunder, (iii) in enforcing the rights of Certificateholders
or (iv) to bona fide creditors or potential creditors of Centurion Bank, any
other Account Owner, American Express Credco or any Transferor for the limited
purpose of enabling any such creditor to identify Receivables or Accounts
subject to this Agreement or the Receivables Purchase Agreements. The Trustee
agrees to take such measures as shall be reasonably requested by any Transferor
to protect and maintain the security and confidentiality of such information
and, in connection therewith, shall allow each Transferor or its duly authorized
representatives to inspect the Trustee's security and confidentiality
arrangements from time to time during business hours. The Trustee shall provide
the applicable Transferor with notice five Business Days prior to disclosure of
any information of the type described in this subsection 2.02(b).
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(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.03. Representations and Warranties of Each
Transferor Relating to Such Transferor. Each Transferor hereby severally
represents and warrants to the Trust (and agrees that the Trustee may rely on
each such representation and warranty in accepting the Receivables in trust and
in authenticating the Certificates) as of each Closing Date (but only if it was
a Transferor on such Date) that:
(a) Organization and Good Standing. Such Transferor is a
corporation validly existing under the laws of the jurisdiction of its
organization or incorporation and has, in all material respects, full power and
authority to own its properties and conduct its business as presently owned or
conducted, and to execute, deliver and perform its obligations under this
Agreement, any Receivables Purchase Agreement (if any) to which it is a party
and each applicable Supplement and to execute and deliver to the Trustee the
Certificates.
(b) Due Qualification. Such Transferor is duly qualified to do
business and is in good standing as a foreign corporation and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would (i) render any Account
Agreement relating to an Account specified herein or in a Receivables Purchase
Agreement to which such Transferor is a party or any Receivable conveyed to the
Trust by such Transferor unenforceable by such Transferor, the Servicer or the
Trustee and (ii) have a material adverse effect on the Investor
Certificateholders; provided, however, that neither Transferor makes any
representation or warranty with respect to any qualification, license or
approval that the Trustee would have to obtain to do business in any state in
which the Trustee seeks to enforce any Receivable.
(c) Due Authorization. The execution and delivery of this
Agreement, each Supplement and each Receivables Purchase Agreement (if any) to
which such Transferor is a party by such Transferor and the execution and
delivery to the Trustee of the Certificates and the consummation by such
Transferor of the transactions provided for in this Agreement, each Supplement
and each such Receivables Purchase Agreement (if any) have been duly authorized
by such Transferor by all necessary corporate action on the part of such
Transferor.
(d) No Conflict. The execution and delivery by such Transferor
of this Agreement, each Supplement, and the Certificates, the performance of the
transactions contemplated by this Agreement and each Supplement and the
fulfillment of the terms hereof and thereof applicable to such Transferor, will
not conflict with or violate any Requirements of Law applicable to such
Transferor or conflict with, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which such Transferor is a party or by
which it or its properties are bound.
(e) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of such Transferor, threatened
against such Transferor before any Governmental Authority (i) asserting the
invalidity of this Agreement, any Supplement or the Certificates, (ii) seeking
to prevent the issuance of any of the Certificates or the consummation of any of
the transactions contemplated by this Agreement, any Supplement or the
Certificates, (iii) seeking any determination or ruling that, in the reasonable
judgment of such Transferor, would materially and adversely affect the
performance by such Transferor of its obligations under this Agreement or any
Supplement, (iv) seeking any determination or ruling that, in the Transferors'
reasonable judgment, would materially and adversely affect the validity or
enforceability of this Agreement, any Supplement or the Certificates or (v)
seeking to affect adversely
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the income or franchise tax attributes of the Trust under the United States
Federal or any State income or franchise tax systems.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by such Transferor in connection with
the execution and delivery by such Transferor of this Agreement, each Supplement
and the Certificates and the performance of the transactions contemplated by
this Agreement and each Supplement by such Transferor have been duly obtained,
effected or given and are in full force and effect.
Section 2.04. Representations and Warranties of each
Transferor Relating to the Agreement and Any Supplement and the Receivables.
(a) Representations and Warranties. Each Transferor hereby
severally represents and warrants to the Trust and the Trustee as of the Initial
Issuance Date, each Closing Date and, with respect to Additional Accounts, as of
the related Addition Date (but only if, in either case, it was a Transferor on
such date) that:
(i) each of the Receivables Purchase Agreements (if any) to
which such Transferor is a party, this Agreement, each Supplement and,
in the case of Additional Accounts, each related Assignment,
constitutes a legal, valid and binding obligation of such Transferor
enforceable against such Transferor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect or general
principles of equity;
(ii) as of the Initial Cut-Off Date and as of the related
Addition Date with respect to Additional Accounts, Schedule 1 to this
Agreement, as supplemented to such date, is an accurate and complete
listing in all material respects of all the Accounts specified herein
or in a Receivables Purchase Agreement with such Transferor as of the
Initial Cut-Off Date or such Addition Cut-Off Date, as the case may be,
and the information contained therein with respect to the identity of
such Accounts and the Receivables existing thereunder is true and
correct in all material respects as of the Initial Cut-Off Date or such
Addition Cut-Off Date, as the case may be;
(iii) each Receivable conveyed to the Trust by such Transferor
has been conveyed to the Trust free and clear of any Lien (other than
as permitted by clause (d) of the term "Eligible Receivables");
(iv) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by such Transferor in connection with
the conveyance by such Transferor of Receivables to the Trust have been
duly obtained, effected or given and are in full force and effect;
(v) either this Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of such
Transferor in the Receivables conveyed to the Trust by such Transferor
and the proceeds thereof and Recoveries identified as relating to the
Receivables conveyed to the Trust by such Transferor which have become
Defaulted Receivables, or, if this Agreement or, in the case of
Additional Accounts, the related Assignment does not constitute a sale
of such property, it constitutes a grant of a first-priority "security
interest" (as defined in the UCC) in such property to the Trust, which,
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in the case of existing Receivables and the proceeds thereof and such
Recoveries, is enforceable upon execution and delivery of this
Agreement, or, with respect to then existing Receivables in Additional
Accounts, as of the applicable Addition Date, and which will be
enforceable with respect to such Receivables hereafter and thereafter
created and (subject to Section 9-306 of the UCC) the proceeds and
Recoveries thereof upon such creation. Upon the filing of the financing
statements and, in the case of Receivables hereafter created and the
proceeds and Recoveries thereof, upon the creation thereof, the Trust
shall have a first-priority perfected security or ownership interest in
such property and proceeds;
(vi) on the Selection Date, each Initial Account specified in
Schedule 1 is an Eligible Account and, on the applicable Addition
Selection Date, each related Additional Account owned by such
Transferor is an Eligible Account;
(vii) on the Selection Date, each Receivable then existing and
conveyed to the Trust by such Transferor is an Eligible Receivable and,
on the applicable Addition Selection Date, each Receivable contained in
the related Additional Accounts and conveyed to the Trust by such
Transferor is an Eligible Receivable;
(viii) as of the date of the creation of any new Receivable in an
Account specified herein or in a Receivables Purchase Agreement (if
any) to which such Transferor is a party, such Receivable is an
Eligible Receivable; and
(ix) no selection procedures believed by such Transferor to be
materially adverse to the interests of the Investor Certificateholders
have been used in selecting such Accounts.
(b) Notice of Breach. The representations and warranties set
forth in Section 2.03, this Section 2.04 and subsection 2.09(f) shall survive
the transfers and assignments of the Receivables to the Trust and the issuance
of the Certificates. Upon discovery by any Transferor, the Servicer or the
Trustee of a breach of any of the representations and warranties set forth in
Section 2.03, this Section 2.04 or subsection 2.09(f), the party discovering
such breach shall give notice to the other parties and to each Series Enhancer
within three Business Days following such discovery, provided that the failure
to give notice within three Business Days does not preclude subsequent notice.
Section 2.05. Reassignment of Ineligible Receivables.
(a) Reassignment of Receivables. In the event (i) any
representation or warranty contained in subsection 2.04(a)(ii), (iii), (iv),
(vi), (vii) or (viii) is not true and correct in any material respect as of the
date specified therein with respect to any Receivable or the related Account and
such breach has a material adverse effect on the Investor Certificateholders
(which determination shall be made without regard to whether funds are then
available pursuant to any Series Enhancement) unless cured within 60 days (or
such longer period, not in excess of 120 days, as may be agreed to by the
Trustee and the Servicer) after the earlier to occur of the discovery thereof by
the Transferor that conveyed such Receivables to the Trust or receipt by such
Transferor of written notice thereof given by the Trustee or the Servicer, or
(ii) it is so provided in subsection 2.07(a) or 2.09(d) (iii) with respect to
any Receivables conveyed to the Trust by such Transferor, then such Transferor
shall accept reassignment of the Certificateholders' Interest in all Receivables
in the related Account ("Ineligible Receivables") on the terms and conditions
set forth in paragraph (b) below.
(b) Price of Reassignment. The Servicer shall deduct the
portion of such Ineligible Receivables reassigned to each Transferor which are
Principal Receivables from the aggregate amount
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of the Principal Receivables used to calculate the Transferor Amount. In the
event that, following the exclusion of such Principal Receivables from the
calculation of the Transferor Amount, the Transferor Amount would be less than
the Required Transferor Amount, not later than 1:00 P.M., New York City time, on
the first Distribution Date following the Monthly Period in which such
reassignment obligation arises, the applicable Transferor shall 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 below the Required
Transferor Amount (up to the amount of such Principal Receivables).
Upon reassignment of any Ineligible Receivable, the Trustee,
on behalf of the Trust, shall automatically and without further action be deemed
to sell, transfer, assign, set over and otherwise convey to the applicable
Transferor or its designee, without recourse, representation or warranty, all
the right, title and interest of the Trust in and to such Ineligible Receivable,
all monies due or to become due and all proceeds thereof and such reassigned
Ineligible Receivable shall be treated by the Trust as collected in full as of
the date on which it was transferred. The obligation of each Transferor to
accept reassignment of any Ineligible Receivables conveyed to the Trust by such
Transferor, and to make the deposits, if any, required to be made to the Special
Funding Account as provided in this Section, shall constitute the sole remedy
respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of the Certificateholders) or any
Series Enhancer. Notwithstanding any other provision of this subsection 2.05(b),
a reassignment of an Ineligible Receivable in excess of the amount that would
cause the Transferor Amount to be less than the Required Transferor Amount shall
not occur if the applicable Transferor fails to make any deposit required by
this subsection 2.05(b) with respect to such Ineligible Receivable. The Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested by the applicable Transferor
to effect the conveyance of such Ineligible Receivables pursuant to this
subsection 2.05(b), but only upon receipt of an Officer's Certificate from such
Transferor certifying that all conditions set forth in this Section 2.05 have
been satisfied.
Section 2.06. Reassignment of Certificateholders' Interest in
Trust Portfolio. In the event any representation or warranty of a Transferor set
forth in subsection 2.03(a) or (c) or subsection 2.04(a)(i) or (v) is not true
and correct in any material respect and such breach has a material adverse
effect on the Investor Certificateholders (which determination shall be made
without regard to whether funds are then available pursuant to any Series
Enhancement), then either the Trustee or the Holders of Investor Certificates
evidencing not less than 50% of the aggregate unpaid principal amount of all
outstanding Investor Certificates, by notice then given to such Transferor and
the Servicer (and to the Trustee if given by the Investor Certificateholders),
may direct such Transferor to accept a reassignment of the Certificateholders'
Interest in the Receivables and any Participation Interests conveyed to the
Trust by such Transferor if such breach and any material adverse effect caused
by such breach is not cured within 60 days of such notice (or within such longer
period, not in excess of 120 days, as may be specified in such notice), and upon
those conditions such Transferor shall be obligated to accept such reassignment
on the terms set forth below; provided, however, that such Receivables will not
be reassigned to such Transferor if, on any day prior to the end of such 60-day
or longer period (i) the relevant representation and warranty shall then be true
and correct in all material respects and (ii) such Transferor shall have
delivered to the Trustee a certificate of an authorized officer describing the
nature of such breach and the manner in which the relevant representation and
warranty has become true and correct.
The applicable Transferor shall deposit in the Collection
Account in immediately available funds not later than 1:00 P.M., New York City
time, on the first Transfer Date following the Monthly Period in which such
reassignment obligation arises, in payment for such reassignment, an amount
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related
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Supplement. Notwithstanding anything to the contrary in this Agreement, such
amounts shall be distributed to the Investor Certificateholders on such
Distribution Date in accordance with the terms of each Supplement. If the
Trustee or the Investor Certificateholders give notice directing the applicable
Transferor to accept a reassignment of the Certificateholders' Interest in the
Receivables as provided above, the obligation of such Transferor to accept such
reassignment pursuant to this Section and to make the deposit required to be
made to the Collection Account as provided in this paragraph shall constitute
the sole remedy respecting an event of the type specified in the first sentence
of this Section available to the Certificateholders (or the Trustee on behalf of
the Certificateholders) or any Series Enhancer.
Section 2.07. Covenants of each Transferor. Each
Transferor hereby covenants that:
(a) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of an Account, such
Transferor will take no action to cause any Receivable conveyed by it to the
Trust to be evidenced by any instrument (as defined in the UCC) and if any such
Receivable is so evidenced as a result of any action taken by such Transferor it
shall be deemed to be an Ineligible Receivable in accordance with subsection
2.05(a) and shall be reassigned to such Transferor in accordance with subsection
2.05(b).
(b) Security Interests. Except for the conveyances hereunder,
such Transferor will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist (except as permitted by
clause (d) of the definition of the term "Eligible Receivable") any Lien on, any
Receivable or Participation Interest conveyed by it to the Trust, whether now
existing or hereafter created, or any interest therein, and such Transferor
shall defend the right, title and interest of the Trust in, to and under the
Receivables and any Participation Interest, whether now existing or hereafter
created, against all claims of third parties claiming through or under such
Transferor.
(c) Transferor's Interest. Except for (i) the conveyances
hereunder, in connection with any transaction permitted by Section 7.02 or
Section 7.05 and as provided in subsection 2.09(g) and Section 6.03 or (ii)
conveyances with respect to which the Rating Agency Condition shall have been
satisfied and a Tax Opinion shall have been delivered to the Trustee, such
Transferor agrees not to transfer, sell, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in, the Transferors'
Interest represented by the Original Transferor Certificate or any Supplemental
Certificate and any such attempted transfer, assignment, exchange, conveyance,
pledge, hypothecation, grant or sale shall be void. Nothing contained in this
subsection 2.07(c) shall be interpreted to prohibit or in any way limit the
Transferors' ability to grant to another Person a participation interest in the
Transferors' Interest upon the delivery to the Trustee of a Tax Opinion.
(d) Delivery of Collections or Recoveries. In the event that
such Transferor receives Collections or Recoveries, such Transferor agrees to
pay the Servicer all such Collections and Recoveries as soon as practicable
after receipt thereof.
(e) Notice of Liens. Such Transferor shall notify the Trustee
and each Series Enhancer promptly after becoming aware of (except as permitted
by clause (d) of the definition of the term "Eligible Receivable") any Lien on
any Receivable or Participation Interest conveyed by it to the Trust other than
the conveyances hereunder and under any Receivables Purchase Agreement.
RFC II hereby further covenants that:
(a) Amendment of the Certificate of Incorporation. RFC II
will not amend in any material respect its Certificate of Incorporation
without providing each Rating Agency with notice no later
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than the fifth Business Day prior to such amendment (unless the right to such
notice is waived by such Rating Agency) and satisfying the Rating Agency
Condition.
(b) Other Indebtedness. RFC II shall not incur any additional
debt, unless each Rating Agency is provided with notice no later than the fifth
Business Day prior to the incurrence of such additional debt (unless the right
to such notice is waived by each Rating Agency) and the Rating Agency Condition
is satisfied with respect to the incurrence of such debt.
(c) Separate Corporate Existence. RFC II shall:
(i) Maintain in full effect its existence, rights and
franchises as a corporation under the laws of the state of its
incorporation and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this
Agreement and each Receivables Purchase Agreement to which it is a
party and each other instrument or agreement necessary or appropriate
to proper administration hereof and permit and effectuate the
transactions contemplated hereby.
(ii) Maintain its own deposit account or accounts, separate
from those of any of its Affiliates, with commercial banking
institutions. The funds of RFC II will not be diverted to any other
Person or for other than the corporate use of RFC II and, except as may
be expressly permitted by this Agreement or any Receivables Purchase
Agreement to which it is a party, the funds of RFC II shall not be
commingled with those of any of its Affiliates.
(iii) To the extent that RFC II contracts or does business
with vendors or service providers where the goods and services provided
are partially for the benefit of any other Person, the costs incurred
in so doing shall be fairly allocated to or among RFC II and such
entities for whose benefit the goods and services are provided, and RFC
II and each such entity shall bear its fair share of such costs. All
material transactions between RFC II and any of its Affiliates shall be
only on an arm's-length basis and shall receive the approval of RFC
II's Board of Directors including at least one Independent Director
(defined below).
(iv) Maintain a principal executive and administrative office
through which its business is conducted and a telephone number separate
from those of its stockholders and Affiliates.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding
all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of such meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, intercompany transaction accounts. Regular stockholders'
and directors' meetings shall be held at least annually.
(vi) Ensure that its Board of Directors shall at all times
include at least one Independent Director (for purposes hereof,
"Independent Director" shall mean any member of the Board of Directors
of RFC II that is not and has not at any time been (x) a director,
officer, agent, employee or shareholder of any Affiliate of RFC II or
(y) a member of the immediate family of any of the foregoing), the
consent or approval of whom shall be required in order for RFC II to
voluntarily institute insolvency proceedings.
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(vii) Ensure that decisions with respect to its business and
daily operations shall be independently made by RFC II (although the
officer making any particular decision may also be an employee, officer
or director of an Affiliate of RFC II) and shall not be dictated by an
Affiliate of RFC II.
(viii) Act solely in its own corporate name and through its
own authorized officers and agents, and no Affiliate of RFC II shall be
appointed to act as its agent, except as expressly contemplated by this
Agreement or each Receivables Purchase Agreement to which it is a
party. RFC II shall at all times use its own stationery.
(ix) Ensure that no Affiliate of RFC II shall advance funds to
RFC II, other than (i) capital contributions from American Express
Travel Related Services Company, Inc., made to enable RFC II to pay the
purchase price of Receivables or (ii) as is otherwise provided herein
or in each Receivables Purchase Agreement to which it is a party, and
no Affiliate of RFC II will otherwise supply funds to, or guaranty
debts of, RFC II; provided, however, that an Affiliate of RFC II may
provide funds to RFC II in connection with the capitalization of RFC
II, including the provision of capital necessary to assure that RFC II
has "substantial assets" as described in Treasury Regulation Section
301.7701-2(d)(2).
(x) Other than organizational expenses and as expressly
provided herein, pay all expenses, indebtedness and other obligations
incurred by it.
(xi) Not enter into any guaranty, or otherwise become liable,
with respect to any obligation of any of its Affiliates other than with
respect to Section 7.04, nor shall RFC II make any loans to any Person.
(xii) Ensure that any financial reports required of RFC II
shall comply with generally accepted accounting principles and shall be
issued separately from, but may be consolidated with, any reports
prepared for any of its Affiliates.
(xiii) Ensure that at all times it is adequately capitalized
to engage in the transactions contemplated in its Certificate of
Incorporation.
Section 2.08. Additional Covenants of Each Transferor
Regarding the Terms of the Accounts. Each Transferor that is an Account Owner
hereby covenants that:
(a) Periodic Rate Finance Charges. (i) Except (x) as otherwise
required by any Requirements of Law or (y) as is deemed by such Transferor to be
necessary in order for it to maintain its credit or charge business, as
applicable, or a program operated by such credit or charge business, as
applicable, on a competitive basis based on a good faith assessment by it of the
nature of the competition with respect to such credit or charge business or such
program, such Transferor shall not at any time take any action which would have
the effect of reducing the Portfolio Yield to a level that could be reasonably
expected to cause any Series to experience any Pay-Out Event or Reinvestment
Event based on the insufficiency of the Portfolio Yield or any similar test and
(ii) except as otherwise required by any Requirements of Law, such Transferor
shall not take any action which would have the effect of reducing the Portfolio
Yield to be less than the then-current highest Average Rate for any Group.
(b) Account Agreements and Guidelines. Subject to compliance
with all Requirements of Law and paragraph (a) above, such Transferor may change
the terms and provisions of the applicable Account Agreements or the applicable
Credit Guidelines in any respect (including, without limitation, the
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calculation of the amount or the timing of charge-offs and the Periodic Rate
Finance Charges to be assessed thereon). Notwithstanding the above, unless
required by Requirements of Law or as permitted by paragraph (a) above, such
Transferor will not take any action with respect to the applicable Account
Agreements or the applicable Credit Guidelines, which, at the time of such
action, such Transferor reasonably believes will have a material adverse effect
on the rights of the Trust or the Investor Certificateholders.
Each Transferor that is not an Account Owner, in its capacity
as purchaser of Receivables from any Account Owner (each, a "Receivables
Originator") or American Express Credco pursuant to any Receivables Purchase
Agreement (if any) to which such Transferor is a party, hereby covenants that
such Transferor will at all times enforce the covenants and agreements of such
Receivables Originators or American Express Credco in such Receivables Purchase
Agreements, including covenants to the effect set forth below only to the extent
to which they are enforceable against such Receivables Originators or American
Express Credco pursuant to such Receivables Purchase Agreements:
(a) Periodic Rate Finance Charges. (i) Except (x) as otherwise
required by any Requirements of Law or (y) as is deemed by Centurion Bank or
other Account Owner, as the case may be, to be necessary in order for it to
maintain its credit or charge business, as applicable, or a program operated by
such credit or charge business, as applicable, on a competitive basis based on a
good faith assessment by it of the nature of the competition with respect to
such credit or charge business or such program, such Receivables Originator
shall not at any time take any action which would have the effect of reducing
the Portfolio Yield to a level that could be reasonably expected to cause any
Series to experience any Pay-Out Event or Reinvestment Event based on the
insufficiency of the Portfolio Yield or any similar test and (ii) except as
otherwise required by any Requirements of Law, such Receivables Originator shall
not take any action which would have the effect of reducing the Portfolio Yield
to be less than the then-current highest Average Rate for any Group.
(b) Account Agreements and Guidelines. Subject to compliance
with all Requirements of Law and paragraph (a) above, Centurion Bank or other
Account Owner, as the case may be, may change the terms and provisions of the
applicable Account Agreements or the applicable Credit Guidelines in any respect
(including the calculation of the amount or the timing of charge-offs and the
Periodic Rate Finance Charges to be assessed thereon). Notwithstanding the
above, unless required by Requirements of Law or as permitted by paragraph (a)
above, Centurion Bank or other Account Owner, as the case may be, will not take
any action with respect to the applicable Account Agreements or the applicable
Credit Guidelines, which, at the time of such action, Centurion Bank or other
Account Owner, as the case may be, reasonably believes will have a material
adverse effect on the rights of the Trust or the Investor Certificateholders.
Each Transferor further covenants that it will not enter into
any amendment to any Receivables Purchase Agreement to which it is a party, or
enter into a new Receivables Purchase Agreement unless the Rating Agency
Condition shall have been satisfied.
Section 2.09. Addition of Accounts.
(a) Required Additional Accounts. (i) If, as of the end of any
Monthly Period, the total amount of Principal Receivables and the then
outstanding principal amount of any Participation Interests theretofore conveyed
to the Trust is less than the Required Minimum Principal Balance on such date,
the Transferors shall on or prior to the close of business on the tenth Business
Day of the next Monthly Period (the "Required Designation Date"), cause to be
designated additional Eligible Accounts to be included as Accounts as of the
Required Designation Date or any earlier date in a sufficient amount (or
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such lesser amount as shall represent all Eligible Accounts then available to
the Transferors under the Receivables Purchase Agreements) such that, after
giving effect to such addition, the aggregate principal balance of Principal
Receivables, plus the then outstanding principal amount of any Participation
Interests conveyed to the Trust as of the close of business on the Addition
Date, is at least equal to the Required Minimum Principal Balance on such date.
(ii) Optional Participation Interests. In lieu of, or in
addition to, causing the designation of Additional Accounts pursuant to
clause (i) above, subject to the conditions specified in paragraph (c)
below, the Transferors may (but shall not be required to) convey to the
Trust participations (including 100% participations) representing
undivided interests in a pool of assets primarily consisting of one or
more of the following ("Participation Interests"): credit card or other
credit account receivables, charge card or other charge account
receivables, consumer loan receivables (secured and unsecured), and/or
any interests in any of the foregoing, including securities
representing or backed by such receivables, and other self-liquidating
financial assets including any "Eligible Assets" as such term is
defined in Rule 3a-7 under the Investment Company Act (or any successor
to such Rule) and collections, together with all earnings, revenues,
dividends, distributions, income, issues and profits thereon. The
addition of Participation Interests in the Trust pursuant to this
paragraph (a) or paragraph (b) below shall be effected by a
Participation Interest Supplement, dated the applicable Addition Date
and entered into pursuant to subsection 13.01(a).
(iii) Any Additional Accounts or Participation Interests
designated to be included as Trust Assets pursuant to clauses (i) or
(ii) above may only be so included if (x) Standard & Poor's shall have
notified the Transferors, the Servicer and the Trustee in writing that
such addition will not result in a reduction or withdrawal of the then
existing rating of any outstanding Series or Class with respect to
which Standard & Poor's is a Rating Agency and (y) the applicable
conditions specified in paragraph (c) below have been satisfied.
(b) Permitted Aggregate Additions. Each Transferor may from
time to time, at its sole discretion, subject to the conditions specified in
paragraph (c) below, voluntarily cause the designation of additional Eligible
Accounts on the applicable Addition Selection Date to be included as Accounts or
Participation Interests to be included as Trust Assets, in either case, as of
the applicable Addition Date.
(c) Conditions to Aggregate Additions. On the Addition Date
with respect to any Aggregate Additions, the Trust shall purchase the
Receivables existing in Aggregate Addition Accounts (and such Aggregate Addition
Accounts shall be deemed to be Accounts for purposes of this Agreement) or shall
purchase such Participation Interests as of the close of business on the
applicable Addition Cut- Off Date, subject to the satisfaction of the following
conditions:
(i) on or before the eighth Business Day immediately preceding
the Addition Date, the applicable Transferor shall have given the
Trustee, the Servicer and each Rating Agency notice (unless such notice
requirement is otherwise waived) that the Aggregate Addition Accounts
or Participation Interests will be included and specifying the
applicable Addition Date, Addition Cut- Off Date and Addition Selection
Date;
(ii) all Aggregate Addition Accounts shall be Eligible
Accounts;
(iii) such Transferor shall have delivered to the Trustee
copies of UCC-1 financing statements covering such Aggregate Addition
Accounts, if necessary to perfect the Trust's undivided interest in the
Receivables arising therein;
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(iv) to the extent required by Section 4.03, such Transferor
shall have deposited in the Collection Account all Collections with
respect to such Aggregate Addition Accounts since the Addition Cut-Off
Date;
(v) as of each of the Addition Cut-Off Date and the Addition
Date, no Insolvency Event shall have occurred nor shall the transfer of
the Receivables arising in the Aggregate Addition Accounts or of the
Participation Interests to the Trust have been made in contemplation of
the occurrence thereof;
(vi) solely with respect to Aggregate Additions designated
pursuant to subsection 2.09(b), the Rating Agency Condition shall have
been satisfied;
(vii) such Transferor shall have delivered to the Trustee an
Officer's Certificate, dated the Addition Date, confirming, to the
extent applicable, the items set forth in clauses (ii) through (vi)
above;
(viii) the addition to the Trust of the Receivables arising
in the Aggregate Addition Accounts or of the Participation Interests
to the Trust will not result in an Adverse Effect and, in the case of
Aggregate Additions, such Transferor shall have delivered to the
Trustee an Officer's Certificate, dated the Addition Date, stating that
such Transferor reasonably believes that the addition to the Trust of
the Receivables arising in the Aggregate Addition Accounts or of the
Participation Interests will not have an Adverse Effect; and
(ix) such Transferor shall have delivered to the Trustee and
each Rating Agency an Opinion of Counsel, dated the Addition Date, in
accordance with subsection 13.02(d)(ii) or (iv), as applicable.
(d) New Accounts.
(i) Each Transferor may from time to time, at its sole
discretion, subject to and in compliance with the limitations specified
in clause (ii) below and the conditions specified in paragraph (e)
below, voluntarily designate newly originated Eligible Accounts to be
included as New Accounts. For purposes of this paragraph, Eligible
Accounts shall be deemed to include only credit or charge accounts of
the same nature as those included as Initial Accounts or which have
previously been included in any Aggregate Addition if the Assignment
related to such Aggregate Addition expressly provides that such type of
credit or charge account is permitted to be designated as a New
Account.
(ii) Unless and until each Rating Agency otherwise consents in
writing, the Transferors shall not be permitted to designate New
Accounts and, upon obtaining such consent, the number and balance of
New Accounts designated with respect to any period designated by the
Rating Agency shall not exceed the amounts designated by the Rating
Agency.
(iii) With respect to each semi-annual period in which New
Accounts are added as Accounts, the failure of such Transferor to
deliver an Opinion of Counsel substantially in the form of Exhibit E-2
(or, if the owner of the applicable Accounts has a long-term rating
below "A" by Moody's or "AA-" by Standard & Poor's, such Opinion of
Counsel shall be delivered quarterly, and if the long-term rating of
the owner of the applicable Accounts is not rated by Moody's or
Standard & Poor's or, if rated, is not rated at least "A-" by Standard
& Poor's and in one of the generic categories of each other Rating
Agency which signifies investment grade,
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such Opinion of Counsel shall be delivered monthly) with respect to the
New Accounts included as Accounts shall result in all Receivables
arising in the New Accounts to which such failure relates to be deemed
to be Ineligible Receivables in accordance with subsection 2.05(a) and
all such Receivables shall be reassigned to such Transferor in
accordance with subsection 2.05(b). The opinion delivery requirement
set forth in the immediately preceding sentence may be modified
provided that the Rating Agency Condition is satisfied.
(e) Conditions to Addition of New Accounts. On the Addition
Date with respect to any New Accounts, at the direction of the Servicer, the
Trustee, on behalf of the Trust, shall purchase the Receivables in such New
Accounts (and such New Accounts shall be deemed to be Accounts for purposes of
this Agreement) as of the close of business on the applicable Addition Cut-Off
Date, subject to the satisfaction of the following conditions:
(i) the New Accounts shall all be Eligible Accounts;
(ii) the applicable Transferor shall have delivered to the
Trustee copies of UCC-1 financing statements covering such New
Accounts, if necessary to perfect the Trust's interest in the
Receivables arising therein;
(iii) to the extent required by Section 4.03, the applicable
Transferor shall have deposited in the Collection Account all
Collections with respect to such New Accounts since the Addition
Cut-Off Date;
(iv) as of each of the Addition Cut-Off Date and the Addition
Date, no Insolvency Event shall have occurred nor shall the transfer to
the Trust of the Receivables arising in the New Accounts have been made
in contemplation of the occurrence thereof; and
(v) the addition of the Receivables arising in the New
Accounts to the Trust will not result in the occurrence of a Pay-Out
Event or a Reinvestment Event.
(f) Representations and Warranties. Each Transferor conveying
any Additional Accounts or Participation Interests hereby represents and
warrants to the Trust and the Trustee as of the related Addition Date as to the
matters set forth in clauses (v) and (viii) of subsection 2.09(c) above and
that, in the case of Additional Accounts, the list delivered pursuant to
subsection 2.09(h) below is, as of the applicable Addition Cut-Off Date, true
and complete in all material respects.
(g) Additional Transferors. The Transferors may designate
Affiliates of the Transferors to be included as Transferors ("Additional
Transferors") under this Agreement in an amendment hereto pursuant to subsection
13.01(a) and, in connection with such designation, the Transferors shall
surrender the Original Transferor Certificate to the Trustee in exchange for a
newly issued Original Transferor Certificate modified to reflect such Additional
Transferor's interest in the Transferor's Interest; provided, however, that
prior to any such designation and exchange the conditions set forth in clauses
(iv) and (vi) of subsection 6.03(b) shall have been satisfied with respect
thereto.
(h) Delivery of Documents. In the case of the designation of
Additional Accounts, the Transferor designating such Accounts shall deliver to
the Trustee (i) the computer file or microfiche list required to be delivered
pursuant to Section 2.01 with respect to such Additional Accounts on the date
such file or list is required to be delivered pursuant to Section 2.01 (the
"Document Delivery Date") and (ii) a duly executed, written Assignment
(including an acceptance by the Trustee for the benefit of the
Certificateholders), substantially in the form of Exhibit B (the "Assignment"),
on the Document Delivery
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Date. In addition, in the case of the designation of New Accounts, the
Transferor designating such Accounts shall deliver to the Trustee on the
Document Delivery Date an Officer's Certificate confirming, to the extent
applicable, the items set forth in clauses (i) through (v) of subsection 2.09(e)
above.
Section 2.10. Removal of Accounts and Participation Interests.
On any day of any Monthly Period each Transferor shall have the right to require
the reassignment to it or its designee of all the Trust's right, title and
interest in, to and under the Receivables then existing and thereafter created,
all monies due or to become due and all amounts received thereafter with respect
thereto and all proceeds thereof in or with respect to the Accounts specified
herein or in a Receivables Purchase Agreement (if any) to which such Transferor
is a party (the "Removed Accounts") or Participation Interests conveyed to the
Trust by such Transferor (the "Removed Participation Interests") (unless
otherwise set forth in the applicable Participation Interest Supplement or
Series Supplement), and designated for removal by the Transferor, upon
satisfaction of the conditions in clauses (i), (iii), (iv) and (v) below:
(i) on or before the eighth Business Day immediately preceding
the Removal Date, such Transferor shall have given the Trustee, the Servicer,
the Rating Agency and each Series Enhancer notice (unless such notice
requirement is otherwise waived) of such removal and specifying the date for
removal of the Removed Accounts and removed Participation Interests (the
"Removal Date");
(ii) on or prior to the date that is five Business Days after
the Removal Date, such Transferor shall amend Schedule 1 by delivering to the
Trustee a computer file or microfiche list containing a true and complete list
of the Removed Accounts specifying for each such Account, as of the date notice
of the Removal Date is given, its account number, the aggregate amount of
Receivables outstanding in such Account;
(iii) such Transferor shall have represented and warranted as
of the Removal Date that the list of Removed Accounts delivered pursuant to
paragraph (ii) above, as of the Removal Date, is true and complete in all
material respects;
(iv) the Rating Agency Condition shall have been satisfied
with respect to the removal of the Removed Accounts and removed Participation
Interests;
(v) such Transferor shall have delivered to the Trustee an
Officer's Certificate, dated the Removal Date, to the effect that such
Transferor reasonably believes that (a) such removal will not have an Adverse
Effect, (b) such removal will not result in the occurrence of a Pay-Out Event or
a Reinvestment Event, and (c) no selection procedures believed by such
Transferor to be materially adverse to, or materially beneficial to, the
interests of the Investor Certificateholders have been used in selecting the
Removed Accounts from among any pool of Accounts of a similar type.
Upon satisfaction of the above conditions, the Trustee shall
execute and deliver to such Transferor a written reassignment in substantially
the form of Exhibit C (the "Reassignment") and shall, without further action, be
deemed to sell, transfer, assign, set over and otherwise convey to such
Transferor or its designee, effective as of the Removal Date, without recourse,
representation or warranty, all the right, title and interest of the Trust in
and to the Receivables arising in the Removed Accounts and Removed Participation
Interests, all monies due and to become due and all amounts received with
respect thereto and all proceeds thereof and any Insurance Proceeds relating
thereto. The Trustee may conclusively rely on the Officer's Certificate
delivered pursuant to this Section 2.10 and shall have no duty to make inquiries
with regard to the matters set forth therein and shall incur no liability in so
relying.
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In addition to the foregoing, on the date when an Account
becomes a Defaulted Account, the Trust shall automatically and without further
action or consideration be deemed to transfer, set over and otherwise convey to
the Transferors with respect to such Account, without recourse, representation
or warranty, all right, title and interest of the Trust in and to the
Receivables in such Defaulted Account, all monies due or to become due with
respect thereto, all proceeds thereof and any Insurance Proceeds relating
thereto; provided, that Recoveries of such Defaulted Account shall be applied as
provided herein.
Section 2.11. Account Allocations. In the event that any
Transferor is unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement, including by reason of the
application of the provisions of Section 9.01 or any order of any Governmental
Authority (a "Transfer Restriction Event"), then, in any such event, (a) such
Transferor and the Servicer agree (except as prohibited by any such order) to
allocate and pay to the Trust, after the date of such inability, all
Collections, including Collections of Receivables transferred to the Trust prior
to the occurrence of such event, and all amounts which would have constituted
Collections but for such Transferor's inability to transfer Receivables (up to
an aggregate amount equal to the amount of Receivables transferred to the Trust
by such Transferor in the Trust on such date), (b) such Transferor and the
Servicer agree that such amounts will be applied as Collections in accordance
with Article IV and the terms of each Supplement and (c) for so long as the
allocation and application of all Collections and all amounts that would have
constituted Collections are made in accordance with clauses (a) and (b) above,
Principal Receivables and all amounts which would have constituted Principal
Receivables but for such Transferor's inability to transfer Receivables to the
Trust which are written off as uncollectible in accordance with this Agreement
shall continue to be allocated in accordance with Article IV and the terms of
each Supplement. For the purpose of the immediately preceding sentence, such
Transferor and the Servicer shall treat the first received Collections with
respect to the Accounts as allocable to the Trust until the Trust shall have
been allocated and paid Collections in an amount equal to the aggregate amount
of Principal Receivables in the Trust as of the date of the occurrence of such
event. If such Transferor and the Servicer are unable pursuant to any
Requirements of Law to allocate Collections as described above, such Transferor
and the Servicer agree that, after the occurrence of such event, payments on
each Account with respect to the principal balance of such Account shall be
allocated first to the oldest principal balance of such Account and shall have
such payments applied as Collections in accordance with Article IV and the terms
of each Supplement. The parties hereto agree that Finance Charge Receivables,
whenever created, accrued in respect of Principal Receivables which have been
conveyed to the Trust shall continue to be a part of the Trust notwithstanding
any cessation of the transfer of additional Principal Receivables to the Trust
and Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV and the terms of each Supplement.
Section 2.12. Discount Option.
(a) The Transferors shall have the option to designate at any
time and from time to time a percentage or percentages, which may be a fixed
percentage or a variable percentage (the "Discount Percentage"), of all or any
specified portion of Principal Receivables created after the Discount Option
Date to be treated as Finance Charge Receivables ("Discount Option
Receivables"). The Transferors shall also have the option of increasing,
reducing or withdrawing the Discount Percentage, at any time and from time to
time, on and after such Discount Option Date. The Transferor shall provide to
the Servicer, the Trustee and any Rating Agency 30 days' prior written notice of
the Discount Option Date and any such designation or increase, reduction or
withdrawal, and such designation, increase, reduction or withdrawal shall become
effective on the Discount Option Date specified therefor upon satisfaction of
the following conditions:
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(i) each Transferor shall have delivered to the Trustee and
any Series Enhancer entitled thereto (if any) an Officer's Certificate
certifying that, based upon facts known to such Transferor at such
time, such designation, increase, reduction or withdrawal will not, at
the time of its occurrence, cause a Pay-Out Event or a Reinvestment
Event, or an event that, with notice or the lapse of time or both,
would constitute a Pay-Out Event or a Reinvestment Event, to occur with
respect to any Series;
(ii) the Rating Agency Condition shall have been satisfied
with respect to such designation, increase, reduction or withdrawal;
and
(iii) only in connection with a reduction or withdrawal of the
Discount Percentage, the Transferors shall have caused an Opinion of
Counsel to the effect described in clause (a) of the definition of "Tax
Opinion" in Section 1.01 to have been delivered to the Trustee.
Notwithstanding any of the foregoing conditions to the designation of the
Discount Percentage, the initial Discount Option Date shall be the Closing Date,
and, beginning on such date, the initial Discount Percentage shall be 2.0%.
(b) After any Discount Option Date, Discount Option Receivable
Collections (calculated using the Discount Percentage specified on such Discount
Option Date) shall be treated as Collections of Finance Charge Receivables.
Section 2.13. Premium Option.
(a) The Transferors shall have the option to designate at any
time and from time to time a percentage or percentages, which may be a fixed
percentage or a variable percentage (the "Premium Percentage"), of all or any
specified portion of Finance Charge Receivables created after the Premium Option
Date to be treated as Principal Receivables ("Premium Option Receivables"). The
Transferors shall also have the option of increasing, reducing or withdrawing
the Premium Percentage, at any time and from time to time, on and after such
Premium Option Date. The Transferors shall provide to the Servicer, the Trustee
and any Rating Agency 30 days' prior written notice of the Premium Option Date
and any such designation or increase, reduction or withdrawal, and such
designation, increase, reduction or withdrawal shall become effective on the
Premium Option Date specified therefor upon satisfaction of the following
conditions:
(i) each Transferor shall have delivered to the Trustee and
any Series Enhancer entitled thereto (if any) an Officer's Certificate
certifying that, based upon facts known to such Transferor at such
time, such designation, increase, reduction or withdrawal will not, at
the time of its occurrence, cause a Pay-Out Event or a Reinvestment
Event, or an event that, with notice or the lapse of time or both,
would constitute a Pay-Out Event or a Reinvestment Event, to occur with
respect to any Series;
(ii) the Rating Agency Condition shall have been satisfied
with respect to such designation, increase, reduction or withdrawal;
and
(iii) only in connection with the designation or any increase
of the Premium Percentage, the Transferors shall have caused an Opinion
of Counsel to the effect described in clause (a) of the definition of
"Tax Opinion" in Section 1.01 to have been delivered to the Trustee.
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(b) After any Premium Option Date, Premium Option Receivable
Collections (calculated using the Premium Percentage specified on such Premium
Option Date) shall be treated as Collections of Principal Receivables.
[END OF ARTICLE II]
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ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer.
(a) TRS agrees to act as the Servicer under this Agreement and
the Certificateholders by their acceptance of Certificates consent to TRS acting
as Servicer.
(b) As agent for each Transferor and the Trust, the Servicer
shall service and administer the Receivables and any Participation Interests,
shall collect and deposit into the Collection Account payments due under the
Receivables and any Participation Interests and shall charge-off as
uncollectible Receivables, all in accordance with its customary and usual
servicing procedures for servicing credit or charge receivables comparable to
the Receivables and in accordance with the applicable Credit Guidelines. As
agent for each Transferor and the Trust, the Servicer shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing and subject to Section 10.01, the Servicer or its
designee is hereby authorized and empowered, unless such power is revoked by the
Trustee on account of the occurrence of a Servicer Default pursuant to Section
10.01, (i) to instruct the Trustee to make withdrawals and payments from the
Collection Account, the Special Funding Account and any Series Account, as set
forth in this Agreement or any Supplement, (ii) to take any action required or
permitted under any Series Enhancement, as set forth in this Agreement or any
Supplement, (iii) to execute and deliver, on behalf of the Trust for the benefit
of the Certificateholders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable Requirements of Law, to commence collection
proceedings with respect to such Receivables and (iv) to make any filings,
reports, notices, applications and registrations with, and to seek any consents
or authorizations from, the Securities and Exchange Commission (the
"Commission") and any state securities authority on behalf of the Trust as may
be necessary or advisable to comply with any Federal or state securities or
reporting requirements or other laws or regulations. The Trustee shall furnish
the Servicer with any documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties hereunder.
(c) The Servicer shall not, and no Successor Servicer shall,
be obligated to use separate servicing procedures, offices, employees or
accounts for servicing the Receivables from the procedures, offices, employees
and accounts used by the Servicer or such Successor Servicer, as the case may
be, in connection with servicing other comparable receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Account Agreements relating to the Accounts and the applicable Credit Guidelines
and all applicable rules and regulations affecting the Accounts and the
Receivables, except insofar as any failure to so comply or perform would not
materially and adversely affect the Trust or the Investor Certificateholders.
(e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust and the
servicing activities hereunder including all expenses related to enforcement of
the Receivables, fees and disbursements of the Trustee (including the reasonable
fees and expenses of its outside counsel) and independent accountants and all
other fees and expenses,
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including the costs of filing UCC continuation statements, the costs and
expenses relating to obtaining and maintaining the listing of any Investor
Certificates on any stock exchange, and any stamp, documentary, excise, property
(whether on real, personal or intangible property) or any similar tax levied on
the Trust or the Trust's assets that are not expressly stated in this Agreement
to be payable by the Trust or a Transferor (other than federal, state, local and
foreign income and franchise taxes, if any, or any interest or penalties with
respect thereto, assessed on the Trust).
Section 3.02. Servicing Compensation. As full compensation for
its servicing activities hereunder and as reimbursement for any expense incurred
by it in connection therewith, the Servicer shall be entitled to receive the
Servicing Fee specified in any Supplement.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. TRS, as initial Servicer, hereby makes, and any Successor Servicer by
its appointment hereunder shall make, with respect to itself, on each Closing
Date (and on the date of any such appointment), the following representations,
warranties and covenants on which the Trustee shall be deemed to have relied in
accepting the Receivables in trust and in authenticating the Certificates:
(a) Organization and Good Standing. The Servicer is a
corporation or other legal entity validly existing under the applicable law of
the jurisdiction of its organization or incorporation and has, in all material
respects, full power and authority to own its properties and conduct its
servicing business as presently owned or conducted, and to execute, deliver and
perform its obligations under this Agreement and each Supplement.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation or other foreign
entity (or is exempt from such requirements) and has obtained all necessary
licenses and approvals in each jurisdiction in which the servicing of the
Receivables and any Participation Interests as required by this Agreement
requires such qualification except where the failure to so qualify or obtain
licenses or approvals would not have a material adverse effect on its ability to
perform its obligations as Servicer under this Agreement.
(c) Due Authorization. The execution, delivery, and
performance of this Agreement and each Supplement, and the other agreements and
instruments executed or to be executed by the Servicer as contemplated hereby,
have been duly authorized by the Servicer by all necessary action on the part of
the Servicer.
(d) Binding Obligation. This Agreement and each Supplement
constitutes a legal, valid and binding obligation of the Servicer, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally from time to time in effect or by
general principles of equity.
(e) No Conflict. The execution and delivery of this Agreement
and each Supplement by the Servicer, and the performance of the transactions
contemplated by this Agreement and each Supplement and the fulfillment of the
terms hereof and thereof applicable to the Servicer, will not conflict with,
violate or result in any breach of any of the material terms and provisions of,
or constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it or its
properties are bound.
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(f) No Violation. The execution and delivery of this Agreement
and each Supplement by the Servicer, the performance of the transactions
contemplated by this Agreement and each Supplement and the fulfillment of the
terms hereof and thereof applicable to the Servicer will not conflict with or
violate any Requirements of Law applicable to the Servicer.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any Governmental Authority seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any Supplement or
seeking any determination or ruling that, in the reasonable judgment of the
Servicer, would materially and adversely affect the performance by the Servicer
of its obligations under this Agreement or any Supplement.
(h) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in connection
with each Receivable and the related Account, if any, will maintain in effect
all qualifications required under Requirements of Law in order to service
properly each Receivable and the related Account, if any, and will comply in all
material respects with all other Requirements of Law in connection with
servicing each Receivable and the related Account the failure to comply with
which would have an Adverse Effect.
(i) No Rescission or Cancellation. The Servicer shall not
permit any rescission or cancellation of any Receivable except in accordance
with the applicable Credit Guidelines or as ordered by a court of competent
jurisdiction or other Governmental Authority.
(j) Protection of Certificateholders' Rights. The Servicer
shall take no action which, nor omit to take any action the omission of which,
would impair the rights of Certificateholders and any Series Enhancer in any
Receivable or the related Account, if any, nor shall it reschedule, revise or
defer payments due on any Receivable except in accordance with the applicable
Credit Guidelines.
(k) Receivables Not To Be Evidenced by Instruments. Except in
connection with its enforcement or collection of an Account, the Servicer will
take no action to cause any Receivable to be evidenced by any instrument (as
defined in the UCC) and if any Receivable is so evidenced it shall be reassigned
or assigned to the Servicer as provided in this Section.
(l) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Servicer in connection with
the execution and delivery of this Agreement and each Supplement by the Servicer
and the performance of the transactions contemplated by this Agreement and each
Supplement by the Servicer, have been duly obtained, effected or given and are
in full force and effect.
In the event (x) any of the representations, warranties or
covenants of the Servicer contained in subsection 3.03 (h), (i) or (j) with
respect to any Receivable or the related Account is breached, and such breach
has a material adverse effect on the Certificateholders' Interest in such
Receivable (which determination shall be made without regard to whether funds
are then available to any Investor Certificateholders pursuant to any Series
Enhancement) and is not cured within 60 days (or such longer period, not in
excess of 150 days, as may be agreed to by the Trustee and the Transferor) of
the earlier to occur of the discovery of such event by the Servicer, or receipt
by the Servicer of notice of such event given by the Trustee or the Transferor,
or (y) as provided in subsection 3.03(k) with respect to any Receivable, all
Receivables in the Account or Accounts to which such event relates shall be
assigned and transferred to the Servicer on the terms and conditions set forth
below.
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The Servicer shall effect such assignment by making a deposit
into the Collection Account in immediately available funds on the Transfer Date
following the Monthly Period in which such assignment obligation arises in an
amount equal to the amount of such Receivables.
Upon each such reassignment or assignment to the Servicer, the
Trustee, on behalf of the Trust, shall automatically and without further action
be deemed to sell, transfer, assign, set over and otherwise convey to the
Servicer, without recourse, representation or warranty, all right, title and
interest of the Trust in and to such Receivables, all monies due or to become
due and all amounts received with respect thereto and all proceeds thereof. The
Trustee shall execute such documents and instruments of transfer or assignment
and take such other actions as shall be reasonably requested by the Servicer to
effect the conveyance of any such Receivables pursuant to this Section but only
upon receipt of an Officer's Certificate of the Servicer that states that all
conditions set forth in this section have been satisfied. The obligation of the
Servicer to accept reassignment or assignment of such Receivables, and to make
the deposits, if any, required to be made to the Collection Account as provided
in the preceding paragraph, shall constitute the sole remedy respecting the
event giving rise to such obligation available to Certificateholders (or the
Trustee on behalf of Certificateholders) or any Series Enhancer, except as
provided in Section 8.04.
Section 3.04. Reports and Records for the Trustee.
(a) Daily Records. For as long as deposits of Collections are
required to be made daily by the Servicer pursuant to subsection 4.03(a), on
each Business Day, the Servicer shall make or cause to be made available at the
office of the Servicer for inspection by the Trustee upon request a record
setting forth (i) the Collections in respect of Principal Receivables and in
respect of Finance Charge Receivables processed by the Servicer on the second
preceding Business Day in respect of each Account and (ii) the amount of
Receivables as of the close of business on the second preceding Business Day in
each Account. The Servicer shall, at all times, maintain its computer files with
respect to the Accounts in such a manner so that the Accounts may be
specifically identified and shall make available to the Trustee at the office of
the Servicer on any Business Day any computer programs necessary to make such
identification. The Trustee shall enter into such confidentiality agreements as
the Servicer shall deem necessary to protect its interests.
(b) Monthly Servicer's Certificate. Not later than the second
Business Day preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Trustee and each Rating Agency a
certificate of a Servicing Officer in substantially the form set forth in the
related Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer
shall deliver to the Trustee and the Rating Agency on or before March 31 of each
calendar year, beginning with March 31, 1997, an Officer's Certificate
substantially in the form of Exhibit D.
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
(a) On or before March 31 of each calendar year, beginning
with March 31, 1997, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Trustee) to
the Trustee, the Servicer and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer and examined certain
documents and records relating to the servicing of Accounts under this Agreement
and each Supplement and that, on the basis of such agreed-upon
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procedures, nothing has come to the attention of such accountants that caused
them to believe that the servicing (including the allocation of Collections) has
not been conducted in compliance with the terms and conditions as set forth in
Articles III and Article IV and Section 8.08 of this Agreement and the
applicable provisions of each Supplement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in such
statement. Such report shall set forth the agreed-upon procedures performed.
(b) On or before March 31 of each calendar year, beginning
with March 31, 1997, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or Transferor) to furnish a report to the Trustee, the Servicer and
each Rating Agency to the effect that they have applied certain procedures
agreed upon with the Servicer to compare the mathematical calculations of
certain amounts set forth in the Servicer's certificates delivered pursuant to
subsection 3.04(b) during the period covered by such report with the Servicer's
computer reports that were the source of such amounts and that on the basis of
such agreed-upon procedures and comparison, such accountants are of the opinion
that such amounts are in agreement, except for such exceptions as they believe
to be immaterial and such other exceptions as shall be set forth in such
statement. Such report shall set forth the agreed-upon procedures performed.
(c) A copy of each certificate and report provided pursuant to
subsection 3.04(b), or Section 3.05 or 3.06 may be obtained by any Investor
Certificateholder or Certificate Owner by a request in writing to the Trustee
addressed to the Corporate Trust Office.
Section 3.07. Tax Treatment. Except as otherwise specified in
a Supplement with respect to a particular Series, the Transferors have entered
into this Agreement, and the Certificates will be issued, with the intention
that, for federal, state and local income and franchise tax purposes, (i) the
Investor Certificates of each Series which are characterized as indebtedness at
the time of their issuance will qualify as indebtedness secured by the
Receivables and (ii) the Trust shall not be treated as an association or
publicly traded partnership taxable as a corporation. The Transferor, by
entering into this Agreement, and each Certificateholder, by the acceptance of
any such Certificate (and each Certificate Owner, by its acceptance of an
interest in the applicable Certificate), agree to treat such Investor
Certificates for federal, state and local income and franchise tax purposes as
indebtedness. Each Holder of such Investor Certificate agrees that it will cause
any Certificate Owner acquiring an interest in a Certificate through it to
comply with this Agreement as to treatment as indebtedness under applicable tax
law, as described in this Section 3.07. Subject to Section 11.11, the Trustee
shall treat the Trust as a security arrangement for federal income tax purposes
and shall not file any federal income tax returns or obtain any federal employer
identification number for the Trust. The provisions of this Agreement shall be
construed in furtherance of the foregoing intended tax treatment.
Section 3.08. Notices to Centurion Bank. In the event that TRS
is no longer acting as Servicer, any Successor Servicer shall deliver or make
available to Centurion Bank and RFC II each certificate and report required to
be provided thereafter pursuant to subsection 3.04(b) and Sections 3.05 and
3.06, as well as all information reasonably requested by Centurion Bank or RFC
II.
Section 3.09. Adjustments.
(a) If the Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing error to
an account obligor, because such Receivable was created in respect of
merchandise which was refused or returned by an account obligor, or because the
Servicer or applicable Account Owner charges off as uncollectible Small
Balances, or if the Servicer otherwise adjusts downward the amount of any
Receivable without receiving Collections therefor or charging off
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such amount as uncollectible, then, in any such case, the amount of Principal
Receivables used to calculate the Transferor Amount, the Transferor's Interest,
and (unless otherwise specified) any other amount required herein or in any
Supplement to be calculated by reference to the amount of Principal Receivables,
will be reduced by the amount of the adjustment. Similarly, the amount of
Principal Receivables used to calculate the Transferor Amount and (unless
otherwise specified) any other amount required herein or in any Supplement to be
calculated by reference to the amount of Principal Receivables will be reduced
by the amount of the Trust's Percentage of any Receivable which was discovered
as having been created through a fraudulent or counterfeit charge or with
respect to which the covenant contained in Section 2.07(b) was breached. Any
adjustment required pursuant to either of the two preceding sentences shall be
made on or prior to the end of the Monthly Period in which such adjustment
obligation arises. In the event that, following the exclusion of such Principal
Receivables from the calculation of the Transferor Amount, the Transferor Amount
would be less than the Required Transferor Amount, not later than 1:00 P.M., New
York City time, on the Distribution Date following the Monthly Period in which
such adjustment obligation arises, the Transferors shall 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 less than the Required Transferor
Amount, due to adjustments with respect to Receivables conveyed by such
Transferor (up to the amount of such Principal Receivables).
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Notwithstanding the first two
sentences of this paragraph, adjustments made pursuant to this paragraph shall
not require any change in any report previously delivered pursuant to subsection
3.04(a) or (b).
Section 3.10. Recoveries. If at any time the Servicer cannot
identify the Recoveries that relate to specific Defaulted Receivables, then the
Servicer shall reasonably estimate, on or prior to each Determination Date, the
amount of Recoveries to be attributed to Accounts.
Section 3.11. Reports to the Commission. The Servicer shall,
on behalf of the Trust, cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder.
The Transferors shall, at the expense of the Servicer, cooperate in any
reasonable request of the Servicer in connection with such filings.
[END OF ARTICLE III]
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ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01. Rights of Certificateholders. The Investor
Certificates shall represent fractional undivided interests in the Trust, which,
with respect to each Series, shall consist of the right to receive, to the
extent necessary to make the required payments with respect to the Investor
Certificates of such Series at the times and in the amounts specified in the
related Supplement, the portion of Collections allocable to Investor
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in the Collection Account and the Special Funding
Account allocable to Certificateholders of such Series pursuant to this
Agreement and such Supplement, funds on deposit in any related Series Account
and funds available pursuant to any related Series Enhancement (collectively,
with respect to all Series, the "Certificateholders' Interest"), it being
understood that, except as specifically set forth in the Supplement with respect
thereto, the Investor Certificates of any Series or Class shall not represent
any interest in any Series Account or Series Enhancement for the benefit of any
other Series or Class. The Transferor Certificates shall represent the ownership
interest in the remainder of the Trust Assets not allocated pursuant to this
Agreement or any Supplement to the Certificateholders' Interest, including the
right to receive Collections with respect to the Receivables and other amounts
at the times and in the amounts specified in any Supplement to be paid to the
Transferors on behalf of all holders of the Transferor Certificates (the
"Transferors' Interest"); provided, however, that the Transferor Certificates
shall not represent any interest in the Collection Account, any Series Account
or any Series Enhancement, except as specifically provided in this Agreement or
any Supplement.
Section 4.02. Establishment of Collection Account and Special
Funding Account. The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (the
"Collection Account"). The Trustee shall possess all right, title and interest
in all monies, instruments, securities, documents, certificates of deposit and
other property on deposit from time to time in the Collection Account and in all
proceeds, earnings, income, revenue, dividends and distributions thereof for the
benefit of the Certificateholders.
The Collection Account shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders. Except as
expressly provided in this Agreement, the Servicer agrees that it shall have no
right of setoff or banker's lien against, and no right to otherwise deduct from,
any funds held in the Collection Account for any amount owed to it by the
Trustee, the Trust, any Certificateholder or any Series Enhancer. If, at any
time, the Collection Account ceases to be an Eligible Deposit Account, the
Trustee (or the Servicer on its behalf) shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) establish a new Collection Account meeting the conditions specified
above, transfer any monies, documents, instruments, securities, certificates of
deposit and other property to such new Collection Account and from the date such
new Collection Account is established, it shall be the "Collection Account."
Pursuant to the authority granted to the Servicer in subsection 3.01(b), the
Servicer shall have the power, revocable by the Trustee, to make withdrawals and
payments from the Collection Account and to instruct the Trustee to make
withdrawals and payments from the Collection Account for the purposes of
carrying out the Servicer's or the Trustee's duties hereunder. The Servicer
shall reduce deposits into the Collection Account payable by a Transferor on any
Deposit Date to the extent that such Transferor is entitled to receive funds
from the Collection Account on such Deposit Date, but only to the extent such
reduction would not reduce the Transferor Amount to an amount less than the
Required Transferor Amount.
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Funds on deposit in the Collection Account (other than
investment earnings and amounts deposited pursuant to Sections 2.06, 9.01, 10.01
or 12.02) shall at the written direction of the Servicer be invested by the
Trustee in Eligible Investments selected by the Servicer. All such Eligible
Investments shall be held by the Trustee for the benefit of the
Certificateholders. The Trustee shall maintain for the benefit of the
Certificateholders possession of the instruments, documents, certificates of
deposit or securities, if any, evidencing such Eligible Investments. Investments
of funds representing Collections collected during any Monthly Period shall be
invested in Eligible Investments that will mature so that such funds will be
available no later than the close of business on the next Transfer Date
following such Monthly Period in amounts sufficient to the extent of such funds
to make the required distributions on such Distribution Date. No such Eligible
Investment shall be disposed of prior to its maturity; provided, however, that
the Trustee may sell, liquidate or dispose of any such Eligible Investment
before its maturity, at the written direction of the Servicer, if such sale,
liquidation or disposal would not result in a loss of all or part of the
principal portion of such Eligible Investment or if, prior to the maturity of
such Eligible Investment, a default occurs in the payment of principal, interest
or any other amount with respect to such Eligible Investment. Unless directed by
the Servicer, funds deposited in the Collection Account on a Transfer Date with
respect to the immediately succeeding Distribution Date are not required to be
invested overnight. On each Distribution Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the
Collection Account shall be paid to the Transferor, except as otherwise
specified in any Supplement. The Trustee shall bear no responsibility or
liability for any losses resulting from investment or reinvestment of any funds
in accordance with this Section 4.02.
The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (the
"Special Funding Account"). The Trustee shall possess all right, title and
interest in all monies, instruments, securities, documents, certificates of
deposit and other property on deposit from time to time in the Special Funding
Account and in all proceeds, dividends distributions, earnings, income and
revenue thereof for the benefit of the Certificateholders. The Special Funding
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. Except as expressly provided in this
Agreement, the Servicer agrees that it shall have no right of setoff or banker's
lien against, and no right to otherwise deduct from, any funds held in the
Special Funding Account for any amount owed to it by the Trustee, the Trust, any
Certificateholder or any Series Enhancer. If, at any time, the Special Funding
Account ceases to be an Eligible Deposit Account, the Trustee (or the Servicer
on its behalf) shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Special Funding Account meeting the conditions specified above, transfer any
monies, documents, instruments, securities, certificates of deposit and other
property to such new Special Funding Account and from the date such new Special
Funding Account is established, it shall be the "Special Funding Account."
Funds on deposit in the Special Funding Account shall at the
written direction of the Servicer be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Certificateholders. The Trustee shall
maintain for the benefit of the Certificateholders possession of the
instruments, documents, certificates of deposit or securities, if any,
evidencing such Eligible Investments. Funds on deposit in the Special Funding
Account on any Distribution Date will be invested in Eligible Investments that
will mature so that such funds will be available on the next Distribution Date.
No such Eligible Investment shall be disposed of prior to its maturity;
provided, however, that the Trustee may sell, liquidate or dispose of any such
Eligible Investment before its maturity, at the written direction of the
Servicer, if such sale, liquidation or disposal would not result in a loss of
all or part of the principal portion of such Eligible
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Investment or if, prior to the maturity of such Eligible Investment, a default
occurs in the payment of principal, interest or any other amount with respect to
such Eligible Investment. Unless directed by the Servicer, funds deposited in
the Special Funding Account on a Transfer Date with respect to the immediately
succeeding Distribution Date are not required to be invested overnight. On each
Distribution Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Special Funding Account shall be
treated as Collections of Finance Charge Receivables with respect to the last
day of the related Monthly Period except as otherwise specified in the related
Supplement. On each Business Day on which funds are on deposit in the Special
Funding Account and on which no Series is in an Accumulation Period or
Amortization Period, the Servicer shall determine the amount (if any) by which
the Transferor Amount exceeds the Required Transferor Amount on such date and
the Transferors may instruct the Trustee to withdraw any such excess from the
Special Funding Account and pay such amount to the Holders of the Transferor
Certificates; provided, however, that, (i) if an Accumulation Period or
Amortization Period has commenced and is continuing with respect to one or more
outstanding Series, any funds on deposit in the Special Funding Account shall be
treated as Shared Principal Collections and shall be allocated and distributed
in accordance with Section 4.04 and the terms of each Supplement to the extent
that doing so would not cause the Transferor Amount to be less than the Required
Transferor Amount and (ii) if, at any time, the Transferors determine that, by
decreasing the amount on deposit in the Special Funding Account, any Series then
outstanding which is issued pursuant to a Supplement which permits partial
amortization as provided in this Section 4.02 may be prevented from experiencing
a Pay-Out Event based upon insufficiency of yield, the Servicer shall on the
next succeeding Distribution Date instruct the Trustee in writing to apply funds
on deposit in the Special Funding Account as "Partial Amortization SFA Amounts"
to such Series to reduce the Invested Amount thereof (or, if more than one such
Series, to each such Series on a pro rata basis according to the Invested
Amounts of such Series) in an amount such that the Special Funding Account is
reduced to an amount that, based on the then current investment yield, (i) would
not cause a yield insufficiency Pay-Out Event to occur for any Series that is
then outstanding and (ii) would not cause the Transferor Amount to be less than
the Required Transferor Amount. In addition, the Servicer shall instruct the
Trustee in writing to apply funds on deposit in the Special Funding Account to
each such Series on such pro rata basis as Partial Amortization SFA Amounts on
any Distribution Date to the extent (subject to the limitations specified in the
preceding sentence) the Transferors so determine in written instructions
provided to the Servicer on or prior to the Determination Date preceding such
Distribution Date.
Section 4.03. Collections and Allocations.
(a) The Servicer will apply or will instruct the Trustee to
apply all funds on deposit in the Collection Account as described in this
Article IV and in each Supplement. Except as otherwise provided below, the
Servicer shall deposit Collections into the Collection Account as promptly as
possible after the Date of Processing of such Collections, but in no event later
than the second Business Day following the Date of Processing. Subject to the
express terms of any Supplement, but notwithstanding anything else in this
Agreement to the contrary, for so long as TRS or an Affiliate of TRS remains the
Servicer and (i) maintains a short-term credit rating (which may be an implied
rating) of not less than A-1 by Standard and Poor's and P-1 by Moody's (or such
other rating below A-1 or P-1, as the case may be, which is satisfactory to such
Rating Agency), (ii) obtains a guarantee with respect to the Servicer's deposit
and payment obligations hereunder pursuant to a guaranty in form and substance
acceptable to each Rating Agency provided the guarantor maintains a short-term
credit rating of P-1 by Moody's and of A-1 by Standard & Poor's (or such other
rating below P-1 or A-1, as the case may be, which is satisfactory to such
Rating Agency), or (iii) the Rating Agency Condition will be satisfied despite
the Servicer's inability to satisfy the rating requirement specified in clause
(i) and for five Business Days following any reduction of any such rating or
failure to satisfy the conditions specified in clause (ii) or (iii), the
Servicer need not make the daily deposits of Collections into the Collection
Account as provided
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in the preceding sentence, but may make a single deposit in the Collection
Account in immediately available funds not later than 1:00 P.M., New York City
time, on the Transfer Date following the Monthly Period with respect to which
such deposit relates. Subject to the first proviso in Section 4.04, but
notwithstanding anything else in this Agreement to the contrary, with respect to
any Monthly Period, whether the Servicer is required to make deposits of
Collections pursuant to the first or the second preceding sentence, (i) the
Servicer will only be required to deposit Collections into the Collection
Account up to the aggregate amount of Collections required to be deposited into
any Series Account or, without duplication, distributed on or prior to the
related Distribution Date to Investor Certificateholders or to any Series
Enhancer pursuant to the terms of any Supplement or Enhancement Agreement and
(ii) if at any time prior to such Distribution Date the amount of Collections
deposited in the Collection Account exceeds the amount required to be deposited
pursuant to clause (i) above, the Servicer, on a daily basis, as applicable, (x)
will distribute to the Transferors any Collections not required to be so
deposited as such Collections are collected or (y) will withdraw such excess
from the Collection Account and distribute such excess to the Transferors.
Subject to the immediately preceding sentence, the Servicer may retain its
Servicing Fee with respect to a Series and shall not be required to deposit it
in the Collection Account.
(b) Collections of Finance Charge Receivables, Principal
Receivables and Defaulted Receivables will be allocated to each Series on the
basis of the Series Allocable Finance Charge Collections of such Series, Series
Allocable Principal Collections of such Series and Series Allocable Defaulted
Amount and amounts so allocated to any Series will not, except as specified in
the related Supplement, be available to the Investor Certificateholders of any
other Series. Allocations of the foregoing amounts between the
Certificateholders' Interest and the Transferor's Interest, among the Series and
among the Classes in any Series, shall be set forth in the related Supplement or
Supplements.
Section 4.04. Shared Principal Collections. On each
Distribution Date, (a) the Servicer shall allocate Shared Principal Collections
(as described below) to each Principal Sharing Series pro rata, in proportion to
the Principal Shortfalls, if any, with respect to such Series, and (b) the
Servicer shall withdraw from the Collection Account and pay to the Holders of
the Transferor Certificates (i) an amount equal to the excess, if any, of (x)
the aggregate amount for all outstanding Series of Collections of Principal
Receivables which the related Supplements specify are to be treated as "Shared
Principal Collections" for such Distribution Date over (y) the aggregate amount
for all outstanding Series which the related Supplements specify are "Principal
Shortfalls" for such Series and for such Distribution Date and, without
duplication, (ii) the aggregate amount for all outstanding Series of that
portion of Series Allocable Principal Collections which the related Supplements
specify are to be allocated and paid to the Holders of the Transferor
Certificates with respect to such Distribution Date; provided, however, that, in
the case of clauses (i) and (ii), if the Transferor Amount as of such
Distribution Date (determined after giving effect to the Trust's Percentage of
any Principal Receivables or Participation Interests transferred to the Trust on
such date) is less than the Required Transferor Amount, the Servicer will not
distribute to the Holders of the Transferor Certificates any such amounts that
otherwise would be distributed to the Holders of the Transferor Certificates,
but shall deposit such funds in the Special Funding Account. The Transferors
may, at their option, instruct the Trustee to deposit Shared Principal
Collections which are otherwise payable to the Holders of the Transferor
Certificates pursuant to the provisions set forth above into the Special Funding
Account.
Section 4.05. Allocation of Trust Assets to Series or Groups.
To the extent so provided in the Supplement for any Series or in an amendment to
this Agreement executed pursuant to subsection 13.01(a), Receivables conveyed to
the Trust pursuant to Section 2.01 and Receivables or Participation Interests
conveyed to the Trust pursuant to Section 2.09 or any Participation Interest
Supplement, and all Collections received with respect thereto may be allocated
or applied in whole or in part to one or
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more Series or Groups as may be provided in such Supplement or amendment,
provided, however, that any such allocation or application shall be effective
only upon satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately preceding
such allocation, the Servicer shall have given the Trustee and each
Rating Agency written notice of such allocation;
(ii) the Rating Agency Condition shall have been satisfied
with respect to such allocation; and
(iii) the Servicer shall have delivered to the Trustee an
Officer's Certificate, dated the date of such allocation, to the effect
that the Servicer reasonably believes that such allocation will not
have an Adverse Effect.
Any such Supplement or amendment may provide that (i) such
allocation to one or more particular Series or Groups may terminate upon the
occurrence of certain events specified therein and (ii) that upon the occurrence
of any such event, such assets and any Collections with respect thereto, shall
be reallocated to other Series or Groups or to all Series, all as shall be
provided in such Supplement or amendment.
Section 4.06. Interchange. Each Transferor shall be permitted
to transfer to the Trust for inclusion as Trust Assets all or a portion of any
interchange, merchant discount or other fees or charges derived from
transactions relating to the Accounts. All of such interchange, merchant
discount or other fees or charges shall be deemed to be, and shall be treated
as, Finance Charge Receivables under this Agreement and each Supplement hereto.
[END OF ARTICLE IV]
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ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Distributions shall be made to, and reports shall be provided
to, Certificateholders as set forth in the applicable Supplement. The identity
of the Certificateholders with respect to distributions and reports shall be
determined according to the immediately preceding Record Date.
[END OF ARTICLE V]
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ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates. The Investor Certificates of
any Series or Class shall be issued in fully registered form (including any
uncertificated Series or Class which is registered in the Certificate Register,
the "Registered Certificates") unless the applicable Supplement provides, in
accordance with then applicable laws, that such Certificates be issued in bearer
form ("Bearer Certificates") with attached interest coupons and a special coupon
(collectively the "Coupons"). Such Registered Certificates or Bearer
Certificates, as the case may be, shall be substantially in the form of the
exhibits with respect thereto attached to the applicable Supplement. The
Original Transferor Certificate will be issued in registered form, substantially
in the form of Exhibit A, and shall upon issue, be executed and delivered by the
Transferors to the Trustee for authentication and redelivery as provided in
Section 6.02. If specified in any Supplement, the Investor Certificates of any
Series or Class shall be issued upon initial issuance as one or more
certificates evidencing the aggregate original principal amount of such Series
or Class as described in Section 6.10. The Original Transferor Certificate shall
be a single certificate and shall initially represent the entire Transferor's
Interest. Each Certificate shall be executed by manual or facsimile signature on
behalf of the Transferors by their respective Presidents, Vice Presidents or
Chief Executive Officers or by attorneys-in-fact duly authorized to execute such
Certificate on behalf of any such officers. Certificates bearing the manual or
facsimile signature of an individual who was, at the time when such signature
was affixed, authorized to sign on behalf of a Transferor shall not be rendered
invalid, notwithstanding that such individual ceased to be so authorized prior
to the authentication and delivery of such Certificates or does not hold such
office at the date of such Certificates. No Certificates shall be entitled to
any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Certificate a certificate of authentication substantially in the
form provided for herein executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. Bearer
Certificates shall be dated the Series Issuance Date. All Registered
Certificates and Transferor's Certificates shall be dated the date of their
authentication.
Section 6.02. Authentication of Certificates. The Trustee
shall authenticate and deliver the Investor Certificates of each Series and
Class that are issued upon original issuance to or upon the order of the
Transferors against payment to the Transferors of the purchase price therefor.
The Trustee shall authenticate and deliver the Original Transferor Certificate
to the Transferors simultaneously with the delivery of the Series 1996-1
Investor Certificate. If specified in the related Supplement for any Series or
Class, the Trustee shall authenticate and deliver outside the United States the
Global Certificate that is issued upon original issuance thereof.
Section 6.03. New Issuances.
(a) The Transferors may from time to time direct the Trustee,
on behalf of the Trust, to issue one or more new Series of Investor
Certificates. The Investor Certificates of all outstanding Series shall be
equally and ratably entitled as provided herein to the benefits of this
Agreement without preference, priority or distinction, all in accordance with
the terms and provisions of this Agreement and the applicable Supplement except,
with respect to any Series or Class, as provided in the related Supplement.
(b) On or before the Series Issuance Date relating to any new
Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The
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Trustee shall execute the Supplement and the Transferors shall execute the
Investor Certificates of such Series and deliver such Investor Certificates to
the Trustee for authentication. In connection with the issuance of a new Series
of Investor Certificates, the designation of an Additional Transferor pursuant
to Section 2.09(g) or at any other time, each Transferor may surrender its
Transferor Certificate to the Trustee in exchange for a newly issued Transferor
Certificate and a new certificate (a "Supplemental Certificate"), the terms of
which shall be defined in a supplement (a "Transferor Certificate Supplement")
to this Agreement (which Transferor Certificate Supplement shall be subject to
Section 13.01 to the extent that it amends any of the terms of this Agreement)
to be delivered to or upon the order of the Transferor. The issuance of any such
Investor Certificates or Supplemental Certificate shall be subject to
satisfaction of the following conditions:
(i) on or before the fifth day immediately preceding the
Series Issuance Date or Transferor Certificate surrender and exchange,
as the case may be, such Transferor shall have given the Trustee, the
Servicer and each Rating Agency notice (unless such notice requirement
is otherwise waived) of such issuance and the Series Issuance Date or
such Transferor Certificate surrender and exchange, as the case may be;
(ii) such Transferor shall have delivered to the Trustee the
related Supplement or Transferor Certificate Supplement, as applicable,
in form satisfactory to the Trustee, executed by each party hereto
(other than the Trustee and the Holder of the Supplemental Certificate,
if any);
(iii) such Transferor shall have delivered to the Trustee any
related Enhancement Agreement executed by each of the parties thereto,
other than the Trustee;
(iv) the Rating Agency Condition shall have been satisfied
with respect to such issuance or such Transferor Certificate surrender
and exchange, as the case may be;
(v) such issuance or surrender and exchange, as the case may
be, will not result in any Adverse Effect and the Transferors shall
have delivered to the Trustee an Officer's Certificate, dated the
Series Issuance Date or the date of such surrender and exchange, as the
case may be, to the effect that the Transferors reasonably believes
that such issuance or such surrender and exchange, as the case may be,
will not, based on the facts known to such officer at the time of such
certification, have an Adverse Effect;
(vi) the Transferors shall have delivered to the Trustee (with
a copy to each Rating Agency) a Tax Opinion, dated the Series Issuance
Date or the date of such surrender and exchange, as the case may be,
with respect to such issuance or surrender and exchange, respectively,
and, in connection with any such exchange, after giving effect to such
exchange, 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; and
(vii) the aggregate amount of Principal Receivables plus the
principal amount of any Participation Interest theretofore conveyed to
the Trust as of the Series Issuance Date or the date of such surrender
and exchange, as the case may be, shall be greater than the Required
Minimum Principal Balance as of the Series Issuance Date or the date of
such surrender and exchange, as the case may be, and after giving
effect to such issuance or such surrender and exchange, respectively.
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Any Supplemental Certificate held by any Person, and any
Investor Certificate held by any Transferor at any time after the date of its
initial issuance, may be transferred or exchanged only upon the delivery to the
Trustee of a Tax Opinion dated as of the date of such transfer or exchange, as
the case may be, with respect to such transfer or exchange.
Section 6.04. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the Corporate Trust
Office a register (the "Certificate Register") in which, subject to such
reasonable regulations as it may prescribe, a transfer agent and registrar
(which may be the Trustee) (the "Transfer Agent and Registrar") shall provide
for the registration of the Registered Certificates and of transfers and
exchanges of the Registered Certificates as herein provided. The Transfer Agent
and Registrar shall initially be the Trustee and any co-transfer agent and
co-registrar chosen by the Transferors and acceptable to the Trustee, including,
if and so long as any Series or Class is listed on the Luxembourg Stock Exchange
and such exchange shall so require, a co-transfer agent and co-registrar in
Luxembourg. Any reference in this Agreement to the Transfer Agent and Registrar
shall include any co-transfer agent and registrar unless the context requires
otherwise.
The Transferors may revoke such appointment and remove any
Transfer Agent and Registrar if the Transferors, after consultation with the
Trustee, determine in their sole discretion that such transfer Agent and
Registrar failed to perform its obligations under this Agreement in any material
respect. Any Transfer Agent and Registrar shall be permitted to resign as
Transfer Agent and Registrar upon 30 days' notice to the Transferors, the
Trustee and the Servicer; provided, however, that such resignation shall not be
effective and such Transfer Agent and Registrar shall continue to perform its
duties as Transfer Agent and Registrar until the Transferors have appointed a
successor Transfer Agent and Registrar reasonably acceptable to the Trustee.
Subject to subsection 6.04(c) below, upon surrender for
registration of transfer or exchange of any Registered Certificate at any office
or agency of the Transfer Agent and Registrar maintained for such purpose, one
or more new Registered Certificates (of the same Series and Class) in authorized
denominations of like aggregate fractional undivided interests in the
Certificateholders' Interest shall be executed, authenticated and delivered, in
the name of the designated transferee or transferees.
At the option of a Registered Certificateholder, subject to
subsection 6.04(c) below, Registered Certificates (of the same Series and Class)
may be exchanged for other Registered Certificates of authorized denominations
of like aggregate fractional undivided interests in the Certificateholders'
Interest, upon surrender of the Registered Certificates to be exchanged at any
such office or agency; Registered Certificates, including Registered
Certificates received in exchange for Bearer Certificates, may not be exchanged
for Bearer Certificates. At the option of the Holder of a Bearer Certificate,
subject to applicable laws and regulations, Bearer Certificates may be exchanged
for other Bearer Certificates or Registered Certificates (of the same Series and
Class) of authorized denominations of like aggregate fractional undivided
interests in the Certificateholders' Interest, upon surrender of the Bearer
Certificates to be exchanged at an office or agency of the Transfer Agent and
Registrar located outside the United States. Each Bearer Certificate surrendered
pursuant to this Section shall have attached thereto all unmatured Coupons;
provided that any Bearer Certificate, so surrendered after the close of business
on the Record Date preceding the relevant payment date or distribution date
after the expected final payment date need not have attached the Coupon relating
to such payment date or distribution date (in each case, as specified in the
applicable Supplement).
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The preceding provisions of this Section notwithstanding, the
Trustee or the Transfer Agent and Registrar, as the case may be, shall not be
required to register the transfer of or exchange any Certificate for a period of
15 days preceding the due date for any payment with respect to the Certificate.
Whenever any Investor Certificates are so surrendered for
exchange, the Transferors shall execute, the Trustee shall authenticate and the
Transfer Agent and Registrar shall deliver (in the case of Bearer Certificates,
outside the United States) the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form satisfactory
to the Trustee or the Transfer Agent and Registrar duly executed by the Investor
Certificateholder or the attorney-in-fact thereof duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any such transfer or
exchange.
All Investor Certificates (together with any Coupons)
surrendered for registration of transfer and exchange or for payment shall be
canceled and disposed of in a manner satisfactory to the Trustee. The Trustee
shall cancel and destroy any Global Certificate upon its exchange in full for
Definitive Euro-Certificates and shall deliver a certificate of destruction to
the Transferors. Such certificate shall also state that a certificate or
certificates of a Foreign Clearing Agency to the effect referred to in Section
6.13 was received with respect to each portion of the Global Certificate
exchanged for Definitive Euro-Certificates.
The Transferors shall execute and deliver to the Trustee
Bearer Certificates and Registered Certificates in such amounts and at such
times as are necessary to enable the Trustee to fulfill its responsibilities
under this Agreement, each Supplement and the Certificates.
The interest of any Investor Certificateholder in any
Receivable shall not be transferable other than through the transfer of an
Investor Certificate, and except as provided in this Article VI, a Certificate
shall not be transferable or divisible.
(b) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, The City of New York, and, if and so long
as any Series or Class is listed on the Luxembourg Stock Exchange, Luxembourg,
an office or agency where Investor Certificates may be surrendered for
registration of transfer or exchange (except that Bearer Certificates may not be
surrendered for exchange at any such office or agency in the United States or
its territories and possessions).
(c)(i) Registration of transfer of Investor Certificates
containing a legend substantially to the effect set forth on Exhibit
G-1 shall be effected only if such transfer (x) is made pursuant to an
effective registration statement under the Act, or is exempt from the
registration requirements under the Act, and (y) is made to a Person
which is not an employee benefit plan, trust or account, including an
individual retirement account, that is subject to ERISA or that is
described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment
in such entity (a "Benefit Plan"). In the event that registration of a
transfer is to be made in reliance upon an exemption from the
registration requirements under the Act, the transferor or the
transferee shall deliver, at its expense, to the Transferors, the
Servicer and the Trustee, an investment letter from the transferee,
substantially
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in the form of the investment and ERISA representation letter attached
hereto as Exhibit G-2, and no registration of transfer shall be made
until such letter is so delivered.
Investor Certificates issued upon registration or transfer of,
or Investor Certificates issued in exchange for, Investor Certificates
bearing the legend referred to above shall also bear such legend unless
the Transferor, the Servicer, the Trustee and the Transfer Agent and
Registrar receive an Opinion of Counsel, satisfactory to each of them,
to the effect that such legend may be removed.
Whenever an Investor Certificate containing the legend
referred to above is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall
promptly seek instructions from the Servicer regarding such transfer
and shall be entitled to receive instructions signed by a Servicing
Officer prior to registering any such transfer. The Transferors hereby
agree to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense
incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by them in relation to
any such instructions furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates
containing a legend to the effect set forth on Exhibit G-3 shall be
effected only if such transfer is made to a Person which is not a
Benefit Plan. By accepting and holding any such Investor Certificate,
an Investor Certificateholder shall be deemed to have represented and
warranted that it is not a Benefit Plan. By acquiring any interest in a
Book-Entry Certificate which contains such legend, a Certificate Owner
shall be deemed to have represented and warranted that it is not a
Benefit Plan.
(iii) If so requested by the Transferors, the Trustee will
make available to any prospective purchaser of Investor Certificates
who so requests, a copy of a letter provided to the Trustee by or on
behalf of the Transferors relating to the transferability of any Series
or Class to a Benefit Plan.
Section 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate (together, in the case of Bearer
Certificates, with all unmatured Coupons (if any) appertaining thereto) is
surrendered to the Transfer Agent and Registrar, or the Transfer Agent and
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Trustee
that such Certificate has been acquired by a bona fide purchaser, the
Transferors shall execute, the Trustee shall authenticate and the Transfer Agent
and Registrar shall deliver (in the case of Bearer Certificates, outside the
United States), in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of like tenor and aggregate
fractional undivided interest. In connection with the issuance of any new
Certificate under this Section, the Trustee or the Transfer Agent and Registrar
may require the payment by the Certificateholder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and Transfer
Agent and Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 6.06. Persons Deemed Owners. The Trustee, the Paying
Agent, the Transfer Agent, the Registrar, the Transferors and the Servicer and
any agent of any of them may (a) prior to due presentation of a Registered
Certificate for registration of transfer, treat the Person in whose name any
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Registered Certificate is registered as the owner of such Registered Certificate
for the purpose of receiving distributions pursuant to the terms of the
applicable Supplement and for all other purposes whatsoever, and (b) treat the
bearer of a Bearer Certificate or Coupon as the owner of such Bearer Certificate
or Coupon for the purpose of receiving distributions pursuant to the terms of
the applicable Supplement and for all other purposes whatsoever; and, in any
such case, neither the Trustee, the Paying Agent, the Transfer Agent, the
Registrar, any Transferor, the Servicer nor any agent of any of them shall be
affected by any notice to the contrary. Notwithstanding the foregoing, in
determining whether the Holders of the requisite Investor Certificates have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Certificates owned by any Transferor, the Servicer, any other Holder
of a Transferor Certificate or any Affiliate thereof, shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Certificates which the Trustee knows
to be so owned shall be so disregarded. Certificates so owned which have been
pledged in good faith shall not be disregarded and may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Certificates and that the pledgee
is not the Transferor, the Servicer, any other Holder of a Transferor
Certificate or any Affiliate thereof. None of the Transferor, the Servicer, the
Trustee, the Registrar or the Paying Agent will have any responsibility or
liability for any of the records relating to or on account of beneficial
ownership in Book-Entry Certificates or for maintaining, supervising or
reviewing records relating thereto.
Section 6.07. Appointment of Paying Agent. The Paying Agent
shall make distributions to Investor Certificateholders from the Collection
Account or applicable Series Account pursuant to the provisions of the
applicable Supplement and shall report the amounts of such distributions to the
Trustee. Any Paying Agent shall have the revocable power to withdraw funds from
the Collection Account or applicable Series Account for the purpose of making
the distributions referred to above. The Trustee may revoke such power and
remove the Paying Agent if the Trustee determines in its sole discretion that
the Paying Agent shall have failed to perform its obligations under this
Agreement or any Supplement in any material respect. The Paying Agent shall
initially be the Trustee and any co-paying agent chosen by the Transferors and
acceptable to the Trustee, including, if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such exchange so requires, a
co-paying agent in Luxembourg or another Western European city. In the event
that any Paying Agent shall resign, the Trustee shall appoint a successor to act
as Paying Agent. The Trustee shall act as Paying Agent until a successor is
appointed. The Trustee shall cause each successor or additional Paying Agent to
execute and deliver to the Trustee an instrument in which such successor or
additional Paying Agent shall agree with the Trustee that it will hold all sums,
if any, held by it for payment to the Investor Certificateholders in trust for
the benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Investor Certificateholders. The Paying Agent shall return
all unclaimed funds to the Trustee and upon removal shall also return all funds
in its possession to the Trustee. The provisions of Sections 11.01, 11.02, 11.03
and 11.05 shall apply to the Trustee also in its role as Paying Agent, for so
long as the Trustee shall act as Paying Agent. Any reference in this Agreement
to the Paying Agent shall include any co-paying agent unless the context
requires otherwise.
Section 6.08. Access to List of Registered Certificateholders'
Names and Addresses. The Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Servicer or the Paying Agent, within five
Business Days after receipt by the Trustee of a request therefor, a list in such
form as the Servicer or the Paying Agent may reasonably require, of the names
and addresses of the Registered Certificateholders. If any Holder or group of
Holders of Investor Certificates of any Series or all outstanding Series, as the
case may be, evidencing not less than 10% of the aggregate unpaid principal
amount of such Series or all outstanding Series, as applicable (the
"Applicants"), apply to the Trustee, and such application states that the
Applicants desire to communicate with other Investor
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Certificateholders with respect to their rights under this Agreement or any
Supplement or under the Investor Certificates and is accompanied by a copy of
the communication which such Applicants propose to transmit, then the Trustee,
after having been adequately indemnified by such Applicants for its costs and
expenses, shall afford or shall cause the Transfer Agent and Registrar to afford
such Applicants access during normal business hours to the most recent list of
Registered Certificateholders of such Series or all outstanding Series, as
applicable, held by the Trustee, within five Business Days after the receipt of
such application. Such list shall be as of a date no more than 45 days prior to
the date of receipt of such Applicants' request.
With respect to any Series of Registered Certificates, every
Registered Certificateholder, by receiving and holding a Registered Certificate,
agrees with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, nor any of their respective agents, shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Registered Certificateholders hereunder, regardless of the sources from
which such information was derived.
Section 6.09. Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents
with respect to the Certificates which shall be authorized to act on behalf of
the Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and certificate of authentication executed on behalf of
the Trustee by an authenticating agent. Each authenticating agent must be
acceptable to the Transferors and the Servicer.
(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any power or any further act on the part of
the Trustee or such authenticating agent. An authenticating agent may at any
time resign by giving notice of resignation to the Trustee and to the
Transferor. The Trustee may at any time terminate the agency of an
authenticating agent by giving notice of termination to such authenticating
agent and to the Transferor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time an authenticating agent shall cease
to be acceptable to the Trustee or the Transferor, the Trustee promptly may
appoint a successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Trustee and the Transferor. The
Transferors agree to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section. The provisions of
Sections 11.01, 11.02 and 11.03 shall be applicable to any authenticating agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
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This is one of the Certificates described in the Pooling and
Servicing Agreement.
----------------------------
----------------------------
as Authenticating Agent
for the Trustee,
By _________________________
Authorized Signatory
Section 6.10. Book-Entry Certificates. Unless otherwise
specified in the related Supplement for any Series or Class, the Investor
Certificates, upon original issuance, shall be issued in the form of one or more
master Investor Certificates representing the Book-Entry Certificates, to be
delivered to the Clearing Agency, by, or on behalf of, the Transferor. The
Investor Certificates shall initially be registered on the Certificate Register
in the name of the Clearing Agency or its nominee, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Investor Certificates, except as provided in Section 6.12. Unless and
until definitive, fully registered Investor Certificates ("Definitive
Certificates") have been issued to the applicable Certificate Owners pursuant to
Section 6.12 or as otherwise specified in any such Supplement:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Transferor, the Servicer and the Trustee may deal with
the Clearing Agency and the Clearing Agency Participants for all
purposes (including the making of distributions) as the authorized
representatives of the respective Certificate Owners;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control; and
(d) the rights of the respective Certificate Owners shall be
exercised only through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until Definitive Certificates are issued pursuant
to Section 6.12, the Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the related Investor
Certificates to such Clearing Agency Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Investor
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction or consent may be
given by Certificate Owners (acting through the Clearing Agency and the Clearing
Agency Participants) owning Investor Certificates evidencing the requisite
percentage of principal amount of Investor Certificates.
Section 6.11. Notices to Clearing Agency. Whenever any notice
or other communication is required to be given to Investor Certificateholders of
any Series or Class with respect to which Book- Entry Certificates have been
issued, unless and until Definitive Certificates shall have been issued to the
related Certificate Owners, the Trustee shall give all such notices and
communications to the applicable Clearing Agency.
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Section 6.12. Definitive Certificates. If Book-Entry
Certificates have been issued with respect to any Series or Class and (a) the
Transferors advise the Trustee that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities under the Depository Agreement
with respect to such Series or Class and the Trustee or the Transferors are
unable to locate a qualified successor, (b) the Transferors, at their option,
advise the Trustee that they elect to terminate the book-entry system with
respect to such Series or Class through the Clearing Agency or (c) after the
occurrence of a Servicer Default, Certificate Owners of such Series or Class
evidencing not less than 50% of the aggregate unpaid principal amount of such
Series or Class advise the Trustee and the Clearing Agency through the Clearing
Agency Participants that the continuation of a book-entry system with respect to
the Investor Certificates of such Series or Class through the Clearing Agency is
no longer in the best interests of the Certificate Owners with respect to such
Certificates, then the Trustee shall notify all Certificate Owners of such
Certificates, through the Clearing Agency, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of any such Certificates by
the Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall authenticate and deliver such
Definitive Certificates. Neither any Transferor nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Investor Certificateholders hereunder.
Section 6.13. Global Certificate; Exchange Date.
(a) If specified in the related Supplement for any Series or
Class, the Investor Certificates for such Series or Class will initially be
issued in the form of a single temporary global Certificate (the "Global
Certificate") in bearer form, without interest coupons, in the denomination of
the entire aggregate principal amount of such Series or Class and substantially
in the form set forth in the exhibit with respect thereto attached to the
related Supplement. The Global Certificate will be executed by the Transferors
and authenticated by the Trustee upon the same conditions, in substantially the
same manner and with the same effect as the Definitive Certificates. The Global
Certificate may be exchanged as described below for Bearer or Registered
Certificates in definitive form (the "Definitive Euro-Certificates").
(b) The Manager shall, upon its determination of the date of
completion of the distribution of the Investor Certificates of such Series or
Class, so advise the Trustee, the Transferor, the Depositaries, and each Foreign
Clearing Agency forthwith. Without unnecessary delay, but in any event not prior
to the Exchange Date, the Transferors will execute and deliver to the Trustee at
its London office or its designated agent outside the United States definitive
Bearer Certificates in an aggregate principal amount equal to the entire
aggregate principal amount of such Series or Class. All Bearer Certificates so
issued and delivered will have Coupons attached. The Global Certificate may be
exchanged for an equal aggregate principal amount of Definitive
Euro-Certificates only on or after the Exchange Date. An institutional investor
that is a U.S. Person may exchange the portion of the Global Certificate
beneficially owned by it only for an equal aggregate principal amount of
Registered Certificates bearing the applicable legend set forth in the form of
Registered Certificates attached to the related Supplement and having a minimum
denomination of $500,000, which may be in temporary form if the Transferors so
elect. The Transferors may elect to waive the $500,000 minimum denomination
requirement. Upon any demand for exchange for Definitive Euro-Certificates in
accordance with this paragraph, the Transferors shall cause the Trustee to
authenticate and deliver the Definitive Euro-Certificates to the Holder (x)
outside the United States, in the case of Bearer Certificates, and (y) according
to the instructions of the Holder, in the case of Registered Certificates, but
in either case only
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upon presentation to the Trustee of a written statement substantially in the
form of Exhibit F-1 with respect to the Global Certificate or portion thereof
being exchanged, signed by a Foreign Clearing Agency and dated on the Exchange
Date or a subsequent date, to the effect that it has received in writing or by
tested telex a certification substantially in the form of (i) in the case of
beneficial ownership of the Global Certificate or a portion thereof being
exchanged by a United States institutional investor pursuant to the second
preceding sentence, the certificate in the form of Exhibit F-2 signed by the
Manager which sold the relevant Certificates or (ii) in all other cases, the
certificate in the form of Exhibit F-3, the certificate referred to in this
clause (ii) being dated on the earlier of the first actual payment of interest
in respect of such Certificates and the date of the delivery of such Certificate
in definitive form. Upon receipt of such certification, the Trustee shall cause
the Global Certificate to be endorsed in accordance with paragraph (d) below.
Any exchange as provided in this Section shall be made free of charge to the
Holders and the beneficial owners of the Global Certificate and to the
beneficial owners of the Definitive Euro-Certificates issued in exchange, except
that a person receiving Definitive Euro-Certificates must bear the cost of
insurance, postage, transportation and the like in the event that such person
does not receive such Definitive Euro-Certificates in person at the offices of a
Foreign Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency
of any written statement referred to above may be relied upon by the Transferors
and the Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its principal amount by an amount equal to the aggregate principal
amount of such Definitive Euro-Certificate or Certificates. Until so exchanged
in full, such Global Certificate shall in all respects be entitled to the same
benefits under this Agreement as Definitive Euro-Certificates authenticated and
delivered hereunder except that the beneficial owners of such Global Certificate
shall not be entitled to receive payments of interest on the Certificates until
they have exchanged their beneficial interests in such Global Certificate for
Definitive Euro-Certificates.
Section 6.14. Meetings of Certificateholders.
(a) If at the time any Bearer Certificates are issued and
outstanding with respect to any Series or Class to which any meeting described
below relates, the Servicer or the Trustee may at any time call a meeting of
Investor Certificateholders of any Series or Class or of all Series, to be held
at such time and at such place as the Servicer or the Trustee, as the case may
be, shall determine, for the purpose of approving a modification of or amendment
to, or obtaining a waiver of any covenant or condition set forth in, this
Agreement, any Supplement or the Investor Certificates or of taking any other
action permitted to be taken by Investor Certificateholders hereunder or under
any Supplement or any Receivables Purchase Agreement. Notice of any meeting of
Investor Certificateholders, setting forth the time and place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
given in accordance with Section 13.05, the first mailing and publication to be
not less than 20 nor more than 180 days prior to the date fixed for the meeting.
To be entitled to vote at any meeting of Investor Certificateholders a Person
shall be (i) a Holder of one or more Investor Certificates of the applicable
Series or Class or (ii) a person appointed by an instrument in writing as proxy
by the Holder of one or more such Investor Certificates. The only persons who
shall be entitled to be present or to speak at any meeting of Investor
Certificateholders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Transferor, the Servicer and the
Trustee and their respec- tive counsel.
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(b) At a meeting of Investor Certificateholders, persons
entitled to vote Investor Certificates evidencing a majority of the aggregate
unpaid principal amount of the applicable Series or Class or all outstanding
Series, as the case may be, shall constitute a quorum. No business shall be
transacted in the absence of a quorum, unless a quorum is present when the
meeting is called to order. In the absence of a quorum at any such meeting, the
meeting may be adjourned for a period of not less than 10 days; in the absence
of a quorum at any such meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days; at the reconvening of any meeting further
adjourned for lack of a quorum, the persons entitled to vote Investor
Certificates evidencing at least 25% of the aggregate unpaid principal amount of
the applicable Series or Class or all outstanding Series, as the case may be,
shall constitute a quorum for the taking of any action set forth in the notice
of the original meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided above except that such notice must be given not less
than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage of the aggregate principal amount of the outstanding
applicable Investor Certificates which shall constitute a quorum.
(c) Any Investor Certificateholder who has executed an
instrument in writing appointing a person as proxy shall be deemed to be present
for the purposes of determining a quorum and be deemed to have voted; provided
that such Investor Certificateholder shall be considered as present or voting
only with respect to the matters covered by such instrument in writing. Subject
to the provisions of Section 13.01, any resolution passed or decision taken at
any meeting of Investor Certificateholders duly held in accordance with this
Section shall be binding on all Investor Certificateholders whether or not
present or represented at the meeting.
(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to the
Servicer, executed by any bank, trust company or recognized securities dealer,
wherever situated, satisfactory to the Servicer. Each such certificate shall be
dated and shall state that on the date thereof a Bearer Certificate bearing a
specified serial number was deposited with or exhibited to such bank, trust
company or recognized securities dealer by the Person named in such certificate.
Any such certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the Person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
Person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by having
the signature of the Person executing the proxy guaranteed by any bank, trust
company or recognized securities dealer satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the
meeting. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Holders of Investor Certificates evidencing a majority of
the aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of any
Investor Certificate challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote except as an Investor Certificateholder or proxy. Any meeting of
Investor Certificateholders duly called at which a quorum is present may be
adjourned from time to time, and the meeting may be held as so adjourned without
further notice.
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(f) The vote upon any resolution submitted to any meeting of
Investor Certificateholders shall be by written ballot on which shall be
subscribed the signatures of Investor Certificateholders or proxies and on which
shall be inscribed the serial number or numbers of the Investor Certificates
held or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
Section 6.15. Uncertificated Classes. Notwithstanding anything
to the contrary contained in this Article VI or in Article XII, unless otherwise
specified in any Supplement any provisions contained in this Article VI and in
Article XII relating to the registration, form, execution, authentication,
delivery, presentation, cancellation and surrender of Certificates shall not be
applicable to any uncertificated Certificates.
[END OF ARTICLE VI]
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ARTICLE VII
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 7.01. Liability of each Transferor. Each Transferor
shall be severally, and not jointly, liable for all obligations, covenants,
representations and warranties of such Transferor arising under or related to
this Agreement or any Supplement. Except as provided in the preceding sentence,
each Transferor shall be liable only to the extent of the obligations
specifically undertaken by it in its capacity as a Transferor.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor. (a) No Transferor shall dissolve, liquidate,
consolidate with or merge into any other corporation or convey, transfer or sell
its properties and assets substantially as an entirety to any Person (in each
case, a "Surviving Entity") unless:
(i)(x) the Surviving Entity is a corporation organized and
existing under the laws of the United States of America or any State or
the District of Columbia and shall expressly assume, by agreement
supplemental hereto, executed and delivered to the Trustee (in form
reasonably satisfactory to the Trustee) the performance of every
covenant and obligation of such Transferor hereunder; and (y) such
Transferor has delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel to the effect that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply with this
Section 7.02, that such supplemental agreement is a valid and binding
obligation of the Surviving Entity enforceable against the Surviving
Entity in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship or other similar laws
affecting creditors' rights generally from time to time in effect and
except as such enforceability may be limited by general principles of
equity;
(ii) all UCC filings, if any, required to perfect the interest
of the Trustee, on behalf of the Trust, in the Receivables to be
conveyed by the Surviving Entity shall have been duly made and copies
thereof shall have been delivered to the Trustee;
(iii) the Trustee shall have received one or more Opinions of
Counsel to the effect that (i) under the UCC, the transfer of
Receivables by the Surviving Entity shall constitute either a sale of,
or the granting of a security interest in, such Receivables by the
Surviving Entity to the Trust, (ii) the condition specified in
paragraph (ii) shall have been satisfied, and (iii) if the Surviving
Entity shall be subject to the FDIA, the interest of the Trust in such
Receivables should not be subject to avoidance by the FDIC if the FDIC
were to become the receiver or conservator of the Surviving Entity; and
(iv) if the Surviving Entity shall not be eligible as a debtor
under Title 11 of the United States Code (the "Bankruptcy Code"), such
Transferor shall have delivered notice of such consolidation, merger,
conveyance or transfer to each Rating Agency or, if the Surviving
Entity shall be subject to the Bankruptcy Code, such Transferor shall
have delivered notice to each Rating Agency (with copies to the
Servicer and the Trustee) of such consolidation, merger, conveyance or
transfer and the Rating Agency Condition shall have been satisfied; and
(v) the Transferors shall have delivered to the Trustee and
each Rating Agency a Tax Opinion, dated the date of such consolidation,
merger, conveyance or transfer, with respect thereto.
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(b) The obligations of each Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferors
hereunder except in each case in accordance with the provisions of the foregoing
paragraph or Section 7.05.
Section 7.03. Limitations on Liability of each Transferor.
Subject to Section 7.01, neither any Transferor nor any of the directors,
officers, employees, incorporators or agents of any Transferor acting in such
capacities shall be under any liability to the Trust, the Trustee, the
Certificateholders, any Series Enhancer, any other Transferor or any other
Person for any action taken or for refraining from the taking of any action in
good faith in such capacities pursuant to this Agreement, it being expressly
understood that such liability is expressly waived and released as a condition
of, and consideration for, the execution of this Agreement and any Supplement
and the issuance of the Certificates; provided, however, that this provision
shall not protect any Transferor or any such person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Each Transferor and any director, officer,
employee or agent of such Transferor may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person (other than
such Transferor) respecting any matters arising hereunder.
Section 7.04. Liabilities. Notwithstanding any provision of
this Agreement (including, without limitation, Sections 7.03, 8.03, 8.04 and
13.07), by entering into this Agreement, each Transferor and any Holder of the
Original Transferor Certificate agrees to be liable, directly to the injured
party, for the entire amount of any losses, claims, damages or liabilities
(other than those incurred by a Certificateholder in the capacity of an investor
in the Certificates) arising out of or based on the arrangement created by this
Agreement or the actions of the Servicer taken pursuant hereto (to the extent
Trust Assets remaining after the Investor Certificateholders and Series
Enhancers have been paid in full are insufficient to pay such losses, claims,
damages or liabilities) as though this Agreement created a partnership under the
New York Uniform Partnership Act in which each Transferor and each such Holder
was a general partner. In the event of the appointment of a Successor Servicer,
the Successor Servicer will (from its own assets and not from the assets of the
Trust) indemnify and hold harmless each Transferor and each such Holder against
and from any losses, claims, damages or liabilities of such Person as described
in this Section arising from the actions or omissions of such Successor
Servicer.
Section 7.05. Assumption of a Transferor's Obligations.
Notwithstanding the provisions of Section 7.02, each Transferor may assign,
convey or transfer all of its right, title and interest in, to and under the
Receivables, the Accounts and the Participation Interests in which it has an
interest and/or its interest in the Transferor Certificates (collectively, the
"Assigned Assets"), together with all servicing functions and other obligations,
if any, under this Agreement or relating to the transactions contemplated hereby
(collectively, the "Assumed Obligations"), to another entity (the "Assuming
Entity") which may be an entity that is not affiliated with such Transferor, and
such Transferor may assign, convey and transfer the Assigned Assets and the
Assumed Obligations to the Assuming Entity, without the consent or approval of
the holders of any Certificates, upon satisfaction of the following conditions:
(a) the Assuming Entity, such Transferor and the Trustee shall
have entered into a supplement to this Agreement or an assumption agreement (in
form and substance reasonably satisfactory to the Trustee) (either, the
"Assumption Agreement") providing for the Assuming Entity to assume the Assumed
Obligations, including the obligation under this Agreement to transfer the
Receivables arising under the Accounts and the Receivables arising under any
Additional Accounts to the Trust, and such Transferor shall have delivered to
the Trustee an Officer's Certificate and an Opinion of Counsel each stating that
such transfer and assumption comply with this Section 7.05, that such Assumption
Agreement is a valid and binding obligation of such Assuming Entity enforceable
against such Assuming Entity in
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accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other similar laws affecting creditors' rights generally from
time to time in effect and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity),
and that all conditions precedent herein provided for relating to such
transaction have been complied with;
(b) all UCC filings required to perfect the interest of the
Trustee, on behalf of the Trust, in the Receivables to be conveyed by the
Assuming Entity shall have been duly made and copies thereof shall have been
delivered to the Trustee;
(c) (i) if the Assuming Entity shall not be eligible to be a
debtor under the Bankruptcy Code, such Transferor shall have delivered notice of
such transfer and assumption to each Rating Agency or (ii) if the Assuming
Entity shall be eligible to be a debtor in a case under the Bankruptcy Code,
such Transferor shall have delivered copies of each such written notice to the
Servicer and the Trustee and the Rating Agency Condition shall have been
satisfied;
(d) the Trustee shall have received one or more Opinions of
Counsel to the effect that (i) the transfer of such Receivables by the Assuming
Entity shall constitute either a sale of, or the granting of a security interest
in, such Receivables by the Assuming Entity to the Trust, (ii) the condition
specified in paragraph (b) shall have been satisfied, and (iii) if the Assuming
Entity shall be subject to the FDIA, the interest of the Trust in such
Receivables should not be subject to avoidance by the FDIC if the FDIC were to
become the receiver or conservator of the Assuming Entity; and
(e) the Trustee shall have received a Tax Opinion.
Upon such transfer to and assumption by the Assuming Entity, such Transferor
shall surrender the Transferor Certificate evidencing its interest in the Trust
to the Transfer Agent and Registrar for registration of transfer and the
Transfer Agent and Registrar shall issue a new Transferor Certificate in the
name of the Assuming Entity. Notwithstanding such assumption, such Transferor
shall continue to be liable for all representations and warranties and covenants
made by it and all obligations performed or to be performed by it in its
capacity as Transferor prior to such transfer.
[END OF ARTICLE VII]
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ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.01. Liability of the Servicer. The Servicer shall be
liable under this Article only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey, transfer or sell its properties and assets
substantially as an entirety to any Person unless:
(a)(i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by
conveyance, transfer or sale the properties and assets of the Servicer
substantially as an entirety shall be, if the Servicer is not the
surviving entity, a corporation organized and existing under the laws
of the United States of America or any State or the District of
Columbia, and, if the Servicer is not the surviving entity, such
corporation shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the performance of every covenant and obligation of the
Servicer hereunder;
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or sale comply with this
Section and that all conditions precedent herein provided for relating
to such transaction have been complied with;
(iii) the Servicer shall have given the Rating Agencies
notice of such consolidation, merger or transfer of assets; and
(b) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be or shall be immediately thereafter an Eligible
Servicer.
Section 8.03. Limitation on Liability of the Servicer and
Others. Except as provided in Section 8.04 and Section 11.05, neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
in its capacity as Servicer shall be under any liability to the Trust, the
Trustee, the Certificateholders, any Series Enhancer or any other Person for any
action taken or for refraining from the taking of any action in good faith in
its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties as Servicer in accordance with this
Agreement and which in its reasonable judgment may involve it in any expense or
liability. The Servicer may, in its sole discretion, undertake any such legal
action which it may deem necessary or desirable for the benefit of the
Certificateholders with respect to this Agreement and the rights and duties of
the parties hereto and the interests of the Certificateholders hereunder.
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Section 8.04. Servicer Indemnification of the Trust and the
Trustee. The Servicer shall indemnify and hold harmless the Trust and the
Trustee from and against any loss, liability, expense, damage or injury arising
out of or relating to any claims, actions or proceedings brought or asserted by
third parties which are suffered or sustained by reason of (a) any acts or
omissions of the Servicer with respect to the Trust pursuant to this Agreement
or (b) the administration by the Trustee of the Trust (in the case of clause (a)
or (b), other than such as may arise from the negligence or wilful misconduct of
the Trustee or as may arise as a result of action taken by the Trustee at the
request of the Investor Certificateholder or any federal, state or local income
or franchise taxes (or any interest or penalties with respect thereto) required
to be paid by the Trustee or the Investor Certificateholder in connection
herewith to any taxing authority), including any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any action, proceeding or claim. Indemnification pursuant to
this Section shall not be payable from the Trust Assets, but shall be payable
only from the assets of the Servicer. The provisions of this Section 8.04 shall
survive termination of this Agreement and the resignation and removal of the
Trustee.
Section 8.05. Resignation of the Servicer. The Servicer shall
not resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, of the obligations and duties of the Servicer hereunder by any
of its Affiliates or by any other entity the appointment of which shall have
satisfied the Rating Agency Condition and, in either case, qualifies as an
Eligible Servicer. Any determination permitting the resignation of the Servicer
shall be evidenced as to clause (a) above by an Opinion of Counsel to such
effect delivered to the Trustee. No resignation shall become effective until the
Trustee or a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 10.02 hereof. If within
120 days of the date of the determination that the Servicer may no longer act as
Servicer under clause (a) above the Trustee is unable to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer. Notwithstanding the
foregoing, the Trustee shall, if it is legally unable so to act, petition a
court of competent jurisdiction to appoint any established institution
qualifying as an Eligible Servicer as the Successor Servicer hereunder. The
Trustee shall give prompt notice to each Rating Agency and each Series Enhancer
upon the appointment of a Successor Servicer. Notwithstanding anything in this
Agreement to the contrary, TRS or Centurion Bank, as Servicer, may assign part
or all of its obligations and duties as Servicer under this Agreement to an
Affiliate of TRS so long as TRS or Centurion Bank, as the case may be, shall
have fully guaranteed the performance of such obligations and duties under this
Agreement and such assignment will not constitute a resignation.
Section 8.06. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures or such procedures as
the Servicer may deem reasonably necessary and (d) at reasonably accessible
offices in the continental United States designated by the Servicer. Nothing in
this Section shall derogate from the obligation of the Transferor, the Trustee
and the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
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Section 8.07. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate all or part of its duties
hereunder with respect to the Accounts and the Receivables to any Person that
agrees to conduct such duties in accordance with the applicable Credit
Guidelines and this Agreement. Such delegation shall not relieve the Servicer of
its liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.05.
Section 8.08. Examination of Records. Each Transferor and the
Servicer shall indicate generally in their computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Trustee, on
behalf of the Trust, pursuant to this Agreement for the benefit of the
Certificateholders. Each Transferor and the Servicer shall, prior to the sale or
transfer to a third party of any receivable held in its custody, examine its
computer records and other records to determine that such receivable is not, and
does not include, a Receivable.
[END OF ARTICLE VIII]
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ARTICLE IX
INSOLVENCY EVENTS
Section 9.01. Rights upon the Occurrence of an Insolvency
Event.
(a) If any Transferor or any Holder of the Original Transferor
Certificate shall consent to or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver or liquidator in any bankruptcy
proceeding or other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to such Transferor or such
Holder of the Original Transferor Certificate of or relating to all or
substantially all of such Person's respective property, or a decree or order of
a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a bankruptcy trustee or conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up, insolvency,
bankruptcy, reorganization, conservatorship, receivership or liquidation of such
Person's respective affairs, shall have been entered against such Transferor or
any Holder of the Original Transferor Certificate; or such Transferor or such
Holder of the Original Transferor Certificate shall admit in writing its
respective inability, or shall be unable, to pay its debts generally as they
become due, or file a petition to take advantage of any applicable bankruptcy
insolvency or reorganization, receivership or conservatorship statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations; or such Transferor or Holder of the Transferor Certificate
shall consent to, or fail to object to, the filing of any such petition, or, if
such Transferor or Holder of the Original Transferor Certificate shall so object
to the filing of any such petition, such petition shall not have been dismissed
within 60 days of the filing thereof (any such act or occurrence being an
"Insolvency Event"); then each Transferor shall on the day any such Insolvency
Event occurs (the "Appointment Date"), immediately cease to transfer Principal
Receivables to the Trust and shall promptly give notice to the Trustee thereof.
Notwithstanding any cessation of the transfer to the Trust of additional
Principal Receivables, Principal Receivables transferred to the Trust prior to
the occurrence of such Insolvency Event, Collections in respect of such
Principal Receivables and Finance Charge Receivables (whenever created) accrued
in respect of such Principal Receivables shall continue to be a part of the
Trust Assets. Upon the Appointment Date, this Agreement and the Trust shall
terminate, subject to the liquidation and dissolution procedures described
below. Within 15 days of the Appointment Date, the Trustee shall (i) publish a
notice in an Authorized Newspaper that an Insolvency Event has occurred, that
the Trust has terminated and that the Trustee intends to sell, dispose of or
otherwise liquidate the Receivables on commercially reasonable terms and in a
commercially reasonable manner and (ii) give notice to Certificateholders
describing the provisions of this Section and requesting instructions from such
Holders. Unless the Trustee shall have received instructions within 60 days from
the date notice pursuant to clause (i) above is first published from (x) Holders
of Investor Certificates evidencing more than 50% of the aggregate unpaid
principal amount of each Series or, with respect to any Series with two or more
Classes, of each Class, (y) each Transferor and other Holder of the Original
Transferor Certificate (other than a Transferor or Holder that is the subject of
such Insolvency Event), including any Additional Transferor and any Holder of a
Supplemental Certificate and any permitted assignee or successor under Section
7.02, and (z) any other Person specified in any related Supplement to the effect
that such Persons disapprove of the liquidation of the Receivables and wish to
reconstitute the Trust pursuant to the terms of this Agreement (as amended in
connection with such reconstitution), the Trustee shall promptly sell, dispose
of or otherwise liquidate the Receivables in a commercially reasonable manner
and on commercially reasonable terms, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator of a Transferor that the terms and manner of
any proposed sale, disposition or liquidation are commercially reasonable. The
provisions of this
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Section 9.01 and any provisions in a Supplement regarding an Insolvency Event
shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of
the Receivables and any Participation Interests pursuant to paragraph (a)
("Insolvency Proceeds") shall be immediately deposited in the Collection
Account. The Trustee shall determine conclusively the amount of the Insolvency
Proceeds which are deemed to be Finance Charge Receivables and Principal
Receivables, allocating Insolvency Proceeds to Finance Charge Receivables and
Principal Receivables in the same proportion as the amount of Finance Charge
Receivables and Principal Receivables bear to one another on the prior
Determination Date. The Insolvency Proceeds shall be allocated and distributed
to Investor Certificateholders in accordance with the terms of each Supplement.
[END OF ARTICLE IX]
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ARTICLE X
SERVICER DEFAULTS
Section 10.01. Servicer Defaults. If any one of the
following events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or to give notice to the Trustee to make such
payment, transfer or deposit on or before the date occurring five Business Days
after the date such payment, transfer or deposit or such instruction or notice
is required to be made or given, as the case may be, under the terms of this
Agreement or any Supplement; provided, however, that any such failure caused by
a nonwillful act of the Servicer shall not constitute a Servicer Default if the
Servicer promptly remedies such failure within five Business Days after
receiving notice of such failure or otherwise becoming aware of such failure;
(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 set forth in this Agreement or any Supplement which has an Adverse
Effect and which continues unremedied for a period of 60 days after the date on
which notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee, or to the Servicer and the Trustee by
Holders of Investor Certificates evidencing not less than 50% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect to any
such failure that does not relate to all Series, 50% of the aggregate unpaid
principal amount of all Series adversely affected by such failure); or the
Servicer shall assign or delegate its duties under this Agreement, except as
permitted by Sections 8.02 and 8.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or any Supplement or in any certificate delivered
pursuant to this Agreement or any Supplement shall prove to have been incorrect
when made, which has an Adverse Effect on the rights of the Investor
Certificateholders of any Series (which determination shall be made without
regard to whether funds are then available pursuant to any Series Enhancement)
and which Adverse Effect continues for a period of 60 days after the date on
which notice thereof, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Investor Certificates evidencing not less than 50% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect to any
such representation, warranty or certification that does not relate to all
Series, 50% of the aggregate unpaid principal amount of all Series adversely
affected by such representation, warranty or certification); or
(d) the Servicer shall consent to the appointment of a
bankruptcy trustee or conservator or receiver or liquidator in any bankruptcy
proceeding or other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all its property, or a decree or order of a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a bankruptcy trustee or a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or the Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations or
such Transferor or Holder of the Transferor Certificate shall consent to, or
fail to object to, the filing of any such petition, or, if such Transferor or
Holder of the Original Transferor Certificate shall so object to
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the filing of any such petition, such petition shall not have been dismissed
within 60 days of the filing thereof;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Trustee, or the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates, by notice then given to the Servicer (and to the
Trustee if given by the Investor Certificateholders) (a "Termination Notice"),
may terminate all but not less than all the rights and obligations of the
Servicer as Servicer under this Agreement; provided, however, if within 60 days
of receipt of a Termination Notice the Trustee does not receive any bids from
Eligible Servicers in accordance with subsection 10.02(c) to act as a Successor
Servicer and receives Officer's Certificates of the Transferors 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 Supplement. The Transferors shall notify the
Trustee prior to the Record Date for the Distribution Date of the purchase if
the Transferors are exercising such right of first refusal. If the Transferors
exercise such right of first refusal, the Transferors shall deposit the purchase
price into the Collection Account on such Distribution Date in immediately
available funds. The purchase price shall be allocated and distributed to
Investor Certificateholders in accordance with the terms of each Supplement.
After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer is appointed by the Trustee pursuant to
Section 10.02, all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Successor Servicer (a "Service Transfer");
and, without limitation, the Trustee is hereby authorized and empowered (upon
the failure of the Servicer to cooperate) to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such Service Transfer. The
Servicer agrees to cooperate with the Trustee and such Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer to
conduct servicing hereunder, including the transfer to such Successor Servicer
of all authority of the Servicer to service the Receivables provided for under
this Agreement, including all authority over all Collections which shall on the
date of transfer be held by the Servicer for deposit, or which have been
deposited by the Servicer, in the Collection Account, or which shall thereafter
be received with respect to the Receivables, and in assisting the Successor
Servicer. The Servicer shall within 20 Business Days transfer its electronic
records relating to the Receivables to the Successor Servicer in such electronic
form as the Successor Servicer may reasonably request and shall promptly
transfer to the Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the Receivables in the manner
and at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section shall require the Servicer to disclose
to the Successor Servicer information of any kind which the Servicer deems to be
confidential, the Successor Servicer shall be required to enter into such
licensing and confidentiality agreements as the Servicer shall deem reasonably
necessary to protect its interests.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in paragraph (a) above for a period of 10 Business Days
after the applicable grace period or under paragraph (b) or (c) above for a
period of 60 Business Days after the applicable grace period, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of
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declared or undeclared war, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes.
The preceding sentence shall not relieve the Servicer from using all
commercially reasonable efforts to perform its obligations in a timely manner in
accordance with the terms of this Agreement and the Servicer shall provide the
Trustee, each Transferor and any Series Enhancer with an Officer's Certificate
giving prompt notice of such failure or delay by it, together with a description
of its efforts so to perform its obligations.
Section 10.02. Trustee To Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.01, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee or until a date
mutually agreed upon by the Servicer and Trustee. The Trustee shall as promptly
as possible after the giving of a Termination Notice appoint an Eligible
Servicer as a successor servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee and the Transferors. The Transferors shall have the
right to nominate to the Trustee the name of a potential successor servicer
which nominee shall be selected by the Trustee as the Successor Servicer. In the
event that a Successor Servicer has not been appointed or has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the Trustee
without further action shall automatically be appointed the Successor Servicer.
The Trustee may delegate any of its servicing obligations to an Affiliate or
agent in accordance with subsection 3.01(b) and Section 8.07. Notwithstanding
the foregoing, the Trustee shall, if it is legally unable so to act, petition a
court of competent jurisdiction to appoint any established institution
qualifying as an Eligible Servicer as the Successor Servicer hereunder. The
Trustee shall give prompt notice to each Rating Agency and each Series Enhancer
upon the appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer.
(c) In connection with any Termination Notice, the Trustee
will review any bids which it obtains from Eligible Servicers and shall be
permitted to appoint any Eligible Servicer submitting such a bid as a Successor
Servicer or, as provided in subsection 10.02(a), the Successor Servicer
nominated by the Transferors for servicing compensation not in excess of the
aggregate Servicing Fees for all Series plus the sum of the amounts with respect
to each Series and with respect to each Distribution Date equal to any
Collections of Finance Charge Receivables allocable to Investor
Certificateholders of such Series which are payable to the Holders of the
Transferor Certificates after payment of all amounts owing to the Investor
Certificateholders of such Series with respect to such Distribution Date or
required to be deposited in the applicable Series Accounts with respect to such
Distribution Date and any amounts required to be paid to any Series Enhancer for
such Series with respect to such Distribution Date pursuant to the terms of any
Enhancement Agreement; provided, however, that the Holders of the Transferor
Certificates shall be responsible for payment of their portion of such aggregate
Servicing Fees and all other such amounts in excess of such aggregate Servicing
Fees. Each holder of any of the Transferor's Certificates agrees that, if TRS
(or any Successor Servicer) is terminated as Servicer hereunder, the portion of
the Collections in respect of Finance Charge Receivables that the Transferors
are entitled to receive pursuant to this Agreement or any Supplement shall be
reduced by an amount sufficient to pay the Transferors' share of the
compensation of the Successor Servicer.
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(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.01, and shall pass to and be vested in the
Transferors and, without limitation, the Transferors are hereby authorized and
empowered to execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Successor Servicer agrees to
cooperate with the Transferors in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing of
the Receivables. The Successor Servicer shall transfer its electronic records
relating to the Receivables to Centurion Bank or its designee in such electronic
form as it may reasonably request and shall transfer all other records,
correspondence and documents to it in the manner and at such times as it shall
reasonably request. To the extent that compliance with this Section shall
require the Successor Servicer to disclose to Centurion Bank information of any
kind which the Successor Servicer deems to be confidential, Centurion Bank shall
be required to enter into such customary licensing and confidentiality
agreements as the Successor Servicer shall deem necessary to protect its
interests.
Section 10.03. Notification to Certificateholders. Within five
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee, each Rating Agency and each
Series Enhancer and the Trustee shall give notice to the Investor
Certificateholders. Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Trustee shall give prompt notice thereof to the
Investor Certificateholders.
[END OF ARTICLE X]
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ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of a Servicer Default
of which a Responsible Officer of the Trustee has actual knowledge and after the
curing of all Servicer Defaults which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this Agreement
and no implied duties or covenants by the Trustee shall be read into this
Agreement. If a Servicer Default to the actual knowledge of a Responsible
Officer of the Trustee has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) In the absence of bad faith or recklessness on its part,
the Trustee may conclusively rely, as to the truth of the statements and
correctness of the opinions expressed therein, upon all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee pursuant to this Agreement. The Trustee,
upon receipt of all resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to the Trustee which are
specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they substantially conform to
the requirements of this Agreement. The Trustee shall give prompt notice to each
Transferor and the Servicer of any material lack of conformity of any such
instrument to the applicable requirements of this Agreement discovered by the
Trustee which would entitle a specified percentage of Investor
Certificateholders to take any action pursuant to this Agreement.
If, within five Business Days, a Transferor or the Servicer
shall not have cured such material lack of conformity, the Trustee shall provide
notice thereof to the Investor Certificateholders.
(c) Subject to subsection 11.01(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing more than 50% of the aggregate unpaid principal amount of
all Investor Certificates (or, with respect to any such action that
does not relate to all Series, 50% of the aggregate unpaid principal
amount of the Investor Certificates of all Series to which such action
relates) relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in subsection 10.01(a) or (b) nor with knowledge of a
Pay-Out Event or Reinvestment Event unless a Responsible Officer of the
Trustee obtains actual knowledge of such failure or the Trustee
receives notice of such failure or event
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from the Servicer or any Holders of Investor Certificates evidencing
not less than 10% of the aggregate unpaid principal amount of all
Investor Certificates (or, with respect to any such failure that does
not relate to all Series, 10% of the aggregate unpaid principal amount
of the Investors Certificates of all Series to which such failure
relates).
(d) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement,
the Trustee shall take no actions reasonably likely to impair the interests of
the Trust in any Receivable now existing or hereafter created or to impair the
value of any Receivable now existing or hereafter created.
(f) Except as expressly provided in this Agreement, the
Trustee shall have no power to vary the corpus of the Trust including by (i)
accepting any substitute obligation for a Receivable initially assigned to the
Trust under Section 2.01 or 2.09, (ii) adding any other investment, obligation
or security to the Trust or (iii) withdrawing from the Trust any Receivables.
(g) In the event that the Paying Agent or the Transfer Agent
and Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement, the
Trustee shall be obligated promptly upon its knowledge thereof to perform such
obligation, duty or agreement in the manner so required.
Section 11.02. Certain Matters Affecting the Trustee. Except
as otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accord with, any resolution, certificate,
statement, instrument, Officer's Certificate, opinion, report, notice, request,
consent, order, appraisal, approval, bond or other paper or document believed by
it to be genuine and to have been signed or presented to it pursuant to this
Agreement by the proper party or parties;
(b) the Trustee may consult with counsel of its choice and any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request, order
or direction of any of the Certificateholders, pursuant to the provisions of
this Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured or waived) to
exercise such of the rights and powers
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vested in it by this Agreement, and to use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs;
(d) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
approval, bond or other paper or document believed by it to be genuine, unless
requested in writing so to do by Holders of Investor Certificates evidencing
more than 25% of the aggregate unpaid principal amount of all Investor
Certificates (or, with respect to any such matters that do not relate to all
Series, 25% of the aggregate unpaid principal amount of the Investor
Certificates of all Series to which such matters relate); provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense, or
liability as a condition to so proceed;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;
(g) except as may be required by subsection 11.01(a), the
Trustee shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the
Transferors with their representations and warranties or for any other purpose;
(h) whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 11.02;
(i) the Trustee shall have no liability with respect to the
acts or omissions of the Servicer (except and to the extent the Servicer is the
Trustee), including, acts or omissions in connection with the servicing,
management or administration of Receivables; calculations made by the Servicer
whether or not reported to the Trustee; and deposits into or withdrawals from
any accounts or funds established pursuant to the terms of this Agreement; and
(j) in the event that the Trustee is also acting as Paying
Agent or Transfer Agent and Registrar hereunder, the rights and protections
afforded to the Trustee pursuant to this Article XI shall also be afforded to
such Paying Agent, Transfer Agent and Registrar.
Section 11.03. Trustee Not Liable for Recitals in
Certificates. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or any Supplement or of the Certificates (other than the certificate
of authentication on the Certificates) or of any Receivable or related document
or as to the perfection or priority of any security interest therein or as to
the efficacy of the Trust. The Trustee shall not be accountable for the use or
application by the Transferors of any of the
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Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferors in respect of the Receivables
or deposited in or withdrawn from the Collection Account, any Series Accounts or
any other accounts hereafter established to effectuate the transactions
contemplated by this Agreement and in accordance with the terms of this
Agreement.
Section 11.04. Trustee May Own Certificates. Subject to any
restrictions that may otherwise be imposed by Section 406 of ERISA or Section
4975(e) of the Code, the Trustee in its individual or any other capacity may
become the owner or pledgee of Investor Certificates with the same rights as it
would have if it were not the Trustee.
Section 11.05. The Servicer To Pay Trustee's Fees and
Expenses. The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to receive, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trust hereby created and in the exercise and performance
of any of the powers and duties hereunder of the Trustee, and the Servicer shall
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement or any Enhancement Agreement (including
the reasonable fees and expenses of its agents, any co-trustee and counsel)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith and except as provided in the following sentence. If the
Trustee is appointed Successor Servicer pursuant to Section 10.02, the
provisions of this Section shall not apply to expenses, disbursements and
advances made or incurred by the Trustee in its capacity as Successor Servicer,
which shall be paid out of the Servicing Fee. The Servicer's covenant to pay the
expenses, disbursements and advances provided for in this Section shall survive
the termination of the Trust and the resignation or removal of the Trustee.
Section 11.06. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times be a corporation organized and doing
business under the laws of the United States or any state thereof authorized
under such laws to exercise corporate trust powers, have a net worth of at least
$50,000,000, be subject to supervision or examination by Federal or state
authority and maintain any credit or deposit rating required by any Rating
Agency (which shall be Baa3, in the case of Moody's unless otherwise notified,
and BBB- in the case of Standard & Poor's unless otherwise notified) or any
higher credit or deposit rating required in connection with the issuance of a
particular Series. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then, for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 11.07.
Section 11.07. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from
the trust hereby created by giving written notice thereof to the Transferors and
the Servicer. Upon receiving such notice of resignation, the Transferors shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
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(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or if a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Servicer may
remove the Trustee and promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment
of successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08.
Section 11.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section
11.07 shall execute, acknowledge and deliver to the Transferor, to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver, at the expense
of the Servicer, to the successor trustee all documents or copies thereof and
statements held by it hereunder; and the Transferors and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided
in this Section unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 11.06.
(c) Notwithstanding any other provisions herein, the
appointment of a successor trustee shall not be effective unless the Rating
Agency Condition shall have been satisfied.
(d) Upon acceptance of appointment by a successor trustee as
provided in this Section, such successor trustee shall provide notice of such
succession hereunder to all Certificateholders and the Servicer shall provide
such notice to each Rating Agency and each Series Enhancer.
Section 11.09. Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 11.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any Requirements of Law of any jurisdiction
in which any part of the Trust may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any
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part of the Trust, and to vest in such Person or Persons, in such capacity and
for the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 11.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 11.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act) except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as Successor Servicer) the Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 11.11. Tax Returns. In the event the Trust shall be
required to file tax returns, the Servicer shall prepare or shall cause to be
prepared such tax returns and shall provide such tax returns to the Trustee for
signature at least five days before such tax returns are due to be filed. The
Servicer, in accordance with the terms of each Supplement, shall also prepare or
shall cause to be prepared all tax information required by law to be distributed
to Investor Certificateholders and shall deliver such information to the Trustee
at least five days prior to the date it is required by law to be distributed to
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Investor Certificateholders. The Trustee, upon request, will furnish the
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust, and
shall, upon request, execute such returns.
Section 11.12. Trustee May Enforce Claims Without Possession
of Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.13. Suits for Enforcement.
(a) If a Servicer Default shall occur and be continuing, the
Trustee, in its discretion may, subject to the provisions of Sections 11.01 and
11.14, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by suit, action or proceeding in equity
or at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Investor Certificates or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
Section 11.14. Rights of Certificateholders To Direct Trustee.
Except as otherwise provided in the applicable Supplement, holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates (or, with respect to any remedy, trust or power
that does not relate to all Series, 50% of the aggregate unpaid principal amount
of the Investor Certificates of all Series to which such remedy, trust or power
relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that, subject to
Section 11.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee after being advised by counsel determines that the
action so directed may not lawfully be taken, or a Responsible Officer or
Responsible Officers of the Trustee in good faith shall determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Investor Certificateholders not parties
to such direction; and provided further, that nothing in this Agreement shall
impair the right of the Trustee to take any action deemed proper by the Trustee
and which is not inconsistent with such direction of the Investor
Certificateholders.
Section 11.15. Representations and Warranties of Trustee.
The Trustee represents and warrants that:
(i) the Trustee is a banking corporation organized, existing
and in good standing under the laws of the State of New York;
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(ii) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement and each Supplement, and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement and each Supplement;
(iii) this Agreement and each Supplement has been duly
executed and delivered by the Trustee;
(iv) the Trustee satisfies the eligibility requirements
prescribed by Section 11.06; and
(v) the Trustee will not use any office, place of business,
agents or employees of the Trustee in the State of Florida to act for,
or on behalf of, the Trust or the Trustee (in its capacity as Trustee
of the Trust), except to the extent that the Trustee first provides an
opinion (at the sole expense of the Transferor) of counsel satisfactory
to the Servicer stating that any such activities proposed to be carried
on in Florida will not cause the Trust to be subject to any Florida
income, franchise or property (including intangibles) tax.
Section 11.16. Maintenance of Office or Agency. The Trustee
will maintain at its expense an office or agency (the "Corporate Trust Office")
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served in the State of New York. The Trustee maintains
its Corporate Trust Office at 101 Barclay Street, Floor 12 East, New York, New
York 10286, as such office and will give prompt notice to the Servicer and to
Investor Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
[END OF ARTICLE XI]
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ARTICLE XII
TERMINATION
Section 12.01. Termination of Trust. The Trust and the
respective obligations and responsibilities of the Transferors, the Servicer and
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Investor Certificateholders as hereinafter set forth) shall
terminate, except with respect to the duties described in Section 8.04 and
subsection 12.02(b), upon the earlier of (i) May 1, 2017, (ii) at the option of
the Transferors, the day following the Distribution Date on which the Invested
Amount for each Series is zero and (iii) the time provided in Section 9.01.
Section 12.02. Final Distribution.
(a) The Servicer shall give the Trustee at least 30 days'
prior notice of the Distribution Date on which the Investor Certificateholders
of any Series or Class may surrender their Investor Certificates for payment of
the final distribution on and cancellation of such Investor Certificates (or, in
the event of a final distribution resulting from the application of Section
2.06, 9.01 or 10.01, notice of such Distribution Date promptly after the
Servicer has determined that a final distribution will occur, if such
determination is made less than 30 days prior to such Distribution Date). Such
notice shall be accompanied by an Officer's Certificate setting forth the
information specified in Section 3.05 covering the period during the
then-current calendar year through the date of such notice. Not later than the
fifth day of the month in which the final distribution in respect of such Series
or Class is payable to Investor Certificateholders, the Trustee shall provide
notice to Investor Certificateholders of such Series or Class specifying (i) the
date upon which final payment of such Series or Class will be made upon
presentation and surrender of Investor Certificates of such Series or Class at
the office or offices therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such payment date
is not applicable, payments being made only upon presentation and surrender of
such Investor Certificates at the office or offices therein specified (which, in
the case of Bearer Certificates, shall be outside the United States). The
Trustee shall give such notice to the Transfer Agent and Registrar and the
Paying Agent at the time such notice is given to Investor Certificateholders.
(b) Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Paying Agent or the Trustee shall pay such
funds to such Investor Certificateholders upon surrender of their Investor
Certificates, if certificated (and any excess shall be paid in accordance with
the terms of any Enhancement Agreement). In the event that all such Investor
Certificateholders shall not surrender their Investor Certificates for
cancellation within six months after the date specified in the notice from the
Trustee described in paragraph (a), the Trustee shall give a second notice to
the remaining such Investor Certificateholders to surrender their Investor
Certificates for cancellation and receive the final distribution with respect
thereto (which surrender and payment, in the case of Bearer Certificates, shall
be outside the United States). If within one year after the second notice all
such Investor Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining such Investor Certificateholders concerning
surrender of their Investor Certificates, and the cost thereof shall be paid out
of the funds in the Collection Account or any Series Account held for the
benefit of such Investor Certificateholders. The Trustee and the Paying Agent
shall pay to the Transferors any monies held by them for the payment of
principal or interest that remains unclaimed for two years. After payment to the
Transferor, Investor Certificateholders entitled to the
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money must look to the Transferors for payment as general creditors unless an
applicable abandoned property law designates another Person.
(c) In the event that the Invested Amount with respect to any
Series is greater than zero on its Series Termination Date (after giving effect
to deposits and distributions otherwise to be made on such Series Termination
Date) the Trustee will sell or cause to be sold on such Series Termination Date
an amount of Principal Receivables (or interests therein) equal to 100% of the
Invested Amount with respect to such Series on such Series Termination Date plus
related Finance Charge Receivables (after giving effect to such deposits and
distributions); provided, however, that in no event shall such amount exceed the
Series Allocation Percentage of Receivables with respect to such Series on such
Series Termination Date. The proceeds (the "Termination Proceeds") from such
sale shall be immediately deposited into the Collection Account for such Series.
The Termination Proceeds shall be allocated and distributed to Investor
Certificateholders of such Series in accordance with the terms of the applicable
Supplement.
Section 12.03. Transferor's Termination Rights. Upon the
termination of the Trust pursuant to Section 12.01 and the surrender of the
Transferor's Certificates, the Trustee shall sell, assign and convey to the
Holders of the Transferor Certificates or any of their designees, without
recourse, representation or warranty, all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, all monies due
or to become due and all amounts received with respect thereto (including all
moneys then held in the Collection Account or any Series Account) and all
proceeds thereof, except for amounts held by the Trustee pursuant to subsection
12.02(b). The Trustee shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, as shall be reasonably requested by
the Transferors to vest in the Holders of the Transferor Certificates or any of
their designees all right, title and interest which the Trust had in the
Receivables.
Section 12.04 Defeasance. Notwithstanding anything to the
contrary in this Agreement or any Supplement:
(a) The Transferors may at their option be discharged from
their obligations hereunder with respect to any Series or all outstanding Series
(each, a "Defeased Series") on the date the applicable conditions set forth in
subsection 12.04(c) are satisfied (a "Defeasance"); provided, however, that the
following rights, obligations, powers, duties and immunities shall survive with
respect to each Defeased Series until otherwise terminated or discharged
hereunder: (i) the rights of the Holders of Investor Certificates of the
Defeased Series to receive, solely from the trust fund provided for in
subsection 12.04(c), payments in respect of principal of and interest on such
Investor Certificates when such payments are due; (ii) the Transferors'
obligations with respect to such Certificates under Sections 6.04 and 6.05;
(iii) the rights, powers, trusts, duties, and immunities of the Trustee, the
Paying Agent and the Registrar hereunder; and (iv) this Section 12.04.
(b) Subject to subsection 12.04(c), the Transferors at their
option may cause Collections allocated to each Defeased Series and available to
purchase additional Receivables to be applied to purchase Eligible Investments
rather than additional Receivables.
(c) The following shall be the conditions precedent to any
Defeasance under subsection 12.04(a):
(i) the Transferors irrevocably shall have deposited or caused
to be deposited with the Trustee (such deposit to be made from other
than the Transferors' or any Affiliate of the Transferors' funds),
under the terms of an irrevocable trust agreement in form and substance
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satisfactory to the Trustee, as trust funds in trust for making the
payments described below, (A) Dollars in an amount equal to, or (B)
Eligible Investments which through the scheduled payment of principal
and interest in respect thereof will provide, not later than the due
date of payment thereon, money in an amount equal to, or (C) a
combination thereof, in each case sufficient to pay and discharge
(without relying on income or gain from reinvestment of such amount),
and which shall be applied by the Trustee to pay and discharge, all
remaining scheduled interest and principal payments on all outstanding
Investor Certificates of each Defeased Series on the dates scheduled
for such payments in this Agreement and the applicable Supplements and
all amounts owing to the Series Enhancers with respect to each Defeased
Series;
(ii) a statement from a firm of nationally recognized
independent public accountants (who may also render other services to
the Transferors) to the effect that such deposit is sufficient to pay
the amounts specified in clause (i) above;
(iii) prior to its first exercise of its right pursuant to
this Section 12.04 with respect to a Defeased Series to substitute
money or Eligible Investments for Receivables, the Transferors shall
have delivered to the Trustee an Opinion of Counsel to the effect
contemplated by clause (b) of the definition in Section 1.01 of the
term "Tax Opinion" (the preparation and delivery of which shall not be
at the expense of the Trustee) with respect to such deposit and
termination of obligations, and an Opinion of Counsel to the effect
that (A) such deposit and termination of obligations will not result in
the Trust being required to register as an "investment company" within
the meaning of the Investment Company Act and (B) if the Transferors'
long-term unsecured debt obligations are not rated at least P-3 or
Baa3, respectively, by Moody's, such deposit and termination of
obligations would not be a fraudulent conveyance (based in reliance on
certain certificates to the effect that the Receivables and termination
of obligations constitute fair value for consideration paid therefor
and as to the solvency of the Sellers);
(iv) the Transferors shall have delivered to the Trustee an
Officer's Certificate of the Transferors stating the Transferors
reasonably believe that such deposit and termination of obligations
will not, based on the facts known to such officer at the time of such
certification, then cause a Pay-Out Event with respect to any Series or
any event that, with the giving of notice or the lapse of time, would
result in the occurrence of a Pay-Out Event with respect to any Series;
and
(v) the Rating Agency Condition shall have been satisfied and
the Transferors shall have delivered copies of such written notice to
the Servicer and the Trustee.
[END OF ARTICLE XII]
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment; Waiver of Past Defaults.
(a) This Agreement may be amended by the parties hereto from
time to time prior to, or in connection with, the issuance of the first Series
of Investor Certificates hereunder without the requirement of any consents or
the satisfaction of any conditions set forth below. This Agreement or any
Supplement may be amended from time to time (including, without limitation, in
connection with the issuance of a Supplemental Certificate, conveyance of a
Participation Interest, allocation of assets pursuant to Section 4.06, the
designation of an Additional Transferor, or to change the definition of Monthly
Period, Determination Date or Distribution Date) by the Servicer, the
Transferors and the Trustee, by a written instrument signed by each of them,
without the consent of any of the Certificateholders, provided that (i) the
Transferors shall have delivered to the Trustee Officer's Certificates, dated
the date of any such amendment, stating that the Transferors reasonably believe
that such amendment will not have an Adverse Effect and (ii) the Rating Agency
Condition shall have been satisfied with respect to any such amendment.
(b) This Agreement or any Supplement may also be amended from
time to time (including in connection with the issuance of a Supplemental
Certificate) by the Servicer, the Transferors and the Trustee, with the consent
of the Holders of Investor Certificates evidencing not less than 66-2/3% of the
aggregate unpaid principal amount of the Investor Certificates of all affected
Series for which the Transferors have not delivered Officer's Certificates
stating that there is no Adverse Effect, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or any Supplement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of or delay the timing of any distributions to (changes
in Pay-Out Events or Reinvestment Events that decrease the likelihood of the
occurrence thereof shall not be considered delays in the timing of distributions
for purposes of this clause) be made to Investor Certificateholders or deposits
of amounts to be so distributed or the amount available under any Series
Enhancement without the consent of each affected Certificateholder, (ii) change
the definition of or the manner of calculating the interest of any Investor
Certificateholder without the consent of each affected Investor
Certificateholder, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor Certificateholder or
(iv) adversely affect the rating of any Series or Class by each Rating Agency
without the consent of the Holders of Investor Certificates of such Series or
Class evidencing not less than 66- 2/3% of the aggregate unpaid principal amount
of the Investor Certificates of such Series or Class (which shall not be deemed
to occur if the Rating Agency Condition shall have been satisfied with respect
to such amendment).
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to subsection 13.01(a)), the Trustee
shall furnish notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
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(e) Notwithstanding anything in this Section (other than
subsection (i) below) to the contrary, no amendment may be made to this
Agreement or any Supplement which would adversely affect in any material respect
the interests of any Series Enhancer without the consent of such Series
Enhancer.
(f) Any Supplement executed in accordance with the provisions
of Section 6.03 shall not be considered an amendment to this Agreement for the
purposes of this Section.
(g) The Holders of Investor Certificates evidencing more than
66-2/3% of the aggregate unpaid principal amount of the Investor Certificates of
each Series or, with respect to any Series with two or more Classes, of each
Class (or, with respect to any default that does not relate to or affect all
Series, 66-2/3% of the aggregate unpaid principal amount of the Investor
Certificates of each Series to which such default relates or, with respect to
any such Series with two or more Classes, of each Class) may, on behalf of all
Certificateholders, waive any default by the Transferors or the Servicer in the
performance of their obligations hereunder and its consequences, except the
failure to make any distributions required to be made to Investor
Certificateholders or to make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
(h) The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise. In connection with the execution of any
amendment hereunder, the Trustee shall be entitled to receive the Opinion
described in subsection 13.02(d).
(i) Additionally, this Agreement and any Supplement executed
in accordance with the provisions of subsection 6.03 will be amended by the
Servicer and the Trustee at the direction of the Transferors without the consent
of any of the Certificateholders or Series Enhancers (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.
Any amendment under this subsection is subject to the requirements that (i) the
Transferors deliver to the Trustee an Officer's Certificate to the effect that
the proposed amendments meet the requirements set forth in this subsection and
(ii) 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 without the consent
of Certificateholders or Series Enhancers in connection with any election
described in this subsection may include, without limitation, the elimination of
any sale of Receivables and subsequent termination of the Trust upon the
occurrence of an Insolvency Event pursuant to Section 9.01 hereof.
(j) In the event that any Receivables Purchase Agreement
provides for any vote or consent by any Investor Certificateholders in
connection with an amendment of such Receivables Purchase Agreement, such
Investor Certificateholders shall be given the opportunity to vote on or consent
to such amendment, in accordance with the terms and conditions specified
therein. In the event that any
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Receivables Purchase Agreement specifies any action to be taken by the
Transferors, Trustee or Servicer, in connection with any amendment of such
Receivables Purchase Agreement, the Transferors, Trustee and Servicer hereby
agree to take such action in accordance with the terms and conditions therein.
(k) Any supplemental agreement executed in accordance with the
provisions of Section 7.02 or any Assumption Agreement executed in accordance
with the provisions of Section 7.05 shall not be considered an amendment to this
Agreement for the purposes of this Section 13.01.
Section 13.02. Protection of Right, Title and Interest to
Trust.
(a) The Servicer shall cause this Agreement, all amendments
and supplements hereto and all financing statements and continuation statements
and any other necessary documents covering the Certificateholders' and the
Trustee's right, title and interest to the Trust to be promptly recorded,
registered and filed, and at all times to be kept recorded, registered and
filed, all in such manner and in such places as may be required by law fully to
preserve and protect the right, title and interest of the Certificateholders and
the Trustee hereunder to all property comprising the Trust. The Servicer shall
deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferors shall
cooperate fully with the Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this paragraph.
(b) Within 30 days after any Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a)
seriously misleading within the meaning of Section 9-402(7) (or any comparable
provision) of the UCC, such Transferor shall give the Trustee notice of any such
change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest or
ownership interest in the Receivables and the proceeds thereof.
(c) Each Transferor and the Servicer shall give the Trustee
prompt notice of any relocation of any office from which it services Receivables
or keeps records concerning the Receivables or of its principal executive office
and whether, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to perfect or to continue
the perfection of the Trust's security interest in the Receivables and the
proceeds thereof. Each Transferor and the Servicer shall at all times maintain
each office from which it services Receivables and its principal executive
offices within the United States. The Trustee shall give each Transferor and the
Servicer prompt notice of any change in the name of the Trustee or any change in
the Trustee's address as shown on any financing statement filed in connection
with the transactions contemplated by this Agreement or any Supplement if the
address so shown ceases to be an address from which information concerning the
Trustee's (on behalf of the Trust) security interest or ownership interest in
the Receivables and the proceeds thereof can be obtained. The Transferors shall
file such financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest or ownership interest in the
Receivables and the proceeds thereof.
(d) The Servicer shall deliver to the Trustee (i) upon the
execution and delivery of each amendment of this Agreement pursuant to Section
13.01 or any Supplement, an Opinion of Counsel to the effect specified in
Exhibit E-1; (ii) on each date specified in subsection 2.09(c)(ix) with respect
to Aggregate Additions to be designated as Accounts, an Opinion of Counsel
substantially in the form of Exhibit E-2, (iii) semiannually, with respect to
any New Accounts included as Accounts, an Opinion of Counsel substantially in
the form of Exhibit E-2, (iv) on each Addition Date on which any Participation
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Interests are to be included in the Trust pursuant to subsection 2.09(a) or (b),
an Opinion of Counsel covering the same substantive legal issues addressed by
Exhibits E-1 and E-2 but conformed to the extent appropriate to relate to
Participation Interests; (v) on or before March 31 of each year, beginning with
March 31, 1997, an Opinion of Counsel substantially in the form of Exhibit E-3;
and (vi) in connection with the occurrence of any event contemplated by Section
7.02 or Section 7.05, the Opinions of Counsel and the Tax Opinion specified
therein.
Section 13.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote
(except as expressly provided in this Agreement) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Investor
Certificateholders from time to time as partners or members of an association,
nor shall any Investor Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(c) No Investor Certificateholder shall have any right by
virtue of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Investor Certificateholder previously shall have made, and unless
the Holders of Investor Certificates evidencing more than 50% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect to any
such action, suit or proceeding that does not relate to all Series, 50% of the
aggregate unpaid principal amount of the Investor Certificates of all Series to
which such action, suit or proceeding relates) shall have made, a request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after such request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb or prejudice the rights of
the holders of any other of the Investor Certificates, or to obtain or seek to
obtain priority over or preference to any other such Investor Certificateholder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Investor
Certificateholders except as otherwise expressly provided in this Agreement. For
the protection and enforcement of the provisions of this Section, each and every
Investor Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 13.04. Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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Section 13.05. Notices; Payments.
(a) All demands, notices, instructions, directions and
communications (collectively, "Notices") under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission (i) in the case of RFC II, to American Express Receivables
Financing Corporation II, at American Express Tower, World Financial Center,
Room 168, 200 Vesey Street, New York, NY 10285- 4405, Attention: Secretary
(facsimile no. (212) 619-9261, (ii) in the case of Centurion Bank, to American
Express Centurion Bank, at 301 North Walnut Street, Wilmington, DE 19801,
Attention: President (facsimile no (302) 576-4600, (iii) in the case of TRS, to
American Express Travel Related Services Company, Inc., American Express Tower,
World Financial Center, 200 Vesey Street, New York, NY 10285, Attention:
Treasurer (facsimile no. (212) 619-8693, (iv) in the case of the Trustee, the
Paying Agent or Transfer Agent and Registrar, to The Bank of New York, 101
Barclay Street, Floor 12 East, New York, New York 10286, Attention: Asset-Backed
Unit (facsimile no. (212) 815-5999, (v) in the case of Moody's, to Moody's
Investors Service Inc. at 99 Church Street, New York, New York 10007, Attention:
ABS Monitoring Department, 4th Floor (facsimile no. (212) 553-4600), (vi) in the
case of Standard & Poor's, to Standard & Poor's Ratings Group at 26 Broadway,
New York, New York 10004, Attention: Asset Backed Group, 15th Floor (facsimile
no. (212) 412-0323), and (vii) to any other Person as specified in any
Supplement; or, as to each party, at such other address or facsimile number as
shall be designated by such party in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder
of Registered Certificates shall be given by first-class mail, postage prepaid,
at the address of such Holder as shown in the Certificate Register. No Notice
shall be required to be mailed to a Holder of Bearer Certificates or Coupons but
shall be given as provided below. Any Notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Investor Certificateholder receives such Notice. In
addition, (a) if and so long as any Series or Class is listed on the Luxembourg
Stock Exchange and such Exchange shall so require, any Notice to Investor
Certificateholders shall be published in an Authorized Newspaper of general
circulation in Luxembourg within the time period prescribed in this Agreement
and (b) in the case of any Series or Class with respect to which any Bearer
Certificates are outstanding, any Notice required or permitted to be given to
Investor Certificateholders of such Series or Class shall be published in an
Authorized Newspaper within the time period prescribed in this Agreement.
Section 13.06. Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
Section 13.07. Certificates Nonassessable and Fully Paid. It
is the intention of the parties to this Agreement that the Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever and that the
Certificates upon authentication and delivery thereof by the Trustee pursuant to
Section 6.02 are and shall be deemed fully paid.
Section 13.08. Further Assurances. The Transferors and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of this Agreement, including the
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execution of any financing statements or continuation statements relating to the
Receivables for filing under the provisions of the UCC of any applicable
jurisdiction.
Section 13.09. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Investor Certificateholders, the Servicer,
the Trustee, the Transferor, the Paying Agent, the Authenticating Agent, the
Transfer Agent, the Registrar, the Series Enhancers and each Holder of a
Supplemental Certificate shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Trust or the
Transferor, acquiesce, petition or otherwise invoke or cause the Trust or the
Transferors to invoke the process of any Governmental Authority for the purpose
of commencing or sustaining a case against the Trust or the Transferors under
any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust or any Transferor or any substantial part of its
property or ordering the winding-up or liquidation of the affairs of the Trust
or any Transferor.
Section 13.10. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 13.11. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
Section 13.12. Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Certificateholders, any Series Enhancer and their respective successors and
permitted assigns. Except as otherwise expressly provided in this Agreement
(including Section 7.04), no other Person will have any right or obligation
hereunder.
Section 13.13. Actions by Certificateholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a Notice given by Certificateholders, such action or
Notice may be taken or given by any Certificateholder, unless such provision
requires a specific percentage of Certificateholders.
(b) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of a Certificate shall bind such Holder and
every subsequent Holder of such Certificate and of any Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee or the Servicer
in reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.14. Rule 144A Information. For so long as any of
the Investor Certificates of any Series or Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, each of the Transferors, the
Trustee, the Servicer and any Series Enhancer agree to cooperate with each other
to provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
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Section 13.15. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.16. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
[END OF ARTICLE XIII]
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IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed by
their respective officers as of the day and year first above written.
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II, as a Transferor,
By: /s/ Leslie R. Scharfstein
--------------------------------
Name: Leslie R. Scharfstein
Title: President
AMERICAN EXPRESS CENTURION BANK,
as a Transferor,
By: /s/ Frank L. Skillern
--------------------------------
Name: Frank L. Skillern
Title: Chief Executive Officer
AMERICAN EXPRESS TRAVEL RELATED SERVICES
COMPANY, INC.,
as the Servicer,
By: /s/ Jay B. Stevelman
--------------------------------
Name: Jay B. Stevelman
Title: Senior Vice President
and Treasurer
THE BANK OF NEW YORK,
as Trustee,
By: /s/ Peter M. Lagatta
--------------------------------
Name: Peter M. Lagatta
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
FORM OF TRANSFEROR CERTIFICATE
THIS TRANSFEROR CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS TRANSFEROR CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS.
THIS TRANSFEROR CERTIFICATE IS NOT PERMITTED TO BE
TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN
COMPLIANCE WITH THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
No. R-_______ One Unit
American Express Credit Account Master Trust
TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST
IN CERTAIN ASSETS OF THE
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
Evidencing an interest in a trust, the corpus of which consists primarily of an
interest in receivables generated from time to time in the ordinary course of
business in a portfolio of revolving credit card and other accounts transferred
by American Express Centurion Bank, a Delaware banking institution ("Centurion
Bank") and American Express Receivables Financing Corporation II ("RFC II"),
each as a transferor (together, the "Transferors").
(Not an interest in or obligation of the Transferors
or any affiliate thereof)
This certifies that Centurion Bank and RFC II are the
registered owners of a fractional interest in the assets of a trust (the
"Trust") not allocated to the Certificateholders' Interest or the interest of
any Holder of a Supplemental Certificate pursuant to the Pooling and Servicing
Agreement dated as of May 16, 1996 (as amended and supplemented, the
"Agreement"), among the Transferors, American Express Travel Related Services
Company, Inc., as servicer (the "Servicer"), and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee"). The corpus of the Trust
consists of (i) the Transferors' fractional undivided interest in a portfolio of
certain receivables (the "Receivables") existing in the revolving credit card
and other accounts identified under the Agreement from time to time (the
"Accounts"), (ii) certain Receivables generated under the Accounts from time to
time thereafter, (iii) certain funds collected or to be collected from
accountholders in respect of the Receivables, (iv) all funds which are from time
to time on deposit in the Collection Account, Special Funding Account and in the
Series Accounts, (v) the benefits of any Series Enhancements issued and to be
issued by Series Enhancers with respect to one or more Series of Investor
Certificates and (vi) all other assets and interests constituting the Trust,
including Recoveries allocated to the Trust pursuant to the Agreement and any
Supplement. Although a summary of certain provisions of the Agreement is set
forth below, this Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced
A-1
<PAGE>
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement may be requested from the Trustee by writing to the Trustee at the
Corporate Trust Office. To the extent not defined herein, the capitalized terms
used herein have the meanings ascribed to them in the Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended and
supplemented from time to time, the Transferors by virtue of the acceptance
hereof assent and are bound.
The Receivables consist of Principal Receivables which arise
generally from the purchase of merchandise and services and amounts advanced to
cardholders as cash advances and Finance Charge Receivables which arise
generally from Periodic Finance Charges, Late Fees and other fees and charges
with respect to the Accounts.
This Certificate is the Transferor Certificate, which
represents the Transferors' interest in certain assets of the Trust, including
the right to receive a portion of the Collections and other amounts at the times
and in the amounts specified in the Agreement. The aggregate interest
represented by the Transferor Certificate at any time in the Receivables in the
Trust shall not exceed the Transferors' Interest at such time. In addition to
the Transferor Certificate, (i) Investor Certificates will be issued to
investors pursuant to the Agreement, which will represent the
Certificateholders' Interest, and (ii) Supplemental Certificates may be issued
pursuant to the Agreement, which will represent that portion of the Transferors'
Interest not allocated to the Transferors. This Transferor Certificate shall not
represent any interest in the Collection Account, the Special Funding Account or
the Series Accounts, except as expressly provided in the Agreement, or any
Series Enhancements.
Unless otherwise specified in a Supplement with respect to a
particular Series the Transferors have entered into the Agreement, and this
Certificate is issued, with the intention that, for federal, state and local
income and franchise tax purposes, (i) the Investor Certificates of each Series
which are characterized as indebtedness at the time of their issuance will
qualify as indebtedness of the Transferors secured by the Receivables and (ii)
the Trust shall not be treated as an association taxable as a corporation. The
Transferors, by entering into the Agreement and by the acceptance of this
Transferor Certificate, agree to treat the Investor Certificates for federal,
state and local income and franchise tax purposes as indebtedness of the
Transferors.
Subject to certain conditions and exceptions specified in the
Agreement, the obligations created by the Agreement and the Trust created
thereby shall terminate upon the earlier of (i) May 1, 2017, (ii) the day
following the Distribution Date on which the Invested Amount and Enhancement
Invested Amount for each Series is zero (provided the Transferors have delivered
a written notice to the Trustee electing to terminate the Trust) and (iii) the
time provided in Section 9.01 of the Agreement.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Transferors have caused this
Certificate to be duly executed.
AMERICAN EXPRESS CENTURION BANK,
as a Transferor
By ___________________________
Name:
Title:
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II,
as a Transferor
By ___________________________
Name:
Title:
Dated: [_________ __, ____]
A-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the American Express Credit Account Master Trust
Transferor Certificate described in the within-mentioned Agreement.
- ------------------------,
as Trustee,
By _______________________
Authorized Signatory
or
By [_______________________],
as Authenticating Agent
for the Trustee,
By ________________________
Authorized Signatory
A-4
<PAGE>
EXHIBIT B
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.09 of
the Pooling and Servicing Agreement)
ASSIGNMENT No. [________] OF RECEIVABLES IN ADDITIONAL
ACCOUNTS dated as of [________], [________] (1), by and among AMERICAN EXPRESS
CENTURION BANK, a Delaware banking institution, and AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II, as Transferors (together, the "Transferors"), and THE
BANK OF NEW YORK, a New York banking corporation not in its individual capacity
but solely as trustee (the "Trustee"), pursuant to the Pooling and Servicing
Agreement referred to below.
WITNESSETH
WHEREAS the Transferors and the Trustee and American Express
Travel Related Services Company, Inc., as the Servicer (the "Servicer"), are
parties to the Pooling and Servicing Agreement dated as of May 16, 1996 (as
amended and supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Transferors wish to
designate Additional Accounts to be included as Accounts and to convey the
Receivables of such Additional Accounts, whether now existing or hereafter
created, to the Trust as part of the corpus of the Trust (as each such term is
defined in the Agreement); and
WHEREAS the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferors and the Trustee hereby agree
as follows:
1. Defined Terms. All capitalized terms used herein shall
have the meanings ascribed to them in the Agreement unless otherwise defined
herein.
"Addition Date" shall mean, with respect to the Additional
Accounts designated hereby, [________], [________].
"Addition Cut-Off Date" shall mean, with respect to the
Additional Accounts designated hereby, [________], [________].
2. Designation of Additional Accounts. On or before the
Document Delivery Date, the Transferors will deliver to the Trustee a computer
file, microfiche list or printed list containing a true and complete schedule
identifying all such Additional Accounts specifying for each such Account, as of
the Addition Cut-Off Date, its account number and the aggregate amount of
Receivables outstanding in such Account, which computer file or microfiche list
shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Transferors do hereby
transfer, assign, set over, sell and otherwise convey, without recourse except
as set forth in the Agreement, to the
- ----------
(1) To be dated as of the applicable Addition Date.
B-1
<PAGE>
Trustee, on behalf of the Trust, for the benefit of the Certificateholders, all
their respective right, title and interest in, to and under the Receivables of
such Additional Accounts existing at the close of business on the Addition
Cut-Off Date and thereafter created from time to time until the termination of
the Trust, all monies due or to become due and all amounts received with respect
thereto and all Collections (including Recoveries) and proceeds (including
Insurance Proceeds and "proceeds" as defined in the UCC) thereof. The foregoing
does not constitute and is not intended to result in the creation or assumption
by the Trust, the Trustee, any Investor Certificateholder or any Series Enhancer
of any obligation of the Servicer, the Transferors or any other Person in
connection with the Accounts, the Receivables or under any agreement or
instrument relating thereto.
(b) The Transferors agree to record and file, at their
own expense, financing statements (and continuation statements when applicable)
with respect to the Receivables now existing and hereafter created in Additional
Accounts, meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary to perfect, and maintain perfection of, the
sale and assignment of their interest in such Receivables to the Trust, and to
deliver a file-stamped copy of each such financing statement or other evidence
of such filing to the Trustee on or prior to the Addition Date. The Trustee
shall be under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with such
sale and assignment.
(c) In connection with such sale, the Transferors further
agree, at their own expense, on or prior to the date of this Assignment, to
indicate in the appropriate computer files that Receivables created in
connection with the Additional Accounts designated hereby have been con- veyed
to the Trust pursuant to the Agreement and this Assignment for the benefit of
the Certificateholders by including in the securitization field of such computer
files the code ["______"] for each such Additional Account.
(d) The Transferors do hereby grant to the Trustee a
security interest in all of their right, title and interest, whether now owned
or hereafter acquired, in and to the Receivables now existing and hereafter
created in the Additional Accounts, all monies due or to become due and all
amounts received with respect thereto and all Collections (including Recoveries)
and proceeds (including Insurance Proceeds and "proceeds" as defined in the UCC)
thereof. This Assignment constitutes a security agreement under the UCC.
4. Acceptance by Trustee. The Trustee hereby acknowledges its
acceptance on behalf of the Trust of all right, title and interest to the
property, now existing and hereafter created, conveyed to the Trust pursuant to
Section 3(a) of this Assignment, and declares that it shall maintain such right,
title and interest, upon the trust set forth in the Agreement for the benefit of
all Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Assignment, the
Transferors delivered to the Trustee the computer file or microfiche list
described in Section 2 of this Assignment.
5. Representations and Warranties of the Transferors. Each
Transferor hereby severally represents and warrants to the Trustee, on behalf of
the Trust, as of the date of this Assignment and as of the Addition Date that:
(a) Legal Valid and Binding Obligation. This
Assignment constitutes a legal, valid and binding obligation of such
Transferor enforceable against such Transferor in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in
B-2
<PAGE>
effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity);
(b) Eligibility of Accounts. As of the Addition
Selection Date, each Additional Account designated hereby is an
Eligible Account and each Receivable in each Additional Account
designated hereby is an Eligible Receivable;
(c) Insolvency. As of each of the Addition Cut-Off
Date and the Addition Date, no Insolvency Event with respect to the
Transferors has occurred and the transfer by the Transferors of
Receivables arising in the Additional Accounts to the Trust has not
been made in contemplation of the occurrence thereof;
(d) Pay Out Event. Such Transferor reasonably
believes that (A) the addition of the Receivables arising in the
Additional Accounts will not, based on the facts known to such
Transferor, then or thereafter cause a Pay Out Event to occur with
respect to any Series and (B) no selection procedure was utilized by
such Transferor which would result in the selection of Additional
Accounts (from among the available Eligible Accounts owned by such
Transferor) that would be materially adverse to the interests of the
Investor Certificateholders of any Series as of the Addition Date;
(e) Security Interest. This Assignment constitutes a
valid sale, transfer and assignment to the Trust of all right, title
and interest, whether now owned or hereafter acquired, of such
Transferor in the Receivables now existing or hereafter created in the
Additional Accounts, all monies due or to become due and all amounts
received with respect thereto and, to the extent set forth in UCC 9-306
in effect in the relevant state, the "proceeds" thereof, or, if this
Assignment does not constitute a sale of such property, it constitutes
a grant of a "security interest" in such property to the Trust, which,
in the case of existing Receivables and the proceeds thereof, is
enforceable upon execution and delivery of this Assignment, and which
will be enforceable with respect to such Receivables hereafter created
and the proceeds thereof upon such creation. Upon the filing of the
financing statements described in Section 3 of this Assignment and, in
the case of the Receivables hereafter created and the proceeds thereof,
upon the creation thereof, the Trust shall have a first priority
perfected security or ownership interest in such property, except for
(i) Liens permitted under clause (d) of the definition of "Eligible
Receivable" in the Agreement, (ii) the interests of the holders of the
Transferor Certificates under the Agreement and (iii) the right to
receive interest and investment earnings (net of losses and investment
expenses) in respect of the Collection Account as provided in the
Agreement or any Series Account if so provided in the applicable
Supplement;
(f) No Conflict. The execution and delivery by such
Transferor of this Assignment, the performance of the transactions
contemplated by this Assignment and the fulfillment of the terms hereof
applicable to such Transferor, will not conflict with or violate any
Requirements of Law applicable to such Transferor or conflict with,
result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which such Transferor is a party or by
which it or its properties are bound;
B-3
<PAGE>
(g) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of such Transferor,
threatened against such Transferor before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
(i) asserting the invalidity of this Assignment, (ii) seeking to
prevent the consummation of any of the transactions contemplated by
this Assignment, (iii) seeking any determination or ruling that, in the
reasonable judgment of such Transferor, would materially and adversely
affect the performance by such Transferor of its obligations under this
Assignment or (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Assignment; and
(h) All Consents. All authorizations, consents,
orders or approvals of any court or other governmental authority
required to be obtained by such Transferor in connection with the
execution and delivery of this Assignment by such Transferor and the
performance of the transactions contemplated by this Assignment by such
Transferor, have been obtained.
(i) List of Accounts. As of the Addition Date, to the
best knowledge of the Transferors, the computer file or microfiche list
of Additional Accounts complies with the requirements of Section 2
hereof.
6. Ratification of Agreement. As supplemented by this
Assignment, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Assignment shall be read, taken and
construed as one and the same instrument.
7. Counterparts. This Assignment may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-4
<PAGE>
IN WITNESS WHEREOF, each Transferor and the Trustee have
caused this Assignment to be duly executed by their respective officers as of
the day and year first above written.
AMERICAN EXPRESS CENTURION BANK,
as a Transferor
By ________________________________
Name:
Title:
AMERICAN EXPRESS RECEIVABLES FINANCE
CORPORATION II, as a Transferor
By ________________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity,
but solely as Trustee
By ________________________________
Name:
Title:
B-5
<PAGE>
EXHIBIT C
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.10 of
the Pooling and Servicing Agreement)
REASSIGNMENT No. OF RECEIVABLES dated as of [________],(1) by
and among AMERICAN EXPRESS CENTURION BANK, a Delaware banking institution, and
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II, the Transferors
(together, the "Transferors"), and THE BANK OF NEW YORK, a New York banking
corporation not in its individual capacity but solely as trustee (the
"Trustee"), pursuant to the Pooling and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS the Transferors and the Trustee are parties to the
Pooling and Servicing Agreement dated as of May 16, 1996 (as amended and
supplemented, the "Agreement");
WHEREAS pursuant to the Agreement, the Transferors wish to
remove from the Trust all Receivables owned by the Trust in certain designated
Accounts owned by the Transferors (the "Removed Accounts") and to cause the
Trustee to reconvey the Receivables of such Removed Accounts, whether now
existing or hereafter created, from the Trust to the Transferors; and
WHEREAS the Trustee on behalf of the Trust is willing to
accept such designation and to reconvey the Receivables in the Removed Accounts
subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferors and the Trustee hereby agree
as follows:
1. Defined Terms. All terms defined in the Agreement and
used herein shall have such defined meanings when used herein, unless otherwise
defined herein.
"Removal Date" shall mean, with respect to the Removed
Accounts designated hereby, [________], [________].
"Removal Notice Date" shall mean, with respect to the Removed
Accounts, [_________, [________].
2. Designation of Removed Accounts. On or before the date that
is 10 Business Days after the Removal Date, the Transferors will deliver to the
Trustee a computer file, microfiche list or printed list containing a true and
complete schedule identifying all Accounts the Receivables of which are being
removed from the Trust, specifying for each such Account, as of the Removal
Notice Date, its account number and the aggregate amount of Receivables in such
Account, which computer file or microfiche list shall supplement Schedule 1 to
the Agreement.
3. Conveyance of Receivables. (a) The Trustee does hereby
transfer, assign, set over and otherwise convey to the Transferors, without
recourse, on and after the Removal Date, all right, title and interest of the
Trust in, to and under the Receivables existing at the close of business on the
Removal Date and thereafter created from time to time in the Removed Accounts
designated hereby,
- --------
(1) To be dated as of the Removal Date.
C-1
<PAGE>
all monies due or to become due and all amounts received with respect thereto
and all proceeds and Recoveries thereof.
(b) In connection with such transfer, the Trustee agrees
to execute and deliver to the Transferors on or prior to the date this
Reassignment is delivered, applicable termination statements prepared by the
Transferors with respect to the Receivables existing at the close of business on
the Removal Date and thereafter created from time to time in the Removed
Accounts reassigned hereby and the proceeds thereof evidencing the release by
the Trust of its interest in the Receivables in the Removed Accounts, and
meeting the requirements of applicable state law, in such manner and such
jurisdictions as are necessary to terminate such interest.
4. Representations and Warranties of the Transferors.
Each Transferor hereby severally represents and warrants to the Trustee, on
behalf of the Trust, as of the Removal Date:
(a) Legal Valid and Binding Obligation. This
Reassignment constitutes a legal, valid and binding obligation of such
Transferor enforceable against such Transferor, in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and except as
such enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity); and
(b) Pay Out Event. Such Transferor reasonably
believes that (A) the removal of the Receivables existing in the Removed
Accounts will not, based on the facts known to such Transferor, then or
thereafter cause a Pay Out Event to occur with respect to any Series and (B) no
selection procedure was utilized by such Transferor which would result in a
selection of Removed Accounts that would be materially adverse to the interests
of the Investor Certificateholders of any Series as of the Removal Date.
(c) List of Removed Accounts. The list of
Removed Accounts delivered pursuant to subsection 2.09(c) of the Agreement, as
of the Removal Date, is true and complete in all material respects.
5. Ratification of Agreement. As supplemented by this
Reassignment, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Reassignment shall be read, taken and
construed as one and the same instrument.
6. Counterparts. This Reassignment may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
C-2
<PAGE>
IN WITNESS WHEREOF, each Transferor and the Trustee have
caused this Reassignment to be duly executed by their respective officers as of
the day and year first above written.
AMERICAN EXPRESS CENTURION BANK,
as a Transferor
By ________________________________
Title:
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II, as a Transferor
By ________________________________
Title:
THE BANK OF NEW YORK,
not in its individual capacity,
but solely as Trustee
By ________________________________
Title:
C-3
<PAGE>
EXHIBIT D
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before March 31 of
each calendar year beginning with March 31, 1997,
pursuant to Section 3.05 of the Pooling and
Servicing Agreement referred to below)
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
The undersigned, a duly authorized representative of American
Express Travel Related Services Company, Inc., as Servicer ("TRS"), pursuant to
the Pooling and Servicing Agreement dated as of May 16, 1996 (as amended and
supplemented, the "Agreement"), among American Express Centurion Bank, a
Delaware banking institution, and American Express Receivables Financing
Corporation II, each as a transferor, TRS, and The Bank of New York, as Trustee,
does hereby certify that:
1. TRS is, as of the date hereof, the Servicer under the
Agreement. Capitalized terms used in this Certificate have their respective
meanings as set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly
authorized pursuant to the Agreement to execute and deliver this Certificate to
the Trustee.
3. A review of the activities of the Servicer during the year
ended December 31, ____, and of its performance under the Agreement was
conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the Agreement
known to me to have been made by the Servicer during the year ended December 31,
____ which sets forth in detail (i) the nature of each such default, (ii) the
action taken by the Servicer, if any, to remedy each such default and (iii) the
current status of each such default: [If applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of ________, 19____.
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC., as Servicer
By ___________________________
Name:
Title:
D-1
<PAGE>
EXHIBIT E-1
FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
Provisions to be included in
Opinion of Counsel to be delivered pursuant
to Section 13.02(d)(i)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions Of Counsel delivered on any applicable Closing Date.
(i) The amendment to the [Pooling and Servicing Agreement],
[Supplement], attached hereto as Schedule 1 (the "Amendment" ), has
been duly authorized, executed and delivered by the Transferors and
constitutes the legal, valid and binding agreement of the Transferors,
enforceable in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws from time to time in effect affecting
creditors' rights generally. The enforceability of the Transferor's
obligations is also subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law)
(ii) The Amendment has been entered into in accordance with
the terms and provisions of Section 13.01 of the Pooling and Servicing
Agreement.
E-1-1
<PAGE>
EXHIBIT E-2
FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
Provisions to be included in
Opinion of Counsel to be
delivered pursuant to
subsection 13.02(d)(ii) Or (iii)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date.
1. Except for any Receivable that is evidenced by an
instrument, the Receivables constitute either general intangibles or accounts
under Article 9 of the UCC.
2. The Pooling and Servicing Agreement creates in favor of the
Trustee a security interest in the rights of the relevant Transferor in such of
the Receivables identified in Schedule 1 to the Pooling and Servicing Agreement
as constitute accounts. To the extent that such security interest is not an
interest of a buyer of accounts, then the Pooling and Servicing Agreement
creates in favor of the Trustee a security interest in the rights of such
Transferors in the proceeds of such Receivables.
3. To extent that transactions contemplated by the Pooling and
Servicing Agreement do not constitute a sale by the relevant Transferors to the
Trustee of such of the Receivables as constitute general intangibles or the
proceeds thereof, the Pooling and Servicing Agreement creates in favor of the
Trustee a security interest in the rights of such Transferors in such of the
Receivables as constitute general intangibles and the proceeds thereof.
4. Each Receivables Purchase Agreement creates in favor of the
relevant Transferor[s] a security interest in the rights of [the transferor of
the Receivables thereunder] in such of the Receivables identified in Schedule 1
to the Receivables Purchase Agreements as constitute accounts.
5. To the extent that transactions contemplated by any
Receivables Purchase Agreement do not constitute a sale by [the transferor of
the Receivables thereunder] to the relevant Transferor[s] of such of the
Receivables as constitute general intangibles or the proceeds thereof, such
Receivables Purchase Agreement creates in favor of the relevant Transferor[s] a
security interest in the rights of [the transferor of the Receivables
thereunder] in such of the Receivables as constitute general intangibles and the
proceeds thereof.
6. The security interests described in paragraphs 2, 3, 4
and 5 above are perfected and of first priority.
E-2-1
<PAGE>
EXHIBIT E-3
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date. Unless otherwise
indicated, all capitalized terms used herein shall have the meanings ascribed to
them in the Pooling and Servicing Agreement and in the Assignment.
1. The Pooling and Servicing Agreement, together with
the Assignments, create in favor of the Trustee a security
interest in the relevant Transferor's rights in the
Receivables identified in Schedule 1 to the Pooling and
Servicing Agreement. Such security interest is perfected and
of first priority.
E-3-1
<PAGE>
EXHIBIT F-1
[FORM OF CLEARANCE SYSTEM CERTIFICATE
TO BE GIVEN TO THE TRUSTEE BY
EUROCLEAR OR CEDEL FOR
DELIVERY OF DEFINITIVE CERTIFICATES
IN EXCHANGE FOR A PORTION OF A
TEMPORARY GLOBAL SECURITY]
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST,
Class [___] Series [199_-_] [Floating Rate] [_%]
Asset Backed Certificates
[Insert title or sufficient description of
Certificates to be delivered]
We refer to that portion of the temporary Global Certificate
in respect of the above-captioned issue which is herewith submitted to be
exchanged for definitive Certificates (the "Submitted Portion") as provided in
the Pooling and Servicing Agreement dated as of May 16, 1996 (as amended and
supplemented, the "Agreement") in respect of such issue. This is to certify that
(i) we have received a certificate or certificates, in writing or by tested
telex, with respect to each of the persons appearing in our records as being
entitled to a beneficial interest in the Submitted Portion and with respect to
such persons beneficial interest either (a) from such person, substantially in
the form of Exhibit G-2 to the Agreement, or (b) from [ ], substantially in the
form of Exhibit G-3 to the Agreement, and (ii) the Submitted Portion includes no
part of the temporary Global Certificate excepted in such certificates
We further certify that as of the date hereof we have not
received any notification from any of the persons giving such certificates to
the effect that the statements made by them with respect to any part of the
Submitted Portion are no longer true and cannot be relied on as of the date
hereof.
We understand that this certificate is required in connection
with certain securities and tax laws in the United States of America. If
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate or a copy thereof to any interested party in
such proceedings.
Dated:(1) [Morgan Guaranty Trust, Company of New York,
Brussels office, as operator of the
Euroclear Systems](2)
[Centrale de Livraison de
Valeurs Mobiliere S. A.](2)
By: _______________________________
- --------
(1) To be dated on the Exchange Date.
(2) Delete the inappropriate reference.
F-1-1
<PAGE>
EXHIBIT F-2
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL
BY [INSERT NAME OF MANAGER]
WITH RESPECT TO REGISTERED CERTIFICATES SOLD TO
QUALIFIED INSTITUTIONAL BUYERS]
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST,
Class [___] Series [199_-_] [Floating Rate] [_%]
Asset Backed Certificates
In connection with the initial issuance and placement of the
above referenced Asset Backed Certificates (the "Certificates"), an
institutional investor in the United States ("institutional investor") is
purchasing U.S.$ aggregate principal amount of the Certificates held in our
account at [Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System] [Cedel Bank] on behalf of such investor.
We reasonably believe that such institutional investor is a
qualified institutional buyer as such term is defined under Rule 144A of the
Securities Act of 1933, as amended.
[We understand that this certificate is required in connection
with United States laws. We irrevocably authorize you to produce this
certificate or a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters covered by
this certificate.]
The Definitive Certificates in respect of this certificate are
to be issued in registered form in the minimum denomination of U.S. $500,000 and
such Definitive Certificates (and, unless the Pooling and Servicing Agreement or
Supplement relating to the Certificates otherwise provides, any Certificates
issued in exchange or substitution for or on registration of transfer of
Certificates) shall bear the following legend:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF
MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO U.S. PERSONS (EACH AS DEFINED HEREIN), EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN. THIS CERTIFICATE CANNOT BE
EXCHANGED FOR A BEARER CERTIFICATE."
Dated:
[ ],
By: __________________________
Authorized Officer
F-2-1
<PAGE>
EXHIBIT F-3
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL BY A BENEFICIAL OWNER
OF CERTIFICATES, OTHER THAN A QUALIFIED INSTITUTIONAL BUYER]
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST,
Class [___] Series [199_-_] [Floating Rate] [_%]
Asset Backed Certificates
This is to certify that as of the date hereof and except as
provided in the third paragraph hereof, the above-captioned Certificates held by
you for our account (i) are owned by a person that is a United States person, or
(ii) are owned by a United States person that is (A) the foreign branch of a
United States financial institution (as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own
account or for resale, or (B) a United States person who acquired the
Certificates through the foreign branch of a financial institution and who holds
the Certificates through the financial institution on the date hereof (and in
either case (A) or (B), the financial institution hereby agrees to comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by
a financial institution for purposes of resale during the Restricted Period (as
defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). In
addition, financial institutions described in clause (iii) of the preceding
sentence (whether or not also described in clause (i) or (ii)) certify that they
have not acquired the Certificates for purposes of resale directly or indirectly
to a United States person or to a person within the United States or its
possessions.
We undertake to advise you by tested telex if the above
statement as to beneficial ownership is not correct on the date of delivery of
the above-captioned Certificates in bearer form with respect to such of said
Certificates as then appear in your books as being held for our account.
This certificate excepts and does not relate to U.S.
$_______________ principal amount of Certificates held by you for our account,
as to which we are not yet able to certify beneficial ownership. We understand
that delivery of Definitive Certificates in such principal amount cannot be made
until we are able to so certify.
F-3-1
<PAGE>
We understand that this certificate is required in connection
with certain securities and tax laws ln the United States of America. If
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate or a copy thereof to any interested party in
such proceedings. As used herein, "United States" means the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction; and "United States
Person" means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States, or any political subdivision thereof, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.
Dated:(1)
By: _________________________
As, or an agent for, the beneficial
owner(s) of the interest in the
Certificates to which this certificate
relates.
- --------
(1) This Certificate must be dated on the earlier of the date of the first
actual payment of interest in respect of the Certificates and the date
of the delivery of the Certificates in definitive form.
F-3-2
<PAGE>
EXHIBIT G-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE
PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN CONDI- TIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT
PLAN (AS DEFINED BELOW).
G-1-1
<PAGE>
EXHIBIT G-2
[FORM OF UNDERTAKING LETTER]
[Date]
The Bank of New York
101 Barclay Street
Floor 12 East
New York, New York 10286
Attention: Asset Backed Group
American Express Centurion Bank
American Express Receivables Financing Corporation II
c/o American Express Travel Related Services Company, Inc.
American Express Tower
World Financial Center
200 Vesey Street
New York, NY 10285
Attention: General Counsel
Re: Purchase of $___________(1) principal amount of
American Express Credit Account Master Trust Class
[__] Series [199_-_] [Floating Rate] [__%] Asset
Backed Certificates
Ladies and Gentlemen:
In connection with our purchase of the above-referenced Asset
Backed Certificates (the "Certificates") we confirm that:
(i) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "1933
Act"), and are being sold to us in a transaction that is exempt from
the registration requirements of the 1933 Act;
(ii) any information we desire concerning the Certificates or
any other matter relevant to our decision to purchase the certificates
is or has been made available to us;
- --------
(1) Not less than $250,000 minimum principal amount.
G-2-1
<PAGE>
(iii) we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
an investment in the Certificates, and we (and any account for which we
are purchasing under paragraph (iv) below) are able to bear the
economic risk of an investment in the Certificates; we (and any account
for which we are purchasing under paragraph (iv) below) are an
"accredited investor" (as such term is defined in Rule 501(a)(1), (2)
or (3) of Regulation D under the 1933 Act); and we are not, and none of
such accounts is, a Benefit Plan;
(iv) we are acquiring the Certificates for our own account or
for accounts as to which we exercise sole investment discretion and not
with a view to any distribution of the Certificates, subject,
nevertheless, to the understanding that the disposition of our property
shall at all times be and remain within our control;
(v) we agree that the Certificates must be held indefinitely
by us unless subsequently registered under the 1933 Act or an exemption
from any registration requirements of that Act and any applicable state
securities laws available;
(vi) we agree that in the event that at some future time we
wish to dispose of or exchange any of the Certificates (such
disposition or exchange not being currently foreseen or contemplated),
we will not transfer or exchange any of the Certificates unless
(A)(l) the sale is of at least U.S. $250,000
principal amount of Certificates to an Eligible Purchaser (as
defined below), (2) a letter to substantially the same effect
as paragraphs (i), (ii), (iii), (iv), (v) and (vi) of this
letter is executed promptly by the purchaser and (3) all
offers or solicitations in connection with the sale, whether
directly or through any agent acting on our behalf, are
limited only to Eligible Purchasers and are not made by means
of any form of general solicitation or general advertising
whatsoever; or
(B) the Certificates are transferred pursuant to Rule
144 under the 1933 Act by us after we have held them for more
than three years; or
(C) the Certificates are sold in any other
transaction that does not require registration under the 1933
Act and, if the Transferors, the Servicer, the Trustee or the
Transfer Agent and Registrar so requests, we theretofore have
furnished to such party an opinion of counsel satisfactory to
such party, in form and substance satisfactory to such party,
to such effect; or
(D) the Certificates are transferred pursuant to an
exception from the registration requirements of the 1933 Act
under Rule 144A under the 1933 Act; and
(vii) we understand that the Certificates will bear a legend
to substantially the following effect:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT") NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE
PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION
G-2-2
<PAGE>
PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN
CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN."
"THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW)."
The first paragraph of this legend may be removed if the Transferors, the
Servicer, the Trustee and the Transfer Agent and Registrar have received an
opinion of counsel satisfactory to them, in form and substance satisfactory to
them, to the effect that such paragraph may be removed.
"Eligible Purchaser" means either an Eligible Dealer or a corporation,
partnership or other entity which we have reasonable grounds to believe and do
believe can make representations with respect to itself to substantially the
same effect as the representations set forth herein. "Eligible Dealer" means any
corporation or other entity the principal business of which is acting as a
broker and/or dealer in securities. "Benefit Plan" means any employee benefit
plan, trust or account, including an individual retirement account, that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or
that is described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or an entity whose underlying assets include plan assets by reason of a
plan's investment in such entity. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Pooling and Servicing
Agreement, dated as of May 16, 1996, among American Express Centurion Bank, a
Delaware banking institution, and American Express Receivables Financing
Corporation II, each as transferor, American Express Travel Related Services
Company, Inc., as Servicer, and The Bank of New York, as trustee.
Very truly yours,
------------------------------
(Name of Purchaser)
By: __________________________
(Authorized Officer)
G-2-3
<PAGE>
EXHIBIT G-3
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT
PLAN (AS DEFINED BELOW).(1)
- --------
(1) The following text should be included in any Certificate in
which the above legend appears:
The [Certificates] may not be acquired by or for the account of any
employee benefit plan, trust or account, including an individual retirement
account, that is subject to the Employee Retirement Income Security Act of
1974, as amended, or that is described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, or an entity whose underlying assets
include plan assets by reason of a plan's investment in such entity (a
"Benefit Plan"). By accepting and holding this Certificate, the Holder
hereof shall be deemed to have represented and warranted that it is not a
Benefit Plan. By acquiring any interest in this Certificate, the applicable
Certificate Owner or Owners shall be deemed to have represented and
warranted that it or they are not Benefit Plans.
G-3-1
<PAGE>
SCHEDULE 1
List of Accounts
[Original list delivered to Trustee]
<PAGE>
EXHIBIT 4.2
<PAGE>
EXECUTION COPY
==============================================================================
SERIES 1996-1 SUPPLEMENT
Dated as of May 16, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of May 16, 1996
$1,000,000,000
------------------------------
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
Series 1996-1
------------------------------
among
AMERICAN EXPRESS CENTURION BANK
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
as Transferors
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
as Servicer
and
THE BANK OF NEW YORK
as Trustee
on behalf of the Series 1996-1 Certificateholders
==============================================================================
G-3-4
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Creation of the Series 1996-1 Certificates
Section 1.01. Designation............................................... 1
ARTICLE II
Definitions
Section 2.01. Definitions................................................ 2
ARTICLE III
Servicing Fee
Section 3.01. Servicing Compensation..................................... 14
ARTICLE IV
Rights of Series 1996-1 Certificateholders and
Allocation and Application of Collections
Section 4.01. Collections and Allocations................................ 15
Section 4.02. Determination of Monthly Interest.......................... 17
Section 4.03. Principal Funding Account; Controlled Accumulation Period.. 18
Section 4.04. Required Amount............................................ 20
Section 4.05. Application of Class A Available Funds, Class B Available
Funds, Collateral Available Funds and Available Principal
Collections................................................ 21
Section 4.06. Defaulted Amounts; Investor Charge-Offs.................... 23
Section 4.07. Excess Spread; Excess Finance Charge Collections........... 24
Section 4.08. Reallocated Principal Collections.......................... 26
Section 4.09. Excess Finance Charge Collections.......................... 26
Section 4.10. Reallocated Investor Finance Charge Collections............ 27
Section 4.11. Shared Principal Collections............................... 28
Section 4.12. Reserve Account............................................ 28
Section 4.13. Investment Instructions.................................... 29
- i -
<PAGE>
ARTICLE V
Distributions and Reports to
Series 1996-1 Certificateholders
Section 5.01. Distributions............................................. 30
Section 5.02. Reports and Statements to Series 1996-1
Certificateholders........................................ 31
ARTICLE VI
Pay-Out Events
Section 6.01. Pay-Out Events............................................ 31
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.01. Optional Repurchase....................................... 33
Section 7.02. Series Termination........................................ 33
ARTICLE VIII
Final Distributions
Section 8.01. Sale of Receivables or Certificateholders' Interest
pursuant to Section 2.06 or 10.01 of the Agreement and
Section 7.01 or 7.02 of this Supplement.................. 34
Section 8.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables pursuant to Section 9.01
of the Agreement......................................... 35
ARTICLE IX
Miscellaneous Provisions
Section 9.01. Ratification of Agreement................................. 36
Section 9.02. Counterparts.............................................. 36
Section 9.03. Governing Law............................................. 36
- ii -
<PAGE>
EXHIBITS
EXHIBIT A-1 - Form of Class A Certificate
EXHIBIT A-2 - Form of Class B Certificate
EXHIBIT B - Form of Monthly Payment Instructions and Notification to the
Trustee
EXHIBIT C - Form of Monthly Series 1996-1 Certificateholders' Statement
EXHIBIT D - Form of Servicer's Certificate
- iii -
<PAGE>
SERIES 1996-1 SUPPLEMENT, dated as of May 16, 1996 (the "Supplement"),
among AMERICAN EXPRESS CENTURION BANK, a Delaware banking corporation,
and AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II, a Delaware
corporation, as Transferors, AMERICAN EXPRESS TRAVEL RELATED SERVICES
COMPANY, INC., a New York corporation, as Servicer, and THE BANK OF NEW
YORK, a banking corporation organized and existing under the laws of
the State of New York, not in its individual capacity, but solely as
Trustee.
Pursuant to the Pooling and Servicing Agreement, dated as of
May 16, 1996 (as amended and supplemented, the "Agreement"), among the
Transferors, the Servicer and the Trustee, the Transferors have created the
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST (the "Trust"). Section 6.03 of the
Agreement provides that the Transferors may from time to time direct the Trustee
to authenticate one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Supplement, the Transferors and the Trustee
shall create a new Series of Investor Certificates and specify the Principal
Terms thereof.
ARTICLE I
Creation of the Series 1996-1 Certificates
Section 1.01. Designation.
(a) There is hereby created a Series of Investor Certificates
to be issued pursuant to the Agreement and this Supplement to be known as
"American Express Credit Account Master Trust, Series 1996-1." The Series 1996-1
Certificates shall be issued in two Classes, the first of which shall be known
as the "Class A Series 1996-1 6.80% Asset Backed Certificates" and the second of
which shall be known as the "Class B Series 1996-1 6.95% Asset Backed
Certificates." In addition, there is hereby created a third Class of
uncertificated interests in the Trust which shall be known as the "Collateral
Interest, Series 1996-1" and which shall be deemed to be "Investor Certificates"
for all purposes under the Agreement and this Supplement other than for purposes
of the definition of the term "Tax Opinion" in Section 1.01 of the Agreement.
The Collateral Interest shall be considered a Class of Series 1996-1 for all
purposes of the Agreement and this Supplement, including for purposes of voting
concerning the liquidation of the Trust pursuant to Section 9.01 of the
Agreement. The Collateral Interest Holder shall be deemed to be the Series
Enhancer for all purposes under the Agreement and this Supplement.
(b) Series 1996-1 shall be included in Group I and shall be a
Principal Sharing Series. Series 1996-1 shall be an Excess Allocation Series.
Series 1996-1 shall not be subordinated to any other Series. Notwithstanding any
provision in the Agreement or in this Supplement to the contrary, the first
Distribution Date with respect to Series 1996-1 shall be the July 15, 1996
Distribution Date and the first Monthly Period shall begin on and include May
16, 1996 and end on and include June 25, 1996.
(c) Except as expressly provided herein, the provisions of
Article VI and Article XII of the Agreement relating to the registration,
authentication, delivery, presentation, cancellation and surrender of Registered
Certificates shall not be applicable to the Collateral Interest.
<PAGE>
ARTICLE II
Definitions
Section 2.01. Definitions.
(a) Whenever used in this Supplement, the following words and
phrases shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms.
"Additional Interest" means, with respect to any Distribution
Date, the Class A Additional Interest, the Class B Additional Interest and the
Collateral Additional Interest for such Distribution Date.
"Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Invested Amount less the Principal
Funding Account Balance on such date of determination.
"Available Principal Collections" shall mean, with respect to
any Monthly Period, an amount equal to the sum of (a) (i) an amount equal to the
Principal Allocation Percentage of Series 1996-1 Allocable Principal Collections
received during such Monthly Period minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period which pursuant to
Section 4.08 are required to fund the Required Amount for the related
Distribution Date, (b) any Shared Principal Collections with respect to other
Series that are allocated to Series 1996-1 in accordance with Section 4.04 of
the Agreement and Section 4.11 hereof, and (c) any other amounts which pursuant
to Section 4.05 or 4.07 hereof are to be treated as Available Principal
Collections with respect to the related Distribution Date.
"Available Reserve Account Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (before giving effect to any deposit to be made to the
Reserve Account on such date) and (b) the Required Reserve Account Amount.
"Base Rate" shall mean, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
equal to the sum of the Class A Monthly Interest, the Class B Monthly Interest,
Collateral Monthly Interest and the Monthly Servicing Fee with respect to the
related Distribution Date and the denominator of which is the Invested Amount as
of the last day of the preceding Monthly Period.
"Class A Additional Interest" shall have the meaning specified
in subsection 4.02(a).
"Class A Adjusted Invested Amount" shall mean, with respect to
any date of determination, an amount equal to the Class A Invested Amount less
the Principal Funding Account Balance (but not in excess of the Class A Invested
Amount) on such date.
"Class A Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) if such Monthly Period relates
to a Distribution Date with respect to the Controlled Accumulation Period, the
amount of Principal Funding Investment Proceeds, if any, with respect to such
Distribution Date, (b) the Class A Floating Percentage of the Reallocated
Investor Finance Charge Collections and (c) the amount of funds, if any, to be
withdrawn from the Reserve Account which, pursuant to subsection 4.12(d), are
required to be included in Class A Available Funds with respect to such
Distribution Date.
- 2 -
<PAGE>
"Class A Certificate Rate" shall mean 6.80% per annum,
calculated on the basis of a 360-day year consisting of twelve 30-day months.
"Class A Certificateholder" shall mean the Person in whose
name a Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any one of the Certificates
executed by the Transferors and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-l.
"Class A Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Adjusted
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of such day; provided, however, that with respect to the first Monthly
Period, the Class A Floating Percentage shall mean the percentage equivalent of
a fraction, the numerator of which is the Class A Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class A Initial Invested Amount" shall mean $865,000,000.
"Class A Interest Shortfall" shall have the meaning specified
in subsection 4.02(a).
"Class A Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Invested Amount, minus
(b) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to such date, minus (c) the excess, if any, of
(i) the aggregate amount of Class A Investor Charge-Offs for all prior
Distribution Dates over (ii) Class A Investor Charge-Offs reimbursed pursuant to
subsection 4.07(b) prior to such date.
"Class A Investor Charge-Offs" shall have the meaning
specified in subsection 4.06(a).
"Class A Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Investor
Default Amount for the related Monthly Period and (ii) the Class A Floating
Percentage for such Monthly Period.
"Class A Monthly Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class A Invested Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Invested Amount as of such day and
(ii) during the Controlled Accumulation Period, the Early Amortization Period or
any Partial 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 close of business on the date on which the Revolving
Period shall have terminated and the denominator of which is the Invested Amount
as of the close of business on the date on which the Revolving Period shall have
terminated; provided, however, that with respect to the first Monthly Period,
the Class A Principal Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Class A Initial Invested Amount and
denominator of which is the Initial Invested Amount.
"Class A Required Amount" shall have the meaning specified in
subsection 4.04(a).
- 3 -
<PAGE>
"Class A Servicing Fee" shall have the meaning specified in
Section 3.01.
"Class B Additional Interest" shall have the meaning specified
in subsection 4.02(b).
"Class B Adjusted Invested Amount" shall mean an amount equal
to the Class B Invested Amount less the positive difference, if any, between the
Principal Funding Account Balance and the Class A Invested Amount on such date.
"Class B Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the Class B Floating Percentage of the
Reallocated Investor Finance Charge Collections.
"Class B Certificate Rate" shall mean 6.95% per annum,
calculated on the basis of a 360-day year consisting of twelve 30-day months.
"Class B Certificateholder" shall mean the Person in whose
name a Class B Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean any one of the Certificates
executed by the Transferors and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2.
"Class B Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class B Adjusted
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of the close of business on such day; provided, however, that with
respect to the first Monthly Period, the Class B Floating Percentage shall mean
the percentage equivalent of a fraction, the numerator of which is the Class B
Initial Invested Amount and the denominator of which is the Initial Invested
Amount.
"Class B Initial Invested Amount" shall mean $60,000,000.
"Class B Interest Shortfall" shall have the meaning specified
in subsection 4.02(b).
"Class B Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Invested Amount, minus
(b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, minus (d) the amount of
Reallocated Principal Collections allocated on all prior Distribution Dates
pursuant to subsection 4.08(a) (excluding any Reallocated Principal Collections
that have resulted in a reduction in the Collateral Invested Amount pursuant to
Section 4.08), minus (e) an amount equal to the amount by which the Class B
Invested Amount has been reduced on all prior Distribution Dates pursuant to
subsection 4.06(a) and plus (f) the amount of Excess Spread and Excess Finance
Charge Collections allocated and available on all prior Distribution Dates
pursuant to subsection 4.07(e) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e); provided, however, that the
Class B Invested Amount may not be reduced below zero.
"Class B Investor Charge-Offs" shall have the meaning
specified in subsection 4.06(b).
"Class B Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Investor
Default Amount for the related Monthly Period and (ii) the Class B Floating
Percentage for such Monthly Period.
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"Class B Monthly Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Principal Percentage" shall mean, with respect to any
Monthly Period, (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class B Invested Amount as of the last day of the immediately preceding
Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the Controlled Accumulation Period, the Early Amortization
Period or any Partial 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 close of business on the date on which the
Revolving Period shall have terminated and the denominator of which is the
Invested Amount as of the close of business on the date on which the Revolving
Period shall have terminated; provided, however, that with respect to the first
Monthly Period, the Class B Principal Percentage shall mean the percentage
equivalent of a fraction, the numerator of which is the Class B Initial Invested
Amount and the denominator of which is the Initial Invested Amount.
"Class B Required Amount" shall have the meaning set forth in
subsection 4.04(b).
"Class B Servicing Fee" shall have the meaning specified in
Section 3.01.
"Closing Date" shall mean May 16, 1996.
"Collateral Additional Interest" shall have the meaning
specified in subsection 4.02(c).
"Collateral Available Funds" shall mean with respect to any
Distribution Date, the Collateral Floating Percentage of Reallocated Investor
Finance Charge Collections with respect to the preceding Monthly Period.
"Collateral Charge-Offs" shall have the meaning specified in
subsection 4.06(c).
"Collateral Default Amount" shall mean, with respect to any
Distribution Date, the product of the Investor Default Amount for the related
Monthly Period and the Collateral Floating Percentage.
"Collateral Floating Percentage" shall mean, with respect to
any Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the Collateral
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is the Adjusted Invested Amount as
of the close of business on such last day; provided, however, that with respect
to the first Monthly Period, the Collateral Floating Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is the Collateral
Initial Invested Amount and the denominator of which is the Initial Invested
Amount.
"Collateral Initial Invested Amount" shall mean $75,000,000.
"Collateral Interest" shall mean a fractional undivided
interest in the Trust which shall consist of the right to receive, to the extent
necessary to make the required payments to the Collateral Interest Holder under
this Supplement, the portion of Collections allocable thereto under the
Agreement and this Supplement and funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Supplement.
"Collateral Interest Holder" shall mean the entity so
designated in the Loan Agreement.
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"Collateral Interest Shortfall" shall have the meaning
specified in subsection 4.02(c).
"Collateral Invested Amount" shall mean, when used with
respect to any date, an amount equal to (a) the Collateral Initial Invested
Amount, minus (b) the aggregate amount of principal payments made to the
Collateral Interest Holder prior to such date, minus (c) the aggregate amount of
Collateral Charge-Offs for all prior Distribution Dates pursuant to subsection
4.06(c), minus (d) the aggregate amount of Reallocated Principal Collections
allocated on all prior Distribution Dates pursuant to Section 4.08 allocable to
the Collateral Invested Amount, minus (e) an amount equal to the amount by which
the Collateral Invested Amount has been reduced on all prior Distribution Dates
pursuant to subsections 4.06(a) and (b), and plus (f) the amount allocated and
available on all prior Distribution Dates pursuant to subsection 4.07(i), for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Collateral Invested Amount may not
be reduced below zero.
"Collateral Monthly Interest" shall have the meaning
specified in subsection 4.02(c).
"Collateral Principal Percentage" shall mean, with respect to
any Monthly Period, (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Collateral Invested Amount as of the last day of the immediately
preceding Monthly Period and the denominator of which is the Invested Amount as
of such day and (ii) during the Controlled Accumulation Period, the Early
Amortization Period or any Partial 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 close of business
on the date on which the Revolving Period shall have terminated and the
denominator of which is the Invested Amount as of the close of business on the
date on which the Revolving Period shall have terminated; provided, however,
that with respect to the first Monthly Period, the Collateral Principal
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Collateral Initial Invested Amount and the denominator of which is
the Initial Invested Amount.
"Collateral Rate" shall mean the rate specified in the Loan
Agreement.
"Collateral Servicing Fee" shall have the meaning set forth
in Section 3.01.
"Controlled Accumulation Amount" shall mean, for any
Distribution Date with respect to the Controlled Accumulation Period,
$77,083,333.34; provided, however, that, if the Controlled Accumulation Period
Length is determined to be less than 12 months, the Controlled Accumulation
Amount for each Distribution Date with respect to the Controlled Accumulation
Period will be equal to (i) the product of (x) the sum of the Class A Initial
Invested Amount and the Class B Initial Invested Amount and (y) the Controlled
Accumulation Period Factor for the related Monthly Period divided by (ii) the
Required Accumulation Factor Number.
"Controlled Accumulation Period" shall mean, unless a Pay-Out
Event shall have occurred prior thereto, the period commencing at the close of
business on the last day of the April 2000 Monthly Period or such later date as
is determined in accordance with subsection 4.03(c) and ending on the first to
occur of (a) the commencement of the Early Amortization Period, (b) the payment
in full of the Invested Amount and (c) the Series 1996-1 Termination Date.
"Controlled Accumulation Period Factor" shall mean, for each
Monthly Period, a fraction, the numerator of which is equal to the sum of the
series invested amounts as of the last day of the prior Monthly Period of all
outstanding Series, and the denominator of which is equal to the sum
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(without duplication) of (a) the Series Invested Amount as of the last day of
the prior Monthly Period, (b) the series invested amounts as of the last day of
the prior Monthly Period of all outstanding Series (other than Series 1996-1)
that are not expected to be in their revolving periods, and (c) the series
invested amounts as of the last day of the prior Monthly Period of all other
outstanding Series that are not Principal Sharing Series and are in their
revolving periods.
"Controlled Accumulation Period Length" has the meaning
specified in subsection 4.03(c).
"Controlled Deposit Amount" shall mean, for any Distribution
Date with respect to the Controlled Accumulation Period, an amount equal to the
sum of the Controlled Accumulation Amount for such Distribution Date and any
Deficit Controlled Accumulation Amount for the immediately preceding
Distribution Date.
"Covered Amount" shall mean, for any Distribution Date with
respect to the Controlled Accumulation Period or the first Special Payment Date,
if such Special Payment Date occurs prior to the date the Class A Invested
Amount is paid in full, an amount equal to the product of (i) one-twelfth of the
Class A Certificate Rate and (ii) the Principal Funding Account Balance, if any,
as of the preceding Distribution Date.
"Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution Date
over the amount deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited in the Principal
Funding Account on such subsequent Distribution Date.
"Distribution Date" shall mean July 15, 1996, and the 15th day
of each calendar month thereafter, or if such 15th day is not a Business Day,
the next succeeding Business Day.
"Early Amortization Period" shall mean the period commencing
at the close of business on the Business Day immediately preceding the day on
which a Pay-Out Event with respect to Series 1996-1 is deemed to have occurred,
and ending on the first to occur of (i) the payment in full of the Invested
Amount or (ii) the Series 1996-1 Termination Date.
"Excess Spread" shall mean, with respect to any Distribution
Date, the sum of the amounts, if any, specified pursuant to subsections
4.05(a)(iv), 4.05(b)(iii) and 4.05(c)(ii) with respect to such Distribution
Date.
"Expected Final Payment Date" shall mean the May 2001
Distribution Date.
"Finance Charge Shortfall" shall have the meaning specified
in Section 4.09.
"Floating Allocation Percentage" shall mean, with respect to
any Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Adjusted Invested
Amount as of the last day of the preceding Monthly Period (or with respect to
the first Monthly Period, the Initial Invested Amount) and the denominator of
which is the product of (x) the Series 1996-1 Allocation Percentage with respect
to such Monthly Period and (y) the sum of (i) the total amount of Principal
Receivables in the Trust as of such day (or with respect to the first Monthly
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Period, the total amount of Principal Receivables in the Trust on the Closing
Date) and (ii) the principal amount on deposit in the Special Funding Account as
of such last day (or with respect to the first Monthly Period, as of the Closing
Date); provided, however, that with respect to any Monthly Period in which an
Addition Date for an Aggregate Addition or a Removal Date occurs the amount in
(y)(i) above shall be (1) the aggregate amount of Principal Receivables in the
Trust at the end of the day on the last day of the prior Monthly Period for the
period from and including the first day of such Monthly Period to but excluding
the related Addition Date or Removal Date and (2) the aggregate amount of
Principal Receivables in the Trust at the end of the day on the related Addition
Date or Removal Date for the period from and including the related Addition Date
or Removal Date to and including the last day of such Monthly Period.
"Group I" shall mean Series 1996-1 and each other Series
specified in the related Supplement to be included in Group I.
"Group I Investor Additional Amounts" shall mean, with respect
to any Distribution Date, the sum of (a) Series 1996-1 Additional Amounts for
such Distribution Date and (b) for all other Series included in Group I, the sum
of (i) the aggregate net amount by which the Invested Amounts of such Series
have been reduced as a result of investor charge-offs, subordination of
principal collections and funding the investor default amounts in respect of any
Class or Series Enhancement interests of such Series as of such Distribution
Date and (ii) if the applicable Supplements so provide, the aggregate unpaid
amount of interest at the applicable certificate rates that has accrued on the
amounts described in the preceding clause (i) for such Distribution Date.
"Group I Investor Default Amount" shall mean, with respect to
any Distribution Date, the sum of (a) the Investor Default Amount for such
Distribution Date and (b) the aggregate amount of the investor default amounts
for all other Series included in Group I for such Distribution Date.
"Group I Investor Finance Charge Collections" shall mean, with
respect to any Distribution Date, the sum of (a) Investor Finance Charge
Collections for such Distribution Date and (b) the aggregate amount of the
investor finance charge collections for all other Series included in Group I for
such Distribution Date.
"Group I Investor Monthly Fees" shall mean with respect to any
Distribution Date, the sum of (a) Series 1996-1 Monthly Fees for such
Distribution Date and (b) the aggregate amount of the servicing fees, investor
fees, fees payable to any Series Enhancer and any other similar fees, which are
payable out of reallocated investor finance charge collections pursuant to the
related Supplements, for all other Series included in Group I for such
Distribution Date.
"Group I Investor Monthly Interest" shall mean, with respect
to any Distribution Date, the sum of (a) Series 1996-1 Monthly Interest for such
Distribution Date and (b) the aggregate amount of monthly interest, including
overdue monthly interest and interest on such overdue monthly interest, if such
amounts are payable out of reallocated investor finance charge collections
pursuant to the related Supplements, for all other Series included in Group I
for such Distribution Date.
"Initial Invested Amount" shall mean $1,000,000,000.
"Invested Amount" shall mean, as of any date of determination,
an amount equal to the sum of (a) the Class A Invested Amount as of such date,
(b) the Class B Invested Amount as of such date and (c) the Collateral Invested
Amount as of such date.
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<PAGE>
"Investor Charge-Offs" shall mean Class A Investor
Charge-Offs, Class B Investor Charge-Offs and Collateral Charge-Offs.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Series 1996-1
Allocable Defaulted Amount for the related Monthly Period and (b) the Floating
Allocation Percentage for such Monthly Period.
"Investor Finance Charge Collections" shall mean with respect
to any Distribution Date, an amount equal to the product of (a) the Floating
Allocation Percentage for the related Monthly Period and (b) Series 1996-1
Allocable Finance Charge Collections deposited in the Collection Account for the
related Monthly Period.
"Loan Agreement" shall mean the agreement among the
Transferors, the Trustee and the Collateral Interest Holder, dated as of May 16,
1996.
"Monthly Interest" means, with respect to any Distribution
Date, the Class A Monthly Interest, the Class B Monthly Interest and the
Collateral Monthly Interest for such Distribution Date.
"Monthly Servicing Fee" shall have the meaning specified in
subsection 3.01.
"Pay-Out Event" shall mean any Pay-Out Event specified in
Section 6.01.
"Principal Allocation Percentage" shall mean, with respect to
any day during a Monthly Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is (a) during the
Revolving Period, the Series Adjusted Invested Amount for Series 1996-1 as of
the last day of the immediately preceding Monthly Period (or, in the case of the
first Monthly Period, the Initial Invested Amount) and (b) during the Controlled
Accumulation Period, the Early Amortization Period or any Partial Amortization
Period, the Series Adjusted Invested Amount for Series 1996-1 as of the close of
business on the date on which the Revolving Period shall have terminated and the
denominator of which is the product of (x) the sum of (i) the total amount of
Principal Receivables in the Trust as of the last day of the immediately
preceding Monthly Period (or with respect to the first Monthly Period, the total
amount of Principal Receivables in the Trust as of the Closing Date) and (ii)
the principal amount on deposit in the Special Funding Account as of such last
day (or with respect to the first Monthly Period, the Closing Date) and (y) the
Series 1996-1 Allocation Percentage as of the last day of the immediately
preceding Monthly Period; provided, however, that with respect to any Monthly
Period in which an Addition Date for an Aggregate Addition or a Removal Date
occurs the amount in (x)(i) above shall be (1) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the last day of the prior
Monthly Period for the period from and including the first day of such Monthly
Period to but excluding the related Addition Date or Removal Date and (2) the
aggregate amount of Principal Receivables in the Trust at the end of the day on
the related Addition Date or Removal Date for the period from and including the
related Addition Date or Removal Date to and including the last day of such
Monthly Period; and provided further, that if after the commencement of the
Controlled Accumulation Period a Pay-Out Event occurs with respect to another
Series that was designated in the Supplement therefor as a Series that is a
"Paired Series" with respect to Series 1996-1, the Transferors may, by written
notice delivered to the Trustee and the Servicer, designate a different
numerator for the foregoing fraction, provided that (x) such numerator is not
less than the Adjusted Invested Amount as of the last day of the revolving
period for such Paired Series, (y) the Transferors shall have received written
notice from each Rating Agency that the Rating Agency Condition has been
satisfied with respect to such designation and shall have delivered copies of
each such written notice to the Servicer and the Trustee and (z) the Transferors
shall have delivered to the Trustee
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<PAGE>
an Officer's Certificate to the effect that, based on the facts known to such
officer at such time, in the reasonable belief of the Transferors, such
designation will not cause a Pay-Out Event or an event that, after the giving of
notice or the lapse of time, would constitute a Pay-Out Event, to occur with
respect to Series 1996-1.
"Principal Funding Account" shall have the meaning specified
in subsection 4.03(a)(i).
"Principal Funding Account Balance" shall mean, with respect
to any date of determination during the Controlled Accumulation Period, the
principal amount, if any, on deposit in the Principal Funding Account on such
date of determination.
"Principal Funding Investment Proceeds" shall have the meaning
specified in subsection 4.03(a)(ii).
"Principal Funding Investment Shortfall" shall mean, with
respect to each Distribution Date during the Controlled Accumulation Period, the
amount, if any, by which the Principal Funding Investment Proceeds are less than
the Covered Amount.
"Reallocated Investor Finance Charge Collections" shall mean
that portion of Group I Investor Finance Charge Collections allocated to Series
1996-1 pursuant to Section 4.10.
"Reallocated Principal Collections" shall mean, with respect
to any Monthly Period, the product of (a) the Series 1996-1 Allocable Principal
Collections deposited in the Collection Account for such Monthly Period and (b)
the sum of the Class B Principal Percentage and the Collateral Principal
Percentage.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (i) the Adjusted
Invested Amount on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series 1996-1 Certificateholders on a prior Distribution Date, plus (iii)
the amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which is
one and the denominator of which is equal to the lowest monthly principal
payment rate on the Accounts, expressed as a decimal, for the three months
preceding the date of such calculation.
"Required Amount" shall mean, with respect to any Monthly
Period, the sum of the Class A Required Amount and the Class B Required Amount.
"Required Collateral Invested Amount" shall mean (i) initially
$75,000,000 and (ii) on any Distribution Date thereafter, 7.5% of the sum of the
Class A Adjusted Invested Amount on such Distribution Date, the Class B Adjusted
Invested Amount on such Distribution Date (in each case after taking into
account payments to be made on such Distribution Date) and the Collateral
Invested Amount on such Distribution Date after taking into account any
adjustments made on such Distribution Date, but not less than $30,000,000,
provided, however, that (1) if either (a) there is a reduction in the Collateral
Invested Amount pursuant to clauses (c), (d) or (e) of the definition thereof
during the Controlled Accumulation Period or (b) a Pay-Out Event with respect to
the Series 1996-1 Certificates has
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<PAGE>
occurred, the Required Collateral Invested Amount for such Distribution Date
thereafter shall equal the Required Collateral Invested Amount for such
Distribution Date immediately preceding such reduction or Pay-Out Event, (2) in
no event shall the Required Collateral Invested Amount exceed the unpaid
principal amount of the Series 1996-1 Certificates as of the last day of the
Monthly Period preceding such Distribution Date after taking into account
payments to be made on the related Distribution Date and (3) the Required
Collateral Invested Amount may be reduced to a lesser amount at any time if the
Rating Agency Condition is satisfied.
"Required Reserve Account Amount" shall mean, with respect to
any Distribution Date on or after the Reserve Account Funding Date, an amount
equal to (1) 0.50% of the Class A Invested Amount as of the preceding
Distribution Date (after giving effect to all changes therein on such date) or
(2) any other percentage (which may be 0%) of the Class A Invested Amount
designated by the Transferors, provided that if such percentage is less than the
percentage specified in clause (1) above, the Transferors shall have received
the prior written consent of the Collateral Interest Holder and written notice
from each Rating Agency that the Rating Agency Condition shall have been
satisfied with respect to such designation and shall have delivered copies of
each such written notice to the Servicer and the Trustee.
"Reserve Account" shall have the meaning specified in
subsection 4.12(a).
"Reserve Account Funding Date" shall mean the Distribution
Date with respect to the Monthly Period which commences three months prior to
the Distribution Date with respect to the first Monthly Period in the Controlled
Accumulation Period or such earlier date as the Transferors may determine by
written notice to the Trustee and the Servicer.
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in the Reserve
Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in
subsection 4.12(c).
"Revolving Period" shall mean the period beginning at the
close of business on the Series Cut-Off Date and ending on the earlier of (a)
the close of business on the day immediately preceding the day the Controlled
Accumulation Period commences and (b) the close of business on the day
immediately preceding the day the Early Amortization Period commences.
"Series Adjusted Portfolio Yield" shall mean, with respect to
any Monthly Period, the annualized percentage equivalent of a fraction, (A) the
numerator of which is equal to (a) Reallocated Investor Finance Charge
Collections with respect to such Monthly Period, plus (b) the amount of any
Principal Funding Investment Proceeds for the related Distribution Date, plus
(c) provided that each Rating Agency has consented in writing to the inclusion
thereof in calculating the Series Adjusted Portfolio Yield, any Excess Finance
Charge Collections that are allocated to Series 1996-1 with respect to such
Monthly Period plus (d) the amount of funds, if any, withdrawn from the Reserve
Account which pursuant to subsection 4.12(d) are required to be included as
Class A Available Funds for the Distribution Date with respect to such Monthly
Period minus (e) the Investor Default Amount for the Distribution Date with
respect to such Monthly Period, and (B) the denominator of which is the Invested
Amount as of the last day of the preceding Monthly Period.
"Series Cut-Off Date" shall mean the close of business on
April 25, 1996.
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"Series 1996-1" shall mean the Series of Certificates the
terms of which are specified in this Supplement.
"Series 1996-1 Additional Amounts" shall mean, with respect to
any Distribution Date, the sum of the amounts determined pursuant to subsections
4.07(b), (e) and (i) for such Distribution Date.
"Series 1996-1 Allocable Defaulted Amount" shall mean the
Series Allocable Defaulted Amount with respect to Series 1996-1.
"Series 1996-1 Allocable Finance Charge Collections" shall
mean the Series Allocable Finance Charge Collections with respect to Series
1996-1.
"Series 1996-1 Allocable Principal Collections" shall mean
the Series Allocable Principal Collections with respect to Series 1996-1.
"Series 1996-1 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1996-1.
"Series 1996-1 Certificate" shall mean a Class A Certificate
or a Class B Certificate or the Collateral Interest.
"Series 1996-1 Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder or the Collateral Interest
Holder.
"Series 1996-1 Certificateholders' Interest" shall mean the
Certificateholders' Interest for Series 1996-1, including the Collateral
Interest.
"Series 1996-1 Monthly Fees" shall mean, with respect to any
Distribution Date, the amount determined pursuant to subsections 4.05(a)(ii),
(b)(ii) and (c)(i) and subsection 4.07(g).
"Series 1996-1 Monthly Interest" shall mean the amounts
determined pursuant to subsections 4.02(a), (b) and (c).
"Series 1996-1 Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series 1996-1 Termination Date" shall mean the December 2003
Distribution Date.
"Series Invested Amount" shall mean the Initial Invested
Amount.
"Series Required Transferor Amount" shall mean an amount
equal to 7% of the Invested Amount.
"Servicing Base Amount" shall have the meaning specified in
Section 3.01.
"Servicing Fee Rate" shall mean 2.0% per annum.
"Special Payment Date" shall mean each Distribution Date
with respect to the Early Amortization Period.
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<PAGE>
"Transferor Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used at any time with respect to Finance Charge
Receivables and Defaulted Receivables, or (b) the Principal Allocation
Percentage, when used at any time with respect to Principal Receivables.
(b) Notwithstanding anything to the contrary in this
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever used
in this Supplement or the Agreement with respect to Series 1996-1, Moody's and
Standard & Poor's. As used in this Supplement and in the Agreement with respect
to Series 1996-1, "highest investment category" shall mean (i) in the case of
Standard & Poor's, AAA or A-1+, as applicable and (ii) in the case of Moody's,
Aaa or P-1, as applicable.
(c) Each capitalized term defined herein shall relate to the
Series 1996-1 Certificates and no other Series of Certificates issued by the
Trust, unless the context otherwise requires. All capitalized terms used herein
and not otherwise defined herein have the meanings ascribed to them in the
Agreement. In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Supplement shall refer to this Supplement as a
whole and not to any particular provision of this Supplement; references to any
Article, subsection, Section or Exhibit are references to Articles, subsections,
Sections and Exhibits in or to this Supplement unless otherwise specified; and
the term "including" means "including without limitation."
ARTICLE III
Servicing Fee
Section 3.01. Servicing Compensation. The share of the
Servicing Fee allocable to the Series 1996-1 Certificateholders with respect to
any Distribution Date (the "Monthly Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) (i) the
Adjusted Invested Amount as of the last day of the Monthly Period preceding such
Distribution Date, minus (ii) the product of the amount, if any, on deposit in
the Special Funding Account as of the last day of the Monthly Period preceding
such Distribution Date and the Series 1996-1 Allocation Percentage with respect
to such Monthly Period (the amount calculated pursuant to this clause (b) is
referred to as the "Servicing Base Amount"); provided, however, that with
respect to the first Distribution Date, the Monthly Servicing Fee shall be equal
to $2,500,000. The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders with respect to any Distribution Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the Class A
Servicing Fee shall be equal to $2,162,500. 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; provided, however, that with respect to the first
Distribution Date, the Class B Servicing Fee shall be equal to $150,000. The
share of the Monthly Servicing Fee allocable to the Collateral Interest with
respect to any Distribution Date (the "Collateral Servicing Fee") shall be equal
to one-twelfth of the product of the (a) Collateral Floating Percentage, (b) the
Servicing Fee Rate and (c) the Servicing Base Amount; provided, however, that
with respect to the first Distribution Date, the Collateral Servicing Fee shall
be equal to $187,500. The remainder of the Servicing Fee shall be paid by the
Holders of the Transferor Certificates or the investor
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certificateholders of other Series (as provided in the related Supplements) and
in no event shall the Trust, the Trustee or the Series 1996-1 Certificateholders
be liable for the share of the Servicing Fee to be paid by the Holders of the
Transferor Certificates or the investor certificateholders of any other Series.
To the extent that the Class A Servicing Fee, the Class B Servicing Fee and the
Collateral Servicing Fee are not paid in full pursuant to the preceding
provisions of this Section 3.01, and Sections 4.05 and 4.07, they shall be paid
by the Holders of the Transferor Certificates.
ARTICLE IV
Rights of Series 1996-1 Certificateholders and
Allocation and Application of Collections
Section 4.01. Collections and Allocations.
(a) Allocations. Collections of Finance Charge Receivables and
Principal Receivables and Defaulted Receivables allocated to Series 1996-1
pursuant to Article IV of the Agreement (and, as described herein, Collections
of Finance Charge Receivables reallocated from other Series in Group I) shall be
allocated and distributed or reallocated as set forth in this Article.
(b) Payments to the Transferor. The Servicer shall on each
Deposit Date withdraw from the Collection Account and pay to the Holders of the
Transferor Certificates the following amounts:
(i) an amount equal to the Transferor Percentage for the
related Monthly Period of Series 1996-1 Allocable Finance Charge
Collections to the extent such amount is deposited in the Collection
Account; and
(ii) an amount equal to the Transferor Percentage for the
related Monthly Period of Series 1996-1 Allocable Principal Collections
deposited in the Collection Account, if the Transferor Amount
(determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds zero.
The withdrawals to be made from the Collection Account
pursuant to this subsection 4.01(b) do not apply to deposits into the Collection
Account that do not represent Collections, including payment of the purchase
price for the Certificateholders' Interest pursuant to Section 2.06 or 10.01 of
the Agreement, payment of the purchase price for the Series 1996-1
Certificateholders' Interest pursuant to Section 7.01 of this Supplement and
proceeds from the sale, disposition or liquidation of Receivables pursuant to
Section 9.01 or 12.02 of the Agreement.
(c) Allocations to the Series 1996-1 Certificateholders. The
Servicer shall, prior to the close of business on each Deposit Date, allocate to
the Series 1996-1 Certificateholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The Servicer
shall allocate to the Series 1996-1 Certificateholders and retain in
the Collection Account for application as provided herein an amount
equal to the product of (A) the Floating Allocation Percentage and (B)
the Series 1996- 1 Allocation Percentage and (C) the aggregate amount
of Collections of Finance Charge Receivables deposited in the
Collection Account on such Deposit Date.
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(ii) Allocations of Principal Collections. The Servicer
shall allocate to the Series 1996-1 Certificateholders the following
amounts as set forth below:
(x) Allocations During the Revolving Period. During the
Revolving Period (A) an amount equal to the product of (I) the
sum of the Class B Principal Percentage and the Collateral
Principal Percentage and (II) the Principal Allocation
Percentage and (III) the Series 1996-1 Allocation Percentage
and (IV) the aggregate amount of Collections of Principal
Receivables deposited in the Collection Account on such
Deposit Date, shall be allocated to the Series 1996-1
Certificateholders and retained in the Collection Account
until applied as provided herein and (B) an amount equal to
the product of (I) the Class A Principal Percentage and (II)
the Principal Allocation Percentage and (III) the Series
1996-1 Allocation Percentage and (IV) the aggregate amount of
Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date shall be allocated to
the Series 1996-1 Certificateholders and, to the extent needed
to make any distribution pursuant to subsection 4.05(d)(i),
deposited in the Collection Account, and otherwise first, if
any other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary,
as Shared Principal Collections on the related Distribution
Date, and second paid to the Holders of the Transferor
Certificates; provided, however, that such amount to be paid
to the Holders of the Transferor Certificates on any Deposit
Date shall be paid to such Holders only if the Transferor
Amount on such Deposit Date is greater than the Required
Transferor Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day) and
otherwise shall be deposited in the Special Funding Account.
(y) Allocations During the Controlled Accumulation
Period. During the Controlled Accumulation Period (A) an
amount equal to the product of (I) the sum of the Class B
Principal Percentage and the Collateral Principal Percentage
and (II) the Principal Allocation Percentage and (III) the
Series 1996-1 Allocation Percentage and (IV) the aggregate
amount of Collections of Principal Receivables deposited in
the Collection Account on such Deposit Date, shall be
allocated to the Series 1996-1 Certificateholders and retained
in the Collection Account until applied as provided herein and
(B) an amount equal to the product of (I) the Class A
Principal Percentage and (II) the Principal Allocation
Percentage and (III) the Series 1996-1 Allocation Percentage
and (IV) the aggregate amount of Collections of Principal
Receivables deposited in the Collection Account on such
Deposit Date (the product specified in this clause (B) for any
such date is hereinafter referred to as a "Percentage
Allocation") shall be allocated to the Series 1996-1
Certificateholders and retained in the Collection Account
until applied as provided herein; provided, however, that if
the sum of such Percentage Allocation and all preceding
Percentage Allocations with respect to the same Monthly Period
exceeds the Controlled Deposit Amount during the Controlled
Accumulation Period for the related Distribution Date, then
such excess shall not be treated as a Percentage Allocation
and shall be first, if any other Principal Sharing Series is
outstanding and in its amortization period or accumulation
period, retained in the Collection Account for application, to
the extent necessary, as Shared Principal Collections on the
related Distribution Date, and second paid to the Holders of
the Transferor Certificates only if the Transferor Amount on
such Deposit Date is greater than the Required Transferor
Amount (after giving effect to all Principal Receivables
transferred to the Trust on such day) and otherwise shall be
deposited in the Special Funding Account.
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(z) Allocations During the Early Amortization Period.
During the Early Amortization Period, an amount equal to the
product of (A) the Principal Allocation Percentage and (B) the
Series 1996-1 Allocation Percentage and (C) the aggregate
amount of Collections of Principal Receivables deposited in
the Collection Account on such Deposit Date, shall be
allocated to the Series 1996-1 Certificateholders and retained
in the Collection Account until applied as provided herein;
provided, however, that after the date on which an amount of
such Collections equal to the Adjusted Invested Amount has
been deposited into the Collection Account and allocated to
the Series 1996-1 Certificateholders, the remainder that has
not been so deposited and allocated shall be first, if any
other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary,
as Shared Principal Collections on the related Distribution
Date, and second paid to the Holders of the Transferor
Certificates only if the Transferor Amount on such date is
greater than the Required Transferor Amount (after giving
effect to all Principal Receivables transferred to the Trust
on such day) and otherwise shall be deposited in the Special
Funding Account.
Section 4.02. Determination of Monthly Interest.
(a) The amount of monthly interest ("Class A Monthly
Interest") distributable from the Collection Account with respect to the Class A
Certificates on any Distribution Date shall be an amount equal to the product of
(i) one-twelfth of the Class A Certificate Rate and (ii) the outstanding
principal balance of the Class A Certificates as of close of business on the
last day of the preceding Monthly Period; provided that Class A Monthly Interest
for the first Distribution Date shall be an amount equal to $9,639,944.44.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class A Interest
Shortfall"), of (x) the Class A Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class A
Monthly Interest on such Distribution Date. If the Class A Interest Shortfall
with respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class A Interest Shortfall is fully paid, an
additional amount ("Class A Additional Interest") equal to the product of (i)
one-twelfth of the sum of (x) the Class A Certificate Rate and (y) 2.0% per
annum and (ii) such Class A Interest Shortfall (or the portion thereof which has
not been paid to the Class A Certificateholders) shall be payable as provided
herein with respect to the Class A Certificates. Notwithstanding anything to the
contrary herein, Class A Additional Interest shall be payable or distributed to
the Class A Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly
Interest") distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to the product of
(i) one-twelfth of the Class B Certificate Rate and (ii) the Class B Invested
Amount as of the close of business on the last day of the preceding Monthly
Period; provided that Class B Monthly Interest for the first Distribution Date
shall be an amount equal to $683,416.67.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class B Interest
Shortfall"), of (x) the Class B Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class B
Monthly Interest on such Distribution Date. If the Class B Interest Shortfall
with respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class B Interest Shortfall is fully paid, an
additional amount ("Class B Additional Interest") equal to the product of
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(i) one-twelfth of the sum of (x) the Class B Certificate Rate and (y) 2.0% per
annum and (ii) such Class B Interest Shortfall (or the portion thereof which has
not been paid to the Class B Certificateholders) shall be payable as provided
herein with respect to the Class B Certificates. Notwithstanding anything to the
contrary herein, Class B Additional Interest shall be payable or distributed to
the Class B Certificateholders only to the extent permitted by applicable law.
(c) The amount of monthly interest ("Collateral Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Invested Amount on any Distribution Date shall be an amount equal to
the product of (i) (A) a fraction, the numerator of which is the actual number
of days in the period from (and including) the immediately preceding
Distribution Date (or in the case of the first Distribution Date, the Closing
Date) to (but excluding) such Distribution Date and the denominator of which is
360, times (B) the Collateral Rate in effect with respect to the period from
(and including) the immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Closing Date) to (but excluding) such
Distribution Date, and (ii) the Collateral Invested Amount as of the close of
business on the last day of the preceding Monthly Period; 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.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "Collateral Interest Shortfall")
equal to (x) the aggregate Collateral Monthly Interest for such Distribution
Date minus (y) the aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the Collateral
Interest Shortfall with respect to any Distribution Date is greater than zero,
on each subsequent Distribution Date until such Collateral Interest Shortfall is
fully paid, an additional amount ("Collateral Additional Interest") shall be
payable as provided herein with respect to the Collateral Invested Amount equal
to the product of (i) (A) a fraction, the numerator of which is the actual
number of days in the period from (and including) the immediately preceding
Distribution Date to (but excluding) such Distribution Date and the denominator
of which is 360, times (B) the Collateral Rate in effect during the period from
(and including) the immediately preceding Distribution Date to (but excluding)
such Distribution Date, and (ii) such Collateral Interest Shortfall (or the
portion thereof which has not been paid to the Collateral Interest Holder).
Notwithstanding anything to the contrary herein, Collateral Additional Interest
shall be payable or distributed to the Collateral Interest Holder only to the
extent permitted by applicable law.
Section 4.03. Principal Funding Account; Controlled
Accumulation Period.
(a)(i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the
Trustee, on behalf of the Trust, an Eligible Deposit Account (the
"Principal Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series
1996-1 Certificateholders. The Principal Funding Account shall
initially be established with the Trustee.
(ii) At the written direction of the Servicer, funds on
deposit in the Principal Funding Account shall be invested by the
Trustee in Eligible Investments selected by the Servicer. All such
Eligible Investments shall be held by the Trustee for the benefit of
the Series 1996-1 Certificateholders; provided, that on each
Distribution Date all interest and other investment income (net of
losses and investment expenses) ("Principal Funding Investment
Proceeds") on funds on deposit therein shall be applied as set forth in
paragraph (iii) below. Funds on deposit in the Principal Funding
Account shall be invested in Eligible Investments that will mature so
that such funds will be available at the close of business on the
Transfer Date preceding the following
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Distribution Date. Unless the Servicer directs otherwise, funds
deposited in the Principal Funding Account on a Transfer Date (which
immediately precedes a Payment Date) upon the maturity of any Eligible
Investments are not required to be invested overnight. No such Eligible
Investment shall be disposed of prior to its maturity; provided,
however, that the Trustee may sell, liquidate or dispose of any such
Eligible Investment before its maturity, at the written direction of
the Servicer, if such sale, liquidation or disposal would not result in
a loss of all or part of the principal portion of such Eligible
Investment or if, prior to the maturity of such Eligible Investment, a
default occurs in the payment of principal, interest or any other
amount with respect to such Eligible Investment.
(iii) On each Distribution Date with respect to the Controlled
Accumulation Period, the Servicer shall direct the Trustee in writing
to withdraw from the Principal Funding Account and deposit into the
Collection Account all Principal Funding Investment Proceeds then on
deposit in the Principal Funding Account and such Principal Funding
Investment Proceeds shall be treated as a portion of Class A Available
Funds.
(iv) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to
be principal amounts on deposit therein for purposes of this
Supplement.
(b)(i) The Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Principal Funding
Account and in all proceeds thereof. The Principal Funding Account
shall be under the sole dominion and control of the Trustee for the
benefit of the Series 1996-1 Certificateholders. If, at any time, the
Principal Funding Account ceases to be an Eligible Deposit Account, the
Trustee (or the Servicer on its behalf) shall within 10 Business Days
(or such longer period, not to exceed 30 calendar days, as to which
each Rating Agency may consent) establish a new Principal Funding
Account meeting the conditions specified in paragraph (a)(i) above as
an Eligible Deposit Account and shall transfer any cash or any
investments to such new Principal Funding Account.
(ii) Pursuant to the authority granted to the Servicer in
subsection 3.01(b) of the Agreement, the Servicer shall have the power
to make withdrawals and payments or to instruct the Trustee to make
withdrawals and payments from the Principal Funding Account for the
purposes of carrying out the Servicer's or Trustee's duties hereunder.
Pursuant to the authority granted to the Paying Agent in Section 5.01
of this Supplement and Section 6.07 of the Agreement, the Paying Agent
shall have the power to withdraw funds from the Principal Funding
Account for the purpose of making distributions to the Series 1996-1
Certificateholders.
(c) The Controlled Accumulation Period is scheduled to
commence at the close of business on the last day of the April 2000 Monthly
Period; provided, however, that if the Controlled Accumulation Period Length
(which shall be determined as described below) is less than 12 months, the date
on which the Controlled Accumulation Period actually commences will be delayed
to the close of business on the last day of the month preceding the month that
is the number of months prior to the Expected Final Payment Date at least equal
to the Controlled Accumulation Period Length and, as a result, the number of
Monthly Periods in the Controlled Accumulation Period will at least equal the
Controlled Accumulation Period Length. On the Determination Date immediately
preceding the April 2000 Distribution Date, and on each Determination Date
thereafter that occurs prior to the Determination Date occurring in the Monthly
Period in which the Controlled Accumulation Period commences, the Servicer will
determine the "Controlled Accumulation Period Length" which will equal the
number of months such that the sum of the Controlled Accumulation Period Factors
for each month during such
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period will be equal to or greater than the Required Accumulation Factor Number;
provided, however, that the Controlled Accumulation Period Length shall not be
less than one month. Notwithstanding the foregoing, if the Controlled
Accumulation Period Length shall have been determined to be less than 12 months
and, after the date on which such determination is made, a Pay-Out Event or
Reinvestment Event (as those terms are defined in the Supplement for such
Series) shall occur with respect to any outstanding Principal Sharing Series
other than Series 1996-1, 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.
Section 4.04. Required Amount.
(a) With respect to each Distribution Date, on the related
Determination Date, the Servicer shall determine the amount (the "Class A
Required Amount"), if any, by which (x) the sum of (i) Class A Monthly Interest
for such Distribution Date, (ii) any Class A Monthly Interest previously due but
not paid to the Class A Certificateholders on a prior Distribution Date, (iii)
any Class A Additional Interest for such Distribution Date and (iv) any Class A
Additional Interest previously due but not paid to the Class A
Certificateholders on a prior Distribution Date, (v) if TRS or an Affiliate of
TRS is no longer the Servicer, the Class A Servicing Fee for such Distribution
Date, (vi) if TRS or an Affiliate of TRS is no longer the Servicer, any Class A
Servicing Fee previously due but not paid to the Servicer, and (vii) the Class A
Investor Default Amount, if any, for such Distribution Date exceeds (y) the
Class A Available Funds. In the event that the difference between (x) the Class
A Required Amount for such Distribution Date and (y) the amount of Excess Spread
and Excess Finance Charge Collections applied with respect thereto pursuant to
subsection 4.07(a) on such Distribution Date is greater than zero, the Servicer
shall give written notice to the Trustee of such excess Class A Required Amount
on the date of computation.
(b) With respect to each Distribution Date, on the related
Determination Date, the Servicer shall determine the amount (the "Class B
Required Amount"), if any, equal to the sum of (x) the amount, if any, by which
(A) the sum of (i) Class B Monthly Interest for such Distribution Date, (ii) any
Class B Monthly Interest previously due but not paid to the Class B
Certificateholders, (iii) Class B Additional Interest, if any, for such
Distribution Date, (iv) any Class B Additional Interest previously due but not
paid to the Class B Certificateholders on a prior Distribution Date, (v) if TRS
or an Affiliate of TRS is no longer the Servicer, the Class B Servicing Fee for
such Distribution Date and (vi) if TRS or an Affiliate of TRS is no longer the
Servicer, any Class B Servicing Fee previously due but not paid to the Servicer
exceeds (B) the Class B Available Funds and (y) the Class B Investor Default
Amount for such Distribution Date. In the event that the difference between (x)
the Class B Required Amount for such Distribution Date and (y) the amount of
Excess Spread and Excess Finance Charge Collections applied with respect thereto
pursuant to subsection 4.07(d) on such Distribution Date is greater than zero,
the Servicer shall give written notice to the Trustee of such excess Class B
Required Amount on the date of computation.
Section 4.05. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds and Available Principal Collections.
The Servicer shall apply, or shall cause the Trustee to apply by written
instruction to the Trustee, on each Distribution Date, Class A Available Funds,
Class B Available Funds, Collateral Available Funds and Available Principal
Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:
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(a) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to Class A Certificateholders on a
prior Distribution Date, plus the amount of any Class A Additional
Interest for such Distribution Date and any Class A Additional Interest
previously due but not distributed to Class A Certificateholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to the Class A Certificateholders;
(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, shall be
distributed to the Servicer (unless such amount has been netted against
deposits to the Collection Account in accordance with Section 4.03 of
the Agreement);
(iii) an amount equal to the Class A Investor Default Amount
for such Distribution Date shall be treated as a portion of Available
Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in Section
4.07.
(b) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to Class B Certificateholders on a
prior Distribution Date, plus the amount of any Class B Additional
Interest for such Distribution Date and any Class B Additional Interest
previously due but not distributed to Class B Certificateholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to the Class B Certificateholders;
(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, shall be
distributed to the Servicer (unless such amount has been netted against
deposits to the Collection Account in accordance with Section 4.03 of
the Agreement); and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in Section
4.07.
(c) On each Distribution Date, an amount equal to the
Collateral Available Funds with respect to such Distribution Date will be
distributed or deposited in the following priority:
(i) if TRS or an Affiliate of TRS is no longer the Servicer,
an amount equal to the Collateral Servicing Fee for such Distribution
Date, plus the amount of any Collateral Servicing Fee previously due
but not distributed to the Servicer on a prior Distribution Date, shall
be distributed to the Servicer (unless such amount has been netted
against deposits to the Collection Account in accordance with Section
4.03 of the Agreement); and
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(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in Section
4.07.
(d) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Available Principal Collections deposited in the
Collection Account for the related Monthly Period shall be distributed in the
following order of priority:
(i) an amount equal to the excess, if any, of the Collateral
Invested Amount over the Required Collateral Invested Amount shall be
paid to the Collateral Interest Holder for application in accordance
with the Loan Agreement; and
(ii) the balance of such Available Principal Collections shall
be treated as Shared Principal Collections and applied in accordance
with Section 4.04 of the Agreement.
(e) On each Distribution Date with respect to the Controlled
Accumulation Period, an amount equal to the Available Principal Collections
deposited in the Collection Account for the related Monthly Period shall be
distributed in the following order of priority:
(i) 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 shall be deposited in the
Principal Funding Account;
(ii) for each Distribution Date prior to the Distribution Date
on which the Class B Invested Amount is paid in full, after giving
effect to paragraph (i) above, an amount equal to the balance, if any,
of such Available Principal Collections shall be paid to the Collateral
Interest Holder for application in accordance with the Loan Agreement
to the extent the Collateral Invested Amount exceeds the Required
Collateral Invested Amount;
(iii) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount shall have been paid in full,
an amount up to the Collateral Invested Amount shall be paid to the
Collateral Interest Holder for application in accordance with the Loan
Agreement; and
(iv) the balance of such Available Principal Collections shall
be treated as Shared Principal Collections and applied in accordance
with Section 4.04 of the Agreement.
(f) On each Distribution Date with respect to the Early
Amortization Period, an amount equal to Available Principal Collections
deposited in the Collection Account for the related Monthly Period shall be
distributed or deposited in the following order of priority:
(i) an amount up to the Class A Adjusted Invested Amount on
such Distribution Date shall be deposited in the Principal Funding
Account for distribution to the Class A Certificateholders;
(ii) for each Distribution Date beginning on the Distribution
Date on which the Class A Invested Amount is paid in full, an amount up
to the Class B Adjusted Invested Amount on such Distribution Date shall
be deposited in the Principal Funding Account for distribution to the
Class B Certificateholders;
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(iii) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount is paid in full, an amount up
to the Collateral Invested Amount on such Distribution Date shall be
paid to the Collateral Interest Holder for application in accordance
with the Loan Agreement; and
(iv) for each Distribution Date, after giving effect to
paragraphs (i), (ii) and (iii) above, an amount equal to the balance,
if any, of such Available Principal Collections will be treated as
Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
Section 4.06. Defaulted Amounts; Investor Charge-Offs.
(a) On each Determination Date, the Servicer shall calculate
the Class A Investor Default Amount, if any, for the related Distribution Date.
If, on any Distribution Date, the Class A Required Amount for the related
Monthly Period exceeds the sum of (x) the amount of Reallocated Principal
Collections allocated to Series 1996-1 with respect to such Monthly Period and
(y) the amount of Excess Spread and the Excess Finance Charge Collections
allocable to Series 1996-1 with respect to such Monthly Period, the Collateral
Invested Amount, if any, will be reduced by the amount of such excess, but not
by more than the Class A Investor Default Amount for such Distribution Date. In
the event that such reduction would cause the Collateral Invested Amount to be a
negative number, the Collateral Invested Amount will be reduced to zero and the
Class B Invested Amount shall be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Investor Default Amount for such Distribution
Date over the amount of such reduction, if any, of the Collateral Invested
Amount with respect to such Distribution Date. In the event that such reduction
would cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount shall be reduced to zero, and the Class A Invested Amount shall
be reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the aggregate amount of
the reductions, if any, of the Collateral Invested Amount and the Class B
Invested Amount for such Distribution Date (a "Class A Investor Charge-Off").
Class A Investor Charge-Offs shall thereafter be reimbursed and the Class A
Invested Amount increased (but not by an amount in excess of the aggregate
unreimbursed Class A Investor Charge-Offs) on any Distribution Date by the
amount of Excess Spread and Excess Finance Charge Collections allocated and
available for that purpose pursuant to subsection 4.07(b). References to
"negative numbers" above shall be determined without regard to the requirement
that the Invested Amount of a Class not be reduced below zero.
(b) On each Determination Date, the Servicer shall calculate
the Class B Investor Default Amount, if any, for the related Distribution Date.
If, on any Distribution Date, the Class B Required Amount for such Distribution
Date exceeds the sum of (x) the amount of Excess Spread and Excess Finance
Charge Collections allocated to Series 1996-1 with respect to the related
Monthly Period which are allocated and available to pay such amount pursuant to
subsection 4.07(d) and (y) the Reallocated Principal Collections allocable to
the Collateral Interest and not required to pay the Class A Required Amount with
respect to such Distribution Date, then the Collateral Invested Amount shall be
reduced by the amount of such excess. In the event that such reduction would
cause the Collateral Invested Amount to be a negative number, the Collateral
Invested Amount shall be reduced to zero, and the Class B Invested Amount shall
be reduced by the amount by which the Collateral Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class B
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Collateral Invested Amount with respect to such
Distribution Date (a "Class B Investor Charge-Off"). Class B Investor
Charge-Offs shall thereafter be reimbursed and the Class B Invested Amount
increased (but not by an
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amount in excess of the aggregate unreimbursed Class B Investor Charge-Offs) on
any Distribution Date by the amount of Excess Spread and Excess Finance Charge
Collections allocated and available for that purpose pursuant to subsection
4.07(e). References to "negative numbers" above shall be determined without
regard to the requirement that the Invested Amount of a Class not be reduced
below zero.
(c) On each Determination Date, the Servicer shall calculate
the Collateral Default Amount. If on any Distribution Date the Collateral
Default Amount for the previous Monthly Period exceeds the amount of Excess
Spread and Excess Finance Charge Collections allocated to Series 1996-1 with
respect to the related Monthly Period which are allocated and available to pay
such amount pursuant to subsection 4.07(h), the Collateral Invested Amount will
be reduced by the amount of such excess but not by more than the lesser of the
Collateral Default Amount and the Collateral Invested Amount for such
Distribution Date (a "Collateral Charge-Off"). The Collateral Invested Amount
will be reimbursed after any reduction pursuant to this Section 4.06 on any
Distribution Date by the amount of Excess Spread and Excess Finance Charge
Collections allocated and available on such Distribution date for that purpose
as described under subsection 4.07(i).
Section 4.07. Excess Spread; Excess Finance Charge
Collections. The Servicer shall apply, or shall cause the Trustee to apply by
written instruction to the Trustee, on each Distribution Date, Excess Spread and
Excess Finance Charge Collections allocated to Series 1996-1 with respect to the
related Monthly Period, to make the following distributions or deposits in the
following order of priority:
(a) an amount equal to the Class A Required Amount, if any,
with respect to such Distribution Date shall be distributed by the
Trustee to fund the Class A Required Amount in accordance with, and in
the priority set forth in, subsections 4.05(a)(i), (ii) and (iii);
(b) an amount equal to the aggregate amount of Class A
Investor Charge-Offs which have not been previously reimbursed shall be
treated as a portion of Available Principal Collections for such
Distribution Date;
(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 shall be distributed to the 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 used to fund the Class B
Required Amount and be applied first in accordance with, and in the
priority set forth in, subsections 4.05(b) (ii) and then any remaining
amount up to the amount of the Class B Investor Default Amount shall be
treated as a portion of Available Principal Collections for such
Distribution Date;
(e) an amount equal to the aggregate amount by which the Class
B Invested Amount has been reduced pursuant to clauses (c), (d) and (e)
of the definition of "Class B Invested Amount" in Section 2.01 of this
Supplement (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated
as a portion of Available Principal Collections for such Distribution
Date;
(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
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Interest Holder on a prior Distribution Date, plus the amount of any
Collateral Additional Interest for such Distribution Date and any
Collateral Additional Interest previously due but not distributed to
the Collateral Interest Holder on a prior Distribution Date, shall be
distributed to the Collateral Interest Holder for application in
accordance with the Loan Agreement;
(g) an amount equal to the Monthly Servicing Fee for such
Distribution Date that has not been paid to the Servicer and any
Monthly Servicing Fee due but not paid to the Servicer on a prior
Distribution Date shall be paid to the Servicer;
(h) an amount equal to the Collateral Default Amount, if any,
for such Distribution Date shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(i) an amount equal to the aggregate amount by which the
Collateral Invested Amount has been reduced pursuant to clauses (c),
(d) and (e) of the definition of "Collateral Invested Amount" (but not
in excess of the aggregate amount of such reductions which have not
been previously reimbursed) shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(j) on each Distribution Date from and after the Reserve
Account Funding Date, but prior to the date on which the Reserve
Account terminates pursuant to subsection 4.12(f), an amount up to the
excess, if any, of the Required Reserve Account Amount over the
Available Reserve Account Amount shall be deposited into the Reserve
Account;
(k) an amount equal to the aggregate of any other amounts then
required to be applied pursuant to the Loan Agreement (to the extent
such amounts are required to be applied pursuant to the Loan Agreement
out of Excess Spread and Excess Finance Charge Collections) shall be
distributed to the Collateral Interest Holder for application in
accordance with the Loan Agreement; and
(l) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be
available for allocation to other Series or to the Holders of the
Transferor Certificates as described in Section 4.05 of the Agreement.
Section 4.08. Reallocated Principal Collections. On each
Distribution Date, the Servicer shall apply, or shall cause the Trustee to
apply, Reallocated Principal Collections with respect to such Distribution Date,
to make the following distributions or deposits in the following order of
priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over
(ii) the amount of Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-1 with respect to the related Monthly Period
shall be distributed by the Trustee to fund any deficiency pursuant to
and in the priority set forth in subsections 4.05(a)(i), (ii) and
(iii); and
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over
(ii) the amount of Excess Spread and Excess Finance Charge Collections
allocated and available to the Class B Certificates pursuant to
subsection 4.07(c) on such Distribution Date shall be applied first to
fund any deficiency pursuant to subsections 4.05(b)(i) and (ii) and
then to fund any deficiency pursuant to and in the priority set forth
in subsection 4.07(c).
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On each Distribution Date, the Collateral Invested Amount
shall be reduced by the amount of Reallocated Principal Collections for such
Distribution Date. In the event that such reduction would cause the Collateral
Invested Amount (after giving effect to any Collateral Charge-Offs for such
Distribution Date) to be a negative number, the Collateral Invested Amount
(after giving effect to any Collateral Charge-Offs for such Distribution Date)
shall be reduced to zero and the Class B Invested Amount shall be reduced by the
amount by which the Collateral Invested Amount would have been reduced below
zero. In the event that the reallocation of Reallocated Principal Collections
would cause the Class B Invested Amount (after giving effect to any Class B
Investor Charge-Offs for such Distribution Date) to be a negative number on any
Distribution Date, Reallocated Principal Collections shall be reallocated on
such Distribution Date in an aggregate amount not to exceed the amount which
would cause the Class B Invested Amount (after giving to any Class B Investor
Charge-Offs for such Distribution Date) to be reduced to zero. References to
"negative numbers" above shall be determined without regard to the requirement
that the Invested Amount of a Class not be reduced below zero.
Section 4.09. Excess Finance Charge Collections. Series 1996-1
shall be an Excess Allocation Series. Subject to Section 4.05 of the Agreement,
Excess Finance Charge Collections with respect to the Excess Allocation Series
for any Distribution Date will be allocated to Series 1996-1 in an amount equal
to the product of (x) the aggregate amount of Excess Finance Charge Collections
with respect to all the Excess Allocation Series for such Distribution Date and
(y) a fraction, the numerator of which is the Finance Charge Shortfall for
Series 1996-1 for such Distribution Date and the denominator of which is the
aggregate amount of Finance Charge Shortfalls for all the Excess Allocation
Series for such Distribution Date. The "Finance Charge Shortfall" for Series
1996-1 for any Distribution Date will be equal to the excess, if any, of (a) the
full amount required to be paid, without duplication, pursuant to subsections
4.05(a), 4.05(b) and 4.05(c) and subsections 4.07(a) through (k) on such
Distribution Date over (b) the sum of (i) the Reallocated Investor Finance
Charge Collections, (ii) if such Monthly Period relates to a Distribution Date
with respect to the Controlled Accumulation Period or Early Amortization Period,
the amount of Principal Funding Investment Proceeds, if any, with respect to
such Distribution Date and (iii) the amount of funds, if any, to be withdrawn
from the Reserve Account which, pursuant to subsection 4.12(d), are required to
be included in Class A Available Funds with respect to such Distribution Date.
Section 4.10. Reallocated Investor Finance Charge
Collections.
(a) That portion of Group I Investor Finance Charge
Collections for any Distribution Date equal to the amount of Reallocated
Investor Finance Charge Collections for such Distribution Date will be allocated
to Series 1996-1 and will be distributed as set forth in this Supplement.
(b) Reallocated Investor Finance Charge Collections with
respect to any Distribution Date shall equal the sum of (i) the aggregate amount
of Series 1996-1 Monthly Interest, Investor Default Amount, Series 1996-1
Monthly Fees and Series 1996-1 Additional Amounts for such Distribution Date and
(ii) that portion of excess Group I Investor Finance Charge Collections to be
included in Reallocated Investor Finance Charge Collections pursuant to
subsection (c) hereof; provided, however, that if the amount of Group I Investor
Finance Charge Collections for such Distribution Date is less than the sum of
(w) Group I Investor Monthly Interest, (x) Group I Investor Default Amount, (y)
Group I Investor Monthly Fees and (z) Group I Investor Additional Amounts, then
Reallocated Investor Finance Charge Collections shall equal the sum of the
following amounts for such Distribution Date:
(A) The product of (I) Group I Investor Finance Charge
Collections (up to the amount of Group I Investor Monthly Interest) and
(II) a fraction, the numerator of which is Series 1996-1 Monthly
Interest and the denominator of which is Group I Investor Monthly
Interest;
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(B) the product of (I) Group I Investor Finance Charge
Collections less the amount of Group I Investor Monthly Interest (up to
the Group I Investor Default Amount) and (II) a fraction, the numerator
of which is the Investor Default Amount and the denominator of which is
the Group I Investor Default Amount;
(C) the product of (I) Group I Investor Finance Charge
Collections less the amount of Group I Investor Monthly Interest and
the Group I Investor Default Amount (up to Group I Investor Monthly
Fees) and (II) a fraction, the numerator of which is Series 1996-1
Monthly Fees and the denominator of which is Group I Investor Monthly
Fees; and
(D) the product of (I) Group I Investor Finance Charge
Collections less the sum of (i) Group I Investor Monthly Interest, (ii)
the Group I Investor Default Amount and (iii) Group I Investor Monthly
Fees and (II) a fraction, the numerator of which is Series 1996-1
Additional Amounts and the denominator of which is Group I Investor
Additional Amounts.
(c) If the amount of Group I Investor Finance Charge
Collections for such Distribution Date exceeds the sum of (i) Group I Investor
Monthly Interest, (ii) Group I Investor Default Amount, (iii) Group I Investor
Monthly Fees and (iv) Group I Investor Additional Amounts, then Reallocated
Investor Finance Charge Collections for such Distribution Date shall include an
amount equal to the product of (x) the amount of such excess and (y) a fraction,
the numerator of which is the Invested Amount as of the last day of the second
preceding Monthly Period (or, for Series 1996-1 only, with respect to the first
Distribution Date, as of the Closing Date) and the denominator of which is the
sum of such Invested Amount and the aggregate invested amounts for all other
Series included in Group I as of such last day (or, for Series 1996-1 only, with
respect to the first Distribution Date, as of the Closing Date).
Section 4.11. Shared Principal Collections. Subject to Section
4.04 of the Agreement, Shared Principal Collections for any Distribution Date
will be allocated to Series 1996-1 in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series for such Distribution Date and (y) a fraction, the numerator of
which is the Series 1996-1 Principal Shortfall for such Distribution Date and
the denominator of which is the aggregate amount of Principal Shortfalls for all
the Series which are Principal Sharing Series for such Distribution Date. The
"Series 1996-1 Principal Shortfall" will be equal to (a) for any Distribution
Date with respect to the Revolving Period, zero, (b) for any Distribution Date
with respect to the Controlled Accumulation Period, the excess, if any, of the
Controlled Deposit Amount with respect to such Distribution Date over the amount
of Available Principal Collections for such Distribution Date (excluding any
portion thereof attributable to Shared Principal Collections), and (c) for any
Distribution Date with respect to the Early Amortization Period, the excess, if
any, of the Invested Amount over the amount of Available Principal Collections
for such Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections).
Section 4.12. Reserve Account.
(a) The Servicer shall establish and maintain, in the name of
the Trustee, on behalf of the Trust, for the benefit of the Class A
Certificateholders and the Collateral Interest Holder, an Eligible Deposit
Account (the "Reserve Account") bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Class A
Certificateholders and the Collateral Interest Holder. The Reserve Account shall
initially be established with the Trustee. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Reserve
Account and in all proceeds thereof. The Reserve Account shall be under the sole
dominion and control of the Trustee for the benefit of the Class A
Certificateholders and the Collateral Interest Holder. If at any time the
Reserve Account ceases
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to be an Eligible Deposit Account, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency shall consent) establish a new Reserve
Account meeting the conditions specified above as an Eligible Deposit Account,
and shall transfer any cash or any investments to such new Reserve Account. The
Trustee, at the direction of the Servicer, shall (i) make withdrawals from the
Reserve Account from time to time in an amount up to the Available Reserve
Account Amount at such time, for the purposes set forth in this Supplement, and
(ii) on each Distribution Date (from and after the Reserve Account Funding Date)
prior to the termination of the Reserve Account make a deposit into the Reserve
Account in the amount specified in, and otherwise in accordance with, subsection
4.07(j).
(b) Funds on deposit in the Reserve Account shall be invested
at the written direction of the Servicer by the Trustee in Eligible Investments.
Funds on deposit in the Reserve Account on any Transfer Date, after giving
effect to any withdrawals from the Reserve Account on such Transfer Date, shall
be invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer Date. The Trustee
shall maintain for the benefit of the Class A Certificateholders and the
Collateral Interest Holder possession of the negotiable instruments or
securities, if any, evidencing such Eligible Investments. No such Eligible
Investment shall be disposed of prior to its maturity; provided, however, that
the Trustee may sell, liquidate or dispose of any such Eligible Investment
before its maturity, at the written direction of the Servicer, if such sale,
liquidation or disposal would not result in a loss of all or part of the
principal portion of such Eligible Investment or if, prior to the maturity of
such Eligible Investment, a default occurs in the payment of principal, interest
or any other amount with respect to such Eligible Investment. On each
Distribution Date, all interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on funds on deposit in
the Reserve Account shall be retained in the Reserve Account (to the extent that
the Available Reserve Account Amount is less than the Required Reserve Account
Amount) and the balance, if any, shall be deposited in the Collection Account
and treated as collections of Finance Charge Receivables allocable to Series
1996-1. For purposes of determining the availability of funds or the balance in
the Reserve Account for any reason under this Supplement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On the Determination Date preceding each Distribution Date
with respect to the Controlled Accumulation Period and the first Special Payment
Date, the Servicer shall calculate the "Reserve Draw Amount" which shall be
equal to the excess, if any, of the Covered Amount with respect to such
Distribution Date or Special Payment Date over the Principal Funding Investment
Proceeds with respect to such Distribution Date or Special Payment Date;
provided, that such amount will be reduced to the extent that funds otherwise
would be available for deposit in the Reserve Account under subsection 4.07(j)
with respect to such Distribution Date or Special Payment Date.
(d) In the event that for any Distribution Date the Reserve
Draw Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on the
related Transfer Date by the Trustee (acting in accordance with the instructions
of the Servicer), deposited into the Collection Account and included in Class A
Available Funds for such Distribution Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the written instructions of the
Servicer, shall withdraw from the Reserve Account, and pay to the Collateral
Interest Holder for application in accordance with the Loan Agreement, an amount
equal to such Reserve Account Surplus.
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(f) Upon the earliest to occur of (i) the day on which the
Invested Amount is paid in full to the Series 1996-1 Certificateholders, (ii) if
the Controlled Accumulation Period has not commenced, the occurrence of a
Pay-Out Event with respect to Series 1996-1, (iii) if the Controlled
Accumulation Period has commenced, the earlier of the first Special Payment Date
and the Expected Final Payment Date and (iv) the termination of the Trust
pursuant to the Agreement, the Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Class A Certificateholders which are payable from the Reserve Account as
provided herein, shall withdraw from the Reserve Account and pay to the
Collateral Interest Holder for application in accordance with the Loan Agreement
all amounts, if any, on deposit in the Reserve Account and the Reserve Account
shall be deemed to have terminated for purposes of this Supplement.
Section 4.13. Investment Instructions. Any investment
instructions required to be given to the Trustee pursuant to the terms hereof
must be given to the Trustee no later than 10:30 a.m. (New York City time) on
the date such investment is to be made. In the event the Trustee receives such
investment instruction later than such time, the Trustee may, but shall have no
obligation to, make such investment. In the event the Trustee is unable to make
an investment required in an investment instruction received by the Trustee
after 10:30 a.m. (New York City time) on such day, such investment shall be made
by the Trustee on the next succeeding Business Day. In no event shall the
Trustee be liable for any investment not made pursuant to investment
instructions received after 10:30 a.m. (New York City time) on the day such
investment is requested to be made.
ARTICLE V
Distributions and Reports to
Series 1996-1 Certificateholders
Section 5.01. Distributions.
(a) On each Distribution Date, the Paying Agent shall
distribute to each Class A Certificateholder of record on the related Record
Date (other than as provided in Section 12.02 of the Agreement) such Class A
Certificateholder's pro rata share of the amounts held by the Paying Agent that
are allocated and available on such Distribution Date to pay interest on the
Class A Certificates pursuant to this Supplement.
(b) On each Special Payment Date and on the Expected Final
Payment Date, the Paying Agent shall distribute (in accordance with the
Certificate delivered by the Servicer pursuant to Section 3.04(b) of the
Agreement) to each Class A Certificateholder of record on the related Record
Date (other than as provided in Section 12.02 of the Agreement) such Class A
Certificateholder's pro rata share of the amounts on deposit in the Principal
Funding Account or otherwise held by the Paying Agent that are allocated and
available on such date to pay principal of the Class A Certificates pursuant to
this Supplement up to a maximum amount on any such date equal to the Class A
Invested Amount on such date (unless there has been an optional repurchase of
the Series 1996-1 Certificateholders' Interest pursuant to Section 10.01 of the
Agreement, in which event the foregoing limitation will not apply).
(c) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Certificate delivered by the Servicer
pursuant to Section 3.04(b) of the Agreement) to each Class B Certificateholder
of record on the related Record Date (other than as provided in Section 12.02 of
the Agreement) such Class B Certificateholder's pro rata share of the amounts
held by the Paying Agent
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that are allocated and available on such Distribution Date to pay interest on
the Class B Certificates pursuant to this Supplement.
(d) On each Special Payment Date, and on the Expected Final
Payment Date, the Paying Agent shall distribute (in accordance with the
Certificate delivered by the Servicer pursuant to Section 3.04(b) of the
Agreement) to each Class B Certificateholder of record on the related Record
Date (other than as provided in Section 12.02 of the Agreement) such Class B
Certificateholder's pro rata share of the amounts on deposit in the Principal
Funding Account or otherwise held by the Paying Agent that are allocated and
available on such date to pay principal of the Class B Certificates pursuant to
this Supplement up to a maximum amount on any such date equal to the Class B
Invested Amount on such date (unless there has been an optional repurchase of
the Series 1996-1 Certificateholders' Interest pursuant to Section 10.01 of the
Agreement, in which event the foregoing limitation will not apply).
(e) The distributions to be made pursuant to this Section 5.01
are subject to the provisions of Sections 2.06, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.01 and 8.02 of this Supplement.
(f) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series 1996-1
Certificateholders hereunder shall be made by check mailed to each Series 1996-1
Certificateholder at such Series 1996-1 Certificateholder's address appearing in
the Certificate Register without presentation or surrender of any Series 1996-1
Certificate or the making of any notation thereon; provided, however, that with
respect to Series 1996-1 Certificates registered in the name of a Clearing
Agency, such distributions shall be made to such Clearing Agency in immediately
available funds.
Section 5.02. Reports and Statements to Series 1996-1
Certificateholders.
(a) On each Distribution Date, the Paying Agent, on behalf of
the Trustee, shall forward to each Series 1996-1 Certificateholder a statement
substantially in the form of Exhibit C to this Supplement prepared by the
Servicer and delivered to the Paying Agent.
(b) Not later than each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent, each Rating Agency and the Collateral
Interest Holder (i) a statement substantially in the form of Exhibit C to this
Supplement prepared by the Servicer and (ii) a certificate of a Servicing
Officer substantially in the form of Exhibit D.
(c) A copy of each statement or certificate provided pursuant
to paragraph (a) or (b) may be obtained by any Series 1996-1 Certificateholder
or any Certificate Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning
with calendar year 1997, the Paying Agent, on behalf of the Trustee, shall
furnish or cause to be furnished to each Person who at any time during the
preceding calendar year was a Series 1996-1 Certificateholder, a statement
prepared by the Servicer containing the information which is required to be
contained in the statement to Series 1996-1 Certificateholders, as set forth in
paragraph (a) above aggregated for such calendar year or the applicable portion
thereof during which such Person was a Series 1996-1 Certificateholder, together
with other information as is required to be provided by an issuer of
indebtedness under the Code. Such obligation of the Servicer shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Paying Agent pursuant to any requirements of the Code
as from time to time in effect.
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ARTICLE VI
Pay-Out Events
Section 6.01. Pay-Out Events. If any one of the following
events shall occur with respect to the Series 1996-1 Certificates:
(a) the occurrence of (i) an Insolvency Event relating to any
Transferor or other holder of the Original Transferor Certificate or
(ii) a TRS Insolvency Event unless an Opinion of Counsel acceptable to
the Trustee to the effect that, for federal income tax purposes, such
TRS Insolvency Event would not cause the Trust to be deemed to be an
association (or publicly traded partnership) taxable as a corporation
shall be delivered to the Trustee and each Rating Agency within 30 days
of the occurrence of such TRS Insolvency Event;
(b) the Trust becomes an investment company within the
meaning of the Investment Company Act;
(c) failure on the part of any Transferor (i) to make any
payment or deposit required by the terms of the Agreement or this
Supplement on or before the date occurring five Business Days after the
date such payment or deposit is required to be made therein or herein
or (ii) duly to observe or perform any other covenants or agreements of
the Transferors set forth in the Agreement or this Supplement, which
failure has a material adverse effect on the Series 1996-1
Certificateholders and which continues unremedied for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to such Transferor by
the Trustee, or to the Transferors and the Trustee by any Holder of the
Series 1996-1 Certificates;
(d) any representation or warranty made by any Transferor in
the Agreement or this Supplement, or any information contained in a
computer file or microfiche list required to be delivered by any
Transferor pursuant to Section 2.01 or subsection 2.08(f) of the
Agreement shall prove to have been incorrect in any material respect
when made or when delivered, which continues to be incorrect in any
material respect for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to such Transferor by the Trustee, or to such
Transferor and the Trustee by any Holder of the Series 1996-1
Certificates and as a result of which the interests of the Series
1996-1 Certificateholders are materially and adversely affected for
such period; provided, however, that a Pay-Out Event pursuant to this
subsection 6.01(d) shall not be deemed to have occurred hereunder if a
Transferor has accepted reassignment of the related Receivable, or all
of such Receivables, if applicable, during such period (or such longer
period not to exceed an additional 60 days as the Trustee may specify)
in accordance with the provisions of the 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 subsection 2.09(a)
of the Agreement;
(f) any Servicer Default which would have an Adverse Effect
shall occur;
(g) the average Series Adjusted Portfolio Yield for any three
consecutive Monthly Periods is reduced to a rate which is less than the
average of the Base Rates for such period;
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(h) the Class A Invested Amount and the Class B Invested
Amount shall not be paid in full on the Expected Final Payment Date; or
(i) a Transfer Restriction Event shall occur;
then, in the case of any event described in subparagraph (c), (d) or (f), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Trustee or the Holders of Series 1996-1 Certificates evidencing more than 50% of
the aggregate unpaid principal amount of Series 1996-1 Certificates by notice
then given in writing to the Transferors and the Servicer (and to the Trustee if
given by the Series 1996-1 Certificateholders) may declare that a Pay-Out Event
has occurred with respect to Series 1996-1 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 1996-1 without any
notice or other action on the part of the Trustee or the Series 1996-1
Certificateholders immediately upon the occurrence of such event.
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.01. Optional Repurchase.
(a) On any day occurring on or after the date on which the
Invested Amount is reduced to 5% or less of the Initial Invested Amount, the
Transferors shall have the option to purchase the Series 1996-1
Certificateholders' Interest, at a purchase price equal to (i) if such day is a
Distribution Date, the Reassignment Amount for such Distribution Date or (ii) if
such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.
(b) The Transferors shall give the Servicer and the Trustee at
least 30 days prior written notice of the date on which the Transferors intend
to exercise such purchase option. Not later than 12:00 noon, New York City time,
on such day the Transferors shall deposit the Reassignment Amount into the
Collection Account in immediately available funds. Such purchase option is
subject to payment in full of the Reassignment Amount. Following the deposit of
the Reassignment Amount into the Collection Amount in accordance with the
foregoing, the Invested Amount for Series 1996-1 shall be reduced to zero and
the Series 1996-1 Certificateholders shall have no further interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 8.01(b).
Section 7.02. Series Termination.
(a) If, on the October 2003 Distribution Date, the Invested
Amount (after giving effect to all changes therein on such date) would be
greater than zero, the Servicer, on behalf of the Trustee, shall, within the
40-day period which begins on such Distribution Date, solicit bids for the sale
of Principal Receivables and the related Finance Charge Receivables (or
interests therein) in an amount equal to the Invested Amount at the close of
business on the last day of the Monthly Period preceding the Series 1996-1
Termination Date (after giving effect to all distributions required to be made
on the Series 1996-1 Termination Date, except pursuant to this Section 7.02).
Such bids shall require that such sale shall (subject to subsection 7.02(b))
occur on the Series 1996-1 Termination Date. The Transferors and the Collateral
Interest Holder shall be entitled to participate in, and to receive from the
Trustee a copy of each other bid submitted in connection with, such bidding
process. Each Transferor and its Affiliates shall be permitted to bid for the
Receivables and, in addition, shall have the right to match any bid and
- 31 -
<PAGE>
to purchase the Receivables such matched price if such matched price shall be
the highest bid price received by the Trustee.
(b) The Servicer, on behalf of the Trustee, shall sell such
Receivables (or interests therein) on the Series 1996-1 Termination Date to the
bidder who made the highest cash purchase offer. The proceeds of any such sale
shall be treated as Collections on the Receivables allocated to the Series
1996-1 Certificateholders pursuant to the Agreement and this Supplement;
provided, however, that the Servicer shall determine conclusively the amount of
such proceeds which are allocable to Finance Charge Receivables and the amount
of such proceeds which are allocable to Principal Receivables. During the period
from the October 2003 Distribution Date to the Series 1996-1 Termination Date,
the Servicer shall continue to collect payments on the Receivables and allocate
and deposit such Collections in accordance with the provisions of the Agreement
and the Supplements.
ARTICLE VIII
Final Distributions
Section 8.01. Sale of Receivables or Certificateholders'
Interest pursuant to Section 2.06 or 10.01 of the Agreement and Section 7.01 or
7.02 of this Supplement.
(a) (i) The amount to be paid by the Transferors with respect
to Series 1996-1 in connection with a reassignment of Receivables to
the Transferors pursuant to Section 2.06 of the Agreement shall equal
the Reassignment Amount for the first Distribution Date following the
Monthly Period in which the reassignment obligation arises under the
Agreement.
(ii) The amount to be paid by the Transferors with respect to
Series 1996-1 in connection with a repurchase of the
Certificateholders' Interest pursuant to Section 10.01 of the Agreement
shall equal the sum of (x) the Reassignment Amount for the Distribution
Date of such repurchase and (y) the sum of (A) the excess, if any, of
(I) a price equivalent to the average of bids quoted on the Record Date
preceding the date of repurchase or, if not a Business Day, on the next
succeeding Business Day by at least two recognized dealers selected by
the Trustee for the purchase by such dealers of a security which is
similar to the Class A Certificates with a remaining maturity
approximately equal to the remaining maturity of the Class A
Certificates and rated by each Rating Agency in the rating category
originally assigned to the Class A Certificates over (II) the portion
of the Reassignment Amount attributable to the Class A Certificates and
(B) the excess, if any, of (I) a price equivalent to the average of
bids quoted on such Record Date, or if not a Business Day, on the next
succeeding Business Day by at least two recognized dealers selected by
the Trustee for the purchase by such dealers of a security which is
similar to the Class B Certificates with a remaining maturity
approximately equal to the remaining maturity of the Class B
Certificates and rated by each Rating Agency in the rating category
originally assigned to the Class B Certificates over (II) the portion
of the Reassignment Amount attributable to the Class B Certificates.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.01 or any amounts allocable to the
Series 1996-1 Certificateholders' Interest deposited into the Collection Account
pursuant to Section 7.02, the Trustee shall, in accordance with the written
direction of the Servicer, not later than 12:00 noon, New York City time, on the
related Distribution Date, make deposits or distributions of the following
amounts (in the priority set forth below and, in each case after giving effect
to any deposits and distributions otherwise to be made on such date) in
immediately available funds: (i) (x) the Class A Invested Amount on such
Distribution Date will be
- 32 -
<PAGE>
distributed to the Paying Agent for payment to the Class A Certificateholders
and (y) an amount equal to the sum of (A) Class A Monthly Interest for such
Distribution Date, (B) any Class A Monthly Interest previously due but not
distributed to the Class A Certificateholders on a prior Distribution Date and
(C) the amount of Class A Additional Interest, if any, for such Distribution
Date and any Class A Additional Interest previously due but not distributed to
the Class A Certificateholders on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Class A Certificateholders,
(ii) (x) the Class B Invested Amount on such Distribution Date will be
distributed to the Paying Agent for payment to the Class B Certificateholders
and (y) an amount equal to the sum of (A) Class B Monthly Interest for such
Distribution Date, (B) any Class B Monthly Interest previously due but not
distributed to the Class B Certificateholders on a prior Distribution Date and
(C) the amount of Class B Additional Interest, if any, for such Distribution
Date and any Class B Additional Interest previously due but not distributed to
the Class B Certificateholders on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Class B Certificateholders
and (iii) the balance, if any, will be distributed to the Collateral Interest
Holder for application in accordance with the Loan Agreement.
(c) Notwithstanding anything to the contrary in this
Supplement or the Agreement, all amounts distributed to the Paying Agent
pursuant to subsection 8.01(b) for payment to the Series 1996-1
Certificateholders shall be deemed distributed in full to the Series 1996-1
Certificateholders on the date on which such funds are distributed to the Paying
Agent pursuant to this Section and shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement.
Section 8.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables pursuant to Section 9.01 of the Agreement.
(a) Not later than 12:00 noon, New York City time, on the
Distribution Date following the date on which the Insolvency Proceeds are
deposited into the Collection Account pursuant to subsection 9.01(b) of the
Agreement, the Trustee shall in accordance with the written direction of the
Servicer (in the following priority and, in each case, after giving effect to
any deposits and distributions otherwise to be made on such Distribution Date)
(i) deduct an amount equal to the Class A Invested Amount on such Distribution
Date from the portion of the Insolvency Proceeds allocated to Series 1996-1
Allocable Principal Collections and distribute such amount to the Paying Agent
for payment to the Class A Certificateholders, provided that the amount of such
distribution shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Series 1996-1 Allocable Principal Collections and (y) the
Principal Allocation Percentage with respect to the related Monthly Period, (ii)
deduct an amount equal to the Class B Invested Amount on such Distribution Date
from the portion of the Insolvency Proceeds allocated to Series 1996-1 Allocable
Principal Collections and distribute such amount to the Paying Agent for payment
to the Class B Certificateholders, provided that the amount of such distribution
shall not exceed (x) the product of (A) the portion of such Insolvency Proceeds
allocated to Series 1996-1 Allocable Principal Collections and (B) the Principal
Allocation Percentage with respect to the related Monthly Period minus (y) the
amount distributed to the Paying Agent pursuant to clause (i) of this sentence
and (iii) deduct an amount equal to the Collateral Invested Amount, if any, on
such Distribution Date from the portion of the Insolvency Proceeds allocated to
Series 1996-1 Allocable Principal Collections and distribute such amount to the
Collateral Interest Holder for application in accordance with the Loan
Agreement, provided that the amount of such distribution shall not exceed (x)
the product of (1) the portion of the Insolvency Proceeds allocated to Series
1996-1 Allocable Principal Collections and (2) the Principal Allocation
Percentage with respect to such Monthly Period minus (y) the amounts distributed
to the Paying Agent pursuant to clauses (i) and (ii) of this sentence. To the
extent that the product of (A) the portion of the Insolvency Proceeds allocated
to Series 1996-1 Allocable Principal Collections and (B) the Principal
Allocation Percentage with respect to the related Monthly Period exceeds the
aggregate amounts distributed to the Paying Agent pursuant to the preceding
sentence, the
- 33 -
<PAGE>
excess shall be allocated to the Transferor's Interest and shall be released to
the Holders of the Transferor Certificates on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall in accordance with the written direction of
the Servicer (in the following priority and, in each case, after giving effect
to any deposits and distributions otherwise to be made on such Distribution
Date) (i) deduct an amount equal to the sum of (w) Class A Monthly Interest for
such Distribution Date, (x) any Class A Monthly Interest previously due but not
distributed to the Class A Certificateholders on a prior Distribution Date and
(y) the amount of Class A Additional Interest, if any, for such Distribution
Date and any Class A Additional Interest previously due but not distributed to
the Class A Certificateholders on a prior Distribution Date from the portion of
the Insolvency Proceeds allocated to Collections of Finance Charge Receivables
and distribute such amount to the Paying Agent for payment to the Class A
Certificateholders, provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated to
Series 1996-1 Allocable Finance Charge Collections, (y) the Floating Allocation
Percentage with respect to the related Monthly Period and (z) the Class A
Floating Percentage with respect to such Monthly Period and (ii) deduct an
amount equal to the sum of (w) Class B Monthly Interest for such Distribution
Date, (x) Class B Monthly Interest previously due but not distributed to the
Class B Certificateholders on a prior Distribution Date and (y) the amount of
Class B Additional Interest, if any, for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the Class B
Certificateholders on a prior Distribution Date from the portion of the
Insolvency Proceeds allocated to Series 1996-1 Allocable Finance Charge
Collections and distribute such amount to the Paying Agent for payment to the
Class B Certificateholders, provided that the amount of such distribution shall
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series 1996-1 Allocable Finance Charge Collections, (y) the Floating
Allocation Percentage with respect to the related Monthly Period and (z) the
Class B Floating Percentage with respect to such Monthly Period. To the extent
that the product of (A) the portion of the Insolvency Proceeds allocated to
Series 1996-1 Allocable Finance Charge Collections and (B) the Floating
Allocation Percentage with respect to the related Monthly Period exceeds the
aggregate amount distributed to the Paying Agent pursuant to the preceding
sentence, the excess shall be released to the Collateral Interest Holder for
application by the Collateral Interest Holder in accordance with the Loan
Agreement.
(c) Notwithstanding anything to the contrary in this
Supplement or the Agreement, all amounts distributed to the Paying Agent
pursuant to this Section for payment to the Series 1996-1 Certificateholders
shall be distributed in full to the Series 1996-1 Certificateholders on the date
on which funds are distributed to the Paying Agent pursuant to this Section and
shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
ARTICLE IX
Miscellaneous Provisions
Section 9.01. Ratification of Agreement. As supplemented by
this Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
Section 9.02. Counterparts. This Supplement may be
executed in two or more counterparts, and by different parties on separate
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
- 34 -
<PAGE>
Section 9.03. Governing Law. THIS SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
- 35 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Supplement to be duly executed and delivered by their respective duly authorized
officers on the day and year first above written.
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II, as a Transferor,
By: /s/ Leslie R. Scharfstein
-----------------------------
Name: Leslie R. Scharfstein
Title: President
AMERICAN EXPRESS CENTURION BANK,
as a Transferor,
By: /s/ Frank L. Skillern
-----------------------------
Name: Frank L. Skillern
Title: Chief Executive Officer
AMERICAN EXPRESS TRAVEL RELATED SERVICES
COMPANY, INC.,
as the Servicer,
By: /s/ Jay B. Stevelman
-----------------------------
Name: Jay B. Stevelman
Title: Senior Vice President
and Treasurer
THE BANK OF NEW YORK,
as Trustee,
By: /s/ Peter M. Lagatta
-----------------------------
Name: Peter M. Lagatta
Title: Assistant Treasurer
<PAGE>
FORM OF CLASS A CERTIFICATE EXHIBIT A-1
REGISTERED $__________ (1)
No. R-_______ CUSIP No. [ ]
Unless this Class A Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to American Express Centurion Bank, American Express Receivables Finance
Corporation II or their agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS A [ ]% ASSET BACKED CERTIFICATE
Expected Final Payment Date:
The [ ] Distribution Date
Each $1,000 minimum denomination represents a
1/[ ] undivided interest
in Class A of the
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST, SERIES 1996-1
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists primarily of an interest in receivables generated from time to
time in the ordinary course of business in a portfolio of consumer revolving
credit card accounts serviced by
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
and other assets and interests constituting the Trust under the Pooling and
Servicing Agreement referred to below.
(Not an interest in or obligation of American Express Travel Related
Services Company, Inc., American Express Centurion Bank, American Express
Receivables Financing Corporation II or any of their respective affiliates)
- ------------------------
(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
This certifies that CEDE & CO. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to the Pooling and Servicing Agreement, dated as
of May 16, 1996 (as amended and supplemented, the "Agreement"), as supplemented
by the Series 1996-1 Supplement dated as of May 16, 1996 (as amended and
supplemented, the "Supplement"), among American Express Centurion Bank and
American Express Receivables Financing Corporation II, as transferors (together,
the "Transferors"), American Express Travel Related Services Company, Inc., as
servicer, and The Bank of New York, a New York banking corporation, as trustee
(the "Trustee"). The corpus of the Trust consists of (i) the Transferors'
ownership interest in a portfolio of receivables (the "Receivables") existing in
the consumer revolving credit card accounts identified under the Agreement from
time to time (the "Accounts"), (ii) all Receivables generated under the Accounts
from time to time thereafter, (iii) funds collected or to be collected from
cardmembers in respect of the Receivables, (iv) all funds which are from time to
time on deposit in the Collection Account, the Special Funding Account and any
other Series Accounts and (v) all other assets and interests constituting the
Trust. The Holder of this Certificate is entitled to the benefits of the
subordination of the Class B Certificates and the Collateral Interest to the
extent provided in the Supplement. Although a summary of certain provisions of
the Agreement and the Supplement is set forth below and in the Summary of Terms
and Conditions attached hereto and made a part hereof, this Class A Certificate
does not purport to summarize the Agreement and the Supplement and reference is
made to the Agreement and the Supplement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and obligations of the Trustee. A copy of the Agreement
and the Supplement (without schedules) may be requested from the Trustee by
writing to the Trustee at the Corporate Trust Office. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement or the Supplement, as applicable.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Supplement, to which
Agreement and Supplement, each as amended and supplemented from time to time,
the Class A Certificateholder by virtue of the acceptance hereof assents and is
bound.
It is the intent of the Transferors and the Class A Certificateholders
that, for federal, state and local income and franchise tax purposes only, the
Class A Certificates will qualify as indebtedness of the Transferors secured by
the Receivables. The Class A Certificateholder, by the acceptance of this Class
A Certificate, agrees to treat this Class A Certificate for federal, state and
local income and franchise tax purposes as debt of the Transferors.
In general, payments of principal with respect to the Class A
Certificates are limited to the Class A Invested Amount, which may be less than
the unpaid principal balance of the Class A Certificates. The Expected Final
Payment Date is the [ ] Distribution Date, but principal with respect
to the Class A Certificates may be paid earlier or later under certain
circumstances described in the Agreement and the Supplement. If for one or more
months during the Controlled Accumulation Period there are not sufficient funds
to pay the Controlled Deposit Amount, then to the extent that excess funds are
not available on subsequent Distribution Dates with respect to the Controlled
Accumulation Period to make up for such shortfalls, the final payment of
principal of the Class A Certificates will occur later than the Expected Final
Payment Date.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate shall
not be entitled to any benefit under the Agreement or the Supplement or be valid
for any purpose.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Transferors have caused this Class A
Certificate to be duly executed.
AMERICAN EXPRESS CENTURION BANK
By:
---------------------------
Name:
Title:
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II
By:
---------------------------
Name:
Title:
Dated: May 16, 1996
A-1-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the American Express Credit Account Master Trust Series 1996-1
Class A Certificates described in the within-mentioned Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee,
By:
------------------------
Authorized Officer
or
By:
------------------------
as Authenticating Agent
for the Trustee,
By:
------------------------
Authorized Officer
A-1-4
<PAGE>
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS A [ ]% ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally
from the purchase of goods and services and amounts advanced to cardmembers as
cash advances and Finance Charge Receivables. This Class A Certificate is one
of a Series of Certificates entitled American Express Credit Account Master
Trust, Series 1996-1 (the "Series 1996-1 Certificates"), and one of a class
thereof entitled Class A Series 1996-1 [ ]% Asset Backed Certificates, (the
"Class A Certificates"), each of which represents a fractional, undivided
interest in certain assets of the Trust. The assets of the Trust are allocated
in part to the investor certificateholders of all outstanding Series (the
"Certificateholders' Interest") with the remainder allocated to the Holders of
the Transferor Certificates. The aggregate interest represented by the Class A
Certificates at any time in the Principal Receivables in the Trust shall not
exceed an amount equal to the Class A Invested Amount at such time. The Class A
Initial Invested Amount is $[ ]. The Class A Invested Amount on any
date will be an amount equal to (a) the Class A Initial Invested Amount, minus
(b) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to such date, minus (c) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates over Class A Investor Charge-Offs reimbursed pursuant to subsection
4.07(b) of the Supplement prior to such date.
Subject to the terms and conditions of the Agreement, the Transferors
may, from time to time, direct the Trustee, on behalf of the Trust, to issue one
or more new Series of Investor Certificates, which will represent fractional,
undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute to each
Class A Certificateholder of record on the last day of the preceding calendar
month (each a "Record Date") such Class A Certificateholder's pro rata share of
such amounts (including amounts on deposit in the Collection Account) as are
payable to the Class A Certificateholders pursuant to the Agreement and the
Supplement. Distributions with respect to this Class A Certificate will be made
by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Series 1996-1 Certificateholders in
accordance with the Agreement and the Supplement.
On any day occurring on or after the day on which the Invested Amount
is reduced to 5% or less of the Initial Invested Amount, the Transferors have
the option to repurchase the Series 1996-1 Certificateholders' Interest in the
Trust. The repurchase price will be equal to (a) if such day is a Distribution
Date, the Reassignment Amount for such Distribution Date or (b) if such day is
not a Distribution Date, the Reassignment Amount for the Distribution Date
following such day. Following the deposit of the Reassignment Amount in the
Collection Account, Series 1996-1 Certificateholders will not have any interest
in the Receivables and the Series 1996-1 Certificates will represent only the
right to receive such Reassignment Amount.
A-1-5
<PAGE>
This Class A Certificate does not represent an obligation of, or an
interest in, the Transferors or the Servicer or any affiliate of any of them and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality. This Class A Certificate is
limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
hereinabove and in the Agreement and the Supplement.
The Class A Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $1,000. The transfer of this Class A
Certificate shall be registered in the Certificate Register upon surrender of
this Class A Certificate for registration of transfer at any office or agency
maintained by the Transfer Agent and Registrar accompanied by a written
instrument of transfer, in a form satisfactory to the Trustee or the Transfer
Agent and Registrar, duly executed by the Class A Certificateholder or such
Class A Certificateholder's attorney, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Class A Certificates of
authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, Class A Certificates are exchangeable for new Class A
Certificates evidencing like aggregate fractional, undivided interests as
requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar and any agent of any of them, may treat the person in whose name this
Class A Certificate is registered as the owner hereof for all purposes, and
neither the Servicer nor the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them, shall be affected by notice to the
contrary except in certain circumstances described in the Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-1-6
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee _______________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _____________________________________ (name and address of
assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ____________ ______________________ (2)
Signature Guaranteed:
-----------------------
- -------------------
(2) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
A-1-7
<PAGE>
[FORM OF CLASS B CERTIFICATE] EXHIBIT A-2
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT
OF A BENEFIT PLAN (AS DEFINED BELOW)
REGISTERED $__________ (1)
No. R-_______ CUSIP No. [ ]
Unless this Class B Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to American Express Centurion Bank, American Express Receivables Financing
Corporation II or their agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS B [ ]% ASSET BACKED CERTIFICATE
Expected Final Payment Date:
The [ ] Distribution Date
Each $1,000 minimum denomination represents a
1/[ ] undivided interest
in Class B of the
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST, SERIES 1996-1
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists primarily of an interest in receivables generated from time to
time in the ordinary course of business in a portfolio of consumer revolving
credit card accounts serviced by
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
and other assets and interests constituting the Trust under the Pooling and
Servicing Agreement referred to below.
(Not an interest in or obligation of American Express Travel Related
Services Company, Inc., American Express Centurion Bank, American Express
Receivables Financing Corporation II or any of their respective affiliates)
- ------------------
(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
A-2-1
<PAGE>
This certifies that CEDE & CO. (the "Class B Certificateholder") is the
registered owner of a fractional, undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Pooling and Servicing Agreement,
dated as of May 16, 1996 (as amended and supplemented, the "Agreement"), as
supplemented by the Series 1996-1 Supplement dated as of May 16, 1996 (as
amended and supplemented, the "Supplement"), among American Express Centurion
Bank and American Express Receivables Financing Corporation II, as transferors
(together, the "Transferors"), American Express Travel Related Services Company,
Inc., as servicer, and The Bank of New York, a New York banking corporation, as
trustee (the "Trustee"). The corpus of the Trust consists of (i) the
Transferors' ownership interest in a portfolio of receivables (the
"Receivables") existing in the consumer revolving credit card accounts
identified under the Agreement from time to time (the "Accounts"), (ii) all
Receivables generated under the Accounts from time to time thereafter, (iii)
funds collected or to be collected from cardmembers in respect of the
Receivables, (iv) all funds which are from time to time on deposit in the
Collection Account, the Special Funding Account, and the other Series Accounts
and (v) all other assets and interests constituting the Trust. The Holder of
this Certificate is entitled to the benefits of the subordination of the
Collateral Interest to the extent provided in the Supplement. Although a
summary of certain provisions of the Agreement and the Supplement is set forth
below and in the Summary of Terms and Conditions attached hereto and made a part
hereof, this Class B Certificate does not purport to summarize the Agreement and
the Supplement and reference is made to the Agreement and the Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Supplement (without schedules) may
be requested from the Trustee by writing to the Trustee at the Corporate Trust
Office. To the extent not defined herein, the capitalized terms used herein
have the meanings ascribed to them in the Agreement or the Supplement, as
applicable.
This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Supplement, to which
Agreement and Supplement, each as amended and supplemented from time to time,
the Class B Certificateholder by virtue of the acceptance hereof assents and is
bound.
This Class B Certificate may not be acquired by or for the account of
any employee benefit plan, trust or account, including an individual retirement
account, that is subject to the Employee Retirement Income Security Act of 1974,
as amended, or that is described in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended, or an entity whose underlying assets include plan
assets by reason of a plan's investment in such entity (a "Benefit Plan"). By
accepting and holding this Class B Certificate, the Holder hereof shall be
deemed to have represented and warranted that it is not a Benefit Plan. By
acquiring any interest in this Class B Certificate , the applicable Certificate
Owner or Owners shall be deemed to have represented and warranted that it or
they are not Benefit Plans.
THIS CLASS B CERTIFICATE IS SUBORDINATED TO THE EXTENT NECESSARY TO
FUND PAYMENTS ON THE CLASS A CERTIFICATES TO THE EXTENT SPECIFIED IN THE
SUPPLEMENT.
It is the intent of the Transferors and the Class B Certificateholders
that, for federal, state and local income and franchise tax purposes only, the
Class B Certificates will qualify as indebtedness of the Transferors secured by
the Receivables. The Class B Certificateholder, by the acceptance of this Class
B Certificate, agrees to treat this Class B Certificate for federal, state and
local income and franchise tax purposes as debt of the Transferors.
A-2-2
<PAGE>
In general, payments of principal with respect to the Class B
Certificates are limited to the Class B Invested Amount, which may be less then
the unpaid principal balance of the Class B Certificates. The Expected Final
Payment Date is the [ ] Distribution Date, but principal with respect
to the Class B Certificates may be paid earlier or later under certain
circumstances described in the Agreement and the Supplement. If for one or more
months during the Controlled Accumulation Period there are not sufficient funds
to pay the Controlled Deposit Amount, then to the extent that excess funds are
not available on subsequent Distribution Dates with respect to the Accumulation
Period to make up for such shortfalls, the final payment of principal of the
Certificates will occur later than the Expected Final Payment Date.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class B Certificate shall
not be entitled to any benefit under the Agreement or the Supplement or be valid
for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class B Certificate
to be duly executed.
AMERICAN EXPRESS CENTURION BANK
By:
----------------------------
Name:
Title:
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION
By:
----------------------------
Name:
Title:
Dated: May 16, 1996
A-2-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the American Express Credit Account Master Trust Series
1996-1 Class B Certificates described in the within mentioned Agreement and
Supplement.
THE BANK OF NEW YORK,
as Trustee
By:
----------------------
Authorized Signatory
A-2-4
<PAGE>
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS B [ ]% ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally
from the purchase of goods and services and amounts advanced to cardmembers as
cash advances and Finance Charge Receivables. This Class B Certificate is one
of a Series of Certificates entitled American Express Credit Account Master
Trust, Series 1996-1 (the "Series 1996-1 Certificates"), and one of a class
thereof entitled Class B Series 1996-1 [ ]% Asset Backed Certificates, (the
"Class B Certificates"), each of which represents a fractional, undivided
interest in certain assets of the Trust. The assets of the Trust are allocated
in part to the investor certificateholders of all outstanding Series (the
"Certificateholders' Interest") with the remainder allocated to the Holders of
the Transferor Certificates. The aggregate interest represented by the Class B
Certificates at any time in the Principal Receivables in the Trust shall not
exceed an amount equal to the Class B Invested Amount at such time. The Class B
Initial Invested Amount is $[ ]. The Class B Invested Amount on any
date will be an amount equal to (a) the Class B Initial Invested Amount, minus
(b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates , minus (d) the amount of
Reallocated Principal Collections allocated on all prior Distribution Dates
pursuant to subsection 4.08(a) of the Supplement (excluding any Reallocated
Principal Collections that have resulted in a reduction in the Collateral
Invested Amount pursuant to Section 4.08), minus (e) an amount equal to the
amount by which the Class B Invested Amount has been reduced to cover the Class
A Investor Default Amount on all prior Distribution Dates, and plus (f) the
amount of Excess Spread and Excess Finance Charge Collections allocated to
Series 1996-1 and applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Class B Invested Amount may not be reduced below
zero.
Subject to the terms and conditions of the Agreement, the Transferors
may, from time to time, direct the Trustee, on behalf of the Trust, to issue one
or more new Series of Investor Certificates, which will represent fractional,
undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute to each
Class B Certificateholder of record on the last day of the preceding calendar
month (each a "Record Date") such Class B Certificateholder's pro rata share of
such amounts (including amounts on deposit in the Collection Account) as are
payable to the Class B Certificateholders pursuant to the Agreement and the
Supplement. Distributions with respect to this Class B Certificate will be made
by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class B
Certificate) except that with respect to Class B Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and surrender of this
Class B Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Series 1996-1 Certificateholders in
accordance with the Agreement and the Supplement.
A-2-5
<PAGE>
On any day occurring on or after the day on which the Invested Amount
is reduced to 5% or less of the Initial Invested Amount, the Transferors have
the option to repurchase the Series 1996-1 Certificateholders' Interest in the
Trust. The repurchase price will be equal to (a) if such day is a Distribution
Date, the Reassignment Amount for such Distribution Date or (b) if such day is
not a Distribution Date, the Reassignment Amount for the Distribution Date next
following such day. Following the deposit of the Reassignment Amount in the
Collection Account, Series 1996-1 Certificateholders will not have any interest
in the Receivables and the Series 1996-1 Certificates will represent only the
right to receive such Reassignment Amount.
This Class B Certificate does not represent an obligation of, or an
interest in, the Transferors or the Servicer or any affiliate of any of them and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality. This Class B Certificate is
limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
hereinabove and in the Agreement and the Supplement.
The Class B Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $1,000. The transfer of this Class B
Certificate shall be registered in the Certificate Register upon surrender of
this Class B Certificate for registration of transfer at any office or agency
maintained by the Transfer Agent and Registrar accompanied by a written
instrument of transfer, in a form satisfactory to the Trustee or the Transfer
Agent and Registrar, duly executed by the Class B Certificateholder or such
Class B Certificateholder's attorney, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Class B Certificates of
authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, Class B Certificates are exchangeable for new Class B
Certificates evidencing like aggregate fractional undivided interests as
requested by the Class B Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar and any agent of any of them, may treat the person in whose name this
Class B Certificate is registered as the owner hereof for all purposes, and
neither the Servicer nor the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them, shall be affected by notice to the
contrary except in certain circumstances described in the Agreement.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-2-6
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee ____________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ____________________ (2)
Signature Guaranteed:
____________________
____________________
- ---------------
(2) NOTE: The signature to this Assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
A-2-7
<PAGE>
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO THE TRUSTEE
______________________________
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
______________________________
The undersigned, a duly authorized representative of American Express
Travel Related Services Company, Inc. ("TRS"), as Servicer pursuant to the
Pooling and Servicing Agreement dated as of May 16, 1996 (as amended and
supplemented, the "Pooling and Servicing Agreement"), among TRS, American
Express Centurion Bank and American Express Receivables Financing Corporation
II, as transferors (together, the "Transferors") and The Bank of New York, as
trustee (the "Trustee"), does hereby certify as follows:
1. Capitalized terms used in this Certificate have their respective
meanings set forth in the Pooling and Servicing Agreement or the Series 1996-1
Supplement dated as of May 16, 1996, among TRS, the Transferors and the Trustee
(as amended and supplemented, the "Supplement"), as applicable.
2. TRS is the Servicer.
3. The undersigned is a Servicing Officer.
I. INSTRUCTION TO MAKE A WITHDRAWAL
Pursuant to subsections 4.05(a), (b) and (c), the Servicer does hereby
instruct the Trustee (i) to make withdrawals from the Collection Account on
___________, ____, which date is a Distribution Date under the Supplement, in
the aggregate amounts (equal to the Class A Available Funds, Class B Available
Funds and Collateral Available Funds, respectively) as set forth below in
respect of the following amounts and (ii) to apply the proceeds of such
withdrawals in accordance with subsections 4.05(a), (b) and (c):
With respect to the Class A Certificates,
A) Pursuant to subsection 4.05(a)(i):
(1) Interest at the Class A Certificate Rate for
the related Interest Period on the Class A
Invested Amount..................................... $_______
(2) Class A Monthly Interest previously due but
not paid............................................ $_______
B-1
<PAGE>
(3) Class A Additional Interest and any Class A
Additional Interest due but not paid................ $_______
B) Pursuant to subsection 4.05(a)(ii):
(1) The Class A Servicing Fee for the preceding
Monthly Period, if applicable........................ $_______
(2) Accrued and unpaid Class A Servicing Fees,
if applicable........................................ $_______
C) Pursuant to subsection 4.05(a)(iii):
Class A Investor Default Amount for the preceding
Monthly Period....................................... $_______
With respect to the Class B Certificates,
A) Pursuant to subsection 4.05(b)(i):
(1) The Collateral Servicing Fee for the preceding
Monthly Period on the Class B Invested Amount......... $_______
(2) Class B Monthly Interest previously due but
not paid.............................................. $_______
(3) Class B Additional Interest and any Class B
Additional Interest previously due but not paid ...... $_______
B) Pursuant to subsection 4.05(b)(ii):
(1) The Class B Servicing Fee for the preceding
Monthly Period, if applicable......................... $_______
(2) Accrued and unpaid Class B Servicing Fees,
if applicable......................................... $_______
With respect to the Collateral Interest
A) Pursuant to subsection 4.05(c)(i):
(1) The Collateral Servicing Fee for the preceding
Monthly Period, if applicable ........................ $_______
(2) Accrued and unpaid Collateral Servicing Fee,
if applicable......................................... $_______
Pursuant to subsections 4.05(d), (e) and (f), the Servicer
hereby instructs the Trustee (i) to make withdrawals from
the Collection Account on ____________, which date is a
Distribution Date under the Supplement, in the aggregate
amounts (equal to the Available Principal Collections) as
set forth below in respect of the following amounts and (ii)
to apply the proceeds of such withdrawals in accordance with
subsections 4.05(d), (e) and (f):
B-2
<PAGE>
A) Pursuant to subsection 4.05(d):
(1) The excess, if any, of the Collateral Invested
Amount over the Required Collateral Invested Amount
paid to the Collateral Interest Holder pursuant to
the Loan Agreement.................................... $_______
(2) Amount to be treated as Shared Principal
Collections .......................................... $_______
B) Pursuant to subsection 4.05(e):
(1) The Lesser of the Controlled Deposit Amount and
the sum of the Class A Adjusted Invested Amount and
the Class B Adjusted Invested Amount deposited in
the Principal Funding Account ........................ $_______
(2) After the Class B Invested Amount is paid in
full, the amount paid to the Collateral Interest
Holder (up to the Collateral Invested Amount)
pursuant to the Loan Agreement ....................... $_______
(3) Prior to the date the Class B Invested Amount
is paid in full, excess of the Collateral Invested
Amount over the Required Collateral Invested Amount
paid to the Collateral Interest Holder pursuant to
the Loan Agreement ................................... $_______
(4) Prior to the date the Class B Invested Amount is
paid in full, amount to be treated as Shared
Principal Collections
C) Pursuant to subsection 4.05(f):
(1) An amount up to the Class A Adjusted Invested
Amount deposited in the Principal Funding Account .... $_______
(2) On and after the Distribution Date on which
the Class A Invested Amount is paid in full, an
amount up to the Class B Invested Amount deposited
in the Principal Funding Account ..................... $_______
(3) On an after the Distribution Date on which the
Class B Invested Amount is paid in full, an amount
up to the Collateral Invested Amount paid to the
Collateral Interest Holder pursuant to the Loan
Agreement............................................. $_______
B-3
<PAGE>
Pursuant to Section 4.07, the Servicer does hereby instruct the
Trustee to apply on __________, which is a Distribution Date under the
Supplement, any Excess Spread and Excess Finance Charge Collections allocated to
Series 1996-1 as follows:
A) Pursuant to subsection 4.07(a):
Class A Required Amount applied in the priority set
forth in subsections 4.05(a)(i), (ii) and (iii)....... $_______
B) Pursuant to subsection 4.07(b):
Aggregate amount of Class A Investor Charge-Offs not
previously reimbursed allocated to Available
Principal Collections ................................ $_______
C) Pursuant to subsection 4.07(c):
Class B Required Amount applied first in the priority
set forth in subsections 4.05(b)(i) and (ii) and any
remaining amount up to the Class B Investor Default
Amount allocated to Available Principal Collections .. $_______
D) Pursuant to subsection 4.07(d):
The amount by which the "Class B Invested Amount"
has been reduced pursuant to clauses (c), (d) and
(e) of the definition thereof allocated to
Available Principal Collections ...................... $_______
E) Pursuant to subsection 4.07(e):
(1) Collateral Monthly Interest....................... $_______
(2) Collateral Monthly Interest previously due but
not paid.............................................. $_______
(3) Collateral Additional Interest and any Collateral
Additional Interest previously due and not paid....... $_______
F) Pursuant to subsection 4.07(f):
Monthly Servicing Fee for such Distribution Date that
has not been paid to the Servicer and any Monthly
Servicing Fee previously due but not paid to
the Servicer.......................................... $_______
G) Pursuant to subsection 4.07(g):
Collateral Default Amount allocated to Available
Principal Collections ................................ $_______
H) Pursuant to subsection 4.07(h):
B-4
<PAGE>
The amount by which the "Collateral Invested Amount"
has been reduced pursuant to clauses (c), (d) and
(e) of the definition thereof allocated to Available
Principal Collections................................. $_______
I) Pursuant to subsection 4.07(i):
The excess of the Required Reserve Account Amount
over the Available Reserve Amount deposited into
the Reserve Account................................... $________
J) Pursuant to subsection 4.07(j):
Paid to the Collateral Interest Holder pursuant to
the Loan Agreement ................................... $_______
K) Pursuant to subsection 4.07(k):
Treated as Excess Finance Charge Collections and
allocated to other Series or paid to the Holders of
the Transferor Certificates .......................... $_______
Pursuant to Section 4.08, the Servicer does hereby instruct the
Trustee to apply on __________, which is a Distribution Date under the Pooling
and Servicing Agreement, $__________ of Reallocated Principal Collections to
fund any deficiencies in the Required Amount after applying Class A Available
Funds, Class B Available Funds, Excess Spread and Excess Finance Charge
Collections thereto.
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 5.01 of the Series Supplement, the Servicer does
hereby instruct the Trustee to pay in accordance with Section 5.01 from the
Interest Funding Account or the Principal Funding Account, as applicable, on
__________, which date is a Payment Date under the Supplement, the following
amounts as set forth below:
A) Pursuant to subsection 5.01(a):
Interest to be distributed to Class A
Certificateholders ................................... $_______
B) Pursuant to subsection 5.01(b):
On the Expected Final Payment Date or a Special Payment
Date, principal to be distributed to the Class A
Certificateholders ................................... $_______
C) Pursuant to subsection 5.01(c):
Interest to be distributed to Class B
Certificateholders .................................. $________
D) Pursuant to subsection 5.01(d):
On the Expected Final Payment Date or a Special Payment
Date, on or after the date Class A Invested Amount is
paid in full, principal to be distributed to the
Class B Certificateholders ........................... $_______
B-5
<PAGE>
III. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to be made in
accordance with this notice, the following amounts will be accrued and unpaid
with respect to all Monthly Periods preceding the current calendar month.
1. Subsection 4.06(a):
The aggregate amount of all unreimbursed Class A
Investor Charge-Offs ................................. $_______
2. Subsections 4.06(a), (b) and 4.08(a):
The aggregate amount by which the "Class B Invested
Amount" has been reduced pursuant to clauses (c), (d)
and (e) of the definition thereof .................... $_______
3. Subsections 4.06(a), (b), (c) and 4.08(a) and (b):
The aggregate amount by which the "Collateral Invested
Amount" has been reduced pursuant to clauses (c), (d)
and (e) of the definition thereof .................... $_______
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of __________, ____.
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC., as Servicer
By: ____________________________________
Name:
Title:
B-6
<PAGE>
EXHIBIT C
MONTHLY SERVICER'S CERTIFICATE
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
--------------------------------------------
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
--------------------------------------------
MONTHLY PERIOD ENDING ___________
The undersigned, a duly authorized representative of American Express Travel
Related Services Company, Inc. ("TRS"), as Servicer pursuant to the Pooling
and Servicing Agreement dated as of May 16, 1996(as amended,and suspended to
date by each Series Supplement thereto, the "Agreement"), among TRS, American
Express Centurion Bank ("Centurion") and American Express Receivables Financing
Corporation II ("RFC II"), as Transferors (each, in such capacity, a
"Transferor"), and The Bank of New York, as Trustee, does hereby certify the
information set forth below.
1. Capitalized terms used in this Certificate have their respective meanings
as set forth in the Agreement. This certificate is delivered pursuant to 3.04
(b)of the Agreement.
2. TRS is Servicer under the Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution Date occurring on July 15,
1996, and the initial Monthly Period from May 16 through June 26, 1996.
A. Information regarding distributions on the Distribution Date in respect
of the Class A Certificates per $1,000 original certificate principal amount.
1. Total amount of the distribution:
2. Amount of the distribution in
respect of Class A Monthly Interest:
3. Amount of the distribution in respect of
Class A Outstanding Monthly Interest:
4. Amount of the distribution in respect of
Class A Additional Interest:
5. Amount of the distribution in
respect of Class A Principal:
B. Class A Investor Charge-Offs and Reimbursement of Class A Investor
Charge-Offs on such Distribution Date.
1. Total amount of Class A Investor Charge-Offs:
<PAGE>
Monthly Servicer's Certificate
American Express Travel Related Services Company, Inc.
2. Amount of Class A Investor Charge-
Offs per $1,000 original certificate
principal amount:
3. Total amount reimbursed in respect of
Class A Investor Charge-Offs:
4. Amount reimbursed in respect of Class
A Investor Charge-Offs per $1,000
original certificate principal amount:
5. The amount, if any, by which the outstanding principal balance of the
Class A Certificates exceeds the Class A Invested Amount after giving
effect to all transactions on such Distribution
Date:
C. Information regarding distributions in respect of the Class B
Certificates, per $1,000 original certificate principal amount.
1. The total amount of the distribution:
2. Amount of the distribution in
respect of class B monthly interest:
3. Amount of the distribution in
respect of class B outstanding monthly interest:
4. Amount of the distribution in
respect of class B additional interest:
5. Amount of the distribution in
respect of class B principal:
D. Amount of reductions in Class B Invested Amount pursuant to clauses (c), (d),
and (e) of the definition of Class B Invested Amount on such Distribution Date.
1. The amount of reductions in Class B Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of Class B Invested Amount:
2. The amount of reductions in the Class B Invested Amount set forth in
paragraph 1 above, per $1,000 original certificate principal amount:
3. The total amount reimbursed in respect
of such reductions in the Class B
Invested Amount:
<PAGE>
Monthly Servicer's Certificate
American Express Travel Related Services Company, Inc.
4. The amount set forth in paragraph 3
above, per $1,000 original certificate
principal amount:
5. The amount, if any, by which the outstanding principal balance of the
Class B Certificates exceeds the Class B Invested Amount after giving
effect to all transactions on such Distribution Date:
E. Information regarding distributions on the Distribution Date to the
Collateral Interest Holder.
1. Total amount distributed to the Collateral
Interest Holder:
2. Amount distributed in respect of Collateral
Monthly Interest:
3. Amount distributed in respect of Collateral
Additional Interest:
4. The amount distributed to the Collateral
Interest Holder in respect of principal
on the Collateral Invested Amount:
F. Amount of reductions in Collateral Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of Collateral Invested Amount.
1. The amount of reductions in the Collateral Invested Amount pursuant to
clauses (c), (d), and (e) of the definition of Collateral Invested Amount:
2. The total amount reimbursed in respect
of such reductions in the Collateral
Invested Amount:
<PAGE>
Monthly Servicer's Certificate
American Express Travel Related Services Company, Inc.
Information Regarding the American Express
Credit Account Master Trust
B. Application of Reallocated Series 1996-1 Finance Charge Collections.
1. Class A Available Funds:
a. Cass A Monthly Interest:
b. Prior Class A Monthly Interest:
c. Class A Additional Interest:
d. Class A Investor Default Amount
(Treated as Available Principal
Collections):
e. Excess Spread:
2. Class B Available Funds:
a. Class B Monthly Interest
b. Prior Class B Monthly Interest:
c. Class B Additional Interest:
d. Excess Spread:
3. Collateral Available Funds:
a. Excess Spread:
C. Reallocated Principal Collections.
1. Principal Allocation Percentage:
2. Series 1996-1 Allocable Principal
Collections:
3. Principal Allocation Percentage of
Series 1996-1 Allocable Principal
Collections:
4. Reallocated Principal Collections
Required to fund the Required Amount:
5.Item 3 minus item 4:
6. Shared Principal Collections from other
Series allocated to Series 1996-1:
7. Other amounts Treated as Available Principal
Collections:
8. Available Principal Collections
(total of 5., 6. & 7.):
D. Application of Available Principal Collections during Revolving Period.
1. Excess of Collateral Invested Amount
over Required Collateral Invested Amount:
2. Treated as Shared Principal Collections:
<PAGE>
Monthly Servicer's Certificate
American Express Travel Related Services Company, Inc.
E. Application of Principal Collections During Accumulation or Amortization
Period.
1. Principal Funding Account:
2. Excess of Collateral Invested Amount
over Required Collateral Invested Amount:
3. Principal Distribution:
4. Treated as Shared Principal Collections:
F. Additional Information regarding Allocations and Delinquencies.
1. Application of Excess Spread and Excess Finance Charge Collections
Allocated to Series 1996-1
a. Applied to fund Class A Required Amount:
b. Class A Investor Charge-Offs treated
as Available Principal Collections:
c. Applied to fund Class B overdue Interest:
d. Applied to fund Class B Required Amount:
e. Reduction of Class B Invested Amount
treated as Available Principal Collections:
f. Applied to Collateral Monthly Interest:
g. Applied to unpaid Monthly Servicing Fee:
h. Collateral Default Amount treated as
Available Principal Collections:
i. Reduction of Collateral Invested Amount
treated as Available Principal Collections:
j. Deposited to Reserve Account:
k. Applied to other amounts owed to
Collateral Interest Holder:
l. Balance:
2. Delinquencies
a. 31-60 Days Delinquent:
b. 61-90 Days Delinquent:
c. 90+ Days Delinquent:
d. Total 30+ Days Delinquent:
American Express Travel Related Services Company, Inc.
Servicer
By:
--------------------------------
Name:
Title:
<PAGE>
Monthly Servicer's Certificate
American Express Travel Related Services Company, Inc.
A. Table of Calculations
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Monthly Period Trust Activity Trust Totals
- ------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
Beginning Principal Rec. Balance
Special Funding Account Balance
Required Transferor Amount
Transferor Amount
Beginning Total Principal Balance
Finance Charge Collections (excluding
Discount Option & Recoveries)
Discount Percentage
Discount Option Receivables Collections
Premium Option Receivables Collections
Recoveries
Total Collections of Fin. Chg. Receivables
Trust Portfolio Yield
Total Collections of Principal Receivables
Monthly Payment Rate
Defaulted Receivables defaulted amount
Monthly Default Rate
Adjustments
New Principal Receivables
Ending Principal Receivables Balance
Required Minimum Principal Balance
Special Funding Account Balance
Ending Total Principal Balance
Group 1 Information Series 1996-1 Series 1996-2 Series 3 Series 4 Group Total
- ---------------------------- ------------------- ------------------- ---------- ----------- ----------------
Average Rate
Invested Amount
Adjusted Invested Amount
Principal Funding Account Balance
Series Alloc. Finance Charge
Collections
Series Alloc. Principal Collections
Allocable Defaulted Amount
Monthly Interest
Monthly Fees
Additional Amounts
Floating Allocation Percentage
Principal Allocation Percentage
Series Allocation Percentage
</TABLE>
<PAGE>
Monthly Servicer's Certificate
American Express Travel Related Services Company, Inc.
Series 1996-1
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Monthly Period Ca Investor Total Investor Transferors Series
Trust Activity Class A Class B Interest Interest Interest Allocations
- ---------------------------- --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Series Allocation Percentage
Beginning Invested/
Transferor Amount
Beginning Adjusted Invested
Amount
Floating Percentage
Principal Percentage
Finance Charge Collections
(excluding Discount Option
& Recoveries)
Discount Percentage
Discount Option Receivables
Collections
Premium Option Receivables
Collections
Recoveries
Collections of Finance Chg.
Receivables
Collections of Principal
Receivables
Defaulted Receivables
Required Minimum Principal
Balance
Reallocated Principal
Charged-Off Principal
Reimbursed Principal
Ending Invested/Transferor
Amounts
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Monthly Period Ca Investor Total Investor Transferors Series
Trust Activity Class A Class B Interest Interest Interest Allocations
- ------------------------ --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Principal Funding Account
Investment Proceeds for
Monthly Period
Reserve Draw Amount
Available Reserve Account
Amount
Reserve Account Surplus
Investor Coupon
Investor Monthly Interest
Due
Investor Outstanding
Interest Due
Investor Additional
Interest Due
Investor Total Interest Due
Investor Default Amount Due
Investor Monthly Fees Due
Investor Additional Amounts
Due
Total Due
Reallocated Investor Finance
Charge Collections
Interest and Principal
Funding Investment Proceeds
Series Adjusted Portfolio
Yield
Base Rate
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Certificates Class A Class B Class C Total
- ---------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Certificates
Balance
Interest Distribution
Principal Deposits in
Principal Funding
Account
Principal Distribution
Total Distribution
Ending Certificate Balance
Pool Factor
Total Distribution per 1,000
Certificates
Interest Dist. per 1,000
Certificates
Principal Dist. per 1,000
Certificates
</TABLE>
<PAGE>
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
The undersigned, a duly authorized representative of American Express
Travel Related Services Company, Inc., as Servicer ("TRS"), pursuant to the
Pooling and Servicing Agreement, dated as of May 16, 1996 (as amended and
supplemented, the "Agreement"), as supplemented by the Series 1996-1 Supplement
(as amended and supplemented, the "Series Supplement"), among TRS, as Servicer,
American Express Centurion Bank and American Express Receivables Financing
Corporation II, as Transferors, and The Bank of New York, as Trustee, does
hereby certify as follows:
1. Capitalized terms used in this Certificate have their respective
meanings as set forth in the Agreement or the Series Supplement, as
applicable.
2. TRS is, as of the date hereof, the Servicer under the Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution Date occurring on
__________ ____, 199__.
5. As of the date hereof, to the best knowledge of the undersigned,
the Servicer has performed in all material respects all its obligations
under the Agreement through the Monthly Period preceding such Distribution
Date [or, if there has been a default in the performance of any such
obligation, set forth in detail the (i) nature of such default, (ii) the
action taken by the Servicer, if any, to remedy such default and (iii) the
current status of each such default; if applicable, insert "None"].
6. As of the date hereof, to the best knowledge of the undersigned,
no Pay Out Event occurred on or prior to such Distribution Date.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Certificate this __ day of __________, 199__.
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC., as Servicer
By: __________________________________
Name:
Title:
D-1
<PAGE>
EXHIBIT 4.3
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 9, 1996)
[LOGO]
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
$865,000,000 CLASS A SERIES 1996-1 6.80% ASSET BACKED CERTIFICATES
$60,000,000 CLASS B SERIES 1996-1 6.95% ASSET BACKED CERTIFICATES
AMERICAN EXPRESS CENTURION BANK
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
------------------------
The Class A Series 1996-1 6.80% Asset Backed Certificates (the 'CLASS A
CERTIFICATES') and the Class B Series 1996-1 6.95% Asset Backed Certificates
(the 'CLASS B CERTIFICATES' and, together with the Class A Certificates, the
'SERIES 1996-1 CERTIFICATES') offered hereby will represent undivided
interests in certain assets of the American Express Credit Account Master
Trust (the 'TRUST') created pursuant to a Pooling and Servicing Agreement (the
'POOLING AND SERVICING AGREEMENT') among American Express Travel Related
Services Company, Inc. ('TRS'), as Servicer (in such capacity, the
'SERVICER'), American Express Centurion Bank ('CENTURION') and American
Express Receivables Financing Corporation II ('RFC II'), as Transferors (each,
in such capacity, a 'TRANSFEROR'), and The Bank of New York, as Trustee (in
such capacity, the 'TRUSTEE'). The property of the Trust includes, among other
things, receivables described herein (the 'RECEIVABLES') generated from time
to time in a portfolio of designated Optima(Registered) Card, Optima Line of
Credit
(continued on next page)
------------------------
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE SERIES 1996-1
CERTIFICATES, AND THERE IS NO ASSURANCE THAT ONE WILL DEVELOP OR, IF ONE DOES
DEVELOP, THAT IT WILL CONTINUE UNTIL THE SERIES 1996-1 CERTIFICATES ARE PAID
IN FULL.
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER CONSIDERATIONS, THE
INFORMATION SET FORTH IN THE SECTIONS ENTITLED 'RISK FACTORS' COMMENCING ON
PAGE S-13 HEREIN AND ON PAGE 19 IN THE PROSPECTUS.
------------------------
THE SERIES 1996-1 CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST
ONLY AND WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF, NOR WILL THEY
BE GUARANTEED BY, CENTURION, RFC II, AMERICAN EXPRESS CREDIT
CORPORATION, AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY,
INC., AMERICAN EXPRESS COMPANY OR ANY AFFILIATE THEREOF.
NEITHER THE SERIES 1996-1 CERTIFICATES NOR THE
UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT THE TRANSFERORS(1)(2)
<S> <C> <C> <C>
Per Class A Certificate...................... 99.890625% .3% 99.590625%
Per Class B Certificate...................... 99.859375% .35% 99.509375%
Total........................................ $ 923,969,531.25 $ 2,805,000.00 $ 921,164,531.25
</TABLE>
(1) Plus accrued interest, if any, at the Class A Certificate Rate or Class B
Certificate Rate, as applicable, from May 16, 1996.
(2) Before deduction of expenses payable by the Transferors, estimated to be
$800,000.
------------------------
The Series 1996-1 Certificates are offered by the Underwriters when, as
and if issued by the Trust and accepted by the Underwriters and subject to the
Underwriters' right to reject orders in whole or in part. It is expected that
the Series 1996-1 Certificates will be delivered in book-entry form on or
about May 16, 1996, through the facilities of The Depository Trust Company,
Cedel Bank, societe anonyme and the Euroclear System.
UNDERWRITERS OF THE CLASS A CERTIFICATES
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS B CERTIFICATES
MERRILL LYNCH & CO. LEHMAN BROTHERS
The date of this Prospectus Supplement is May 9, 1996.
<PAGE>
(continued from previous page)
and Sign & Travel(Registered) revolving credit accounts and, in the future,
may include other charge or credit accounts (collectively, the 'ACCOUNTS'). In
addition, the Collateral Interest (as defined herein) will be issued in the
initial amount of $75,000,000 and will be subordinated to the Series 1996-1
Certificates as described herein. The Transferors initially will own the
remaining undivided interest in the Trust not represented by the Series 1996-1
Certificates and the other investor certificates or interests issued by the
Trust. The Transferors may offer from time to time other series of
certificates that evidence undivided interests in certain assets of the Trust,
which may have terms significantly different from the Series 1996-1
Certificates and which are not offered hereby. The issuance of additional
series of certificates may impact the timing or amount of payments received by
holders of the Series 1996-1 Certificates.
Interest will accrue on the Class A Certificates from May 16, 1996 (the
'CLOSING DATE', at the rate of 6.80% per annum (the 'CLASS A CERTIFICATE
RATE'). Interest on the Class B Certificates will accrue from the Closing Date
at the rate of 6.95% per annum (the 'CLASS B CERTIFICATE RATE'). Interest on
the Series 1996-1 Certificates will be distributed on July 15, 1996 and on the
15th day of each month thereafter (or, if such 15th day is not a business day,
the immediately succeeding business day) (each, a 'DISTRIBUTION DATE').
Principal with respect to the Class A Certificates and the Class B
Certificates is scheduled to be distributed on the May 2001 Distribution Date,
but may be paid earlier or later under certain limited circumstances described
herein. See 'Maturity Considerations' and 'Series Provisions--Pay-Out Events'
herein and 'Description of the Certificates--Pay-Out Events and Reinvestment
Events' in the Prospectus. Principal payments will not be made to Class B
Certificateholders until the final principal payment has been made in respect
of the Class A Certificateholders. See 'Series Provisions--Principal
Payments.'
Application will be made to list the Series 1996-1 Certificates on the
Luxembourg Stock Exchange.
------------------------
THE FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED BY THE CLASS B
CERTIFICATES WILL BE SUBORDINATED TO THE EXTENT NECESSARY TO FUND PAYMENTS
WITH RESPECT TO THE CLASS A CERTIFICATES TO THE EXTENT DESCRIBED HEREIN.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES
1996-1 CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
THE SERIES 1996-1 CERTIFICATES OFFERED HEREBY CONSTITUTE THE FIRST,
SEPARATE SERIES OF INVESTOR CERTIFICATES BEING OFFERED BY THE TRUST FROM TIME
TO TIME PURSUANT TO A PROSPECTUS DATED MAY 9, 1996. THIS PROSPECTUS SUPPLEMENT
DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE OFFERING OF THE SERIES 1996-1
CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS AND
PURCHASERS ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS IN FULL. SALES OF THE SERIES 1996-1 CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
UPON RECEIPT OF A REQUEST BY AN INVESTOR, OR HIS OR HER REPRESENTATIVE,
WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE
UNDERWRITERS WILL TRANSMIT OR CAUSE TO BE TRANSMITTED PROMPTLY, WITHOUT CHARGE
AND IN ADDITION TO ANY SUCH DELIVERY REQUIREMENTS, A PAPER OR ELECTRONIC
FORMAT COPY OF A PROSPECTUS SUPPLEMENT AND PROSPECTUS.
S-2
<PAGE>
SUMMARY OF SERIES TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Reference is made to the Index of Defined Terms in this
Prospectus Supplement and the Prospectus for the location herein and therein of
the definitions of certain capitalized terms used herein. Certain capitalized
terms used but not defined herein have the meanings assigned to them in the
Prospectus.
<TABLE>
<S> <C>
TRUST..................................... American Express Credit Account Master Trust (the 'TRUST').
TITLE OF SECURITIES....................... $865,000,000 Class A Series 1996-1 6.80% Asset Backed Certificates
(the 'CLASS A CERTIFICATES') and $60,000,000 Class B Series 1996-1
6.95% Asset Backed Certificates (the 'CLASS B CERTIFICATES' and,
together with the Class A Certificates, the 'SERIES 1996-1
CERTIFICATES').
INITIAL INVESTED AMOUNT................... $1,000,000,000 (the 'INITIAL INVESTED AMOUNT').
CLASS A INITIAL INVESTED AMOUNT........... $865,000,000 (the 'CLASS A INITIAL INVESTED AMOUNT').
CLASS B INITIAL INVESTED AMOUNT........... $60,000,000 (the 'CLASS B INITIAL INVESTED AMOUNT').
COLLATERAL INITIAL INVESTED AMOUNT........ $75,000,000 (the 'COLLATERAL INITIAL INVESTED AMOUNT').
SERIES REQUIRED TRANSFEROR AMOUNT......... For any date, 7% of the Invested Amount (the 'SERIES REQUIRED
TRANSFEROR AMOUNT').
CLASS A CERTIFICATE RATE.................. 6.80% per annum.
CLASS B CERTIFICATE RATE.................. 6.95% per annum.
CONTROLLED ACCUMULATION AMOUNT............ For each Distribution Date with respect to the Controlled
Accumulation Period, $77,083,333.34 except that, if the commencement
of the Controlled Accumulation Period is delayed as described herein
under 'Series Provisions--Principal Payments,' the Controlled
Accumulation Amount for each Distribution Date with respect to the
Controlled Accumulation Period will be determined as described under
'Series Provisions--Application of Collections--Payments of
Principal.' The Invested Amount will be paid in full to the Class A
and Class B Certificateholders at the end of the Controlled
Accumulation Period.
EXPECTED FINAL PAYMENT DATE............... The May 2001 Distribution Date.
CLOSING DATE.............................. May 16, 1996 (the 'CLOSING DATE').
SERIES INVESTED AMOUNT.................... The Initial Invested Amount.
THE SERIES 1996-1 CERTIFICATES; THE
COLLATERAL INTEREST..................... Each of the Series 1996-1 Certificates offered hereby represents an
undivided interest in the Trust. The portion of the Trust Assets
allocated to Series 1996-1 as described under 'The Pooling and
Servicing Agreement Generally--Allocations' in the Prospectus will be
further allocated among the interest of the holders of the Class A
Certificates (the 'CLASS A CERTIFICATEHOLDERS' INTEREST'), the
interest of the holders of the Class B Certificates (the 'CLASS B
CERTIFICATEHOLDERS' INTEREST'), the interest of the Collateral
Interest Holder (as defined below), and the interest of the holders
of the Transferor Certificates (the 'TRANSFERORS' INTEREST'), as
described below. The Class A Certificateholders' Interest and the
Class B Certificateholders' Interest are sometimes collectively
referred to herein as the 'SERIES 1996-1 CERTIFICATEHOLDERS'
INTEREST.' A specified undivided interest in the Trust Assets (the
'COLLATERAL INTEREST') in the initial amount of $75,000,000 (which
amount
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
represents 7.5% of the sum of the Class A Initial Invested Amount,
the Class B Initial Invested Amount and the Collateral Initial
Invested Amount) constitutes Credit Enhancement for the Series 1996-1
Certificates. The provider of such Credit Enhancement is referred to
herein as the 'COLLATERAL INTEREST HOLDER.' Allocations will be made
to the Collateral Interest, and the Collateral Interest Holder will
have voting and certain other rights as if the Collateral Interest
were a subordinated class of Series 1996-1 Certificates. For purposes
of this Prospectus Supplement, the 'COLLATERAL INTEREST' shall be
deemed to be the 'COLLATERAL INVESTED AMOUNT' for the Series 1996-1
Certificates for all purposes under the Prospectus. The Transferors'
Interest will represent the right to the assets of the Trust not
allocated to the Class A Certificateholders' Interest, the Class B
Certificateholders' Interest, the Collateral Interest or the holders
of other undivided interests in the Trust. The principal amount of
the Transferors' Interest will fluctuate as the amount of Receivables
in the Trust changes from time to time.
The aggregate amount of Principal Receivables allocated to the Series
1996-1 Certificateholders' Interest and the Collateral Interest (the
'INVESTED AMOUNT') will be $1,000,000,000 on the Closing Date (the
'INITIAL INVESTED AMOUNT').
The aggregate amount of Principal Receivables allocable to the Class
A Certificateholders' Interest (as more fully defined herein, the
'CLASS A INVESTED AMOUNT') will be $865,000,000 on the Closing Date
(the 'CLASS A INITIAL INVESTED AMOUNT'). The aggregate amount of
Principal Receivables allocable to the Class B Certificateholders'
Interest (as more fully defined herein, the 'CLASS B INVESTED
AMOUNT') will be $60,000,000 on the Closing Date (the 'CLASS B
INITIAL INVESTED AMOUNT'). The aggregate amount of Principal
Receivables allocable to the Collateral Interest (as more fully
defined herein, the 'COLLATERAL INVESTED AMOUNT') will be $75,000,000
on the Closing Date (the 'COLLATERAL INITIAL INVESTED AMOUNT'). The
Class B Certificateholders' Interest will decline in certain
circumstances as a result of (a) the allocation to the Class B
Certificateholders' Interest of certain Defaulted Amounts, including
such amounts otherwise allocable to the Class A Certificateholders'
Interest when the Collateral Interest is zero, and (b) the
reallocation of collections of Principal Receivables otherwise
allocable to the Class B Certificateholders' Interest to fund certain
payments in respect of the Class A Certificates. Any such reductions
in the Class B Certificateholders' Interest may be reimbursed out of
Excess Spread, if any, Excess Finance Charge Collections allocable to
Series 1996-1, if any, and the reallocation of certain amounts
allocable to the Collateral Interest as described herein. During the
Controlled Accumulation Period, for the purpose of allocating
collections of Finance Charge Receivables and the Defaulted Amount
with respect to each Monthly Period, the Class A Certificateholders'
Interest will be reduced (in an amount not to exceed the Class A
Invested Amount) by the amount on deposit in the Principal Funding
Account (as so reduced, the 'CLASS A ADJUSTED INVESTED AMOUNT') and
the Class B Certificateholders' Interest will be reduced by the
amount by which the amount on deposit in the Principal Funding
Account exceeds the Class A
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
Invested Amount (as so reduced, the 'CLASS B ADJUSTED INVESTED
AMOUNT,' and, together with the Class A Adjusted Invested Amount and
the Collateral Invested Amount, the 'ADJUSTED INVESTED AMOUNT'). The
principal amount of the Transferors' Interest will fluctuate as the
amount of Principal Receivables in the Trust, the invested amount of
each Series and the amounts on deposit in the Special Funding Account
change from time to time.
The Class A Certificates, the Class B Certificates and the Collateral
Interest will each include the right to receive (but only to the
extent needed to make payments of interest on each Distribution Date
at the applicable certificate rate and payments of principal and
subject to any reallocation of such amounts as described herein),
varying percentages of the collections of Finance Charge Receivables
and Principal Receivables and will be allocated varying percentages
of the Defaulted Amount with respect to each Monthly Period.
Collections of Finance Charge Receivables and Principal Receivables
and the Defaulted Amount will be allocated to Series 1996-1 based on
the Series Allocation Percentage for Series 1996-1 (subject to
reallocation, in the case of certain Series Allocable Finance Charge
Collections, to other Series in Group I as described under 'The
Pooling and Servicing Agreement Generally--Reallocations Among
Different Series Within a Reallocation Group' in the Prospectus).
Reallocated Investor Finance Charge Collections and the Investor
Default Amount will be further allocated to the holders of the Class
A Certificates and the holders of the Class B Certificates and the
Collateral Interest based on the Class A Floating Percentage, the
Class B Floating Percentage and the Collateral Floating Percentage,
respectively (each defined herein). The Principal Allocation
Percentage of Series Allocable Principal Collections will be
allocated to the holders of the Class A Certificates, the Class B
Certificates and the Collateral Interest based on the Class A
Principal Percentage, the Class B Principal Percentage and the
Collateral Principal Percentage, respectively (each defined herein).
OTHER SERIES.............................. The Series 1996-1 Certificates will be the first Series of investor
certificates issued by the Trust. Additional Series are expected to
be issued from time to time by the Trust. See 'The Pooling and
Servicing Agreement Generally--New Issuances' and '--Reallocations
Among Different Series Within a Reallocation Group' in the Prospectus
and 'Maturity Considerations' herein.
RECEIVABLES............................... The Receivables arise in Accounts that have been selected from the
Total Portfolio, based on criteria specified in the Pooling and
Servicing Agreement as applied at the close of business on the cycle
billing date for such Accounts occurring in the monthly period
beginning on the close of business on September 1, 1995, and ending
at the close of business on September 30, 1995 (the 'SELECTION
DATE'), and as more fully described herein under 'The Total
Portfolio.' The aggregate amount of Receivables (including
Receivables in Accounts closed since the Selection Date at the
request of Account holders) in the Accounts as of March 26, 1996, was
$1,857,367,374, comprised of $1,826,999,587 of Principal Receivables
and $30,367,787 of Finance Charge Receivables.
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
DENOMINATIONS............................. Beneficial interests in the Series 1996-1 Certificates will be
offered for purchase in denominations of $1,000 and integral
multiples thereof.
REGISTRATION OF SERIES 1996-1
CERTIFICATES............................ The Series 1996-1 Certificates initially will be represented by
Series 1996-1 Certificates registered in the name of Cede, as the
nominee of DTC. No purchaser of a Series 1996-1 Certificate will be
entitled to receive a definitive certificate except under certain
limited circumstances described in the Prospectus. Purchasers of the
Series 1996-1 Certificates may elect to hold their Series 1996-1
Certificates through DTC (in the United States) or Cedel or Euroclear
(in Europe). See 'Description of the Certificates--Definitive
Certificates' in the Prospectus.
SERVICING FEE............................. The Servicing Fee Rate for the Series 1996-1 Certificates will be
2.0% per annum. The Class A Servicing Fee, the Class B Servicing Fee
and the Collateral Interest Servicing Fee will be paid on each
Distribution Date as described under 'Series Provisions--Application
of Collections--Payment of Fees, Interest and Other Items' and
'--Servicing Compensation and Payment of Expenses' herein. See
'Description of the Certificates--Servicing Compensation and Payment
of Expenses' in the Prospectus.
REVOLVING PERIOD AND CONTROLLED
ACCUMULATION PERIOD..................... The 'REVOLVING PERIOD' with respect to the Series 1996-1 Certificates
means the period from and including the Closing Date to, but not
including, the earlier of (a) the commencement of the controlled
accumulation period with respect to the Series 1996-1 Certificates
(the 'CONTROLLED ACCUMULATION PERIOD') and (b) the commencement of
the Early Amortization Period. Unless a Pay-Out Event has occurred,
the Controlled Accumulation Period will commence at the close of
business on the last day of the April 2000 Monthly Period; provided,
that subject to the conditions set forth under 'Series
Provisions--Principal Payments' herein, the day on which the
Revolving Period ends and the Controlled Accumulation Period begins
may be delayed to no later than the close of business on the last day
of the March 2001 Monthly Period. The Controlled Accumulation Period
will end on the earliest of (a) the commencement of the Early
Amortization Period, (b) the payment in full of the Invested Amount
and (c) the Series Termination Date for Series 1996-1 (the 'SERIES
1996-1 TERMINATION DATE'). No principal will be payable to Class A
Certificateholders until the May 2001 Distribution Date (the
'EXPECTED FINAL PAYMENT DATE'), or, upon the occurrence of a Pay-Out
Event as described herein, the first Distribution Date with respect
to the Early Amortization Period. No principal will be payable to the
Class B Certificateholders until the Class A Invested Amount is paid
in full. No principal will be payable to the Collateral Interest
Holder until the Class B Invested Amount is paid in full; provided,
that during the Revolving Period or the Controlled Accumulation
Period, certain collections of Principal Receivables allocable to the
Series 1996-1 Certificateholders' Interest and the Collateral
Interest will be paid to the Collateral Interest Holder to the extent
that the Collateral Invested Amount exceeds the Required Collateral
Invested Amount. For the period beginning on the Closing Date and
ending with the
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
commencement of the Controlled Accumulation Period or the Early
Amortization Period, collections of Principal Receivables otherwise
allocable to the Series 1996-1 Certificateholders' Interest and the
Collateral Interest (other than collections of Principal Receivables
allocated to the Class B Certificateholders' Interest and the
Collateral Interest ('REALLOCATED PRINCIPAL COLLECTIONS') that are
used to pay any deficiency in the Class A Required Amount or Class B
Required Amount) will, subject to certain limitations, be treated as
Shared Principal Collections and applied to cover principal payments
due to or for the benefit of Certificateholders of other Principal
Sharing Series, or paid to the holders of the Transferor Certificates
or, in certain circumstances, deposited in the Special Funding
Account. See 'Series Provisions--Pay-Out Events' herein and
'Description of the Certificates--Pay-Out Events and Reinvestment
Events' in the Prospectus for a discussion of the events which might
lead to the termination of the Revolving Period prior to the
commencement of the Controlled Accumulation Period. In addition, see
'Series Provisions--Principal Payments' herein and 'The Pooling and
Servicing Agreement Generally-- Sharing of Principal Collections
Among Principal Sharing Series' in the Prospectus.
EARLY AMORTIZATION PERIOD................. During the period from the day on which a Pay-Out Event has occurred
and ending on the earlier of (a) the payment of the Invested Amount
in full and (b) the Series 1996-1 Termination Date (the 'EARLY
AMORTIZATION PERIOD'), Available Principal Collections (as defined
herein) will be distributed monthly on each Distribution Date to the
holders of the Class A Certificates and, following payment in full of
the Class A Invested Amount, to the holders of the Class B
Certificates and, following payment in full of the Class B Invested
Amount, to the Collateral Interest Holder beginning with the
Distribution Date in the month following the commencement of the
Early Amortization Period. See 'Series Provisions--Pay-Out Events'
herein and 'Description of the Certificates--Pay-Out Events and
Reinvestment Events' in the Prospectus for a discussion of the events
which might lead to the commencement of the Early Amortization
Period.
SUBORDINATION OF THE CLASS B CERTIFICATES
AND THE COLLATERAL INTEREST............. The Class B Certificates and the Collateral Interest will be
subordinated, as described herein, to the extent necessary to fund
payments with respect to the Class A Certificates as described
herein. In addition, the Collateral Interest will be subordinated to
the extent necessary to fund certain payments with respect to the
Class B Certificates. If the Collateral Interest 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 allocable to holders of the
Class B Certificates 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 holders of the Class B Certificates will be reduced.
Thereafter, such reductions of the Class B Invested Amount will be
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
reimbursed and the Class B Invested Amount will be increased on each
Distribution Date by the amount, if any, of Excess Spread and Excess
Finance Charge Collections allocable to Series 1996-1 for such
Distribution Date available for that purpose. See 'The Pooling and
Servicing Agreement Generally--Credit Enhancement--Subordination' in
the Prospectus.
ADDITIONAL AMOUNTS AVAILABLE TO
CERTIFICATEHOLDERS...................... With respect to any Distribution Date, Excess Spread and Excess
Finance Charge Collections allocable to Series 1996-1 will be applied
to fund the Class A Required Amount and the Class B Required Amount,
if any, as well as certain other items. The 'CLASS A REQUIRED AMOUNT'
means with respect to any Distribution Date the amount, if any, by
which the sum of (a) the Class A Monthly Interest due on such
Distribution Date and any overdue Class A Monthly Interest and Class
A Additional Interest thereon, (b) if TRS or an affiliate of TRS is
no longer the Servicer, the Class A Servicing Fee for the related
Monthly Period and any overdue Class A Servicing Fee and (c) the
Class A Investor Default Amount, if any, for the related Monthly
Period exceeds the Class A Available Funds for the related Monthly
Period. The 'CLASS B REQUIRED AMOUNT' means the amount equal to the
sum of (a) the amount, if any, by which the sum of (i) Class B
Monthly Interest due on the related Distribution Date and any overdue
Class B Monthly Interest and Class B Additional Interest thereon and
(ii) if TRS or an affiliate of TRS is no longer the Servicer, the
Class B Servicing Fee for the related Monthly Period and any overdue
Class B Servicing Fee exceeds the Class B Available Funds for the
related Monthly Period and (b) the Class B Investor Default Amount,
if any, for the related Monthly Period. The 'REQUIRED AMOUNT' for any
Monthly Period shall mean the sum of (a) the Class A Required Amount
and (b) the Class B Required Amount for such Monthly Period. 'EXCESS
SPREAD' for any Transfer Date will equal the sum of (a) the excess of
(i) Class A Available Funds for the related Monthly Period over (ii)
the sum of the amounts referred to in clauses (a), (b) and (c) in the
definition of 'Class A Required Amount' above and (b) the excess of
(i) Class B Available Funds for the related Monthly Period over (ii)
the sum of the amounts referred to in clauses (a)(i) and (ii) in the
definition of 'Class B Required Amount' above and (c) Collateral
Available Funds (defined herein) for the related Monthly Period not
used, if TRS or an affiliate of TRS is no longer the Servicer, to pay
the Collateral Interest Servicing Fee, as described herein.
If, on any Distribution Date, Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-1 are less than the Class A
Required Amount, Reallocated Principal Collections allocable first to
the Collateral Interest and then to the Class B Certificateholders'
Interest with respect to the related Monthly Period will be used to
fund the remaining Class A Required Amount. If Reallocated Principal
Collections with respect to such Monthly Period are insufficient to
fund the remaining Class A Required Amount for the related
Distribution Date, then the Collateral Invested Amount (after giving
effect to reductions for any Collateral Charge-Offs (defined herein)
and Reallocated Principal
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
Collections on such Distribution Date) will be reduced by the amount
of such deficiency (but not by more than the Class A 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 (after giving effect to reductions for any Class B
Investor Charge-Offs (defined below) and any Reallocated Class B
Principal Collections on such Distribution Date) will be reduced by
the amount by which the Collateral Invested Amount would have been
reduced below zero (but not by more than the excess of the Class A
Investor Default Amount, if any, for such Monthly Period over the
amount of such reduction, if any, of the Collateral Invested Amount
with respect to such Monthly Period). 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 Monthly Period over such reductions in the Collateral
Invested Amount and the Class B Invested Amount with respect to such
Monthly Period) (such reduction, a 'CLASS A INVESTOR CHARGE-OFF'). If
the Collateral Invested Amount and the Class B Invested Amount are
reduced to zero, the Class A Certificateholders will bear directly
the credit and other risks associated with their undivided interest
in the Trust. See 'Series Provisions--Reallocation of Cash Flows' and
'--Defaulted Receivables; Investor Charge-Offs.'
If, on any Distribution Date, Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-1 not required to pay the Class
A Required Amount or reimburse Class A Investor Charge-Offs is less
than the Class B Required Amount, Reallocated Principal Collections
allocable to the Collateral Interest for the related Monthly Period
not required to pay the Class A Required Amount will be used to fund
the remaining Class B Required Amount. If such remaining Reallocated
Principal Collections allocable to the Collateral Interest with
respect to such Monthly Period are insufficient to fund the remaining
Class B Required Amount for such Distribution Date, then the
Collateral Invested Amount (after giving effect to reductions for any
Collateral Charge-Offs, Reallocated Principal Collections and any
adjustments made thereto for the benefit of the Class A
Certificateholders) will be reduced by the amount of such deficiency
(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
Monthly Period over such reduction in the Collateral Invested Amount
with respect to such Monthly Period) (such reduction, a 'CLASS B
INVESTOR CHARGE-OFF'). In the event of a reduction of the
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
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 'The Pooling and
Servicing Agreement Generally--Reallocation Among Different Series
Within a Reallocation Group' in the Prospectus and '--Defaulted
Receivables; Investor Charge-Offs' herein.
REQUIRED COLLATERAL INVESTED
AMOUNT.................................. The 'REQUIRED COLLATERAL INVESTED AMOUNT' with respect to any
Distribution Date means (i) initially $75,000,000 and
(ii) thereafter on each Distribution Date an amount equal to the
greater of (a) 7.5% 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
taking into account any adjustments made on such Distribution Date)
and (b) $30,000,000; 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 1996-1 Certificates as of the last day of the Monthly Period
preceding such 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 such reduction.
REALLOCATED INVESTOR FINANCE CHARGE
COLLECTIONS............................. The Series 1996-1 Certificates will be the first Series issued by the
Trust in a Group of Series ('GROUP I'), constituting a Reallocation
Group, which may be issued by the Trust from time to time.
Collections of Finance Charge Receivables allocable to the investor
certificates of each Series in Group I will be aggregated and made
available for certain required distributions to all Series in Group I
pro rata based upon the relative amount of such required
distributions for each Series in Group I as described under 'The
Pooling and Servicing Agreement Generally--Reallocations Among
Different Series Within a Reallocation Group' in the Prospectus.
Consequently, any issuance of a new Series in Group I may have the
effect of reducing or increasing the amount of collections of Finance
Charge Receivables allocable to the Series 1996-1 Certificates. See
'Risk Factors--Effect of the Issuance of New Series' in the
Prospectus. In addition, it has not been determined whether any
Series issued by the Trust in the future will be included in Group I.
SHARED PRINCIPAL COLLECTIONS.............. Series 1996-1 has been designated as a Principal Sharing Series.
Collections of Principal Receivables and certain other amounts
otherwise allocable to other Principal Sharing Series, if any, to the
extent such collections are not needed to make payments to or
deposits for the benefit of the certificateholders of such other
Series, will be applied to cover principal payments due to or for the
benefit of the holders of the Series 1996-1 Certificates and the
Collateral Interest. See 'The Pooling and Servicing Agreement
Generally--Sharing of Principal Collections Among Principal Sharing
Series'
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
in the Prospectus. There can be no assurance that any Series issued
by the Trust in the future will be designated a Principal Sharing
Series.
EXCESS FINANCE CHARGE COLLECTIONS......... Series 1996-1 has been designated as an Excess Allocation Series. See
'The Pooling and Servicing Agreement Generally--Sharing of Excess
Finance Charge Collections Among Excess Allocation Series' in the
Prospectus.
OPTIONAL REPURCHASE....................... The Series 1996-1 Certificateholders' Interest and the Collateral
Interest will be subject to optional repurchase by the Transferors on
any Distribution Date after the sum of the Class A Invested Amount,
the Class B Invested Amount and the Collateral Invested Amount, if
any, is reduced to an amount which is not more than $50,000,000 (5%
of the Initial Invested Amount). 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 Series 1996-1 Certificates and the Collateral Interest (and
accrued and unpaid interest with respect to interest amounts that
were due but not paid on a prior Distribution Date) through (a) if
the day on which such purchase 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.
SERIES 1996-1 TERMINATION DATE............ The December 2003 Distribution Date. See 'Series Provisions--Series
Termination.'
TRUSTEE................................... The Bank of New York in its capacity as the Trustee under the Pooling
and Servicing Agreement.
TAX STATUS................................ Tax Counsel to the Transferors is of the opinion that under existing
law the Series 1996-1 Certificates will be characterized as debt for
federal income tax purposes. Under the Pooling and Servicing
Agreement, the Certificate Owners (defined in the Prospectus) will
agree to treat the Series 1996-1 Certificates as debt of the
Transferors for federal income tax purposes. See 'Tax Matters' in the
Prospectus for additional information concerning the application of
federal income tax laws.
ERISA CONSIDERATIONS...................... Subject to the considerations described below, the Class A
Certificates are eligible for purchase by employee benefit plan
investors. Under a regulation issued by the Department of Labor, the
Trust Assets would not be deemed 'plan assets' of an employee benefit
plan holding the Class A Certificates if certain conditions are met,
including that the Class A Certificates must be held, upon completion
of the public offering made hereby, by at least 100 investors who are
independent of the Transferor and of one another. The Underwriters
expect that the Class A Certificates will be held by at least 100
independent investors at the conclusion of the offering, although no
assurance can be given, and no monitoring or other measures will be
taken to ensure, that such condition will be met with respect to the
Class A Certificates. The Transferor anticipates that the other
conditions of the regulation will be met. If the Trust Assets were
deemed to be 'plan assets' of an employee benefit plan investor
(e.g., if the 100 independent investor criterion is not satisfied),
violations of the 'prohibited transaction' rules of
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
the Employee Retirement Income Security Act of 1974, as amended
('ERISA'), could result and generate excise tax and other liabilities
under ERISA and section 4975 of the Internal Revenue Code of 1986 as
amended (the 'CODE'), unless a statutory, regulatory or
administrative exemption is available. It is uncertain whether
existing exemptions from the 'prohibited transaction' rules of ERISA
would apply to all transactions involving the Trust Assets.
Accordingly, fiduciaries or other persons contemplating purchasing
the Series 1996-1 Certificates on behalf or with 'plan assets' of any
employee benefit plan should consult their counsel before making a
purchase. See 'ERISA Considerations' in the Prospectus.
The Underwriters currently do not expect that the Class B
Certificates will be held by at least 100 such persons and,
therefore, do not expect that such Class B Certificates will qualify
as publicly offered securities under the regulation referred to in
the preceding paragraph. Accordingly, the Class B Certificates may
not be acquired by (a) any employee benefit plan that is subject to
ERISA, (b) any plan or other arrangement (including an individual
retirement account or Keogh plan) that is subject to section 4975 of
the Code, or (c) any entity whose underlying assets include 'plan
assets' under the regulation by reason of any such plan's investment
in the entity. By its acceptance of a Class B Certificate, each Class
B Certificateholder will be deemed to have represented and warranted
that it is not subject to the foregoing limitation.
CLASS A CERTIFICATE RATING................ It is a condition to the issuance of the Class A Certificates that
they be rated in the highest rating category by at least one
nationally recognized rating agency. The rating of the Class A
Certificates is based primarily upon the quality of the Receivables,
the continued ability of the Account Owners to generate and transfer
such Receivables, the terms of the Class B Certificates and the
benefits of the Collateral Interest. See 'Risk Factors--Limited
Nature of Rating' in the Prospectus and 'Risk Factors--Certificate
Ratings' herein.
CLASS B CERTIFICATE RATING................ It is a condition to the issuance of the Class B Certificates that
they be rated in one of the three highest rating categories by at
least one nationally recognized rating agency. The rating of the
Class B Certificates is based primarily upon the quality of the
Receivables, the continued ability of the Account Owners to generate
and transfer such Receivables and the benefits of the Collateral
Interest. See 'Risk Factors--Limited Nature of Rating' in the
Prospectus and 'Risk Factors--Certificate Ratings' herein.
LISTING................................... Application will be made to list the Series 1996-1 Certificates on
the Luxembourg Stock Exchange.
</TABLE>
S-12
<PAGE>
RISK FACTORS
Potential investors should consider, among other things, the risk factors
discussed under 'Risk Factors' in the Prospectus and the following risk factors
in connection with the purchase of the Series 1996-1 Certificates.
Limited Amounts of Credit Enhancement. Although Credit Enhancement with
respect to the Class A Certificates will be provided by the subordination of the
Class B Certificates to the extent described herein and by the Collateral
Interest, and with respect to the Class B Certificates, will be provided by the
Collateral Interest, the amount available thereunder is limited and, in certain
circumstances described herein, may be reduced or may otherwise decline. If the
Collateral Invested Amount has been reduced to zero, Class B Certificateholders
will bear directly the credit and other risks associated with their undivided
interests in the Trust and the Class B Invested Amount may be reduced. If the
Class B Invested Amount is reduced to zero, Class A Certificateholders will bear
directly the credit and other risks associated with their undivided interest in
the Trust. Further, in the event of a reduction of the Class B Invested Amount
or the Collateral Invested Amount, the amount of principal and interest
available to make distributions with respect to the Class A Certificates and the
Class B Certificates may be reduced.
Effect of Subordination of Class B Certificates; Principal Payments. The
Class B Certificates are subordinated in right of payment of principal to the
Class A Certificates. Payments of principal in respect of the Class B
Certificates will not commence until after the final principal payment with
respect to the Class A Certificates has been made as described herein. Moreover,
the Class B Invested Amount is subject to reduction if the Class A Required
Amount for any Monthly Period is greater than zero and is not funded from Excess
Spread and Excess Finance Charge Collections allocated to Series 1996-1,
Reallocated Principal Collections with respect to the Collateral Interest and
reductions in the Collateral Invested Amount, if any. To the extent the Class B
Invested Amount is reduced, the percentage of collections of Finance Charge
Receivables allocable to the Class B Certificateholders' Interest in future
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 and interest distributable to the Class B Certificateholders will be
reduced. See 'Series Provisions--Allocation Percentages' and '--Subordination of
the Class B Certificates and the Collateral Interest' herein. If the Class B
Invested Amount is reduced to zero, the holders of the Class A Certificates will
bear directly the credit and other risks associated with their undivided
interest in the Trust.
Certificate Ratings. It is a condition to issuance of the Class A
Certificates that they be rated in the highest rating category by at least one
nationally recognized rating agency specified in the Series 1996-1 Supplement
(each, with respect to Series 1996-1, a 'RATING AGENCY') and that the Class B
Certificates be rated in one of the three highest rating categories by at least
one Rating Agency. Each Rating Agency's rating addresses such Rating Agency's
assessment of the likelihood of full payment of principal and interest of the
applicable class of Certificates by the Expected Final Payment Date. The ratings
are based primarily on the quality of the Receivables, the continued ability of
the Account Owners to generate and transfer such Receivables, the benefits of
the Collateral Interest and, in the case of the Class A Certificates, the terms
of the Class B Certificates. The ratings do not address the possibility of the
occurrence of a Pay-Out Event with respect to the Certificates. The ratings are
not a recommendation to purchase, hold or sell Certificates, inasmuch as such
ratings do not comment as to the market price or suitability for a particular
investor. There is no assurance that the ratings will remain for any given
period of time or that a Rating Agency's ratings will not be lowered or
withdrawn by such Rating Agency if in its judgment circumstances so warrant.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement and the Supplement for Series 1996-1
(the 'SERIES 1996-1 SUPPLEMENT') provide that the Class A Certificateholders
will not receive payments of principal until the May 2001 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 1996-1 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') for the related Monthly Period on deposit in
the Collection Account, (b) the Controlled Deposit Amount, which is equal to the
sum of the
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<PAGE>
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') 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 1996-1 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'
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 1996-1, 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 1996-1 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 1996-1. 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 1996-1 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 1996-1 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
1996-1 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 1996-1 Certificates, the final
payment of principal to the Series 1996-1 Certificateholders may be delayed.
Should a Pay-Out Event occur with respect to the Series 1996-1 Certificates
and the Early Amortization Period commence, any amount on deposit (a) in the
Principal Funding Account will be paid to the Series 1996-1 Certificateholders
on the first Special Payment Date and the Series 1996-1 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 1996-1 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 1996-1, entitled to the benefits of Shared Principal
Collections. See 'Description of the Certificates--Pay-Out Events and
Reinvestment Events' in the Prospectus and 'Series Provisions--Pay-Out Events'
herein.
The ability of the Series 1996-1 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' herein. 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 1996-1 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 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 1996-1 Certificateholders could expect to receive payments of
principal on their
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<PAGE>
Series 1996-1 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' herein. As described under 'Series
Provisions--Principal Payments,' 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, may issue additional Series
from time to time, 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 1996-1 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 Prospectus.
THE TOTAL PORTFOLIO
GENERAL
The Accounts to be included in the Trust (the 'TRUST PORTFOLIO') were
selected from the total portfolio of Optima Card, Optima Line of Credit and Sign
& Travel accounts owned by Centurion (the 'TOTAL PORTFOLIO') based upon the
eligibility criteria specified in the Pooling and Servicing Agreement applied as
of the Selection Date. See 'Risk Factors--Effect of Addition of Trust Assets on
Credit Quality' in the 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 Prospectus. There can be no assurance that the yield, loss and delinquency
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>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, -----------------------------------------
1996 1995 1994 1993
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1)............. $ 9,770,197 $8,425,402 $7,324,850 $ 6,088,011
Total Gross Charge-Offs(2)..................... 156,704 486,581 454,371 504,986
Total Recoveries............................... 25,984 98,328 101,395 92,078
----------- ---------- ---------- -----------
Total Net Charge-Offs(3)....................... $ 130,720 $ 388,253 $ 352,976 $ 412,908
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
Total Net Charge-Offs as a Percentage of
Average Receivables Outstanding.............. 5.35%(4) 4.61% 4.82% 6.78%
</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.
Over time, as Accounts selected for the Trust Portfolio are charged-off in
the ordinary course of business, the Trust will benefit from Recoveries made
with respect to such Accounts. However, because the Accounts selected for the
Trust Portfolio on the Selection Date did not include accounts with charged-off
balances, it is expected that in the months that initially follow the Closing
Date the percentage of 'Total Gross Charge-Offs'
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<PAGE>
that result in 'Total Recoveries' for the Trust Portfolio will be less than the
historical percentage of 'Total Gross Charge-Offs' that resulted in 'Total
Recoveries' as reported in the preceding table.
AVERAGE RECEIVABLES DELINQUENT AS A PERCENTAGE OF THE TOTAL PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED ---------------------------------------------------------------------------------
MARCH 31,1996 1995 1994 1993
------------------------- ------------------------- ------------------------- --------------------------
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) $9,770,197 100.00% $8,425,402 100.00% $7,324,850 100.00% $6,088,011 100.00%
Average
Receivables
Delinquent:
31 to 60 Days 187,467 1.92 163,136 1.94 142,724 1.95 158,156 2.60
61 to 90 Days 78,747 0.81 65,915 0.78 58,022 0.79 67,498 1.11
91 Days or
More...... 100,785 1.03 83,168 0.99 76,889 1.05 90,120 1.48
---------- ------- ---------- ------- ---------- ------- ---------- -------
Total........ $ 366,999 3.76% $ 312,219 3.71% $ 277,635 3.79% $ 315,774 5.19%
---------- ------- ---------- ------- ---------- ------- ---------- -------
---------- ------- ---------- ------- ---------- ------- ---------- -------
</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 Prospectus.
REVENUE EXPERIENCE OF THE TOTAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, ------------------------------------
1996 1995 1994 1993
--------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1).................... $ 9,770,197 $8,425,402 $7,324,850 $6,088,011
Total Finance Charges and Fees Billed(2).............. 383,281 1,419,945 1,156,129 939,876
Total Finance Charges and Fees Billed as a
Percentage of Average Receivables Outstanding....... 15.69%(3) 16.85% 15.78% 15.44%
</TABLE>
- ------------------
(1) Average Receivables Outstanding for each indicated period is calculated as
the average of the month-end receivables balances for such period.
(2) Total Finance Charges and Fees Billed are comprised of periodic finance
charges, cash advance fees, annual membership fees and certain other fees.
(3) This percentage is an annualized figure.
S-16
<PAGE>
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 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
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, -----------------------
1996 1995 1994 1993
--------------- ---- ---- ----
Lowest Month............... 9.98% 8.16% 8.57% 8.24%
Highest Month.............. 10.73 9.93 9.53 9.11
Monthly Average............ 10.30 9.53 8.91 8.62
THE RECEIVABLES
The Receivables (including Receivables in Accounts closed since the
Selection Date at the request of Account holders) in the Trust Portfolio, as of
March 26, 1996, totaled $1,857,367,374 and included $1,826,999,587 of Principal
Receivables and $30,367,787 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
since the Selection Date at the request of Account holders and all Receivables
(including both Finance Charge Receivables and Principal Receivables) other than
Receivables in Accounts closed since the Selection Date at the request of
Account holders.
As of March 26, 1996, Optima Accounts totaled 997,543 Accounts,
representing approximately 74.2% of the number of Accounts, and Sign & Travel
Accounts totaled 346,299 Accounts, representing approximately 25.8% of the
number of Accounts. As of March 26, 1996, Receivables in the Optima Accounts
totaled $1,399,967,286, representing 75.6% of the Receivables in the Trust
Portfolio, and Receivables in the Sign & Travel Accounts totaled $452,613,954,
representing 24.4% of the Receivables in the Trust Portfolio. Approximately
17.39%, 13.27%, 8.83%, 7.99% and 6.30% 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.
The following tables summarize the Trust Portfolio by various criteria as
of March 26, 1996. 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 March 26, 1996.
S-17
<PAGE>
COMPOSITION BY ACCOUNT BALANCE TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- --------- --------- -------------- -----------
Credit Balance........... 14,571 1.1% $ (1,270,500) (0.1)%
Zero Balance............. 534,447 39.8 0 0.0
$1 to $1,000............. 330,195 24.6 134,602,784 7.3
$1,001 to $5,000......... 363,344 27.0 899,730,279 48.6
$5,001 to $10,000........ 81,732 6.1 560,124,051 30.2
$10,001 or More.......... 19,553 1.4 259,394,626 14.0
--------- ------ -------------- -----
Total............... 1,343,842 100.0% $1,852,581,240 100.0%
--------- ------ -------------- -----
--------- ------ -------------- -----
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ------------------ -------- -------- -------------- -----------
Less than $1,000......... 117,386 8.7% $ 35,258,205 1.9%
$1,001 to $5,000......... 487,399 36.3 428,899,785 23.2
$5,001 to $10,000........ 296,317 22.0 541,024,613 29.2
$10,001 or More.......... 96,441 7.2 394,784,683 21.3
--------- ----- -------------- ------
Total (Optima
Accounts)......... 997,543 74.2% 1,399,967,286 75.6%
--------- ----- -------------- ------
No Pre-Set Spending Limit
(Sign & Travel
Accounts).............. 346,299 25.8% 452,613,954 24.4%
--------- ----- -------------- ------
Grand Total......... 1,343,842 100.0% $1,852,581,240 100.0%
--------- ----- -------------- ------
--------- ----- -------------- ------
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ------------------------------- --------- --------- -------------- -----------
Current to 30 Days............. 1,316,024 97.9% $1,783,538,409 96.3%
31 to 60 Days.................. 13,550 1.0 31,457,699 1.7
61 to 90 Days.................. 5,213 0.4 13,750,599 0.7
91 or More..................... 9,055 0.7 23,834,533 1.3
--------- ----- -------------- ------
Total..................... 1,343,842 100.0% $1,852,581,240 100.0%
--------- ----- -------------- ------
--------- ----- -------------- ------
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT AGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ----------- -------- -------- -------------- -----------
Not More than 12 Months..... 107,712 8.0% $ 84,738,973 4.6%
12 Months to 17 Months...... 206,699 15.4 180,182,114 9.7
18 Months to 23 Months...... 107,740 8.0 102,534,999 5.5
24 Months to 35 Months...... 298,343 22.2 257,960,396 13.9
36 Months to 47 Months...... 51,155 3.8 69,194,264 3.7
48 Months to 59 Months...... 70,195 5.2 109,885,616 5.9
60 Months to 71 Months...... 102,227 7.6 172,320,643 9.3
72 Months or More........... 399,771 29.8 875,764,235 47.4
--------- ----- -------------- -----
Total.................. 1,343,842 100.0% $1,852,581,240 100.0%
--------- ----- -------------- -----
--------- ----- -------------- -----
S-18
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Certificates, before the deduction of
expenses, will be paid to the Transferors. RFC II will use such proceeds to pay
Credco the purchase price of the Receivables transferred to RFC II by Credco
pursuant to the RFC II Purchase Agreement. Each of Credco and Centurion will use
its proceeds for general corporate purposes.
RFC II, CENTURION, AEDC AND CREDCO
RFC 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
Centurion was incorporated under Delaware banking laws as a limited service
bank in 1985. Its principal office is located at 301 N. Walnut Street,
Wilmington, Delaware 19801. Centurion is a wholly owned subsidiary of TRS.
As of December 31, 1995, Centurion had total deposits of approximately $1.8
billion, total assets of approximately $11.2 billion and total equity capital of
approximately $1 billion. Centurion had net income of approximately $217 million
for the year ended December 31, 1995.
AEDC
In September 1995, American Express announced its intention to combine by
merger Centurion's business with that of American Express Deposit Corporation, a
Utah-chartered, FDIC-insured industrial loan company ('AEDC'), which, like
Centurion, is a wholly owned subsidiary of TRS. As of December 31, 1995, AEDC
had total assets of approximately $219 million, total deposits of approximately
$67 million and total equity capital of $31 million. AEDC had net income of
approximately $4 million for the year ended December 31, 1995. The merger, which
has been approved by the necessary regulatory authorities and is expected to
occur in mid-1996, will result in substantially all of the assets and
liabilities of Centurion, including Centurion's rights and obligations under the
Pooling and Servicing Agreement and Centurion's rights and obligations with
respect to the Accounts owned by Centurion, being assumed by AEDC, which will be
the merger's surviving institution. Upon the completion of the merger, AEDC will
be renamed American Express Centurion Bank. Centurion and AEDC intend to comply
with the requirements of the Pooling and Servicing Agreement regarding merger or
consolidation of or assumption of the obligations of a Transferor, as described
under 'Merger or Consolidation of a Transferor or the Servicer' in the
Prospectus.
CREDCO
Credco is a wholly owned subsidiary of TRS primarily engaged in the
business of purchasing charge card account receivables generated by TRS and
certain revolving credit account receivables generated by Centurion. Its
principal office is located at 301 N. Walnut Street, Wilmington, Delaware 19801.
As of December 31, 1995, and based upon the Annual Report on Form 10-K of
Credco at such date, Credco had total assets of approximately $20.2 billion and
total equity capital of approximately $1.8 billion. Credco had net income of
approximately $197 million for the one-year period ended December 31, 1995.
S-19
<PAGE>
THE SERVICER
As of December 31, 1995, TRS, the Servicer, had approximately $48.9 billion
in total assets, approximately $43.7 billion in total liabilities and redeemable
preferred stock and approximately $5.2 billion in shareholder's equity.
SERIES PROVISIONS
The Series 1996-1 Certificates will be issued pursuant to the Pooling and
Servicing Agreement and a Supplement specifying the Principal Terms of the
Certificates (the 'SERIES 1996-1 SUPPLEMENT'), the forms of which have been
filed as exhibits to the Registration Statement of which the Prospectus and this
Prospectus Supplement are a part. The following summary describes certain terms
applicable to the Series 1996-1 Certificates. Reference should be made to the
Prospectus for additional information concerning the Series 1996-1 Certificates
and the Pooling and Servicing Agreement. See 'The Pooling and Servicing
Agreement Generally' in the Prospectus.
INTEREST PAYMENTS
Interest on the Class A Certificates and the Class B Certificates will
accrue from the Closing Date on the outstanding principal balances of the Class
A Certificates and the Class B Certificates at the Class A Certificate Rate and
Class B Certificate Rate, respectively. Interest will be distributed monthly on
each Distribution Date, commencing on the July 1996 Distribution Date, to the
Series 1996-1 Certificateholders in whose names the Series 1996-1 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'). 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. Interest on the Series 1996-1
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Interest payments on the Class A Certificates on any Distribution Date will
be an amount equal to one-twelfth of the product of the Class A Certificate Rate
and the outstanding principal balance of the Class A Certificates as of the
close of business on the last day of the preceding Monthly Period, except that
interest on the Class A Certificates for the first Distribution Date will be an
amount equal to $9,639,944.44. 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 Class A Certificateholders' Interest for such
Monthly Period are insufficient to pay such interest, Excess Spread and Excess
Finance Charge Collections allocated to Series 1996-1 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 1996-1 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 1996-1 in accordance with the Pooling and
Servicing Agreement and the Series 1996-1 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 1996-1 Supplement with respect to such Distribution Date.
Interest payments on the Class B Certificates on any Distribution Date will
be an amount equal to one-twelfth of the product of the Class B Certificate Rate
and the Class B Invested Amount as of the close of business on the last day of
the preceding Monthly Period, except that interest on the Class B Certificates
for the first Distribution Date will be an amount equal to $683,416.67. 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
S-20
<PAGE>
Funds for the related Monthly Period. To the extent Class B Available Funds
allocated to 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 1996-1 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 1996-1 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).
PRINCIPAL PAYMENTS
During the Revolving Period (which 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), no principal payments will be made to
the Series 1996-1 Certificateholders. 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, which will begin upon the
occurrence of a Pay-Out Event, and until the Series 1996-1 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 1996-1 Certificates
during the Controlled Accumulation Period, the Early Amortization Period will
commence and any amount on deposit in the Principal Funding Account will be paid
first to the Class A Certificateholders on the first Special Payment Date and
then, after the Class A Invested Amount is paid in full, to the Class B
Certificateholders. If, on the Expected Final Payment Date, monies on deposit in
the Principal Funding Account are insufficient to pay the Class A Invested
Amount and the Class B Invested Amount, a Pay-Out Event will occur and the Early
Amortization Period will commence. After payment in full of the Class A Invested
Amount, the Class B Certificateholders will be entitled to receive an amount
equal to the Class B Invested Amount.
'AVAILABLE PRINCIPAL COLLECTIONS' means, with respect to any Monthly
Period, an amount equal to the sum of (1) an amount equal to the Principal
Allocation Percentage of the Series Allocation Percentage of all collections of
Principal Receivables received during such Monthly Period (minus certain
Reallocated Principal Collections used to fund the Required Amount), (2) any
Shared Principal Collections with respect to other Principal Sharing Series that
are allocated to Series 1996-1, and (3) certain other amounts which pursuant to
the Series 1996-1 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 April 2000 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 April 2000
Distribution Date and on each Determination Date thereafter until the Controlled
Accumulation Period actually
S-21
<PAGE>
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 1996-1; 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
April 2000 Monthly Period and the number of months in the Controlled
Accumulation Period will be equal to the Controlled Accumulation Period Length.
The effect of the foregoing calculation is to reduce the Controlled Accumulation
Period Length based on the invested amounts of other Principal Sharing Series
that are scheduled to be in their revolving periods and thus scheduled to create
Shared Principal Collections during the Controlled Accumulation Period. In
addition, if the Controlled Accumulation Period Length shall have been
determined to be less than 12 months and, after the date on which such
determination is made, a Pay-Out Event or Reinvestment Event (as those terms are
defined in the Supplement for such Series) shall occur with respect to any
outstanding Principal Sharing Series, the Controlled Accumulation Period will
commence on the earlier of (i) the first day of the Monthly Period immediately
succeeding the date that such Pay-Out Event or Reinvestment Event shall have
occurred with respect to such Series and (ii) the date on which the Controlled
Accumulation Period is then scheduled to commence.
On each Distribution Date with respect to the Early Amortization Period
until the Class A Invested Amount has been paid in full or the Series 1996-1
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 1996-1 Termination
Date. After payment in full of the Class B Invested Amount, the Collateral
Interest Holder will be entitled to receive, on each Distribution Date,
Available Principal Collections until the earlier of the date the Collateral
Invested Amount is paid in full and the Series 1996-1 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 1996-1 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 Prospectus and, with respect to Series
1996-1 specifically, as described below.
S-22
<PAGE>
Pursuant to the Pooling and Servicing Agreement, during each Monthly
Period, the Servicer will allocate to Series 1996-1 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 1996-1 and for any Monthly Period, the product of (a) the Series
Allocation Percentage for Series 1996-1 and (b) the amount of collections of
Finance Charge Receivables deposited in the Collection Account, the amount of
collections of Principal Receivables deposited in the Collection Account and the
amount of all Defaulted Amounts with respect to such Monthly Period,
respectively.
'SERIES ALLOCATION PERCENTAGE' means, with respect to Series 1996-1 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 1996-1 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 1996-1 and
for any Monthly Period, the Series Invested Amount for Series 1996-1, less the
excess, if any, of all reductions in the Invested Amount (other than any
reductions occasioned by payments of principal to the Series 1996-1
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 1996-1 with respect to any Monthly Period will be
allocated to the Series 1996-1 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 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 Group I as
set forth in 'The Pooling and Servicing Agreement Generally--Reallocations Among
Different Series Within a Reallocation Group' in the Prospectus. Reallocated
Investor Finance Charge Collections allocated to Series 1996-1 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
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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 1996-1 will be allocated
to the Series 1996-1 Certificates and the Collateral Interest based on the
Principal Allocation Percentage and the remainder of such Series Allocable
Principal Collections will be allocated to the Transferors' Interest. The
'PRINCIPAL ALLOCATION PERCENTAGE' means, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is (a) during the Revolving Period, the Series Adjusted
Invested Amount for Series 1996-1 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 1996-1 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 1996-1 as of the last day of the
immediately preceding Monthly Period; provided, however, that because the Series
1996-1 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 1996-1, 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 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 1996-1.
Such amounts so allocated to the Series 1996-1 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
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Invested Amount as of the end of the Revolving Period, and the denominator of
which is the Invested Amount as of such day.
As used herein, the following terms have the meanings indicated:
'CLASS A 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 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 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 herein under '--Defaulted Receivables; Investor Charge-Offs,'
plus (vi) the aggregate amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-1 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.
'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 under
'-- Defaulted Receivables; Investor Charge-Offs,' and plus (vi) the
aggregate amount of Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-1 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.
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 1996-1
Certificateholders. During the Controlled Accumulation Period, the Servicer will
transfer collections in respect of Principal Receivables, Shared Principal
Collections allocated to Series 1996-1 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 under
'--Application of Collections.'
Unless a Pay-Out Event has occurred with respect to the Series 1996-1
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
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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 under '--Reserve
Account'). The Available Reserve Account Amount at any time will be limited and
there can be no assurance that sufficient funds will be available to fund any
such shortfall. The 'COVERED AMOUNT' shall mean for any Distribution Date with
respect to the Controlled Accumulation Period or the first Special Payment Date,
if such Special Payment Date occurs prior to the payment in full of the Class A
Invested Amount, an amount equal to one-twelfth of the product of (i) the Class
A Certificate Rate and (ii) the Principal Funding Account Balance, if any, as of
the preceding Distribution Date.
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 1996-1 (in the order of priority described below
under '--Application of Collections--Payment of Fees, Interest and Other Items')
to increase the amount on deposit in the Reserve Account (to the extent such
amount is less than the Required Reserve Account Amount). In addition, on each
such Distribution Date, the Transferors will have the option, but will not be
required, to make a deposit in the Reserve Account to the extent that the amount
on deposit in the Reserve Account, after giving effect to any Excess Spread and
Excess Finance Charge Collections allocated and available to be deposited in the
Reserve Account on such Distribution Date, is less than the Required Reserve
Account Amount. The 'RESERVE ACCOUNT FUNDING DATE' will be the Distribution Date
with respect to the Monthly Period that commences three months prior to the
Distribution Date with respect to the first Monthly Period in the Controlled
Accumulation Period, or such earlier date as the Transferor may determine. The
'REQUIRED RESERVE ACCOUNT AMOUNT' for any Distribution Date on or after the
Reserve Account Funding Date will be equal to 0.5% of the Class A Invested
Amount as of the preceding Distribution Date, or any other percentage (which may
be 0%) of the Class A Invested Amount designated by the Transferors provided
that the designation of such other percentage by the Transferors shall have
received the prior written consent of the Collateral Interest Holder and shall
have satisfied the Rating Agency Condition. On each Distribution Date, after
giving effect to any deposit to be made to, and any withdrawal to be made from,
the Reserve Account on such Distribution Date, the Trustee will withdraw from
the Reserve Account an amount equal to the excess, if any, of the amount on
deposit in the Reserve Account over the Required Reserve Account Amount and
shall distribute such excess to the Collateral Interest Holder for application
in accordance with the terms of the Loan Agreement.
Provided that the Reserve Account has not terminated as described below,
all amounts on deposit in the Reserve Account on any Distribution Date (after
giving effect to any deposits to, or withdrawals from, the Reserve Account to be
made on such Distribution Date) will be invested through the following
Distribution Date by the Trustee at the direction of the Servicer in Eligible
Investments. The interest and other investment income (net of investment
expenses and losses) earned on such investments (the 'INTEREST FUNDING
INVESTMENT PROCEEDS') will be retained in the Reserve Account (to the extent the
amount on deposit therein is less than the Required Reserve Account Amount) or
deposited in the Collection Account and treated as collections of Finance Charge
Receivables allocable to Series 1996-1.
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
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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 1996-1 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 1996-1 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
1996-1 Supplement. If the Class A Required Amount is greater than zero, Excess
Spread and Excess Finance Charge Collections allocated to Series 1996-1 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 1996-1, are insufficient to fund the
Class A Required Amount for such related Monthly Period, then the Collateral
Invested Amount will be reduced by the amount of such excess (but not by more
than the Class A Investor Default Amount for such Distribution Date). In the
event that such reduction would cause the Collateral Invested Amount to be a
negative number, the Collateral Invested Amount will be reduced to zero, and the
Class B Invested Amount will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero (but not by more than the
excess of the Class A Investor Default amount, if any, for such Distribution
Date over the amount of such reduction, if any, of the Collateral Invested
Amount with respect to such Distribution Date). In the event that such reduction
would cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount will be reduced to zero and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and the Class B Invested
Amount with respect to such Distribution Date as described above. Any such
reduction in the Class A Invested Amount will have the effect of slowing or
reducing the return of principal and interest to the
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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.'
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
1996-1 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.'
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 '--Excess Spread; Excess Finance Charge Collections'
below. When such reductions of the Class A Invested Amount and Class B Invested
Amount have been fully reimbursed, reductions of the Collateral Invested Amount
shall be reimbursed and the Collateral Invested Amount increased up to the
Required Collateral Invested Amount in a similar manner.
APPLICATION OF COLLECTIONS
Payment of Fees, Interest and Other Items. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds and Collateral Available Funds (see
'--Interest Payments' above) on deposit in the Collection Account in the
following priority:
(A) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed
or deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus any Class A Outstanding Monthly Interest,
plus additional interest with respect to any such Class A
Outstanding Monthly Interest at a rate equal to the Class A
Certificate Rate plus 2% per annum (the 'CLASS A ADDITIONAL
INTEREST'), will be distributed to holders of the Class A
Certificates;
(ii) if TRS or an affiliate of TRS is no longer the Servicer,
an amount equal to the Class A Servicing Fee for such Distribution
Date, plus the amount of any Class A Servicing Fee previously due
but not distributed to the Servicer on a prior Distribution Date,
will be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount
for such Distribution Date will be treated as a portion of
Available Principal Collections for such Distribution Date; and
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<PAGE>
(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 one-twelfth of the product of (i) the Class A Certificate Rate
and (ii) the outstanding principal balance of the Class A Certificates as of the
close of business on the last day of the preceding Monthly Period; provided,
that Class A Monthly Interest for the first Distribution Date will be an amount
equal to $9,639,944.44.
'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 one-twelfth of the product of (i) the Class B Certificate Rate
and (ii) the Class B Invested Amount as of the close of business on the last day
of the preceding Monthly Period; provided, that Class B Monthly Interest for the
first Distribution Date will be an amount equal to $683,416.67.
'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 1996-1 in accordance with the Pooling and Servicing
Agreement and the Series 1996-1 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 1996-1
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;
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(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 under '--Payments of Principal' below;
(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;
(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 Transferor,
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
(l) 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 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.
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'COLLATERAL RATE' means a rate specified in the Loan Agreement not to
exceed one-month LIBOR plus 1% 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 Prospectus;
(ii) on each Distribution Date with respect to the Controlled
Accumulation Period, all such Available Principal Collections will be
distributed or deposited in the following priority:
(A) an amount equal to the lesser of (x) the Controlled
Deposit Amount and (y) the sum of the Class A Adjusted Invested
Amount and the Class B Adjusted Invested Amount will be deposited
in the Principal Funding Account;
(B) for each Distribution Date before the Class B Invested
Amount is paid in full, an amount equal to the balance, if any, of
such Available Principal Collections will be paid to the
Collateral Interest Holder, for application in accordance with the
Loan Agreement, to the extent the Collateral Invested Amount is
greater than the Required Collateral Invested Amount;
(C) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount is paid in full, an
amount up to the Collateral Invested Amount will be paid to the
Collateral Interest Holder; and
(D) for each Distribution Date, the balance, if any, of
Available Principal Collections not applied pursuant to paragraphs
(A) and (B) or (C) (as applicable) above will be treated as Shared
Principal Collections and applied as described under 'The Pooling
and Servicing Agreement Generally--Sharing of Principal
Collections Among Principal Sharing Series' in the 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, $77,083,333.34; 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
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different for each Distribution Date with respect to the Controlled Accumulation
Period and will be determined by the Transferors in accordance with the Series
1996-1 Supplement based on the principal payment rates for the Accounts and on
the invested amounts of other Principal Sharing Series that are scheduled to be
in their revolving periods and then scheduled to create Shared Principal
Collections during the Controlled Accumulation Period.
'DEFICIT CONTROLLED ACCUMULATION AMOUNT' means (a) on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution Date
over the amount deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited in the Principal
Funding Account on such subsequent Distribution Date.
'CONTROLLED DEPOSIT AMOUNT' shall mean, for any Distribution Date with
respect to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
REQUIRED COLLATERAL INVESTED AMOUNT
The 'REQUIRED COLLATERAL INVESTED AMOUNT' with respect to any Distribution
Date means (i) initially $75,000,000 and (ii) thereafter on each Distribution
Date an amount equal to the greater of (a) 7.5% 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) $30,000,000; 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 1996-1 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 1996-1 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 1996-1 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 1996-1 and Reallocated Principal Collections,
the Collateral Invested Amount will be reduced by the amount of such excess, but
not by more than
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the Class A Investor Default Amount for such Distribution Date. In the event
that such reduction would cause the Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Collateral Invested
Amount would have been reduced below zero, but not by more than the excess, if
any, of the Class A Investor Default Amount for such Distribution Date over the
amount of such reduction, if any, of the Collateral Invested Amount with respect
to such Distribution Date. In the event that such reduction would cause the
Class B Invested Amount to be a negative number, the Class B Invested Amount
will be reduced to zero, and the Class A Invested Amount will be reduced by the
amount by which the Class B Invested Amount would have been reduced below zero,
but not by more than the excess, if any, of the Class A Investor Default Amount
for such Distribution Date over the amount of the reductions, if any, of the
Collateral Invested Amount and of the Class B Invested Amount with respect to
such Distribution Date as described above (a 'CLASS A INVESTOR CHARGE-OFF'),
which will have the effect of slowing or reducing the return of principal to the
holders of the Class A Certificates. If the Class A Invested Amount has been
reduced by the amount of any Class A Investor Charge-Offs, it will thereafter be
increased on any Distribution Date (but not by an amount in excess of the
aggregate Class A Investor Charge-Offs) by the amount of Excess Spread and
Excess Finance Charge Collections allocable to Series 1996-1 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 1996-1 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
1996-1 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 1996-1 which is allocated and available to fund such amount
as described 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 1996-1 allocated and available for that purpose as described under
'--Application of Collections--Excess Spread; Excess Finance Charge
Collections.'
PAIRED SERIES
The Series 1996-1 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
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will increase by up to a corresponding amount. Upon payment in full of the
Series 1996-1 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 1996-1 Certificateholders after the Series 1996-1
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 1996-1
Certificateholders. See 'Risk Factors--Effect of the Issuance of New Series' and
'The Pooling and Servicing Agreement Generally--Paired Series' in the
Prospectus.
PAY-OUT EVENTS
The 'PAY-OUT EVENTS' with respect to the Series 1996-1 Certificates will
include each of the following:
(a) the occurrence of (i) an Insolvency Event (as such term is defined
in the Prospectus) with respect to any Transferor or other holder of the
Original Transferor Certificate or (ii) a TRS Insolvency Event (as such
term is defined below) unless an opinion of counsel acceptable to the
Trustee to the effect that, for federal income tax purposes, such TRS
Insolvency Event would not cause the Trust to be deemed to be an
association (or a publicly traded partnership) taxable as a corporation is
delivered to the Trustee and each Rating Agency within 30 days of the
occurrence of such TRS Insolvency Event;
(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
1996-1 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 1996-1 Supplement, which failure has a
material adverse effect on the Series 1996-1 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 1996-1 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 1996-1 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 1996-1 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 1996-1 Supplement.
Then, in the case of any event described above in subparagraph (c), (d) or
(f), after the applicable grace period, if any, set forth in such subparagraphs,
either the Trustee or the holders of Series 1996-1 Certificates evidencing more
than 50% of the aggregate unpaid principal amount of Series 1996-1 Certificates
by notice then given in writing to the Transferors and the Servicer (and to the
Trustee if given by the Series 1996-1 Certificateholders) may declare that a
Pay-Out Event has occurred with respect to Series 1996-1 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 1996-1
without any notice or other action on the part of the Trustee immediately upon
the occurrence of such event.
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For purposes of the Pay-Out Event described in clause (a) above, the term
'TRS INSOLVENCY EVENT' shall mean the consent by TRS to, or the failure by TRS
to object to, the appointment of a bankruptcy trustee or conservator, receiver
or liquidator in any bankruptcy proceeding or other insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or relating
to TRS or all or substantially all of TRS' property; the entering of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a bankruptcy trustee or conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up, insolvency,
bankruptcy, reorganization, conservatorship, receivership or liquidation of TRS'
affairs, which decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; TRS' inability, or the admission by TRS in
writing of TRS' inability, to pay its debts generally as its debts become due;
the filing of any petition, the effect of which would cause TRS to take
advantage of any applicable bankruptcy, insolvency or reorganization,
receivership or conservatorship statute; the making by TRS of an assignment for
the benefit of TRS' creditors; the voluntary suspension by TRS of the payment of
TRS' obligations; or the consent by TRS to, or the failure of TRS to object to,
the filing of any petition described above, or, if TRS shall have objected to
the filing of any such petition, the failure of such petition to have been
dismissed within 60 days of the filing thereof.
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 1996-1 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 1996-1
Certificates and the Collateral Interest for the related Distribution Date and
the denominator of which is the Invested Amount as of the last day of the
preceding Monthly Period.
'SERIES ADJUSTED PORTFOLIO YIELD' means, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, (i) the numerator of
which is equal to (a) Reallocated Investor Finance Charge Collections (including
any investment earnings and certain other amounts that are to be treated as
collections of Finance Charges Receivables allocable to Series 1996-1 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 1996-1, 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 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
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 1996-1
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) 2.00% (the 'SERVICING FEE RATE') and (b) (i) the Adjusted
Invested Amount as of the last day of the Monthly Period preceding such
Distribution Date, 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 1996-1
with respect to such Monthly Period (the amount calculated pursuant to this
clause (b) is referred to as the 'SERVICING BASE AMOUNT'); provided, however,
with respect to the first Distribution Date, the Monthly Servicing Fee shall be
equal to $2,500,000. 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
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Servicing Fee Rate and (c) the Servicing Base Amount; provided, however, that
with respect to the first Distribution Date, the Class A Servicing Fee shall be
equal to $2,162,500. 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; provided, however, that with respect to the first Distribution Date, the
Class B Servicing Fee shall be equal to $150,000. 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; provided, however, that
with respect to the first Distribution Date, the Collateral Interest Servicing
Fee shall be equal to $187,500. 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 1996-1 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.
SERIES TERMINATION
If, on the Distribution Date, which is two months prior to the Series
1996-1 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 1996-1 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 Series 1996-1 Certificateholders' Interest 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 Series 1996-1 Certificateholders' Interest; (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 (l) Shared Principal
Collections.
S-36
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the 'UNDERWRITING AGREEMENT') among the Transferors, TRS, the underwriters of
the Class A Certificates named below (the 'CLASS A UNDERWRITERS') and the
underwriters of the Class B Certificates named below (the 'CLASS B
UNDERWRITERS,' and together with the Class A Underwriters, the 'UNDERWRITERS'),
the Transferors have agreed to cause the Trust to sell to the Underwriters, and
the Underwriters have agreed to purchase, the principal amount of the Class A
Certificates and Class B Certificates set forth opposite their names:
PRINCIPAL AMOUNT OF
UNDERWRITERS OF THE CLASS A CERTIFICATES CLASS A CERTIFICATES
- ---------------------------------------- --------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................. $165,000,000
CS First Boston Corporation............................. 165,000,000
Lehman Brothers Inc. ................................... 165,000,000
Morgan Stanley & Co. Incorporated....................... 165,000,000
Salomon Brothers Inc ................................... 165,000,000
BA Securities, Inc. .................................... 5,000,000
Commerzbank Capital Markets Corporation................. 5,000,000
Credit Lyonnais Securities (USA) Inc. .................. 5,000,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc. ............ 5,000,000
First Union Capital Markets Corp. ...................... 5,000,000
HSBC Securities, Inc. .................................. 5,000,000
NatWest Capital Markets Limited......................... 5,000,000
Societe Generale Securities Corporation................. 5,000,000
------------
Total.......................................... $865,000,000
------------
------------
PRINCIPAL AMOUNT OF
UNDERWRITERS OF THE CLASS B CERTIFICATES CLASS B CERTIFICATES
- ---------------------------------------- --------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................ $ 30,000,000
Lehman Brothers Inc. .................................. 30,000,000
------------
Total......................................... $60,000,000
------------
------------
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 1996-1
Certificates offered hereby will be issued if any are issued.
The Class A Underwriters propose initially to offer the Class A
Certificates to the public at the price set forth on the cover page hereof and
to certain dealers at such price less concessions not in excess of .2% 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 .125% 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 .25% 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 .125% 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.
NatWest Capital Markets Limited, a United Kingdom broker-dealer and a
member of the Securities Futures Authority Limited, has agreed that, as part of
the distribution of the Class A Certificates offered hereby and subject to
certain exceptions, it will not offer or sell any Class A Certificates within
the United States, its territories or possessions or to persons who are citizens
thereof or residents therein. The Underwriting Agreement does not limit the sale
of the Series 1996-1 Certificates offered hereby outside of the United States.
Each Underwriter has represented and agreed that (a) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986
and the Public Offers of Securities Regulations 1995 (the 'REGULATIONS') with
respect to anything done by it in relation to the Series 1996-1 Certificates in,
from or
S-37
<PAGE>
otherwise involving the United Kingdom; (b) it has only issued or passed on and
will only issue or pass on to any person in the United Kingdom any document
received by it in connection with the issue of the Series 1996-1 Certificates if
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on; and (c) it has
not offered or sold and, during the period of six months from the date hereof,
will not offer or sell any Series 1996-1 Certificates to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing, or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Regulations.
The Transferors will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the Underwriters may be required to make in respect thereof.
S-38
<PAGE>
INDEX OF DEFINED TERMS
Accounts.......................................... S-2
Adjusted Invested Amount.......................... S-5
AEDC.............................................. S-19
American Express.................................. S-19
Available Final Distribution Amount............... S-36
Available Principal Collections................... S-21
Available Reserve Account Amount.................. S-27
Base Rate......................................... S-35
Centurion......................................... S-1
Class A Additional Interest....................... S-28
Class A Adjusted Invested Amount.................. S-4, S-25
Class A Available Funds........................... S-20
Class A Certificate Rate.......................... S-2
Class A Certificateholders' Interest.............. S-3
Class A Certificates.............................. S-1, S-3
Class A Floating Percentage....................... S-23
Class A Initial Invested Amount................... S-3, S-4
Class A Invested Amount........................... S-4, S-25
Class A Investor Charge-Off....................... S-9, S-33
Class A Investor Default Amount................... S-32
Class A Monthly Interest.......................... S-29
Class A Outstanding Monthly Interest.............. S-29
Class A Principal Percentage...................... S-24
Class A Required Amount........................... S-8, S-27
Class A Servicing Fee............................. S-35
Class A Underwriters.............................. S-37
Class B Additional Interest....................... S-29
Class B Adjusted Invested Amount.................. S-5, S-25
Class B Available Funds........................... S-21
Class B Certificate Rate.......................... S-2
Class B Certificateholders' Interest.............. S-3
Class B Certificates.............................. S-1, S-3
Class B Floating Percentage....................... S-23
Class B Initial Invested Amount................... S-3, S-4
Class B Invested Amount........................... S-4, S-25
Class B Investor Charge-Off....................... S-9, S-33
Class B Investor Default Amount................... S-32
Class B Monthly Interest.......................... S-29
Class B Outstanding Monthly Interest.............. S-29
Class B Principal Percentage...................... S-24
Class B Required Amount........................... S-8, S-28
Class B Servicing Fee............................. S-36
Class B Underwriters.............................. S-37
Closing Date...................................... S-2, S-3
Code.............................................. S-12
Collateral Additional Interest.................... S-31
Collateral Available Funds........................ S-29
Collateral Charge-Off............................. S-33
Collateral Default Amount......................... S-33
Collateral Floating Percentage.................... S-23
Collateral Initial Invested Amount................ S-3, S-4
Collateral Interest............................... S-3, S-4
S-39
<PAGE>
Collateral Interest Holder........................ S-4
Collateral Interest Servicing Fee................. S-36
Collateral Invested Amount........................ S-4, S-25
Collateral Monthly Interest....................... S-30
Collateral Principal Percentage................... S-24
Collateral Rate................................... S-31
Controlled Accumulation Amount.................... S-31
Controlled Accumulation Period.................... S-6
Controlled Accumulation Period Length............. S-22
Controlled Deposit Amount......................... S-32
Covered Amount.................................... S-26
Deficit Controlled Accumulation Amount............ S-32
Distribution Date................................. S-2
Early Amortization Period......................... S-7
Eligible Deposit Account.......................... S-25
ERISA............................................. S-12
Excess Spread..................................... S-8, S-29
Expected Final Payment Date....................... S-6, S-13
Floating Allocation Percentage.................... S-23
Group I........................................... S-10
Highest Bid....................................... S-36
Initial Invested Amount........................... S-3, S-4
Interest Funding Investment Proceeds.............. S-26
Invested Amount................................... S-4, S-25
Investor Default Amount........................... S-32
Loan Agreement.................................... S-30
Monthly Report.................................... S-36
Monthly Servicing Fee............................. S-35
Paired Series..................................... S-33
Pay-Out Events.................................... S-34
Period Length Determination Date.................. S-22
Pooling and Servicing Agreement................... S-1
Principal Allocation Percentage................... S-24
Principal Funding Account......................... S-14
Principal Funding Account Balance................. S-25
Principal Funding Investment Proceeds............. S-26
Rating Agency..................................... S-13
Reallocated Principal Collections................. S-7, S-27
Receivables....................................... S-1
Record Date....................................... S-20
Regulations....................................... S-37
Required Amount................................... S-8
Required Collateral Invested Amount............... S-10, S-32
Required Reserve Account Amount................... S-26
Reserve Account................................... S-26
Reserve Account Funding Date...................... S-26
Revolving Period.................................. S-6
RFC II............................................ S-1
Selection Date.................................... S-5
Series 1996-1 Certificateholders' Interest........ S-3
Series 1996-1 Certificates........................ S-1, S-3
Series 1996-1 Supplement.......................... S-13, S-20
Series 1996-1 Termination Date.................... S-6
Series Adjusted Invested Amount................... S-23
S-40
<PAGE>
Series Adjusted Portfolio Yield................... S-35
Series Allocable Defaulted Amount................. S-23
Series Allocable Finance Charge Collections....... S-23
Series Allocable Principal Collections............ S-23
Series Allocation Percentage...................... S-23
Series Required Transferor Amount................. S-3
Servicer.......................................... S-1
Servicing Base Amount............................. S-35
Servicing Fee Rate................................ S-35
Special Payment Date.............................. S-13
Total Portfolio................................... S-15
Transferor........................................ S-1
Transferors' Interest............................. S-3
TRS............................................... S-1, S-19
TRS Insolvency Event.............................. S-35
Trust............................................. S-1, S-3
Trust Portfolio................................... S-15
Trustee........................................... S-1
Underwriters...................................... S-37
Underwriting Agreement............................ S-37
S-41
<PAGE>
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<PAGE>
PROSPECTUS
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
ASSET BACKED CERTIFICATES
AMERICAN EXPRESS CENTURION BANK
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
---------------------
American Express Centurion Bank ('CENTURION') and American Express
Receivables Financing Corporation II ('RFC II'), as transferors (each, in such
capacity, a 'TRANSFEROR'), may sell from time to time one or more series (each,
a 'SERIES') of asset backed certificates (the 'CERTIFICATES') evidencing
undivided interests in certain assets of the American Express Credit Account
Master Trust (the 'TRUST') to be created pursuant to a pooling and servicing
agreement (the 'POOLING AND SERVICING AGREEMENT') among American Express Travel
Related Services Company, Inc., as Servicer (in such capacity, the 'SERVICER'),
Centurion and RFC II, as Transferors, and The Bank of New York, as trustee (the
'TRUSTEE'). The property of the Trust includes, among other things, receivables
as described herein (the 'RECEIVABLES') generated from time to time in a
portfolio of designated Optima(Registered) Card, Optima Line of Credit and Sign
& Travel(Registered) revolving credit accounts which, in the future, may include
other charge or credit accounts (collectively, the 'ACCOUNTS').
Certificates will be sold from time to time under this Prospectus on terms
determined for each Series at the time of the sale and described in the related
prospectus supplement (each, a 'PROSPECTUS SUPPLEMENT'). Each Series will
consist of one or more classes of Certificates (each, a 'CLASS'). Each
Certificate will represent an undivided interest in certain assets of the Trust
and the interest of the holders of each Class or Series will include the right
to receive a varying percentage of each month's collections with respect to the
Receivables at the times, in the manner and to the extent described herein and,
with respect to any Series offered hereby, in the related Prospectus Supplement.
Interest and principal payments with respect to each Series offered hereby will
be made as specified in the related Prospectus Supplement. A Series offered
hereby (or any Class within such Series) may be entitled to the benefits of a
cash collateral guaranty, cash collateral account, collateral interest, letter
of credit, 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.
In addition, any Series offered hereby may include one or more Classes which are
subordinated in right and priority of payment to one or more other Classes of
such Series or another Series, in each case to the extent described in the
related Prospectus Supplement. Each Series of Certificates or Class offered
hereby will be rated in one of the four highest categories by at least one
nationally recognized statistical rating organization.
---------------------
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER CONSIDERATIONS, THE
INFORMATION SET FORTH IN THE SECTIONS ENTITLED 'RISK FACTORS' COMMENCING ON PAGE
19 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
---------------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF, NOR WILL THEY BE GUARANTEED BY,
CENTURION, RFC II, AMERICAN EXPRESS CREDIT CORPORATION, AMERICAN EXPRESS
TRAVEL RELATED SERVICES COMPANY, INC., AMERICAN EXPRESS COMPANY OR ANY
AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE UNDERLYING ACCOUNTS
OR RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
Certificates may be sold by the Transferors directly to purchasers, through
agents designated from time to time, through underwriting syndicates led by one
or more managing underwriters or through one or more underwriters acting alone.
If underwriters or agents are involved in the offering of the Certificates of
any Series offered hereby, the name of the managing underwriter or underwriters
or agents will be set forth in the related Prospectus Supplement. If an
underwriter, agent or dealer is involved in the offering of the Certificates of
any Series offered hereby, the underwriter's discount, agent's commission or
dealer's purchase price will be set forth in, or may be calculated from, the
related Prospectus Supplement, and the net proceeds to the Transferors from such
offering will be the public offering price of such Certificates less such
discount in the case of an underwriter, the purchase price of such Certificates
less such commission in the case of an agent or the purchase price of such
Certificates in the case of a dealer, and less, in each case, the other expenses
of the Transferors associated with the issuance and distribution of such
Certificates. See 'Plan of Distribution' for a more detailed discussion of the
plan pursuant to which the Certificates will be offered.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF CERTIFICATES OF ANY
SERIES UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.
The date of this Prospectus is May 9, 1996
<PAGE>
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<PAGE>
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT.......................... 2
REPORTS TO CERTIFICATEHOLDERS.................. 2
AVAILABLE INFORMATION.......................... 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE........................ 2
PROSPECTUS SUMMARY............................. 3
RISK FACTORS................................... 19
USE OF PROCEEDS................................ 28
THE TRUST...................................... 28
CENTURION'S REVOLVING CREDIT
BUSINESSES.................................... 29
General...................................... 29
Underwriting and Authorization Procedures.... 30
Billing and Payments......................... 31
Collection Efforts........................... 32
RFC II, CREDCO, CENTURION, AEDC AND TRS........ 32
RFC II....................................... 32
Credco....................................... 32
Centurion and AEDC........................... 32
TRS.......................................... 33
MERGER OR CONSOLIDATION OF A TRANSFEROR OR THE
SERVICER...................................... 33
ASSUMPTION OF A TRANSFEROR'S OBLIGATIONS....... 33
THE ACCOUNTS................................... 34
DESCRIPTION OF THE CERTIFICATES................ 35
General...................................... 35
Book-Entry Registration...................... 35
Definitive Certificates...................... 38
Interest..................................... 38
Principal.................................... 39
Pay-Out Events and Reinvestment
Events.................................... 40
Servicing Compensation and Payment of
Expenses.................................. 41
THE POOLING AND SERVICING
AGREEMENT GENERALLY........................... 41
Conveyance of Receivables.................... 41
Representations and Warranties............... 42
The Transferor Certificates; Additional
Transferors............................... 44
Additions of Accounts or Participation
Interests................................. 45
Removal of Accounts.......................... 45
Discount Option.............................. 46
Premium Option............................... 46
Indemnification.............................. 47
Collection and Other Servicing Procedures.... 47
New Issuances................................ 48
Collection Account........................... 49
Deposits in Collection Account............... 50
Allocations.................................. 51
Groups of Series............................. 52
Reallocations Among Different Series Within a
Reallocation Group........................ 52
Sharing of Excess Finance Charge Collections
Among Excess Allocation Series............ 55
Sharing of Principal Collections Among
Principal Sharing Series.................. 55
Paired Series................................ 55
Special Funding Account...................... 56
Funding Period............................... 56
Defaulted Receivables; Rebates and Fraudulent
Charges................................... 57
Credit Enhancement........................... 57
Servicer Covenants........................... 59
Certain Matters Regarding the Servicer....... 59
Servicer Default............................. 59
Evidence as to Compliance.................... 60
Amendments................................... 61
Defeasance................................... 61
List of Certificateholders................... 62
The Trustee.................................. 62
DESCRIPTION OF THE PURCHASE AGREEMENTS......... 62
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....... 64
Transfer of Receivables...................... 64
Certain Matters Relating to Insolvency and
Receivership.............................. 64
Consumer Protection Laws..................... 66
Proposed Legislation......................... 67
Recent Litigation............................ 67
TAX MATTERS.................................... 68
Federal Income Tax Consequences-- General.... 68
Federal Income Tax Consequences-- United
States Investors.......................... 70
Federal Income Tax Consequences--
Non-United States Investors............... 72
State and Local Tax Consequences............. 73
ERISA CONSIDERATIONS........................... 73
PLAN OF DISTRIBUTION........................... 74
LEGAL MATTERS.................................. 75
INDEX OF DEFINED TERMS......................... 76
i
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to any Series will, among other things,
set forth with respect to such Series: (a) the initial aggregate principal
amount of each Class of such Series; (b) the Certificate Rate (or method of
determining the Certificate Rate) of each such Class; (c) the expected date or
dates on which the Invested Amount with respect to each such Class will be paid
to the holders of the Certificates of such Class; (d) the extent to which any
Class within a Series is subordinated to any other Class of such Series or any
other Series; (e) the Distribution Dates for the respective Classes; (f)
relevant financial information with respect to the Receivables; (g) additional
information with respect to any Series Enhancement relating to such Series; and
(h) the plan of distribution of such Series.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) are issued,
monthly and annual unaudited reports, containing information concerning the
Trust and prepared by the Servicer, will be sent on behalf of the Trust to Cede
& Co. ('CEDE'), as nominee of The Depository Trust Company ('DTC') and
registered holder of the Certificates pursuant to the Pooling and Servicing
Agreement. Such reports will be made available by DTC and its participants to
the Certificateholders in accordance with the rules, regulations and procedures
creating and affecting DTC and as described under 'Series Provisions-- Reports'
in the applicable Prospectus Supplement and 'The Pooling and Servicing Agreement
Generally--Evidence as to Compliance.' Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The Pooling and Servicing Agreement does not require the sending of,
and neither Transferor intends to send, any of its financial reports to the
Certificateholders or to the owners of beneficial interests in the Certificates
('CERTIFICATE OWNERS').
AVAILABLE INFORMATION
The Transferors, as originators of the Trust, have filed a Registration
Statement under the Securities Act of 1933, as amended (the 'SECURITIES ACT'),
with the Securities and Exchange Commission (the 'COMMISSION') with respect to
the Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement and amendments thereof and
exhibits thereto, which are available for inspection without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549; Seven World Trade Center, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of the Registration Statement and amendments thereof and
exhibits thereto may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Servicer will file with the Commission such periodic reports, if any,
with respect to the Trust as are required under the Securities Exchange Act of
1934, as amended (the 'EXCHANGE ACT'), and the rules and regulations of the
Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates offered hereby shall be deemed to be incorporated
by reference into this Prospectus and to be part hereof. Any statement contained
herein or in a document deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in any other subsequently filed document which
also is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as modified or superseded, to constitute a part of this
Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to American Express Travel Related Services Company, Inc.,
American Express Tower, World Financial Center, 200 Vesey Street, New York, New
York 10048, Attention: Secretary. Telephone requests for such copies should be
directed to (212) 640-5583.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and in any
accompanying Prospectus Supplement (each, a 'PROSPECTUS SUPPLEMENT'). Reference
is made to the Index of Defined Terms for the location herein of the definitions
of certain capitalized terms used herein. Unless the context requires otherwise,
certain capitalized terms, when used herein and in any accompanying Prospectus
Supplement, relate only to the particular Series being offered by such
Prospectus Supplement.
Issuer............................. American Express Credit Account Master
Trust (the 'TRUST'). The Trust, as a
master trust, is expected to issue series
of Certificates (each, a 'SERIES') from
time to time. See 'The Trust,' 'Risk
Factors--Effect of Addition of Trust
Assets on Credit Quality,' 'The Pooling
and Servicing Agreement
Generally--Additions of Accounts or
Participation Interests' and '--Removal
of Accounts.'
Servicer........................... American Express Travel Related Services
Company, Inc., a New York Corporation
('TRS'), as servicer or any successor
servicer (in such capacity, the
'SERVICER').
Trustee............................ The Bank of New York, a New York banking
corporation (the 'TRUSTEE').
Account Owner...................... Centurion is the owner of the Accounts (as
such, an 'ACCOUNT OWNER'). In the future,
'ACCOUNT OWNERS' may also include (i) one
or more different transferors that may
transfer receivables pursuant to
receivables purchase agreements, which
may include terms different from the RFC
II Purchase Agreement (as defined
herein), between each such transferor and
RFC II, Centurion or an Additional
Transferor as the transferee of such
receivables (each, a 'RECEIVABLES
PURCHASE AGREEMENT'), or (ii) one or more
Additional Transferors (as defined
herein). See 'The Pooling and Servicing
Agreement Generally--The Transferor
Certificates; Additional Transferors' for
a description of the circumstances under
which such Additional Transferors may be
designated.
Transferors........................ American Express Centurion Bank
('CENTURION'), a Delaware state-chartered
bank, and American Express Receivables
Financing Corporation II, a Delaware
corporation ('RFC II'), are the
transferors of interests in the
Receivables (each, in such capacity, or
any Additional Transferor (as defined
below) is herein referred to as a
'TRANSFEROR'). Each of Centurion and RFC
II is a wholly owned subsidiary of TRS,
which is a wholly owned subsidiary of
American Express Company ('AMERICAN
EXPRESS').
Subject to certain conditions described
herein under 'The Pooling and Servicing
Agreement Generally--The Transferor
Certificates; Additional Transferors,'
the Transferors may designate one or more
of their affiliates to transfer
Receivables or Participation Interests
(as defined herein) to the Trust from
time to time (such affiliates,
'ADDITIONAL TRANSFERORS'). Under certain
circumstances, a Transferor may transfer
its respective interests and obligations
as a Transferor to another entity that
will assume all of such Transferor's
obligations under the Pooling and
Servicing Agreement and related
agreements. For a discussion of the
circumstances in which a Transferor may
be permitted to merge or consolidate or
to sell substantially all of its assets,
see 'Merger or Consolidation of a
Transferor or the Servicer.'
3
<PAGE>
In September 1995, American Express
announced its intention to combine by
merger Centurion's business with that of
American Express Deposit Corporation, a
Utah-chartered, FDIC-insured industrial
loan company ('AEDC'), which, like
Centurion, is a wholly-owned subsidiary
of TRS. Such merger has been approved by
regulatory authorities and is expected to
occur in mid-1996. AEDC, which will be
the surviving entity of the merger, will
assume all of Centurion's rights and
obligations under the Pooling and
Servicing Agreement and the other
agreements to which Centurion is a party
that are related to the transactions
described in this Prospectus, as well as
all of Centurion's rights and obligations
with respect to the Accounts owned by
Centurion and the Receivables related
thereto. See 'RFC II, Credco, Centurion,
AEDC and TRS--Centurion and AEDC' for a
more detailed discussion of the intended
merger and additional information
regarding AEDC. Following such merger and
compliance with the applicable
requirements described under 'Merger or
Consolidation of a Transferor or the
Servicer,' AEDC will be considered to be
'CENTURION' and a 'TRANSFEROR' for all
purposes hereof and under the Pooling and
Servicing Agreement and all related
agreements and documents.
Trust Assets....................... The assets of the Trust (the 'TRUST
ASSETS') include receivables arising from
time to time (the 'RECEIVABLES') under
the Accounts, as such Receivables are
conveyed to the Trust and as more fully
described under 'The Accounts,' including
monies due and to become due with respect
thereto, monies and other property on
deposit in certain accounts of the Trust
for the benefit of Certificateholders,
Participation Interests (as defined
herein), if any, and any Series
Enhancement (as defined herein) issued
with respect to a particular Series (the
drawing on or payment of any Series
Enhancement for the benefit of a Series
or Class of Certificateholders will not
be available to the Certificateholders of
any other Series or Class) and certain
rights of the Transferors to receive
Recoveries (as defined herein). 'SERIES
ENHANCEMENT' means, with respect to any
Series or Class of Certificates, any
Credit Enhancement (as defined herein)
for the benefit of Certificateholders of
such Series or Class. The subordination
of any Series or Class of Certificates to
another Series or Class of Certificates
shall be deemed to be Series Enhancement.
'PARTICIPATION INTERESTS' mean
participations representing undivided
interests in a pool of assets primarily
consisting of credit account receivables,
consumer loan receivables, charge card
receivables or other self-liquidating
financial assets. To the extent that such
participations encompass previously
issued credit-card or other asset-backed
securities, such securities (i) either
will have been registered under the
Securities Act or will have been held for
the 'holding period' prescribed by Rule
144(k) under the Securities Act and (ii)
will have been acquired in a bona fide
secondary market transaction, rather than
from the issuer thereof or one of such
issuer's affiliates or such securities
will have otherwise been acquired in
compliance with the Securities Act.
To the extent provided in any Supplement
(as defined herein), or in an amendment
to the Pooling and Servicing Agreement,
all or a portion of the Receivables or
Participation Interests conveyed to
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<PAGE>
the Trust and all collections received
with respect thereto may be allocated to
one or more Series or groups of Series
(each a 'GROUP') as long as the Rating
Agency Condition (as defined herein)
shall have been satisfied with respect to
such allocation and the Servicer shall
have delivered an officer's certificate
to the Trustee to the effect that the
Servicer reasonably believes such
allocation will not have an Adverse
Effect (as defined herein).
The Certificates................... Asset backed certificates (the
'CERTIFICATES') will be issued in Series,
each of which will consist of one or more
Classes, representing undivided interests
in the Trust. The specific terms of a
Series or Class will be established as
described herein under 'The Pooling and
Servicing Agreement Generally--New
Issuances.' However, while the specific
terms of any Series or Class offered
hereby will be described in the related
Prospectus Supplement, the terms of such
Series or Class will not be subject to
prior review by, or consent of, the
holders of the Certificates of any
previously issued Series.
The Certificates of a Series offered hereby
will generally be available for purchase
in minimum denominations of $1,000 and in
integral multiples thereof, and will only
be available in book-entry form except in
certain limited circumstances as
described herein under 'Description of
the Certificates--Definitive
Certificates.' Interests in the Trust
Assets will be allocated among (a) the
Certificateholders, including Credit
Enhancers (as defined herein) holding
uncertificated subordinated interests
(each, a 'COLLATERAL INVESTED AMOUNT'),
of a particular Series (the
'CERTIFICATEHOLDERS' INTEREST'), (b) the
Certificateholders (including such
holders of Collateral Invested Amounts)
of other Series, if any, and (c) the
interest of the Transferors and their
permitted transferees (the 'TRANSFERORS'
INTEREST'), as described below. The
Invested Amount of a Series offered
hereby will, except as otherwise provided
herein and except with respect to
Certificates with a variable principal
amount, remain fixed at the aggregate
initial principal amount of the
Certificates of such Series. The
Certificateholders' Interest of a Series
will include the right to receive (but
only to the extent needed to make
required payments under the Pooling and
Servicing Agreement, including the
related Supplement, and subject to any
reallocation of such amounts if the
related Supplement so provides) varying
percentages of collections of Finance
Charge Receivables and Principal
Receivables and will be allocated a
varying percentage of the Defaulted
Receivables with respect to each Monthly
Period (defined below). For a description
of how collections of Finance Charge
Receivables and principal Receivables
will be allocated among Series, see
'Description of the
Certificates--Interest' and
'--Principal.' If the Certificates of a
Series offered hereby include more than
one Class of Certificates, the
collections allocable to the Invested
Amount of such Series may be further
allocated among each Class in such Series
as described in the related Prospectus
Supplement.
'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
5
<PAGE>
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.'
The Transferors' Interest.......... The Transferors' Interest at any time
represents the right to the Trust Assets
in excess of the Certificateholders'
Interest including the Collateral
Invested Amounts of all Series then
outstanding. The principal amount of the
Transferors' Interest (the 'TRANSFEROR
AMOUNT') will fluctuate as the amount of
the Principal Receivables held by the
Trust changes from time to time. In
addition, the Transferors intend to cause
the issuance of Series from time to time
and any such issuance will have the
effect of decreasing the Transferor
Amount to the extent of the initial
Invested Amount of such Series. See 'Risk
Factors--Effect of the Issuance of New
Series.'
The level of the 'REQUIRED TRANSFEROR
AMOUNT,' which equals the sum of the
Series Required Transferor Amounts for
each outstanding Series, 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.'
Issuance of New Series............. The Pooling and Servicing Agreement
authorizes the Trustee to issue three
types of certificates: (a) one or more
Series of Certificates, (b) a certificate
evidencing the Transferors' Interest in
the Trust retained by the Transferors
(the 'ORIGINAL TRANSFEROR CERTIFICATE'),
which certificate will be held by the
Transferors, and (c) one or more
certificates (each, a 'SUPPLEMENTAL
CERTIFICATE') held by transferees of a
portion of the Transferors' Interest. The
Original Transferor Certificate and any
Supplemental Certificates are
collectively referred to as the
'TRANSFEROR CERTIFICATES.' The Pooling
and Servicing Agreement provides that,
pursuant to one or more supplements to
the Pooling and Servicing Agreement
(each, a 'SUPPLEMENT'), the Transferors
may cause the Trustee without the consent
of the Certificateholders to issue one or
more new Series and accordingly cause a
reduction in the Transferors' Interest
represented by the Transferor
Certificates. There can be no assurance
that the terms of any Series might not
have an impact on the timing or amount of
payments received by a Certificateholder
of another Series. Under the Pooling and
Servicing Agreement, the Transferors may
define, with respect to any Series, the
Principal Terms of such Series. See 'The
Pooling and Servicing Agreement
Generally--New Issuances' for a
discussion of, among other things, the
characteristics that other Series may
have and the conditions that must be
satisfied if a new Series will be issued.
The Transferors may offer any Series to
the
6
<PAGE>
public or other investors under a
disclosure document (a 'DISCLOSURE
DOCUMENT'), which will consist of a
Prospectus Supplement in the case of a
Series offered hereby, in transactions
either registered under the Securities
Act or exempt from registration
thereunder, directly or through one or
more underwriters or placement agents, in
fixed-price offerings or in negotiated
transactions or otherwise. See 'Plan of
Distribution' for a more detailed
discussion of the plan pursuant to which
any such Series may be offered.
A new Series may be issued only upon
satisfaction of the conditions described
herein under 'The Pooling and Servicing
Agreement Generally--New Issuances'
including, among others, that (a) such
issuance will satisfy the Rating Agency
Condition (as defined herein) and (b)
each Transferor shall have delivered to
the Trustee and certain providers of
Series Enhancement a certificate of an
authorized representative to the effect
that, in the reasonable belief of such
Transferor, such issuance will not, based
on the facts known to such representative
at the time of such certification, have
an Adverse Effect (as defined herein).
The Accounts....................... The Accounts consist of certain Optima
Card, Optima Line of Credit and Sign &
Travel revolving credit accounts owned by
Centurion and, in the future, may also
consist of charge or other revolving
credit accounts owned by an Account Owner
and designated from time to time by the
Transferors or an Additional Transferor
that, in each case, meet the criteria
provided in the Pooling and Servicing
Agreement for an Eligible Account (as
defined herein), but will not include any
Removed Accounts (as defined herein). No
Account is being sold or transferred to
the Trust, and each Account will continue
to be controlled and held by an Account
Owner. See 'Centurion's Revolving Credit
Businesses' and 'Description of the
Purchase Agreements.'
Centurion and Credco, in the ordinary
course of their respective businesses,
have entered into certain receivables
purchase agreements (collectively, the
'CREDCO PURCHASE AGREEMENT') pursuant to
which Centurion has sold to Credco all of
its right, title and interest in and to
certain Receivables in the Accounts,
including Centurion's rights to
recoveries of charged-off Receivables
('RECOVERIES') allocable to such
Receivables so transferred to Credco.
Credco and RFC II will enter into a
receivables purchase agreement (the 'RFC
II PURCHASE AGREEMENT'). Pursuant to the
RFC II Purchase Agreement, Credco will
sell to RFC II all of its right, title
and interest in and to the Receivables in
the Accounts in existence at the close of
business on April 25, 1996 (the 'INITIAL
CUT-OFF DATE'), and Credco may also sell
to RFC II all of its right, title and
interest in and to the Receivables in
Additional Accounts (as defined herein)
existing at the close of business on each
applicable date of designation thereof.
In addition, Credco will assign to RFC II
its rights to Recoveries associated with
the Receivables so sold to RFC II. The
terms of the RFC II Purchase Agreement
are described in more detail under
'Description of the Purchase Agreements.'
Any Transferor may in the future enter
into other receivables purchase
agreements with additional Account Owners
or purchasers from Account Owners, such
as
7
<PAGE>
Credco, pursuant to which such Transferor
may purchase, for addition to the Trust,
existing or subsequently arising
receivables.
RFC II in turn will transfer such
Receivables, and Centurion will from time
to time transfer certain other
Receivables, in each case, including the
associated rights to Recoveries, to the
Trust pursuant to the Pooling and
Servicing Agreement.
On the first Series Closing Date, the
Transferors will convey to the Trust the
Receivables that existed on the Initial
Cut-Off Date in certain Optima Card,
Optima Line of Credit and Sign & Travel
revolving credit accounts (the 'INITIAL
ACCOUNTS') 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 'SELECTION
DATE'). Centurion will also directly or
indirectly convey to the Trust
Receivables arising in the Initial
Accounts from time to time thereafter
until the termination of the Trust. In
addition, pursuant to the Pooling and
Servicing Agreement, the Transferors
expect (subject to certain limitations
and conditions), and in some
circumstances will be obligated, to have
Additional Accounts designated, the
Receivables of which will be included in
the Trust or, in lieu thereof or in
addition thereto, to include
Participation Interests in the Trust.
Additional Accounts include New Accounts
(as defined herein) and Aggregate
Addition Accounts (as defined herein). If
Additional Accounts are designated, the
Transferors will convey to the Trust all
Receivables in such Additional Accounts,
whether such Receivables are then
existing or thereafter created. The
addition to the Trust of Receivables in
Aggregate Addition Accounts or
Participation Interests will be subject
to certain conditions, including, among
others, that (a) unless such addition is
a required addition, such addition will
satisfy the Rating Agency Condition and
(b) each Transferor of such Receivables
shall have delivered to the Trustee a
certificate of an authorized officer to
the effect that, in the reasonable belief
of such Transferor, such addition will
not have an Adverse Effect. The
Transferors will also have the right, in
certain circumstances, to remove from the
Trust all Receivables of certain
designated Accounts or Participation
Interests (the 'REMOVED ACCOUNTS'). See
'The Pooling and Servicing Agreement
Generally-- Additions of Accounts or
Participation Interests' and '--Removal
of Accounts' for a more detailed
discussion of the circumstances and
manner in which, respectively, Additional
Accounts may be designated or
Participation Interests may be added to
the Trust and the Receivables of certain
Accounts or Participation Interests may
be removed from the Trust.
The Receivables.................... The Receivables include (a) periodic
finance charges, cash advance fees,
administrative fees, late charges, credit
insurance premiums, annual membership
fees and certain other fees, Discount
Receivables, if any, and the interest
portion of any Participation Interests as
determined pursuant to the applicable
Supplement (the 'FINANCE CHARGE
RECEIVABLES'), and (b) amounts charged by
Account holders for merchandise and
services, amounts advanced to Account
holders as cash advances or otherwise
8
<PAGE>
borrowed by Account holders under any
line of credit existing under an Account,
Premium Receivables, if any, and the
principal portion of any Participation
Interests as determined pursuant to the
applicable Supplement (the 'PRINCIPAL
RECEIVABLES'). Recoveries will be treated
as Finance Charge Receivables.
All new Receivables arising in the Accounts
during the term of the Trust
automatically will be sold by Centurion
directly or indirectly to the Trust.
Accordingly, the amount of Receivables
will fluctuate from day to day as new
Receivables are generated and as existing
Receivables are collected, charged-off as
uncollectible or otherwise adjusted.
Clearance and Settlement........... Unless otherwise provided in the related
Prospectus Supplement, Certificateholders
may elect to hold their Certificates
through any of (a) DTC (in the United
States) or (b) Cedel Bank, societe
anonyme ('CEDEL') or the Euroclear System
('EUROCLEAR') (in Europe). See
'Description of the
Certificates--Book-Entry Registration.'
Interest........................... Interest will accrue on the Invested Amount
or the outstanding principal amount of
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 Invested
Amount of a Series offered hereby will
generally be used to make interest
payments to Certificateholders of such
Series on each Interest Payment Date with
respect thereto; provided that if an
Early Amortization Period or Early
Accumulation Period commences with
respect to such Series, thereafter
interest will be distributed to such
Certificateholders monthly on each
Special Payment Date (defined herein). 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) will be deposited in one
or more trust accounts (each, an
'INTEREST FUNDING ACCOUNT') and used to
make interest payments to
Certificateholders of such Series or
Class on the following Interest Payment
Date with respect thereto. If a Series
has more than one Class of Certificates,
each such Class may have a separate
Interest Funding Account. See
'Description of the
Certificates--Interest' for a more
detailed discussion of the foregoing.
Principal.......................... The principal of the Certificates of each
Series offered hereby will be scheduled
to be paid either (a) in full on an
expected date specified in the related
Prospectus Supplement (the 'EXPECTED
FINAL PAYMENT DATE'), in which case such
Series will have a Controlled
Accumulation Period as described below
under '--Controlled Accumulation Period,'
or (b) in installments commencing on a
date specified in the related Prospectus
Supplement (the 'PRINCIPAL COMMENCEMENT
DATE'), in which case such Series
generally will have a Controlled
Amortization Period as described below
under '--Controlled Amortization Period.'
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
9
<PAGE>
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'
for a description of factors that may
affect the timing of principal payments
on Certificates. See 'Description of the
Certificates--Principal.'
Revolving Period................... The Certificates of each Series offered
hereby will have a revolving period (the
'REVOLVING PERIOD') that will commence on
the date of issuance of the related
Series (the 'SERIES CLOSING DATE') or on
a date prior thereto specified in the
related Supplement and, for a Series
offered hereby, in the related Prospectus
Supplement (the 'SERIES CUT-OFF DATE')
and continue until the earlier of (a) the
commencement of the Early Amortization
Period or Early Accumulation Period with
respect to such Series and (b) the date
specified in the related Prospectus
Supplement as the end of the Revolving
Period with respect to such Series. If
the related Prospectus Supplement
provides that a Series is a Principal
Sharing Series (as defined herein),
during the Revolving Period with respect
to such Series, collections of Principal
Receivables and certain other amounts
otherwise allocable to the
Certificateholders' Interest of such
Series will be treated as Shared
Principal Collections (as defined herein)
and will be distributed to, or for the
benefit of, the Certificateholders of
other Principal Sharing Series or the
holders of the Transferor Certificates or
deposited into the Special Funding
Account (as defined herein), as more
fully described in the related Prospectus
Supplement. If the related Prospectus
Supplement provides that a Series is not
a Principal Sharing Series, during the
Revolving Period with respect to such
Series, collections of Principal
Receivables and certain other amounts
otherwise allocable to the
Certificateholders' Interest of such
Series will be paid to the holders of the
Transferor Certificates or deposited into
the Special Funding Account, as more
fully described in the related Prospectus
Supplement. See 'Description of the
Certificates-- Principal,' and '--Pay-Out
Events and Reinvestment Events' for a
discussion of the events that might lead
to the termination of the Revolving
Period with respect to a Series prior to
its scheduled date.
Controlled Accumulation Period..... If the related Prospectus Supplement so
specifies, unless an Early Amortization
Period or, if so specified in the related
Prospectus Supplement, an Early
Accumulation Period commences with
respect to a Series offered hereby, the
Certificates of such Series will have a
scheduled accumulation period (the
'CONTROLLED ACCUMULATION PERIOD') that
will commence at the close of business on
the date or dates specified or determined
as specified in such Prospectus
Supplement and continue until the
earliest of (a) the commencement of the
Early Amortization Period or, if so
specified in the related Prospectus
Supplement, an Early Accumulation Period
with respect to such Series, (b) payment
in full of the Invested Amount, including
the Collateral Invested
10
<PAGE>
Amount, if any, of the Certificates of
such Series, and (c) the series
termination date with respect to such
Series (the 'SERIES TERMINATION DATE').
During the Controlled Accumulation Period
with respect to a Series, collections of
Principal Receivables and, if so
specified in the related Prospectus
Supplement, certain other amounts
allocable to the Certificateholders'
Interest of such Series, including Shared
Principal Collections, if any, allocable
to such Series, will be deposited on each
Distribution Date in a trust account
established for the benefit of the
Certificateholders of such Series (each,
a 'PRINCIPAL FUNDING ACCOUNT') and used
to make principal distributions to the
Certificateholders of such Series or any
Class thereof when due. The amount to be
deposited in the 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, and
the Controlled Accumulation Period with
respect to each Class may commence on
different dates. In addition, the related
Prospectus Supplement may describe
certain priorities among such Classes
with respect to deposits of principal
into such Principal Funding Accounts.
Early Accumulation Period.......... If so specified and under the conditions
set forth in the Prospectus Supplement
relating to a Series having a Controlled
Accumulation Period, during the period
from the day on which a Reinvestment
Event (as defined herein) has occurred,
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 (the 'EARLY ACCUMULATION PERIOD'),
collections of Principal Receivables and,
if so specified in the related Prospectus
Supplement, 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 the Principal
Funding Account and used to make
distributions of principal to the
Certificateholders of such Series or any
Class thereof on the Expected Final
Payment Date. The amount to be deposited
in the Principal Funding Account during
the Early Accumulation Period will not be
limited to any Controlled Deposit Amount.
See 'Description of the
Certificates--Pay-Out Events and
Reinvestment Events' for a discussion of
the events which might lead to
commencement of an Early Accumulation
Period.
Controlled Amortization Period..... 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
11
<PAGE>
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 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
Certificateholders of such Series or any
Class thereof then scheduled to receive
such distributions. 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 the related 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
different Controlled Amortization Amount.
In addition, the related Prospectus
Supplement may describe certain
priorities among such Classes with
respect to such distributions.
Early Amortization Period.......... During the period from the day on which a
Pay-Out Event has occurred with respect
to a Series to the date on which the
Invested Amount, including the Collateral
Invested Amount, if any, of the
Certificates of such Series has been paid
in full or the related Series Termination
Date has occurred (the 'EARLY
AMORTIZATION PERIOD'), 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 Certificateholders of
such Series monthly on each Distribution
Date beginning with the first Special
Payment Date with respect to such Series.
During the Early Amortization Period with
respect to a Series, distributions of
principal to Certificateholders, in
general, will not be subject to any
Controlled Deposit Amount or Controlled
Distribution Amount. In addition, upon
the commencement of the Early
Amortization Period with respect to a
Series, 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 with respect to such Series. See
'Description of the Certificates--Pay-Out
Events and Reinvestment Events' for a
discussion of the events that might lead
to the commencement of the Early
Amortization Period with respect to a
Series.
Allocations Among Series........... Pursuant to the Pooling and Servicing
Agreement, during each Monthly Period,
the Servicer is required to first
allocate to each Series collections of
Principal Receivables and Finance Charge
Receivables and the Defaulted Receivables
with respect to such Monthly Period based
on the Series Allocation Percentage (as
defined herein). Subject to reallocation
among Series in a Reallocation Group,
such amounts allocated to each Series are
12
<PAGE>
then further allocated within each Series
to the Certificateholders, any Series
Enhancement and the holders of the
Transferor Certificates pursuant to the
terms of the related Supplement. See 'The
Pooling and Servicing Agreement
Generally-- Allocations,' where the
manner in which collections are so
allocated is discussed at greater length.
Reallocations Among Series in a
Reallocation Group............... If so specified in the related Prospectus
Supplement, the Certificates of a Series
may be included in a Group that will be
subject to reallocations of collections
of Receivables and other amounts or
obligations among the Series in such
Group (a 'REALLOCATION GROUP').
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. For a more detailed
discussion of the effect of the issuance
of new Series and the manner in which
Collections will be allocated among
Reallocation Groups and the Series within
such Reallocation Groups, see,
respectively, 'Risk Factors--Effect of
the Issuance of New Series' and 'The
Pooling and Servicing Agreement
Generally--Reallocation Among Different
Series Within a Reallocation Group.'
Sharing of Excess Finance Charge
Collections Among Excess
Allocation Series................ If the Prospectus Supplement for a Series
so provides, any Series may be designated
as a Series that shares with other Series
similarly designated, subject to certain
limitations, certain Excess Finance
Charge Collections (as defined herein)
allocable to any such Series (an 'EXCESS
ALLOCATION SERIES'). Subject to certain
limitations described under 'The Pooling
and Servicing Agreement
Generally--Sharing of Excess Finance
Charge Collections Among Excess
Allocation Series,' collections of
Finance Charge Receivables and certain
other amounts allocable to the
Certificateholders' Interest of any
Series that is designated as an Excess
Allocation 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) will be
applied to cover shortfalls with respect
to amounts payable from collections of
Finance Charge Receivables allocable to
any other Series designated as an Excess
Allocation Series, in each case pro rata
based upon the Invested Amount of each
such Series that has such a shortfall
with respect to the related Monthly
Period. See 'The Pooling and Servicing
Agreement Generally--Sharing of Excess
Finance Charge Collections Among Excess
Allocation Series.'
Sharing of Principal Collections
Among Principal Sharing Series... If the Prospectus Supplement for a Series
so provides, any Series may be designated
as a Series that shares with other Series
similarly designated, subject to certain
limitations, certain excess collections
of Principal Receivables and certain
other amounts allocable to the
Certificateholders' Interest of such
Series (a 'PRINCIPAL SHARING SERIES'). To
the extent that collections of
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Principal Receivables and certain other
amounts that are allocated to the
Certificateholders' Interest of any
Principal Sharing Series are not needed
to make payments to the
Certificateholders of such Series or are
not required to be deposited in a
Principal Funding Account for such
Series, such collections may be applied
to cover principal payments due to or for
the benefit of Certificateholders of
another Principal Sharing Series. Any
such reallocation will not result in a
reduction in the Invested Amount of the
Series to which such collections were
initially allocated. For a more detailed
discussion of the foregoing, see 'The
Pooling and Servicing Agreement
Generally--Sharing of Principal
Collections Among Principal Sharing
Series.'
Paired Series...................... If so specified in the related Prospectus
Supplement, a Series of Certificates may
be issued (a 'PAIRED SERIES') that is
paired with one or more other Series or a
portion of one or more other Series
previously issued by the Trust (a 'PRIOR
SERIES'). A Paired Series may be issued
at or after the commencement of a
Controlled Accumulation Period or
Controlled Amortization Period for a
Prior Series. As the Invested Amount of
the Prior Series having a Paired Series
is reduced, the Invested Amount of the
Paired Series will increase by an equal
amount. Upon payment in full of such
Prior Series, the Invested Amount of the
Paired Series will be equal to the amount
of the Invested Amount paid to
Certificateholders of such Prior Series.
If a Pay-Out Event or Reinvestment Event
occurs (a) with respect to the Prior
Series having a Paired Series or (b) with
respect to the Paired Series when such
Prior Series is in a Controlled
Amortization Period or Controlled
Accumulation Period, the percentage
specified in the applicable Prospectus
Supplement for the allocation of
collections of Principal Receivables to
the Certificateholders' Interest of such
Prior Series (the 'PRINCIPAL ALLOCATION
PERCENTAGE') and the Series Allocation
Percentage for the Prior Series and the
Principal Allocation Percentage and the
Series Allocation Percentage for the
Paired Series will be reset as specified
in the related Prospectus Supplement and
the Controlled Amortization Period,
Controlled Accumulation Period, Early
Amortization Period or Early Accumulation
Period for such Prior Series could be
lengthened, which, in turn, may result in
the holders of the Certificates of such
Prior Series receiving the final payment
of principal on such Certificates after
the Expected Final Payment Date.
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 that otherwise
would be distributed to the holders of
the Transferor Certificates, but shall
deposit such funds in 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
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<PAGE>
funds on deposit in the Special Funding
Account will be released and treated as
collections of Principal Receivables to
the extent needed to cover principal
payments due to or for the benefit 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.
Funding Period..................... The Prospectus Supplement relating to a
Series of Certificates 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-FUNDING AMOUNT') will be held
in a trust account established with the
Trustee for the benefit of
Certificateholders of such Series (the
'PRE-FUNDING ACCOUNT') pending the
transfer of additional Principal
Receivables to the Trust or pending the
reduction of the Invested Amounts of
other Series issued by the Trust. The
related Supplement will specify the
initial Invested Amount on the Series
Closing Date 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 Principal
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 or
Reinvestment Event as specified 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. In
the event that 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
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<PAGE>
Series in a manner and at such time as
set forth in the related Prospectus
Supplement.
If so specified in the related Prospectus
Supplement, monies in the Pre-Funding
Account with respect to any Series 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
investment earnings and any applicable
payment under any such investment
arrangement will be applied to pay
interest on the Certificates of such
Series.
Credit Enhancement................. The credit enhancement (the 'CREDIT
ENHANCEMENT') with respect to a Series
offered hereby may include a cash
collateral guaranty, cash collateral
account, collateral interest, letter of
credit, 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 or to a Series by subordination
provisions which require that
distributions of principal or interest be
made with respect to the Certificates of
such Class or Classes or such Series
before distributions are made to one or
more other Classes of such Series or to
another Series (if the Supplement for
such Series so provides).
The type, characteristics and amount of the
Credit Enhancement with respect to any
Series will be determined based on
several factors, including the
characteristics of the Receivables and
Accounts underlying or comprising the
Trust Assets as of the Series Closing
Date with respect thereto, and will be
established on the basis of requirements
of each applicable Rating Agency. The
terms of the Series Enhancement with
respect to any Series offered hereby will
be described in the related Prospectus
Supplement. If so specified in the
Prospectus Supplement for a Series, the
level of Credit Enhancement for such
Series may be reduced or increased if
such reduction or increase satisfies the
Rating Agency Condition. See both 'The
Pooling and Servicing Agreement
Generally--Credit Enhancement' and 'Risk
Factors--Limited Nature of Rating' for a
more detailed discussion of the
foregoing.
Servicing.......................... TRS, in its capacity as Servicer under the
Pooling and Servicing Agreement, will be
the initial Servicer for the Trust. The
Servicer will be responsible for
servicing, managing and making
collections on the Receivables. Subject
to certain exceptions described under
'The Pooling and Servicing Agreement
Generally--Deposits in Collection
Account' and '--Allocations,' which
currently permit the Servicer to make
deposits on a monthly basis, the Servicer
will deposit any collections on the
Receivables in a Monthly Period into the
Collection Account within two business
days of the Date of Processing (defined
below) to the extent such collections are
allocable to the Certificateholders'
Interest of any Series and are required
to be deposited into an account for the
benefit of, or distributed to, the
Certificateholders of any Series or the
provider of any Series Enhancement. 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
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<PAGE>
in the Supplement for a Series and
reflected in the Prospectus Supplement
for such Series. On the earlier of (a)
the second business day following the
Date of Processing and (b) the day on
which the Servicer deposits any
collections into the Collection Account,
subject to certain exceptions described
herein, the Servicer will pay to the
holders of the Transferor Certificates
their allocable portion of any
collections then held by the Servicer.
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). 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.
In certain limited circumstances, TRS may
resign or be removed as Servicer, in
which event the Trustee or, so long as it
meets certain eligibility standards set
forth in the Pooling and Servicing
Agreement, a third-party servicer may be
appointed as the successor Servicer. TRS
is permitted to delegate all or part of
its duties as Servicer to any of its
affiliates or, subject to certain
conditions, to third-party service
providers, but any such delegation will
not relieve the Servicer of its liability
and responsibility with respect to such
duties under the Pooling and Servicing
Agreement or any Supplement. In addition,
TRS may assign all or part of its
obligations and duties as Servicer under
the Pooling and Servicing Agreement if
such assignment satisfies the Rating
Agency Condition. The Servicer will
receive servicing fees payable with
respect to each Series offered hereby as
servicing compensation from the Trust.
For discussion of the manner in which
such fees will be allocated and
calculated, see 'Description of the
Certificates--Servicing Compensation and
Payment of Expenses.'
Income Tax Withholding............. Interest on the Certificates held by
non-U.S. persons will be subject to
United States withholding tax unless the
holder complies with applicable IRS
identification requirements. Interest on
the Certificates held by U.S. persons
will be subject to backup withholding
unless the holder complies with
applicable IRS identification
requirements.
Tax Status......................... Except to the extent otherwise provided in
the related Prospectus Supplement, in the
opinion of special tax counsel for the
Transferors and the Trust, the
Certificates of each Series offered
hereby are properly characterized as debt
for federal income tax purposes. Each
Certificateholder, by acceptance of a
Certificate of such a Series, will agree
to treat the Certificates of such Series
as debt for federal, state and local
income and franchise tax
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<PAGE>
purposes. See 'Tax Matters' for
additional information concerning the
application of federal income tax laws.
ERISA Considerations............... See 'ERISA Considerations' herein and
'Summary of Series Terms--ERISA
Considerations' in the applicable
Prospectus Supplement.
Certificate Rating................. It will be a condition to the issuance of
each Series of Certificates or Class
thereof offered pursuant to this
Prospectus and the related Prospectus
Supplement that they be rated in one of
the four highest applicable rating
categories by at least one nationally
recognized statistical rating
organization selected by the Transferors,
as specified in the applicable Supplement
(each rating agency rating any Series, a
'RATING AGENCY'). The rating or ratings
applicable to the Certificates of each
such Series or Class thereof will be set
forth in the related Prospectus
Supplement. A security rating should be
evaluated independently of similar
ratings of different types of securities.
A rating is not a recommendation to buy,
sell or hold securities and may be
subject to revision or withdrawal at any
time by the assigning Rating Agency. Each
rating should be evaluated independently
of any other rating. See 'Risk
Factors--Limited Nature of Rating.'
Listing............................ If so specified in the Prospectus
Supplement relating to a Series,
application will be made to list the
Certificates of such Series, or all or a
portion of any Class thereof, on the
Luxembourg Stock Exchange or any other
specified exchange.
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<PAGE>
RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Certificates.
Limited Liquidity. It is anticipated that, to the extent permitted, the
underwriters of any Series of Certificates offered hereby will make a market in
such Certificates, but in no event will any such underwriter be under an
obligation to do so. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will provide
Certificateholders of any Series offered hereby with liquidity of investment or
that it will continue for the life of such Certificates.
Potential Priority of Certain Liens. Centurion represents and warrants in
the Credco Purchase Agreement that the transfer of Receivables pursuant thereto
to Credco is a valid sale and assignment of such Receivables from Centurion to
Credco. Centurion and Credco have filed or will file appropriate Uniform
Commercial Code ('UCC') financing statements to evidence this sale and perfect
Credco's right, title and interest in such Receivables. However, if a
conservator or receiver for Centurion is appointed and such conservator or
receiver argues that the transaction between Centurion and Credco should be
recharacterized as a pledge of such receivables to secure a borrowing by
Centurion, rather than an absolute transfer, delays in payments of collections
of Receivables to Credco and, therefore, to RFC II, and possible reductions in
the amounts of such payments could result. Moreover, if the transfer of
Receivables by Centurion to Credco pursuant to the Credco Purchase Agreement is
deemed to create a security interest therein under applicable law, (i) a tax or
governmental lien or other nonconsensual lien on property of Centurion arising
before Receivables come into existence may have priority over Credco's (and,
therefore, RFC II's) interest in such Receivables and (ii) if the Federal
Deposit Insurance Corporation ('FDIC') were appointed receiver or conservator of
Centurion, the receiver's or conservator's administrative expenses may also have
priority over Credco's, and, therefore, RFC II's, ownership or security interest
in the Receivables transferred by Centurion to Credco and by Credco to RFC II.
Credco represents and warrants in the RFC II Purchase Agreement that the
transfer of all Receivables pursuant thereto to RFC II is a valid sale and
assignment of such Receivables from Credco to RFC II. Credco and RFC II will
file appropriate UCC financing statements to evidence this sale and perfect RFC
II's right, title and interest in such Receivables. While Credco and RFC II will
treat the transactions described in the RFC II Purchase Agreement as sales of
the Receivables to RFC II under applicable state law and will take all actions
that are required under applicable state law to perfect RFC II's ownership
interest in the Receivables, if Credco were to become a debtor in a bankruptcy
case or a creditor or a bankruptcy trustee of Credco or Credco itself as a
debtor-in-possession were to take the position that the sale of Receivables to
RFC II should be recharacterized as a pledge of such Receivables to secure a
borrowing of Credco, then delays in payments of collections of Receivables to
RFC II (and therefore to the Trust and the Certificateholders) and possible
reductions in the amount of such payments could occur. Moreover, if the transfer
of Receivables by Credco to RFC II is deemed to create a security interest
therein under applicable state law, a tax or governmental lien or other
nonconsensual lien on property of Credco arising before Receivables come into
existence may have priority over Credco's (and, therefore, the Trust's) interest
in such Receivables. These issues are discussed in more detail under 'Certain
Legal Aspects of the Receivables--Transfer of Receivables.'
Each Transferor 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 such Receivables. Each Transferor will file appropriate UCC financing
statements to evidence this sale and perfect the Trust's right, title and
interest in such Receivables. If the transfer of the Receivables to the Trust
were deemed to create a security interest therein under the UCC, a tax or
governmental lien or other nonconsensual lien on property of a Transferor
arising before a Receivable is transferred to the Trust may have priority over
the Trust's interest in such Receivable. If (i) RFC II were to become a debtor
in a bankruptcy case and a bankruptcy trustee or a creditor of RFC II or RFC II
as a debtor-in-possession were to take the position that the transfer of the
Receivables from RFC II to the Trust should be characterized as a pledge of such
Receivables or (ii) if the FDIC were appointed receiver or conservator of
Centurion, then delays in distributions on the Certificates and possible
reductions in such distributions could occur and, in the case of clause (ii),
the receiver's or conservator's
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<PAGE>
administrative expenses may have priority over Centurion's (and, therefore, the
Trust's) security interest in the Receivables transferred by Centurion to the
Trust. See 'Certain Legal Aspects of the Receivables--Certain Matters Relating
to Insolvency and Receivership.'
Certain Matters Relating to the Insolvency or Receivership of a Transferor
or Other Holder of the Original Transferor Certificate. To the extent Centurion
has granted or will grant a security interest in the Receivables to Credco or
the Trust, and such security interest is validly perfected before the occurrence
of an Insolvency Event (defined herein) relating to Centurion and was not or
will not be taken in contemplation of insolvency or with the intent to hinder,
delay or defraud Centurion or its creditors, the Federal Deposit Insurance Act
('FDIA'), as amended, including as amended by the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended ('FIRREA'), provides that such
security interest should not be subject to avoidance by the FDIC as receiver or
conservator for Centurion. Positions taken by the FDIC staff prior to the
passage of 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 related Receivables. If, however, the FDIC were to assert a
contrary position, such as requiring Credco or the Trustee to establish its
right to those payments by submitting to and completing the administrative
claims procedure under the FDIA, or the conservator or receiver were to request
a stay of proceedings with respect to Centurion as provided under the FDIA,
delays in payments on the Certificates and possible reductions in the amount of
those payments could occur. See 'Certain Legal Aspects of the
Receivables--Transfer of Receivables' and '--Certain Matters Relating to
Insolvency and Receivership.'
RFC II is a separate, limited purpose subsidiary of TRS, 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 Title 11 of the United States Code (the 'BANKRUPTCY CODE')
without the prior unanimous consent of all of its directors. See 'RFC II,
Credco, Centurion, AEDC and TRS--RFC II' for more information regarding RFC II.
If RFC II were to become a debtor in a bankruptcy case and a creditor or
bankruptcy trustee of RFC II or RFC II itself as a debtor-in-possession were to
take the position that the transfer of Receivables by RFC II to the Trust should
be recharacterized as a pledge of such Receivables to secure a borrowing of RFC
II, then delays in payments of collections of such Receivables to the Trust (and
therefore to the Certificateholders) could occur or (should the court rule in
favor of any such creditor or trustee, or RFC II) reductions in the amount of
such payments could result.
The Pooling and Servicing Agreement provides that upon the occurrence of an
Insolvency Event (as defined herein) with respect to any Transferor or other
holder of the Original Transferor Certificate, a Pay-Out Event or Reinvestment
Event would occur with respect to each Series, and pursuant to the terms of the
Pooling and Servicing Agreement, new Principal Receivables would not be
transferred by the Transferors to the Trust, unless the bankruptcy trustee,
receiver or conservator for any Transferor or other holder of the Original
Transferor Certificate or such Transferor or such holder of the Original
Transferor Certificate as a debtor-in-possession instructs otherwise. In
addition, if TRS were to become a debtor in a bankruptcy case, and a creditor,
bankruptcy trustee or TRS as a debtor-in-possession were to request a bankruptcy
court to order that TRS be substantively consolidated with RFC II, delays in,
and reductions in the amounts of, distributions on the Certificates could occur.
Following the occurrence of an Insolvency Event with respect to any Transferor
or other holder of the Original Transferor Certificate, the Trustee would sell
the Receivables (unless Holders (as defined herein) of Certificates evidencing
undivided interests aggregating more than 50% of the aggregate unpaid principal
amount of each Series (or with respect to any Series with two or more Classes,
50% of the unpaid principal amount of each Class), each Transferor (or other
holder of the Original Transferor Certificate) not 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, and provided that a bankruptcy trustee, conservator or
receiver for such Transferor or holder or such Transferor or such holder of the
Original Transferor Certificate as a debtor-in-possession does not order a sale
despite such instructions not to sell), thereby causing early termination of the
Trust. The entire proceeds of such sale or liquidation will be treated as
collections of Receivables and allocated accordingly among Series. In such
event, the portion of the proceeds of such sale allocable to such
Certificateholders of a related Series and the proceeds of any collections on
the Receivables in the Collection Account allocated to the Certificateholders'
Interest of such Series may be
20
<PAGE>
insufficient to pay such Certificateholders in full. 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 exists, the bankruptcy trustee, the conservator or the receiver
for such Transferor or holder of the Original Transferor Certificate or such
Transferor or such holder of the Original Transferor Certificate 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 Reinvestment Period. A receiver or conservator of Centurion may also
disaffirm or repudiate Centurion's obligations, under the Pooling and Servicing
Agreement, to accept reassignment of Receivables from the Trust under certain
conditions. See 'Certain Legal Aspects of the Receivables--Certain Matters
Relating to Insolvency and Receivership.'
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.
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 Standard and Poor's Ratings Services ('S&P') and P-1 by Moody's Investors
Service, Inc. ('MOODY'S') (or such other rating below A-1 or P-1, as the case
may be, which is acceptable to such Rating Agency), which is currently the case,
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, liquidation, 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- or insolvency-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.
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Potential Effects of Consumer Protection Laws. The Accounts and
Receivables are subject to numerous federal and state consumer protection laws
which impose requirements on the solicitation, making, enforcement and
collection of consumer loans. Such laws, as well as any new laws or rulings
which may be adopted (including, but not limited to, federal or state interest
rate caps on credit cards), may adversely affect the Servicer's ability to
collect on the Receivables or Centurion's ability to maintain the required level
of periodic finance charges, annual membership fees and other fees. In addition,
failure by the Servicer to comply with such requirements could adversely affect
the Servicer's ability to enforce the Accounts or Receivables.
Pursuant to the Pooling and Servicing Agreement, Centurion will make
certain representations and warranties relating to the validity and
enforceability of the Accounts and each of the Transferors will make certain
representations and warranties relating to the validity and enforceability of
the Receivables, and pursuant to the RFC II Purchase Agreement, Credco will make
similar representations and warranties with respect to the Receivables. However,
it is not anticipated that the Trustee will make any examination of the
Receivables or the records relating thereto for the purpose of establishing the
presence or absence of defects, compliance with such representations and
warranties, or for any other purpose. The sole remedy if any such representation
or warranty is not complied with and such noncompliance continues beyond the
applicable cure period, is that the Receivables affected thereby will be
reassigned to the Transferors (in the case of RFC II, for reassignment, in turn,
to Credco pursuant to the RFC II Purchase Agreement) or assigned to the
Servicer, as the case may be. In addition, in the event of the breach of certain
representations and warranties, the Transferors may be obligated to accept the
reassignment of the entire Trust portfolio, in which case a Pay-Out Event would
occur, causing Certificateholders to receive principal payments on their
Certificates sooner than anticipated and thereby reducing the anticipated yield
on such Certificates. For more information regarding the foregoing, see 'The
Pooling and Servicing Agreement Generally--Representations and Warranties' and
'--Servicer Covenants' and 'Certain Legal Aspects of the Receivables--Consumer
Protection Laws.'
Application of federal and state bankruptcy and debtor relief laws would
affect the interests of Certificateholders in the Receivables if such laws
result in any Receivables being written off as uncollectible when there are no
funds available pursuant to any applicable Credit Enhancement or other sources.
For more information regarding the foregoing, see 'The Pooling and Servicing
Agreement Generally--Defaulted Receivables; Rebates and Fraudulent Charges.'
Potential Effect of Non-Compliance with CEBA. The Competitive Equality
Banking Act of 1987 ('CEBA') contains provisions which limit the ability of
nonbanking companies, such as TRS, the owner of Centurion, to own banks.
However, the legislation permits any nonbanking company which owned a bank on
March 5, 1987 to retain control of such bank. TRS meets this prerequisite. CEBA
provides that if TRS or Centurion fails to comply with certain statutory
restrictions, TRS will be required to divest control of Centurion or to limit
its activities significantly. In addition, future federal or state legislation,
regulation or interpretation of federal or state legislation or regulation could
adversely affect the business of Centurion or the relationship of TRS with
Centurion. The only restricition in CEBA that applies to AEDC is the prohibition
of overdrafts incurred by AEDC on behalf of an affiliate.
Potential Effect of Legislation. Congress and the states may enact new
laws and amendments to existing laws to regulate further the consumer credit
industry or to reduce finance charges or other fees or charges applicable to
consumer credit accounts. The potential effect of any such legislation could be
to reduce the yield on the Accounts. If such yield is reduced, a Pay-Out Event
or Reinvestment Event could occur, and an Early Amortization Period or Early
Accumulation Period may commence. See 'Description of the Certificates--Pay-Out
Events and Reinvestment Events' for discussion of what may give rise to a
Pay-Out Event or a Reinvestment Event and what would happen if, for a particular
Series, an Early Amortization Period or an Early Accumulation Period were to
commence.
Recent Litigation. Since October 1991, a number of lawsuits and
administrative actions have been filed in several states against out-of-state
banks (principally federally-insured state-chartered banks and federally-insured
national banks) and other entities that issue credit cards. These actions
challenge a portion or all of various fees and charges (such as late fees,
over-credit-limit fees, returned payment check fees and annual membership fees)
assessed against residents of the states in which such suits were filed, based
on restrictions or prohibitions under
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such states' laws alleged to be applicable to the out-of-state credit card
issuers. There can be no assurance that an Account Owner will not be named as a
defendant in similar lawsuits or administrative actions. In addition, in October
1991, a federal district court upheld a Massachusetts law that bars credit card
issuers from assessing late payment fees on credit card accounts of residents of
that state in a proceeding in which Centurion was not a party. However, in
August 1992 the court of appeals reversed the federal district court on the
grounds that Massachusetts law was preempted by applicable federal law. In
January 1993, the United States Supreme Court declined to review the decision of
the court of appeals. In December 1994, the Superior Court of Pennsylvania
reinstated a class-action law suit, stating that not all of Pennsylvania's
consumer protection laws which purport to prohibit credit card fees and
contingent default charges have been preempted by federal law. This case has
been appealed to the Pennsylvania Supreme Court. In December 1995, a lawsuit was
filed against 'American Express Company Inc.' and other defendants not
affiliated with the Transferors in the Superior Court of New Jersey, Passaic
County. The case, which was removed to federal court in February 1996, is an
action in which the plaintiffs seek to recover from the defendants certain
credit card fees that the plaintiffs allege were improperly charged by the
defendants under state law. Further proceedings in the case have been stayed
pursuant to a stipulation among the parties thereto. The Supreme Courts of
California, Colorado and New Jersey have also recently handed down decisions in
similar actions. The California and Colorado Supreme Courts opined that federal
law governs late fees and found for the defendant credit card issuers, while the
New Jersey Supreme Court found that late payment fees are not interest and that,
therefore, state law is not preempted by federal law with respect to such fees.
On January 19, 1996, the United States Supreme Court accepted an appeal from the
California Supreme Court's decision, which found that the charge in question was
governed by federal law and was, therefore, proper. Such actions, and similar
actions which may be brought in other states as a result of such actions, if
resolved adversely to credit card issuers, or reversals of favorable judicial
decisions, could have the effect of limiting certain charges, other than
periodic finance charges, that could be assessed on credit card accounts of
residents of such states and could require credit card issuers such as Centurion
to pay refunds and civil penalties with respect to charges previously imposed on
account holders in such states. A potential effect of any such litigation that
may involve an Account Owner, if successful, would be to reduce the amount of
late charges and other ancillary fees and affect the collectibility of certain
Receivables and as a result may affect the amount of collections available for a
Series or Group of Series. If such a reduction occurs, a Pay-Out Event or
Reinvestment Event may occur. See 'Description of the Certificates--Pay-Out
Events and Reinvestment Events.'
Payments and Maturity; Dependency on Account Holder Repayments. The
Receivables may be paid at any time and there is no assurance that there will be
additional Receivables created in the Accounts, that Receivables will be added
to the Trust from Additional Accounts or Aggregate Additional Accounts
designated to the Trust, or that any particular pattern of Account holder
repayments will occur. The actual rate of accumulation of principal with respect
to a Series in a Principal Funding Account during a Controlled Accumulation
Period or Early Accumulation Period and the rate of distribution of principal
with respect to a Series during a Controlled Amortization Period or Early
Amortization Period will depend upon, among other factors, the rate of Account
holder repayments, the timing of the receipt of repayments and the rate of
default by Account holders. As a result, no assurance can be given that the
Invested Amount of a Series will be paid on the Expected Final Payment Date, if
any, with respect to a Series or that payments of principal during the
Controlled Amortization Period with respect to a Series will equal the
Controlled Amortization Amount, if any, with respect to such Series or will
follow any particular pattern. Account holder monthly payment rates with respect
to the Accounts are dependent upon a variety of factors, including seasonal
purchasing and payment habits of cardholders, the availability of other sources
of credit, general economic conditions, tax laws and the terms of the Accounts
(which terms are subject to change by Centurion). Increased convenience use
(where Account holders pay their Account balances in full on or prior to the due
date and thus avoid all finance charges) would decrease the effective yield on
the Accounts and could result in a Pay-Out Event or Reinvestment Event with
respect to one or more Series and the commencement of an Early Amortization
Period or Early Accumulation Period with respect to one or more Series, as well
as a decrease in protection to Certificateholders against defaults under the
Accounts. No assurance can be given as to the Account holder payment rates that
will actually occur in any future period.
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A decline in the amount of Receivables in the Accounts for any reason
(including the decision by Account holders to use competing sources of credit,
an economic downturn or other factors) could result in the occurrence of a
Pay-Out Event or a Reinvestment Event with respect to a Series and the
commencement of an Early Amortization Period or Early Accumulation Period with
respect to such Series. The Pooling and Servicing Agreement provides that the
Transferors will be required (subject to certain conditions) to designate
Additional Accounts, the receivables of which will be added to the Trust in the
event that the amount of the Principal Receivables is not maintained at the
Required Minimum Principal Balance or if the Transferor Amount is less than the
Required Transferor Amount. If Additional Accounts are not designated by the
Transferors when required, a Pay-Out Event or Reinvestment Event may occur and
result in the commencement of an Early Amortization Period or Early Accumulation
Period.
In addition, if a Series utilizes a Pre-Funding Account (see 'The Pooling
and Servicing Agreement Generally--Funding Period' for a description of the
material characteristics of a Pre-Funding Account), the Certificateholders of
such Series may receive principal payments on their Certificates sooner than
anticipated, thereby reducing the anticipated yield on such Certificates, if
amounts on deposit in the Pre-Funding Account are not fully invested (to the
extent of the Invested Amount for such Series) in Receivables prior to the
termination of the Funding Period.
Social, Legal and Economic Factors. Changes in account use, payment
patterns and the rate of defaults by Account holders result from a variety of
social, legal and economic factors. Economic factors include the rate of
inflation, unemployment levels, tax law changes and relative interest rates. The
use of incentive programs (e.g., gift awards for account usage) may also affect
account use. The Transferors are unable to determine and have no basis to
predict whether or to what extent social, legal or economic factors will affect
future account use or repayment patterns.
Competition in the Credit Card Industry. Centurion encounters substantial
and increasingly intense competition worldwide with respect to the credit card
businesses from cards issued by banks under revolving credit plans, particularly
the VISA* card issued by members of VISA International Service Association, Inc.
('VISA') and MasterCard* issued by members of MasterCard International,
Incorporated ('MASTERCARD'); businesses that issue their own card or otherwise
extend credit to their customers; the Discover Card, a revolving credit card;
and, to a lesser extent, charge cards such as Diners Club. Most U.S. banks
issuing credit cards under revolving credit plans charge annual fees in addition
to interest charges where permitted by state law. The issuer of the Discover
Card in most states, as well as some issuers of VISA cards and MasterCards,
charge no annual fees. Certain member institutions of VISA and MasterCard also
offer mileage credit to card holders under airline frequent flyer programs, as
well as premium cards with enhanced services or lines of credit. Centurion also
encounters competition worldwide with respect to the number and quality of
service establishments which accept the Optima Card, the American Express Card,
the Gold Card and the Platinum Card. In addition, benefits provided under
certain Accounts could be modified or terminated in the future by Centurion
which could make the revolving credit products offered by Centurion less
attractive to consumers. If consumers choose to use competing sources of payment
or credit, the rate at which new Receivables are generated in Accounts may be
reduced and certain purchase and payment patterns with respect to Receivables
may be affected. The Trust will be dependent upon the continued ability of
Centurion to generate new Receivables. If the rate at which new Receivables are
generated declines significantly and Centurion does not designate Additional
Accounts, a Pay-Out Event or Reinvestment Event could occur, in which event an
Early Amortization Period or Early Accumulation Period would commence.
Ability of an Account Owner to Change Terms of the Accounts; Decrease in
Finance Charges. Pursuant to the Pooling and Servicing Agreement, the
Transferors will be transferring the Receivables arising in the Accounts, not
the Accounts themselves, to the Trust. Each Account Owner will have the right to
determine the annual percentage rates and the fees which will be applicable from
time to time to the Accounts owned by it, to alter the minimum monthly payment
required under the Accounts owned by it and to change various other terms,
- ------------------
* VISA(Registered) and MasterCard(Registered) are federally registered
servicemarks of VISA U.S.A., Inc. and MasterCard International Inc.,
respectively.
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as well as the origination, underwriting and collection practices, relating to
the Accounts owned by it. A decrease in the annual percentage rates or a
reduction in fees would decrease the Portfolio Yield (defined below) and could
result in the occurrence of a Pay-Out Event or Reinvestment Event and the
commencement of an Early Amortization Period or Early Accumulation Period. An
alteration of payment terms may result in fewer payments on Receivables being
made in any month. In the Pooling and Servicing Agreement or in a Receivables
Purchase Agreement to which it is a party, each Account Owner agrees or will
agree that, unless required by law or unless, in its good faith judgment, it
deems it necessary to maintain on a competitive basis its credit or charge
business or any program operated in connection with its credit or charge
business, it will not take any action which would 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 any similar test and agrees or will
agree that, unless required by law, it will not take any action that would have
the effect of reducing the Portfolio Yield to less than the highest Average Rate
(defined below) for any Group. 'PORTFOLIO YIELD' means, with respect to the
Trust as a whole and, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction (a) the numerator of which is the aggregate
of the sum of the Series Allocable Finance Charge Collections (as defined
herein) for all Series during the immediately preceding Monthly Period
calculated on a cash basis after subtracting therefrom the Series Allocable
Defaulted Amount (as defined herein) for all Series for such Monthly Period and
(b) the denominator of which is the total amount of Principal Receivables as of
the last day of such immediately preceding Monthly Period. Unless otherwise
provided in the Prospectus Supplement with respect to any Series, 'AVERAGE RATE'
means, with respect to any Group, the percentage equivalent of a decimal equal
to the sum of the amounts for each outstanding Series (or each Class within a
Series consisting of more than one Class) within such Group obtained by
multiplying (a) the certificate rate for such Series or Class (adjusted to take
into account any payments received or payable pursuant to any interest rate
agreements) and (b) a fraction, the numerator of which is the aggregate unpaid
principal amount of the Certificates of such Series or Class and the denominator
of which is the aggregate unpaid principal amount of all Certificates within
such Group. In servicing the Accounts, each of TRS and any successor servicer
will be required to exercise the same care and apply the same policies that it
exercises in servicing other comparable accounts. Except as specified above,
there are no restrictions specified in the Pooling and Servicing Agreement on
the ability of an Account Owner to change the terms of its Accounts.
There can be no assurances that changes in applicable law, changes in the
marketplace or prudent business practice might not result in a determination by
an Account Owner to decrease customer finance charges or otherwise take actions
which would change other Account terms. Under certain circumstances, an Account
Owner may be required from time to time to designate Receivables from time to
time existing in Additional Accounts or Participation Interests for inclusion in
the Trust. However, such Additional Accounts or Participation Interests may not
be of the same credit quality or have the same characteristics as the Accounts,
the Receivables of which have been conveyed to the Trust. See 'The Pooling and
Servicing Agreement Generally--Additions of Accounts or Participation Interests'
for a more detailed discussion of the circumstances and manner in which
Additional Accounts may be designated for the Trust.
Effect of Subordination. Certain Series may have one or more Classes of
Certificates ('SUBORDINATED CERTIFICATES'), payments of principal in respect of
which will not commence until after the final principal payment shall have been
made with respect to one or more other Classes of Certificates ('SENIOR
CERTIFICATES') in such Series. In addition, if so specified in the related
Prospectus Supplement, if collections of finance charges allocable to the
Certificates of a Series are insufficient to cover required amounts due with
respect to the Senior Certificates of such Series, the Invested Amount with
respect to the Subordinated Certificates may be reduced, resulting in a
reduction of the portion of collections of finance charges allocable to the
Subordinated Certificates in future periods and a possible delay or reduction in
principal and interest payments on the Subordinated Certificates. Moreover, if
so specified in the related Prospectus Supplement, in the event of a sale of
Receivables in the Trust due to the insolvency of RFC II, the appointment of a
conservator or receiver for Centurion or a bankruptcy trustee or receiver for
Credco, or due to the inability of the Trustee to act as or find a successor
Servicer after a Servicer Default, the portion of the net proceeds of such sale
allocable to pay principal to the Certificates of a Series will be used first to
pay amounts due to the Senior Certificateholders and any remainder will be used
to pay amounts due to the Subordinated Certificateholders.
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Basis Risk. The Accounts generally have finance charges set (generally on
a monthly basis) at a variable rate above the prime rate as published in The
Wall Street Journal (the 'PRIME RATE') or other specified index. Any Class of
Certificates offered hereby may bear interest at a fixed rate or a floating rate
based on a different floating rate index. If there is a decline in the Prime
Rate or such other specified index, the amount of collections of Finance Charge
Receivables on the Accounts may be reduced, whereas the amounts payable as
interest with respect to the Certificates and other amounts required to be
funded out of collections of Finance Charge Receivables may not be similarly
reduced.
Affinity and Co-Branded Programs. In the future, Additional Accounts that
will be originated under affinity or co-branded programs between a Transferor
and an unaffiliated entity may be designated to the Trust. The terms of such
programs may affect the rate at which new Receivables are generated in the
Accounts.
Limited Nature of Rating. Any rating assigned to the Certificates of a
Series or a Class by a Rating Agency will reflect such Rating Agency's
assessment of the likelihood that Certificateholders of such Series or Class
will receive the payments of interest and principal required to be made under
the Pooling and Servicing Agreement and the related Supplement and will be based
primarily on the value of the Receivables in the Trust. Any such rating will
therefore generally address credit risk and will not, unless otherwise specified
in the related Prospectus Supplement with respect to any Class or Series offered
hereby, address the likelihood that the principal of, or interest on, any
Certificates of such Class or Series will be prepaid, paid on a scheduled date
or paid on any particular date before the applicable Series Termination Date. In
addition, any such rating will not address the possibility of the occurrence of
a Pay-Out Event or Reinvestment Event with respect to such Class or Series or
the possibility of the imposition of United States withholding tax with respect
to non-U.S. Certificateholders. Further, the available amount of any Credit
Enhancement with respect to any such Series or Class will be limited and will be
subject to reduction from time to time as described in the related Prospectus
Supplement. In addition, the rating of any Series or Class may be dependent upon
the rating of any provider of Series Enhancement for such Series or Class. The
rating of the Certificates of a Class or Series will not be a recommendation to
purchase, hold or sell such Certificates, and such rating will not comment as to
the marketability of such Certificates, any market price or suitability for a
particular investor. There is no assurance that any rating will remain for any
given period of time or that any rating will not be lowered or withdrawn
entirely by a Rating Agency if in such Rating Agency's judgment circumstances so
warrant.
Effect of the Issuance of New Series. The Trust, as a master trust, is
expected to issue new Series from time to time. While the terms of any Series
will be specified in a Supplement, the provisions of a Supplement and,
therefore, the terms of any new Series, will not be subject to the prior review
or consent of holders of the Certificates of any previously issued Series. Such
terms may include methods for determining applicable investor percentages and
allocating collections, provisions creating different or additional security or
other Series Enhancements, provisions subordinating such Series to other Series
or subordinating other Series (if the Supplement relating to such Series so
permits) to such Series, and any other amendment or supplement to the Pooling
and Servicing Agreement which is made applicable only to such Series. The
obligation of the Trustee to issue any new Series is subject to the following
conditions, among others: (a) such issuance 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') and (b) each
Transferor shall have delivered to the Trustee a certificate of an authorized
officer to the effect that, in the reasonable belief of such Transferor, such
issuance will not (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'). There can be no assurance, however, that the issuance of any
other Series, including any Series issued from time to time hereafter, might not
have an impact on the timing or amount of payments received by a
Certificateholder. In addition, the Supplements relating to Series which are
part of a Group as described herein may provide that collections of Receivables
allocable to such Series will be reallocated among all Series in the Group.
Consequently, the issuance of new Series in a Group may have the effect of
reducing the amount of collections of Receivables which are reallocated to the
Certificates of existing Series in such Group. For example, in a Reallocation
Group, which will provide for the reallocation of collections of Finance Charge
Receivables
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allocable to a Series among all Series in such Group, an additional Series which
is issued with a larger claim with respect to monthly interest than that of
previously issued Series in such Group (due to a higher certificate rate) will
receive a proportionately larger reallocation of collections of Finance Charge
Receivables. Such issuance will reduce the amount of collections of Finance
Charge Receivables which are reallocated to the existing Series in such Group.
Furthermore, there can be no assurance that, for any Series in a Group, the
Trust will issue any other Series in such Group. Accordingly, the anticipated
benefits of sharing or reallocation of collections of Receivables may not be
realized. See 'The Pooling and Servicing Agreement Generally--Groups of Series.'
Effect of Addition of Trust Assets on Credit Quality. The Transferors may
from time to time designate Participation Interests to be conveyed to the Trust
or may designate Additional Accounts, the Receivables in which will be conveyed
to the Trust. The primary purpose for such designation would be to increase,
from time to time, the aggregate amount of Receivables held by the Trust,
thereby permitting the issuance of new Series from time to time. In addition,
under certain circumstances, the Transferors will be obligated to designate
Aggregate Addition Accounts or, at the Transferors' option, Participation
Interests for inclusion in the Trust. '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. Aggregate Addition Accounts may be subject to
different eligibility criteria than the Accounts, the Receivables of which are
currently included in the Trust, and may include accounts originated,
underwritten or collected using criteria different from those which were applied
to the Accounts, the Receivables of which are currently included in the Trust,
because such accounts were originated at a later date or were part of a
portfolio of revolving credit accounts or other charge or credit accounts which
were not part of the Accounts or which were acquired from another revolving
credit issuer or other credit issuer, respectively. Moreover, Aggregate Addition
Accounts may not be accounts of the same type previously included in the Trust.
Consequently, there can be no assurance that such Aggregate Addition Accounts
will be of the same credit quality as the Accounts, the Receivables of which are
currently included in the Trust. In addition, such Aggregate Addition Accounts
may consist of revolving credit accounts or other charge or credit accounts
which have different terms than the Accounts, the Receivables of which are
currently included in the Trust, including, in the case of revolving credit
accounts, lower periodic finance charges, which may have the effect of reducing
the Portfolio Yield. The designation of Aggregate Addition 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) such
Aggregate Addition Accounts are Eligible Accounts, (b) the designation of such
Aggregate Addition Accounts will satisfy the Rating Agency Condition and (c)
each Transferor shall have delivered to the Trustee a certificate of an
authorized officer to the effect that, in the reasonable belief of such
Transferor, such designation will not have an Adverse Effect. The Transferors
expect to convey from time to time to the Trust the Receivables arising in
certain Aggregate Addition Accounts in accordance with the provisions of the
Pooling and Servicing Agreement.
The Transferors may also from time to time, at their sole discretion,
designate Eligible Accounts to be included as Accounts ('NEW 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 each transfer of such Receivables. If such opinion of
counsel with respect to Receivables in any New Accounts is not so received, all
Receivables arising in the New Accounts to which such failure relates will be
removed from the Trust. The designation of New Accounts may be made at random or
in accordance with the application of specific criteria determined from time to
time at the discretion of the Transferors, but will be subject to the
satisfaction of certain conditions,
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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.'
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 Selection Date, are collectively referred to herein as an 'AGGREGATE
ADDITION.'
'ELIGIBLE ACCOUNT' means a credit or charge account 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 in existence and maintained
by an Account Owner or such successors or assignees, is payable in United States
dollars, has not been sold or pledged to any other party except for any other
Account Owner that has entered into a Receivables Purchase Agreement, a
Transferor or an Additional Transferor, does not have receivables which have
been sold or pledged to any other party other than Credco pursuant to the Credco
Purchase Agreement or a Transferor, except as provided below has an Account
holder who has not been confirmed by the Servicer in its computer files as being
involved in any voluntary or involuntary bankruptcy proceeding, has an Account
holder who has provided as his or her most recent billing address an address
located in the United States, its territories or possessions or Canada or a
United States military address (provided, however, that, at any time, up to 3%
of the Accounts may have Account holders who have provided as their most recent
billing addresses, addresses outside of such jurisdictions), has not been
identified as an account with respect to which the related card has been lost or
stolen (if such account is a credit card or charge card account), 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 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.
Allocations. To the extent provided in any Supplement, or any amendment to
the Pooling and Servicing Agreement, portions of the Receivables or
Participation Interests conveyed to the Trust and collections received with
respect thereto may be allocated to one or more Series or Groups which may
separately benefit from different types and methods of Series Enhancement as
long as the Rating Agency Condition shall have been satisfied with respect to
such allocation and the Servicer shall have delivered an officer's certificate
to the Trustee to the effect that the Servicer reasonably believes such
allocation will not have an Adverse Effect.
USE OF PROCEEDS
The net proceeds from the sale of the 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
The Trust will be formed pursuant to the Pooling and Servicing Agreement.
The Trust will not engage in any business activity other than acquiring and
holding the Receivables and the other Trust Assets and proceeds therefrom,
issuing Certificates, the Original Transferor Certificate and any Supplemental
Certificates and making payments thereon and on any Series Enhancements and
related activities. As a consequence, the Trust is not expected to have any
source of capital other than the Trust Assets. The Trust will be administered in
accordance with the laws of the State of New York.
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On the first Series Closing Date, the Transferors will convey to the Trust,
without recourse, all Receivables that existed in the Initial Accounts at the
close of business on the Initial Cut-Off Date, and all Receivables arising under
such Accounts from time to time thereafter, in exchange for the net cash
proceeds from the sale of one or more Series of Certificates plus the Transferor
Certificates representing the Transferors' Interest. In addition, the
Transferors may convey from time to time to the Trust, without recourse, all
Receivables existing in certain Additional Accounts and Participation Interests,
if any, at the close of business on each applicable date of designation thereof.
The Trust Assets will consist of 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
receive 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 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.'
CENTURION'S REVOLVING CREDIT BUSINESSES
GENERAL
Pursuant to the RFC II Purchase Agreement, Credco will transfer to RFC II,
and pursuant to the Pooling and Servicing Agreement, RFC II and Centurion will
transfer to the Trust, certain Receivables generated from transactions made by
persons who are holders of Optima Card accounts (each, an 'OPTIMA CARD
ACCOUNT'), Optima Line of Credit accounts (each, an 'OPTIMA LINE OF CREDIT
ACCOUNT') and Sign & Travel revolving credit accounts (each, a 'SIGN & TRAVEL
ACCOUNT'). Optima Card Accounts and Optima Line of Credit Accounts are sometimes
referred to herein as 'OPTIMA ACCOUNTS.' Cards issued by Centurion are currently
accepted worldwide, and may be used for the purchase of merchandise and
services. The Sign & Travel Account is currently available only to holders
(each, a 'CARDMEMBER') of American Express(Registered) Card, Gold Card and
Platinum Card(Registered) accounts, excluding corporate card accounts (each such
account, a 'CHARGE CARD ACCOUNT'). The Optima Card Account, Optima Line of
Credit Account and the Sign & Travel Account (such accounts, the 'REVOLVING
CREDIT ACCOUNTS') are owned by Centurion and are primarily serviced either by
Centurion at its headquarters or at its subsidiary facility located in
Jacksonville, Florida, or by TRS out of operations centers. Operations at the
Jacksonville facility are expected to be phased out by mid-1996; its functions
are being assumed by TRS facilities.
Subject to certain conditions, the Transferors may convey to the Trust
receivables arising in charge or credit accounts of a type not currently
included as Accounts. Such accounts may not be originated, underwritten, used or
collected in the same manner as the accounts described below and may differ with
respect to loss and delinquency experience, revenue experience and historical
payment rates. Such accounts may also have different terms than the accounts
described below. Consequently, the addition to the Trust of receivables arising
in such accounts could have the effect of reducing the Portfolio Yield.
Optima Card Accounts. The Optima Card Account is accessed primarily by use
of the Optima Card and may be used to purchase merchandise and services from
participating service establishments or to obtain cash advances through check
access, by using a loan activator check available only to make payments on
outstanding balances on the Cardmember's Charge Card Account or from automated
teller machines. The Optima Card Account was first offered by Centurion in early
1987. All Optima Card Accounts are originated by Centurion and are generated by
direct mail solicitations and telemarketing to prospects as well as to existing
Cardmembers having a credit history with a Charge Card Account. Beginning in
1994 with the Optima True Grace Card product, in which a grace period on new
purchases is offered even if the Account holder is carrying a balance over from
the prior month, and certain other forms of Optima Card Accounts, offers are
also made to non-Cardmembers. Other forms of Optima Card Accounts (i.e.,
Accounts with special features) are currently being
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tested and may be offered more broadly in the future. In addition, Centurion
offers Optima Card Accounts that are originated under affinity or co-branded
programs between Centurion and certain unaffiliated entities. Centurion also
runs print advertisements and a limited number of radio and television
advertisements for Optima Card Accounts and has a toll free telephone number for
requests for information and applications. Receivables are also generated by
soliciting the transfer of account balances from competitors' accounts.
Optima Line of Credit Accounts. The Optima Line of Credit Account is an
unsecured revolving line of credit that is offered as an additional benefit in
association with certain approved Cardmembers' Charge Card Accounts. The Optima
Line of Credit Accounts may be accessed by writing a check supplied to
Cardmembers by Centurion, by using a loan activator check available only to make
payments on outstanding balances on the customer's Charge Card Account, or to
obtain cash from automatic teller machines. The predecessor to the Optima Line
of Credit Account was established in 1985. The Optima Line of Credit Accounts
owned by Centurion were principally generated through (i) applications mailed
directly to existing Cardmembers, (ii) direct mail solicitations to existing or
prospective Cardmembers for accounts on a pre-approved credit basis and (iii)
with respect to certain Optima Line of Credit Accounts, purchases of accounts
from other financial institutions providing lines of credit to Cardmembers.
Sign & Travel Accounts. The Sign & Travel Account is a feature associated
with consumer Charge Card Accounts. 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 for at least one year have been
invited to obtain a Sign & Travel Account. A Cardmember may only use the Sign &
Travel Account for certain travel-related purchases and may access the Sign &
Travel Account by indicating to the travel product merchant or to TRS, as
Servicer, the preference to have such travel items billed to the Sign & Travel
Account. Certain non-travel-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. The predecessor to the Sign & Travel Account
was established in 1965 as a closed-end credit account and was changed to an
open-end credit account in 1983. All Sign & Travel Accounts are owned by
Centurion.
UNDERWRITING AND AUTHORIZATION PROCEDURES
Optima Card Accounts. Centurion uses two types of approval processes in
determining whether to open an Optima Card Account: the 'pre-approved process'
and the 'full application process.' The pre-approved process involves
determining in advance that a person will qualify for an Optima Card Account.
Centurion determines the minimum credit criteria required for a consumer to
receive an offer. These criteria were developed from proprietary risk models and
commercially available risk evaluation scores. Credit bureaus provide Centurion
with the credit attributes, scores, and encrypted names and addresses of persons
passing the minimum criteria. Centurion then screens out persons with prior
Centurion delinquencies and incidents of fraud, and uses its proprietary risk
and response modeling to finalize the solicitation pool. Centurion may also
determine the eligibility of such persons to receive an offer based on such
person's activities (e.g., membership in a rewards program, holding credit
cards, magazine or newspaper subscriptions, and college enrollment).
The full application process is used for evaluation of unsolicited
applications. The primary sources of these applications are the 'inbound'
telemarketing program that features a toll-free telephone number and, on a
limited basis, the American Express 'Take One' boxes located in a variety of
public establishments. The full application process entails receiving a
completed application, evaluating the application using proprietary scoring
models and credit bureau information, screening out prior Centurion
delinquencies and incidents of fraud, and verifying that the information on the
application is both accurate and provided by the true applicant.
In addition to the credit review performed in connection with origination
of accounts, Centurion has established credit authorization procedures
applicable to Optima Card Account utilizations. Utilizations of such Optima Card
Accounts are subject to authorization at the time of such utilization based upon
the Cardmember's past spending and payment activity and personal resources.
Certain utilizations, such as purchases indicating out-of-pattern spending,
initial utilizations on new accounts and charges to non-current accounts, are
subject to closer credit scrutiny. The credit limits for Optima Card Accounts
generally range from $500 to $15,000, although the credit limits applicable to
certain Optima Card Accounts may be as high as $50,000.
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Optima Line of Credit Accounts. Optima Line of Credit Accounts are no
longer actively solicited. They had been underwritten pursuant to procedures
similar to those for Optima Card Accounts. Authorization based on Account
holders' past spending and payment behavior and personal resources occurs at the
time of utilization.
Sign & Travel Accounts. Centurion extends the right to access a Sign &
Travel Account to qualified Cardmembers after they have been Charge Card Account
holders in good standing for one year. There is no pre-set spending limit on
these accounts. However, utilizations of the Sign & Travel Account are subject
to approval through a credit authorization process similar to credit
authorization procedures applicable to the Optima Card Account.
BILLING AND PAYMENTS
The accounts owned by Centurion have various billing and payment
structures, including various annual fees and monthly finance charges. Each
account holder is subject to an agreement governing the terms and conditions of
the Optima Card Account, the Optima Line of Credit Account and the Sign & Travel
Account, as applicable. Pursuant to each such agreement, Centurion reserves the
right to change or terminate any terms, conditions, service or features of the
account (including increasing or decreasing monthly finance charges, fees or
minimum payments or changing the order in which payments made by account holders
will be applied to satisfy amounts owing by account holders). Such changes are
subject to the requirements of applicable laws and to certain limitations in the
Pooling and Servicing Agreement described herein. Any announced increase in the
APR (defined below) or other change making the terms of an account more
stringent, generally becomes effective on a designated future date, absent
instructions from the account holder to the contrary, or in any event, upon
subsequent use of the account.
Optima Card Accounts. Generally, an Optima Card Account holder is charged
(i) an annual fee for the Optima Card of $0.00 to $25.00, (ii) a variable APR
finance charge on merchandise and services purchased and on cash advances equal
to the Prime Rate plus a spread ranging from 6.00% to 12.90%, depending on the
Cardmember's tenure, spending and payment patterns and type of product, (iii)
amounts payable for certain uses of the Optima Card, including the standard
network fee of 2% on cash advances obtained through an automated teller machine,
with a $2.50 minimum charge and a $20 maximum charge, and a 1% fee for obtaining
American Express Travelers Cheques, and (iv) if applicable, insufficient funds
fees, late fees, overlimit fees and other fees. The Optima True Grace Card and
other newer variations of the Optima Card Account include annual-fee, grace-
period, APR, rewards and other provisions that vary from the original version of
the Optima Card Account. Optima Card Accounts are billed by Centurion on a cycle
basis. Generally, Optima Card Account holders must make a minimum payment equal
to the greater of (a) $15 or, if the balance is less than $15, such balance, and
(b) 1/36th of the new balance plus any amount which is past due. Payments on the
Optima Card Accounts are currently generally applied, in order of application,
to balances in respect of finance charges and fees, cash advances, and
merchandise and services.
Optima Line of Credit Accounts. Billing and payment for Optima Line of
Credit Accounts are the same as for Optima Card Accounts, except there is no
annual fee.
Sign & Travel Accounts. There are no annual fee or other fees imposed for
the use of the Sign & Travel Account except for a monthly finance charge, based
on an annual percentage rate (an 'APR'), on the outstanding balance on the Sign
& Travel Account. The APR for the Sign & Travel Account balances is variable
equal to the Prime Rate plus 9.9%. Effective May 1, 1996, Sign & Travel Accounts
not in good standing will be assessed interest at an APR equal to the Prime Rate
plus 12.9%. The Sign & Travel Account is billed by Centurion on a cycle basis at
the same time as the obligor's Charge Card Account. Generally, Sign & Travel
Account holders must make a monthly minimum payment equal to the greater of (a)
$20.00 or, if the balance is less than $20.00, such balance, and (b) 1/36th of
the new balance plus any amount which is past due. Currently, payments made on
the Charge Card or Sign & Travel Accounts are generally applied first, to past
due Sign & Travel Account balances, second, to past due Charge Card Account
balances, third, to current Sign & Travel Account minimum payments, fourth, to
current Charge Card Account balances, and finally, to outstanding Sign & Travel
Account balances. Each minimum monthly payment is applied first to finance
charges and then to the appropriate principal balance designated in the
preceding sentence.
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COLLECTION EFFORTS
Efforts to collect delinquent Optima Card Accounts, Optima Line of Credit
Accounts and Sign & Travel Accounts are made by Centurion and collection
agencies and attorneys retained by Centurion. Under current practice, Centurion
includes a request for payment of overdue amounts on all billing statements upon
delinquency. Centurion uses its proprietary risk evaluation systems to determine
the appropriate collection strategy. Account holders whom Centurion considers a
high risk may be contacted by either a letter or a telephone call when the
account becomes delinquent or sooner based on a number of factors, including the
account holder's tenure and the amount owed in relation to prior spending and
payment behavior. An Account is generally considered to be delinquent if the
minimum payment specified in the Account holder's most recent billing statement
is not received by the next statement cycle date. If Centurion determines that
the account holder is unable to pay the outstanding balance, the account is
'pre-empted'--i.e., the card is cancelled, credit privileges are revoked, and
more intensive collection action is initiated. For all other account holders,
credit privileges are generally cancelled no later than 90 days from initial
billing. For both the pre-empted 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.
Pursuant to the Pooling and Servicing Agreement, the Receivables in an
Account will be charged-off no later than the date on which such Account is 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 credit evaluation, servicing, charge-off and
collection practices of Centurion may change over time in accordance with its
business judgment and applicable law.
RFC II, CREDCO, CENTURION, AEDC AND TRS
RFC II
American Express Receivables Financing Corporation 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 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, investors diversified financial services and international banking
services throughout the world. RFC II was organized for the limited purpose of
issuing securities of the type offered hereby, purchasing, holding, owning and
selling receivables and any activities incidental to and necessary or convenient
for the accomplishment of such purposes. Neither TRS, as stockholder of RFC II,
nor RFC II's board of directors, intends to change the business purpose of RFC
II. RFC II's executive offices are located at American Express Tower, World
Financial Center, 200 Vesey Street, Room 138, New York, New York 10285-4405.
CREDCO
American Express Credit Corporation ('CREDCO'), is a wholly owned
subsidiary of TRS primarily engaged in the business of purchasing charge card
account receivables generated by TRS and certain revolving credit account
receivables generated by Centurion. Its principal office is located at 301 N.
Walnut Street, Wilmington, Delaware 19801.
CENTURION AND AEDC
American Express Centurion Bank ('CENTURION'), a Transferor, was
incorporated under Delaware banking laws as a limited service bank in 1985. Its
principal office is located at 301 N. Walnut Street, Wilmington, Delaware 19801.
Centurion is a wholly owned subsidiary of TRS.
In September 1995, American Express announced its intention to combine by
merger Centurion's business with that of American Express Deposit Corporation, a
Utah-chartered, FDIC-insured industrial loan company ('AEDC'), which, like
Centurion, is a wholly owned subsidiary of TRS. The merger, which has been
approved by the necessary regulatory authorities and is expected to occur in
mid-1996, will result in substantially all of the assets and liabilities of
Centurion (including Centurion's rights and obligations under the Pooling and
Servicing Agreement, the Credco Purchase Agreement and all other agreements to
which Centurion is a party that are
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related to the transactions described in this Prospectus and all of Centurion's
rights and obligations with respect to the Accounts owned by Centurion and the
Receivables related thereto) being assumed by AEDC, which will be the merger's
surviving institution. Upon the completion of the merger, AEDC will be renamed
American Express Centurion Bank. Centurion and AEDC intend to comply with the
requirements of the Pooling and Servicing Agreement regarding merger or
consolidation of or assumption of the obligations of a Transferor or Servicer,
respectively, as described under 'Merger or Consolidation of a Transferor or the
Servicer.'
TRS
American Express Travel Related Services Company, Inc. ('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, AEDC,
RFC II and Credco. TRS, directly or through its subsidiaries, provides a variety
of products and services, including the Charge Card Accounts, consumer loans,
American Express(Registered) Travelers Cheques, corporate and consumer travel
products and services, magazine publishing, database marketing and management
and insurance. TRS' principal office is located at American Express Tower, World
Financial Center, 200 Vesey Street, New York, New York 10285.
MERGER OR CONSOLIDATION OF A TRANSFEROR OR THE SERVICER
According to the Pooling and Servicing Agreement, no Transferor is
permitted to consolidate with or merge into, or to sell all or substantially all
of its assets as an entirety to, any other entity (in each case, a 'SURVIVING
TRANSFEROR COMPANY') unless, as specified in the Pooling and Servicing
Agreement, (i) the Surviving Transferor Company is organized under the laws of
the United States of America, any state thereof or the District of Columbia,
(ii) the Surviving Transferor Company, the Transferors and the Trustee shall
have entered into and delivered to the Trustee a supplement to the Pooling and
Servicing Agreement (in form reasonably satisfactory to the Trustee) providing
for the Surviving Transferor Company to assume all of such Transferor's
obligations under the Pooling and Servicing Agreement, (iii) such Transferor
shall have delivered to the Trustee (a) an officer's certificate and an Opinion
of Counsel regarding the enforceability against the Surviving Transferor Company
of such assumption agreement and (b) a Tax Opinion (which shall also be
addressed and delivered to each Rating Agency), (iv) all 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 (iv) and certain other matters specified
in the Pooling and Servicing Agreement, and (vi) if the Surviving Transferor
Company 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 the assumption of such Transferor's
obligations by the Surviving Transferor Company and the Rating Agency Condition
shall have been satisfied or, if the Surviving Transferor Company shall not be
eligible to be a debtor in a case under the Bankruptcy Code, such Transferor
shall have delivered to the Rating Agencies notice of the assumption of such
Transferor's obligations by the Surviving Transferor Company.
According to the Pooling and Servicing Agreement, the Servicer is not
permitted to consolidate with or merge into, or to sell all or substantially all
of its assets to, any other entity (in each case, a 'SURVIVING SERVICER
COMPANY') unless, in addition to certain other conditions specified in the
Pooling and Servicing Agreement, such Surviving Servicer Company is an Eligible
Servicer, such Surviving Servicer Company is a corporation organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia, and such Surviving Transferor Company expressly
assumes (by entering into and delivering to the Trustee a supplement to the
Pooling and Servicing Agreement in form reasonably satisfactory to the Trustee)
the obligations of the Servicer under the Pooling and Servicing Agreement.
ASSUMPTION OF A TRANSFEROR'S OBLIGATIONS
A Transferor may, from time to time, consider a transfer of all or a
portion of its credit or charge accounts (if any) and a transfer of all or a
portion of its respective receivables arising thereunder, which may include all,
but not less than all, of the Accounts and such Transferor's remaining
respective interests in (a) the Receivables arising thereunder, (b)
Participations and (c) the Trust (collectively, the 'ASSIGNED ASSETS'), together
with all servicing functions, if any, and other obligations under the Pooling
and Servicing Agreement or relating to the transactions contemplated thereby
(collectively, the 'ASSUMED OBLIGATIONS'), to another entity (the
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'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 or other charge or credit accounts owned by
Centurion or other Account Owners (all selected accounts 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 as of the Selection Date 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.
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' 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.' Because the Initial Accounts were
designated as of the Selection Date and subsequent Aggregate Addition Accounts
may be designated from time to time, there
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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, 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.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and the related 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 (together with any successor
depository selected by the Transferors, the 'DEPOSITORY'), except as set forth
below. Unless otherwise stated in the related Prospectus Supplement, the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples thereof in book-entry form. The Transferors have been
informed by DTC that DTC's nominee will be Cede & Co. ('CEDE'). Accordingly,
Cede is expected to be the holder of record of the Certificates. Except under
the limited circumstances described herein, no Certificateholder will be
entitled to receive a Definitive Certificate representing such person's interest
in the Certificates. Unless and until Definitive Certificates are issued under
the limited circumstances described herein, all references herein to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
its Participants (as defined herein), and all references herein to
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.'
Payments of interest and principal will be made on each related Interest
Payment Date to the Certificateholders in whose names the Certificates were
registered on the last day of the calendar month preceding such Interest Payment
Date, unless otherwise specified in the related Prospectus Supplement (each, a
'RECORD DATE').
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
Certificateholders may hold their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe) if they are participants of such
systems, or indirectly through organizations which are participants in such
systems.
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Cede, as nominee for DTC, will hold the global Certificate or Certificates.
Cedel and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective Depositaries (as defined herein) which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC. Citibank, N.A. will act as depositary for Cedel and Morgan
Guaranty Trust Company of New York will act as depositary for Euroclear (in such
capacities, the 'DEPOSITARIES').
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'clearing
corporation' within the meaning of the UCC in effect in the State of New York
and a 'clearing agency' registered pursuant to the provisions of Section 17A of
the Exchange Act. DTC was created to hold securities for its participating
organizations ('PARTICIPANTS') and to facilitate the settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ('INDIRECT PARTICIPANTS').
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing systems by its Depositary. Cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
a result of sales of securities by or through a Cedel Participant or a Euroclear
Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant Cedel or Euroclear cash account only
as of the business day following settlement in DTC. For information with respect
to tax documentation procedures relating to the Certificates, see 'Tax
Matters--Federal Income Tax Consequences--Non-United States Investors.'
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
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such Certificate shall be overdue and notwithstanding any notice of ownership or
writing thereon or any notice to the contrary) for the purpose of making payment
and for all other purposes.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates and is required to
receive and transmit distributions of principal of and interest on the
Certificates. Participants and Indirect Participants with which holders of
beneficial interests in the Certificates have accounts similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
these respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Certificates to pledge Certificates to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such Certificates, may be limited due to the lack of a Definitive
Certificate for such Certificates.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Certificateholder under the Pooling and Servicing Agreement and the
related Supplement only at the direction of one or more Participants to whose
account with DTC the Certificates are credited. Additionally, DTC has advised
the Transferor that it may take actions with respect to the Certificateholders'
Interest that conflict with other of its actions with respect thereto.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ('CEDEL
PARTICIPANTS') and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies, that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ('EUROCLEAR PARTICIPANTS') and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the 'EUROCLEAR OPERATOR'), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
'COOPERATIVE'). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), underwriters, securities brokers and
dealers and other professional financial intermediaries. Indirect access to
Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the 'EUROCLEAR PROVISIONS'). The Euroclear Provisions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution
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of specific certificates to specific securities clearance accounts. The
Euroclear Operator acts under the Euroclear Provisions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See 'Tax Matters--Federal Income Tax Consequences--Non-United States Investors.'
Cedel or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Certificateholder under the Pooling and Servicing
Agreement and the related Supplement on behalf of a Cedel Participant or
Euroclear Participant only in accordance with its relevant rules and procedures
and subject to its Depositary's ability to effect such actions on its behalf
through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Certificates among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be issued as definitive certificates in fully
registered certificated form ('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 the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Certificates and instructions for
re-registration, the Trustee will issue the Certificates in the form of
Definitive Certificates, and thereafter the Trustee will recognize the holders
of such Definitive Certificates as Certificateholders under the Pooling and
Servicing Agreement and the related Supplement ('HOLDERS').
Distribution of principal and interest on the Certificates will be made by
the Trustee directly to Holders in accordance with the procedures described
herein and in the Prospectus Supplement and set forth in the Pooling and
Servicing Agreement and the related Supplement. Interest payments and principal
payments will be made to Holders in whose names the Definitive Certificates were
registered at the close of business on the related Record Date. Distributions
will be made by check mailed to the address of such Holder as it appears on the
register maintained by the Trustee. The final payment on any Certificate
(whether Definitive Certificates or Certificates registered in the name of
Cede), however, will be made only upon presentation and surrender of such
Certificate on the final payment date at such office or agency as is specified
in the notice of final distribution to Certificateholders. The Trustee will
provide such notice to registered Certificateholders not later than the fifth
day of the month of the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar, which will initially be the
Trustee. No service charge will be imposed for any registration of transfer or
exchange, but the transfer agent and registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
INTEREST
Interest will accrue on the Certificates of a Series or Class 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
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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 Certificates of each Series will have a Revolving Period during which
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. Unless an Early Amortization
Period or Early Accumulation Period commences with respect to a Series,
following the Revolving Period with respect to such Series, such Series will
have either a Controlled Amortization Period or a Controlled Accumulation
Period.
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 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 for any Series offered hereby on any
Distribution Date may, but will not necessarily, be limited to an amount equal
to a Controlled Accumulation Amount specified in such Prospectus Supplement 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.
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 be limited to an amount equal
to 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.
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 related Prospectus Supplement for a
discussion of the events that might lead to the commencement of the Early
Accumulation Period with respect to a Series.
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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 related 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 or, unless certain conditions specified in such Prospectus
Supplement can be satisfied, relating to TRS, (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
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Certificateholder would have realized on its Certificates had such Pay-Out Event
not occurred. If a Series has more than one Class of Certificates, each Class
may have different Pay-Out Events which, in the case of any Series of
Certificates offered hereby, will be described in the related Prospectus
Supplement.
A particular Series may have no Pay-Out Events or only limited Pay-Out
Events, but may have in lieu thereof specified events ('REINVESTMENT EVENTS')
that end the reinvestment of the Trust in new Receivables and apply available
collections of Principal Receivables to the purchase of Eligible Investments. A
Reinvestment Event may include all or some of the events that constitute Pay-Out
Events for other Series. The Early Accumulation Period with respect to a Series
will commence on the day on which a Reinvestment Event occurs or is deemed to
occur with respect thereto. If a Series has more than one Class of Certificates,
each Class may have different Reinvestment Events (or may have only Pay-Out
Events) which, in the case of any Series of Certificates offered hereby, will be
described in the related Prospectus Supplement.
In addition to the consequences of a Pay-Out Event or Reinvestment Event
discussed above, if an Insolvency Event shall occur, immediately on the day of
such event the Transferors will cease to transfer 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.
If the only Pay-Out Event or Reinvestment Event to occur with respect to
any Series is the bankruptcy, insolvency, liquidation receivership or
conservatorship of a Transferor, the Trustee may not be permitted to suspend
transfers of Receivables to the Trust, and the instructions to sell the
Receivables may not be given effect.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses is a monthly servicing fee (the 'SERVICING FEE'). The Servicing
Fee will be allocated among the Transferors' Interest (the 'TRANSFEROR SERVICING
FEE'), Certificateholders of each Series and, if any, the holder of the
Collateral Interest of such Series. The portion of the Servicing Fee allocable
to each Series of Certificates on any Distribution Date (the 'MONTHLY SERVICING
FEE') will generally be equal to one-twelfth of the product of (a) the
applicable servicing fee percentage with respect to such Series and (b) the
Invested Amount of such Series with respect to the related Monthly Period.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee, paying agent,
transfer agent and registrar and independent accountants and other fees which
are not expressly stated in the Pooling and Servicing Agreement to be payable by
the Trust or the Transferors other than federal, state and local income and
franchise taxes, if any, of the Trust.
THE POOLING AND SERVICING AGREEMENT GENERALLY
CONVEYANCE OF RECEIVABLES
On the first Series Closing Date, Credco will sell and assign 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 will sell and
assign 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 will thereafter
directly or indirectly sell and assign, from time to time, to the Trust, and
Credco, to the extent that
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Credco owns any Receivables arising in any designated Additional Accounts, will
thereafter 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.'
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 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 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 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
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comply with which would have 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, (j) 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 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.
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
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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.'
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.
THE TRANSFEROR CERTIFICATES; ADDITIONAL TRANSFERORS
The Pooling and Servicing Agreement provides that the Transferors may
exchange a portion of the Original Transferor Certificate for one or more
additional certificates (each, a 'SUPPLEMENTAL CERTIFICATE') for transfer or
assignment to a person designated by the Transferors upon the execution and
delivery of a supplement to the Pooling and Servicing Agreement (which
supplement shall be subject to the amendment section of the Pooling and
Servicing Agreement to the extent that it amends any of the terms of the Pooling
and Servicing Agreement; see '--Amendments'); provided, that (a) the Rating
Agency Condition is satisfied for such exchange, (b) each Transferor shall have
delivered to the Trustee an officer's certificate to the effect that such
Transferor reasonably believes that such exchange will not, based on the facts
known to such officer at the time of such certification, have an Adverse Effect,
(c) the Transferors shall have delivered to the Trustee a Tax Opinion (as
defined herein) with respect to such exchange, (d) the aggregate amount of
Principal Receivables in the Trust as of the date of such exchange will be
greater than the Required Minimum Principal Balance as of such date and (e) the
Transferors or other holders of the Original Transferor Certificate as of the
date of such exchange shall have a remaining interest in the Trust of not less
than, in the aggregate, 2% of the total amount of Principal Receivables and
funds on deposit in the Special Funding Account, the Principal Funding Account
and any other similar account. The primary purpose for such a transfer would be
to convey an interest in the Original Transferor Certificate to another person.
Any transfer or assignment of a Supplemental Certificate is subject to the
condition set forth in (c) above.
If an affiliate of the Transferors owns Eligible Accounts, the receivables
of which are eligible for transfer to the Trust, the Transferors may wish to
designate such affiliate to be included as a 'Transferor' ('ADDITIONAL
TRANSFERORS') under the Pooling and Servicing Agreement (by means of an
amendment to the Pooling and Servicing Agreement that will not require the
consent of any Certificateholder; see '--Amendments'). 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
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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' shall have been satisfied with
respect to the transfer of Receivables or Participation Interests by any
Additional Transferor to the Trust. Following the inclusion of an Additional
Transferor, the Additional Transferor will be treated in the same manner as a
Transferor, and each Additional Transferor generally will have the same
obligations and rights as a Transferor described herein.
ADDITIONS OF ACCOUNTS OR PARTICIPATION INTERESTS
Under the Pooling and Servicing Agreement, the Transferors will be
obligated, in certain circumstances described below, to designate from time to
time Additional Accounts to be included as Accounts. In connection with any such
designation, the Transferors (pursuant to the Pooling and Servicing Agreement)
will convey to the Trust, and, to the extent that Credco owns any Receivables
arising in such Accounts, Credco (pursuant to the RFC II Purchase Agreement)
shall be required to convey to RFC II for conveyance by RFC II to the Trust, all
of their respective interests in all Receivables arising from such Additional
Accounts, subject to the following conditions, among others: (i) each such
Additional Account must be an Eligible Account and (ii) except for the addition
of New Accounts (a) the selection of the Aggregate Addition Accounts is done in
a manner which the relevant Transferor reasonably believes will not result in an
Adverse Effect and (b) except for the addition of New Accounts, the Rating
Agency Condition shall have been satisfied. The Transferors will be obligated to
designate Additional Accounts (to the extent available) if the aggregate amount
of Principal Receivables in the Trust at the end of any Monthly Period is less
than the Required Minimum Principal Balance as of the end of such Monthly
Period. In lieu of adding Additional Accounts, the Transferors may convey
Participation Interests to the Trust. 'REQUIRED MINIMUM PRINCIPAL BALANCE' as of
any date of determination means the sum of the Series Invested Amounts for all
outstanding Series plus the sum of the Series Required Transferor Amounts (as
defined herein) for each such Series minus the amount on deposit in the Special
Funding Account. The 'SERIES INVESTED AMOUNT' for a Series will be the amount
set forth in the related Supplement and, for each Series offered hereby, in the
related Supplement for such Series, but will generally equal the initial
Invested Amount for a Series.
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 Selection Date, may not have been a part of the
portfolio of accounts of Centurion as of the Selection Date, they may not be of
the same credit quality as the Initial Accounts because such Additional Accounts
or Participation Interests may have been originated at a later date using
credit, origination or underwriting criteria different from those which were
applied to the Initial Accounts or may have been acquired from another revolving
credit issuer or entity that had different credit, origination or underwriting
criteria. Consequently, the performance of such Additional Accounts or
Participation Interests may be better or worse than the performance of the
Initial Accounts.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in this paragraph, on any day of any
Monthly Period, the Transferors may, but shall not be obligated to, acquire all
Receivables and proceeds thereof with respect to Removed Accounts and
Participation Interests, and Credco may, but shall not be obligated to, acquire
from RFC II the Receivables and proceeds thereof transferred by Credco to RFC II
in the Removed Accounts. The designation of Removed Accounts and Participation
Interests and the acquisition by the Transferors of the Receivables and proceeds
thereof could occur for a number of reasons including, among others, a
determination by the Transferors that the Trust contains more Receivables than
the Transferors are obligated to retain in the Trust under the Pooling and
Servicing Agreement and any applicable Supplements and a determination that the
Transferors do not desire to obtain additional financing through the Trust at
such time. The only limitation on the right of the Transferors to require the
reassignment of the Receivables in designated Removed Accounts are those
described herein and in the related Prospectus Supplement. The Transferors are
permitted to designate and require reassignment of the Receivables from Removed
Accounts and Participation Interests only upon satisfaction of the following
conditions: (i) the Transferors shall have delivered to the Trustee a computer
file or microfiche list containing a true and complete list of all Removed
Accounts, such Accounts to be identified by, among other things, account number
and their aggregate amount of Receivables; (ii) each Transferor shall have
delivered an officer's certificate to the trustee to the effect that in the
reasonable belief of such Transferor (a) no selection procedure believed by such
Transferor to be materially adverse to the interests of the Certificateholders
or such Transferor
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was utilized in removing the Removed Accounts from among any pool of Accounts of
a similar type, (b) such removal will not have an Adverse Effect and (c) such
removal will not result in the occurrence of a Pay-Out Event or a Reinvestment
Event and (iii) the Transferors shall have delivered 8 business days' prior
written notice of the removal to each Rating Agency, the Trustee and the
Servicer and prior to the date on which such Receivables are to be removed the
Rating Agency Condition shall have been satisfied with respect to such removal.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that the Transferors may at
any time and from time to time, but without any obligation to do so, designate a
specified fixed or variable percentage (the 'DISCOUNT PERCENTAGE') of the amount
of Receivables existing and arising in all or any specified portion of the
Accounts on and after the date such designation becomes effective that otherwise
would have been treated as Principal Receivables to be treated as Finance Charge
Receivables (the 'DISCOUNT RECEIVABLES'). After any such designation, pursuant
to the Pooling and Servicing Agreement, the Transferors may, without notice to
or consent of the Certificateholders, from time to time increase, reduce or
withdraw the Discount Percentage. The Transferors must provide 30 days prior
written notice to the Servicer, the Trustee, each Rating Agency and any provider
of Series Enhancement of any such designation or increase, reduction or
withdrawal, and such designation or increase, reduction or withdrawal will
become effective on the date specified therein only if (a) each Transferor will
have delivered to the Trustee and certain providers of Series Enhancement a
certificate of an authorized officer of such Transferor to the effect that,
based on the facts known to such Transferor at the time, such designation or
increase, reduction or withdrawal will not at the time of its occurrence cause a
Pay-Out Event or Reinvestment Event or an event that, with notice or the lapse
of time or both, would constitute a Pay-Out Event or Reinvestment Event, to
occur with respect to any Series, (b) the Rating Agency Condition will have been
satisfied with respect to such designation or increase, reduction or withdrawal,
and (c) only in the case of a reduction or withdrawal of the Discount
Percentage, the Transferors will have (i) delivered to the Trustee an opinion of
counsel to the effect that such reduction of the Discount Percentage will not
adversely affect the tax characterization as debt of any Certificates of any
outstanding Series or Class that were characterized as debt at the time of their
issuance and (ii) in certain circumstances, obtained the prior written consent
of each provider of Series Enhancement entitled to consent thereto. On the Date
of Processing of any collections on or after the date the exercise of the
discount option takes effect, the product of (i) the Discount Percentage then in
effect and (ii) collections of Receivables with respect to the Accounts on or
after the date such option is exercised that otherwise would be Principal
Receivables will be deemed collections of Finance Charge Receivables and will be
applied accordingly, unless otherwise provided in the related Supplement.
Although, except as described in the next paragraph, there can be no assurance
that the Transferors will do so, any such designation may occur because the
Transferors determine that the exercise of the discount option is needed to
provide a sufficient yield on the Receivables to cover interest and other
amounts due and payable from collections of Finance Charge Receivables or to
avoid the occurrence of a Pay-Out Event or Reinvestment Event relating to the
reduction of the average Portfolio Yield of Accounts in the Trust, if the
related Supplement provides for such a Pay-Out Event or Reinvestment Event. The
existence of Discount Receivables will result in an increase in the amount of
collections of Finance Charge Receivables and a reduction in the balance of
Principal Receivables outstanding and a reduction in the Transferor Amount.
On the first Series Closing Date, the Transferors will designate 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
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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.
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
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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.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with Account holders, investigating payment
delinquencies, evaluating the increase of credit limits and the issuance of
credit cards and credit accounts, providing billing and tax records to Account
holders and maintaining internal records with respect to each Account.
Managerial and custodial services performed by the Servicer on behalf of the
Trust include providing assistance in any inspections of the documents and
records relating to the Accounts and Receivables by the Trustee pursuant to the
Pooling and Servicing Agreement, maintaining the agreements, documents and files
relating to the Accounts and Receivables as custodian for the Trust and
providing related data processing and reporting services for Certificateholders
and on behalf of the Trustee.
The Pooling and Servicing Agreement provides that the Servicer may delegate
its duties under that agreement to any entity that agrees to conduct such duties
in accordance with the Pooling and Servicing Agreement and the credit account
guidelines set forth therein. Notwithstanding any such delegation the Servicer
will continue to be liable for all of its obligations under the Pooling and
Servicing Agreement.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that, pursuant to any one or
more Supplements, the Transferors may direct the Trustee to authenticate from
time to time new Series subject to the conditions described below (each such
issuance, a 'NEW ISSUANCE'). Each New Issuance will have the effect of
decreasing the Transferor Amount to the extent of the initial Invested Amount of
such new Series. Under the Pooling and Servicing Agreement, the Transferors may
designate, with respect to any newly issued Series: (a) its name or designation;
(b) its initial principal amount (or method for calculating such amount) and its
invested amount in the Trust (the 'INVESTED AMOUNT'), which is generally based
on the aggregate amount of Principal Receivables in the Trust allocated to such
Series, and its Series Invested Amount; (c) its certificate rate (or formula for
the determination thereof); (d) the interest payment date or dates (each, an
'INTEREST PAYMENT DATE') and the date or dates from which interest shall accrue;
(e) the method for allocating collections to Certificateholders of such Series;
(f) any bank accounts to be used by such Series and the terms governing the
operation of any such bank accounts; (g) the percentage used to calculate the
Monthly Servicing Fee; (h) the provider and terms of any form of Series
Enhancement with respect thereto; (i) the terms on which the Certificates of
such Series may be repurchased or 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; (l) the extent to which the Certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such global certificate or certificates, the terms and
conditions, if any, upon which such global certificate or certificates may be
exchanged, in whole or in part, for definitive certificates, and the manner in
which any interest payable on such global certificate or certificates will be
paid); (m) whether the Certificates of such Series may be issued in bearer form
and any limitations imposed thereon; (n) the priority of such Series with
respect to any other Series; (o) the Group, if any, in which such Series will be
included; and (p) any other relevant terms (all such terms, the 'PRINCIPAL
TERMS' of such Series). None of the Transferors, the Servicer, the Trustee or
the Trust is required or intends to obtain the consent of any Certificateholder
of any outstanding Series to issue any additional Series. The Transferors may
offer any Series to the public under a Prospectus Supplement or other Disclosure
Document, in transactions either registered under the Securities Act or exempt
from registration thereunder, directly, through one or more underwriters or
placement agents, in fixed-price offerings or in negotiated transactions or
otherwise in the manner discussed under 'Plan of Distribution.' 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.
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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, an account (the 'COLLECTION ACCOUNT') with an
Eligible Institution. 'ELIGIBLE INSTITUTION' means the Trustee or any other
depository institution organized under the laws of the United States, any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank) which at all times has a long-term unsecured debt rating or
certificate of deposit rating that is acceptable to each Rating Agency and is
a member of the FDIC. Notwithstanding the preceding sentence, any institution
the appointment of which satisfies the Rating Agency Condition will be an
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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. 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 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 related 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. With respect to the Certificateholders'
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<PAGE>
Interest, if the net amount in respect of Finance Charge Receivables to be
deposited into the Collection Account on any Transfer Date pursuant to the
preceding sentence 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.
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.
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<PAGE>
The Servicer will then allocate amounts initially allocated to a
particular Series between the Certificateholders' Interest and the
Transferors' Interest for such Monthly Period as follows:
(a) Series Allocable Finance Charge Collections and the Series
Allocable Defaulted Amount will at all times be allocated to the
Invested Amount of a Series based on the Floating Allocation
Percentage of such Series; and
(b) Series Allocable Principal Collections will at all times be
allocated to the Invested Amount of such Series based on the
Principal Allocation Percentage of such Series.
The 'FLOATING ALLOCATION PERCENTAGE' and the 'PRINCIPAL ALLOCATION
PERCENTAGE' with respect to any Series will be determined as set forth in the
related Prospectus Supplement. Amounts not allocated to the Invested Amount of
any Series as described above will be allocated to the Transferors' Interest.
GROUPS OF SERIES
If so specified in the related Prospectus Supplement, the Certificates of
a Series may be included in a Reallocation Group, which is a Group of Series
subject to reallocations of collections of Receivables and other amounts or
obligations among Series in such 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 the Issuance of New
Series.' 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, whether any previously issued Series have been included
in such a Group and whether any such Series or any previously issued Series
may be removed from such a Group.
REALLOCATIONS AMONG DIFFERENT SERIES WITHIN A REALLOCATION GROUP
Group Investor Finance Charge Collections. Any Series offered hereby
may, if so specified in the related Prospectus Supplement, be included in a
Reallocation Group. Other Series issued in the future may also be included in
such Reallocation Group.
For each Monthly Period, the Servicer will calculate the Group Investor
Finance Charge Collections (as defined herein) for a particular Reallocation
Group and, on the following Distribution Date, will allocate such amount among
the Certificateholders' Interest (including any Collateral Invested Amount)
for all Series in such Group in the following priority:
(i) Group Investor Monthly Interest (as defined herein);
(ii) Group Investor Default Amount (as defined herein);
(iii) Group Investor Monthly Fees (as defined herein);
(iv) Group Investor Additional Amounts (as defined herein); and
(v) the balance pro rata among each Series in such Group based on
the current Invested Amount of each such Series.
In the case of clauses (i), (ii), (iii) and (iv) above, if the amount of
Group Investor Finance Charge Collections (as defined herein) is not
sufficient to cover each such amount in full, the amount available will be
allocated among the Series in such Group pro rata based on the claim that each
Series has under the applicable clause. This means, for example, that if the
amount of Group Investor Finance Charge Collections is not sufficient to cover
Group Investor Monthly Interest, each Series in such Group will share such
amount pro rata and any other Series in such Group with a claim with respect
to monthly interest, overdue monthly interest and interest on such overdue
monthly interest, if applicable, which is larger than the claim for such
amounts for any other Series in such Group offered hereby (due to a higher
certificate rate) will receive a proportionately larger allocation.
The amount of Group Investor Finance Charge Collections allocated to the
Certificateholders' Interest (including any Collateral Invested Amount) for a
particular Series offered hereby as described above is referred to herein as
'REALLOCATED INVESTOR FINANCE CHARGE COLLECTIONS.'
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'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.
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 1 are referred
to as 'SERIES ALLOCABLE FINANCE CHARGE COLLECTIONS.' See '--Allocations'
above.
In Step 2, the amount of collections of Finance Charge Receivables
allocable to the Invested Amount (including any Collateral Invested Amount) of
a Series (the 'INVESTOR FINANCE CHARGE COLLECTIONS') is determined by
multiplying Series Allocable Finance Charge Collections for each Series by the
applicable Floating Allocation Percentages. See '--Allocations' above.
Investor Finance Charge Collections for all Series in a particular
Reallocation Group (or Group Investor Finance Charge Collections) are pooled
as shown above in Step 3 for reallocation to each such Series as shown in Step
4. In Step 4 Group Investor Finance Charge Collections are reallocated to each
Series in such Group as described above based on the respective claim of each
Series with respect to interest payable on the Certificates or Collateral
Invested Amount (if any) of such Series, the Defaulted Amount allocable to the
Certificateholders' Interest of such Series and the Monthly Servicing Fee and
certain other amounts in respect to such Series. The excess is allocated pro
rata among the Series in such Group based on each Series' respective Invested
Amounts.
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___________________________________________________
American Express Credit Account
Master Trust
Finance Charge Collections
___________________________________________________
|
____________________________|______________________
| | |
__________|___________ ___________|__________ ___________|__________
Series 1 Series 2 Series 3
Series Allocable Series Allocable Series Allocable
Finance Charge Finance Charge Finance Charge
Step Collections Collections Collections
1 (based upon the Series (based upon the Series (based upon the Series
Allocation Percentage) Allocation Percentage) Allocation Percentage)
______________________ ______________________ ______________________
| | |
| | |
______|_____ ______|______ _______|____
______|_____ _____|____ ______|_____ ______|____ ______|_____ _____|_____
Investor Investor Investor
Finance Finance Finance
Charge Charge Charge
Transferors' Collection Transferors' Collections Transferors' Collections
Step Finance (based Finance (based Finance (based
2 Charge upon the Charge upon the Charge upon the
Collections Floating Collections Floating Collections Floating
Allocation Allocation Allocation
Percentage) Percentage) Percentage)
____________ __________ ___________ ___________ ___________ ___________
| | |
|________________________|______________________|
|
|
____________________________|___________________________
Step 3 ___ Group Investor Finance Charge Collections
| ________________________________________________________
|
|
|_____________________________
| ___________________|____________________
| ______|___________________|____________________|________
Step 4 | Series 1 Series 2 Series 3
| Investor Monthly Investor Monthly Investor Monthly
| Interest Interest Interest
| ________________________________________________________
|
|
|_____________________________
| ___________________|____________________
| ______|___________________|____________________|________
| Series 1 Series 2 Series 3
| Investor Default Investor Default Investor Default
| Amount Amount Amount
| ________________________________________________________
|
|
|_____________________________
| ___________________|____________________
| ______|___________________|____________________|________
| Series 1 Series 2 Series 3
| Investor Monthly Investor Monthly Investor Monthly
| Fees Fees Fees
| ________________________________________________________
|
|
|_____________________________
| ___________________|____________________
| ______|___________________|____________________|________
| Series 1 Series 2 Series 3
| Investor Investor Investor
| Additional Amounts Additional Amounts Additional Amounts
| ________________________________________________________
|
|
|_____________________________
___________________|____________________
______|___________________|____________________|________
Series 1 Series 2 Series 3
Balance based Balance based Balance based
upon Investor upon Investor upon Investor
Amount Amount Amount
________________________________________________________
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<PAGE>
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS AMONG EXCESS ALLOCATION SERIES
Any Series offered hereby may be designated an Excess Allocation Series
(including a Series in a Reallocation Group or other type of Group). If the
Supplements for the related Excess Allocation Series so provide, collections
of Finance Charge Receivables and certain other amounts allocable to the
Certificateholders' Interest of any such Series in excess of the amounts
necessary to make required payments with respect to such Series (including
payments to the provider of any related Series Enhancement) that are payable
out of collections of Finance Charge Receivables (any such excess, the 'EXCESS
FINANCE CHARGE COLLECTIONS') may be applied to cover any shortfalls with
respect to amounts payable from collections of Finance Charge Receivables
allocable to any other Excess Allocation Series pro rata based upon the amount
of the shortfall, if any, with respect to each other Excess Allocation Series,
provided that the sharing of Excess Finance Charge Collections among Excess
Allocation Series will cease if each Transferor shall deliver to the Trustee a
certificate of an authorized representative to the effect that, in the
reasonable belief of such Transferor, the continued sharing of Excess Finance
Charge Collections among Excess Allocation Series would have adverse
regulatory implications with respect to the Transferors or any Account Owner.
Following the delivery by the Transferors of any such certificates to the
Trustee there will not be any further sharing of Excess Finance Charge
Collections among such Series in any such Group. In all cases, any Excess
Finance Charge Collections remaining after covering shortfalls with respect to
all outstanding Excess Allocation Series will be paid to the holders of the
Transferor Certificates. While any Series offered hereby may be designated as
an Excess Allocation Series, there can be no assurance that (a) any other
Series will be designated as an Excess Allocation Series, (b) there will be
any Excess Finance Charge Collections with respect to any such other Series
for any Monthly Period, (c) any agreement relating to any Series Enhancement
will not be amended in such a manner as to increase payments to the providers
of Series Enhancement and thereby decrease the amount of Excess Finance Charge
Collections available from such Series or (d) a Transferor will not at any
time deliver a certificate as described above. While the Transferors believe
that, based upon applicable rules and regulations as currently in effect, the
sharing of Excess Finance Charge Collections among Excess Allocation Series
will not have adverse regulatory implications for it, or any Account Owner,
there can be no assurance that this will continue to be true in the future.
SHARING OF PRINCIPAL COLLECTIONS AMONG PRINCIPAL SHARING SERIES
If the Prospectus Supplement for the related Series provides that such
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') 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 Collections with respect
to any Monthly Period or that any other Series will be designated as Principal
Sharing Series.
PAIRED SERIES
If so provided in the related Prospectus Supplement, a Prior Series may
be paired with a Paired Series issued by the Trust. 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
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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 during a Funding Period, the Pre-Funding Amount will be held in a
Pre-Funding Account pending the transfer of additional Receivables to the
Trust or pending the reduction of the Invested Amounts of other Series issued
by the Trust. The related Prospectus Supplement will specify the initial
Invested Amount with respect to 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
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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.
CREDIT ENHANCEMENT
General. For any Series, Credit Enhancement may be provided with respect
to one or more Classes thereof. Credit Enhancement with respect to one or more
Classes of a Series offered hereby may include a letter of credit, cash
collateral guaranty, cash collateral account, collateral interest, surety
bond, insurance policy, spread account, guaranteed rate agreement, maturity
liquidity facility, tax protection agreement, interest rate swap agreement,
interest rate cap agreement, or any combination of the foregoing. Credit
Enhancement may also be provided to a Class or Classes of a Series by
subordination provisions that require distributions of principal or interest
be made with respect to the Certificates of such Class or Classes before
distributions are made to one or more Classes of such Series. If so specified
in the related Prospectus Supplement, any form of Credit Enhancement may be
available to more than one Class or Series to the extent described therein.
The presence of Credit Enhancement with respect to a Class is intended to
enhance the likelihood of receipt by Certificateholders of such Class of the
full amount of principal and interest with respect thereto and to decrease the
likelihood that such Certificateholders will experience losses. However,
unless otherwise specified in the related Prospectus Supplement, the Credit
Enhancement, if any, with respect thereto will not provide protection against
all risks of loss and will not guarantee repayment of the entire principal
balance of the Certificates and interest thereon. If losses occur that exceed
the amount covered by the Credit Enhancement or that are not covered by the
Credit Enhancement, Certificateholders will bear their allocable share of such
losses. In addition, if specific Credit Enhancement is provided for the
benefit of more than one Class or Series, Certificateholders of any such Class
or Series will be subject to the risk that such Credit Enhancement will be
exhausted by the claims of Certificateholders of other Classes or Series.
If Credit Enhancement is provided with respect to a Series offered
hereby, the related Prospectus Supplement will include a description of (a)
the amount payable under such Credit Enhancement, (b) any conditions to
payment thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Credit Enhancement may be reduced
and under which such Credit Enhancement may be terminated or replaced and (d)
any provisions of any agreement relating to such Credit Enhancement material
to the Certificateholders of such Series. Additionally, in certain cases, the
related Prospectus Supplement may set forth certain information with respect
to the provider of any third-party Credit Enhancement (the 'CREDIT ENHANCER'),
including (i) a brief description of its principal business activities, (ii)
its principal place of business, place of incorporation or the jurisdiction
under which it is chartered or licensed to do business, (iii) if
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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 a Series offered hereby may be subordinated to one or more
other Classes of such Series. 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
related Prospectus Supplement (the 'L/C ISSUER'). Subject to the terms and
conditions specified in the related Prospectus Supplement, the L/C Issuer will
be obligated to honor drawings under a letter of credit in an aggregate dollar
amount (which may be fixed or may be reduced as described in the related
Prospectus Supplement), net of unreimbursed payments thereunder, equal to the
amount described in the related Prospectus Supplement. The amount available
under a letter of credit will be reduced to the extent of the unreimbursed
payments thereunder.
Cash Collateral Guaranty or Account. If so specified in the related
Prospectus Supplement, the Certificates of any Class or Series offered hereby
may have the benefit of a guaranty (the 'CASH COLLATERAL GUARANTY') secured by
the deposit of cash or certain permitted investments in an account (the 'CASH
COLLATERAL ACCOUNT'). A Cash Collateral Guaranty or a Cash Collateral Account
with respect to a Class or Series may be fully or partially funded on the
Series Closing Date with respect thereto and the funds on deposit therein will
be invested in Eligible Investments. The amount available to be withdrawn from
a Cash Collateral Guaranty or a Cash Collateral Account will be the lesser of
the amount on deposit in the Cash Collateral Guaranty or the Cash Collateral
Account and an amount specified in the related Prospectus Supplement. The
related Prospectus Supplement will set forth the circumstances under which
such withdrawals will be made from the Cash Collateral Guaranty or the Cash
Collateral Account.
Collateral Interest. If so specified in the related Prospectus
Supplement, support for a Series of Certificates or one or more Classes
thereof may be provided initially by an uncertificated, subordinated interest
in the Trust (the 'COLLATERAL INTEREST') in an amount initially equal to a
percentage of the Certificates of such Series specified in such Prospectus
Supplement. References to Collateral Invested Amounts herein include
Collateral Interests, if any.
Insurance Policy or Surety Bond. If so specified in the related
Prospectus Supplement, insurance with respect to a Series or Class of
Certificates offered hereby may be provided by one or more insurance
companies. Such insurance will guarantee, with respect to one or more Classes
of the related Series, distributions of interest or principal in the manner
and amount specified in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond may
be purchased for the benefit of the holders of any Series or Class of
Certificates offered hereby to assure distributions of interest or principal
with respect to such Series or Class of Certificates in the manner and amount
specified in such Prospectus Supplement.
Spread Account. If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a Series offered hereby may be
provided by the periodic deposit of certain available excess cash flow from
the Trust Assets into a spread account intended to assure the subsequent
distributions of interest and principal on the Certificates of such Class or
Series in the manner specified in such Prospectus Supplement.
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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 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.
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
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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.
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
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throughout the preceding year or, if there has been a default in the
performance of any such obligation, specifying the nature and status of the
default.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended
from time to time (including, without limitation, in connection with the
issuance of a Supplemental Certificate, addition of a Participation Interest,
allocation of assets in the Trust to a Series or Group, the designation of
Additional Transferors, the addition to the Trust of receivables arising from
charge or credit accounts other than the Revolving Credit Accounts or to
change the definition of Monthly Period, Determination Date or Distribution
Date) by the Servicer, the Transferors and the Trustee, and without the
consent of the Certificateholders of any Series, provided that (x) the Rating
Agency Condition shall have been satisfied and (y) each Transferor shall have
delivered to the Trustee a certificate of an officer of such Transferor to the
effect that such Transferor reasonably believes that such amendment will not
have an Adverse Effect.
The Pooling and Servicing Agreement or any Supplement may be amended by
the Transferors, the Servicer and the Trustee with the consent of the
Certificateholders evidencing not less than 66 2/3% of the aggregate unpaid
principal amount of the Certificates of all affected Series for which the
Transferors have not delivered an officer's certificate stating that there
will be no Adverse Effect, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or any Supplement or of modifying in any manner the rights
of Certificateholders. No such amendment, however, may (a) reduce in any
manner the amount of, or delay the timing of, deposits or distributions on any
Certificate without the consent of each Certificateholder, (b) (i) change the
definition or the manner of calculating the Certificateholders' Interest or
the Invested Amount or (ii) reduce the aforesaid percentage of the aggregate
unpaid principal amount of the Certificates the holders of which are required
to consent to 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--Federal Income Tax
Consequences--General--Pending Legislation.' 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 occurence
of an Insolvency Event. See 'Certain Legal Aspects of the Receivables--Certain
Matters Relating to Insolvency and Receivership.'
DEFEASANCE
Pursuant to the Pooling and Servicing Agreement, the Transferors may
terminate their substantive obligations in respect of a Series or the Pooling
and Servicing Agreement (the 'DEFEASED SERIES') by depositing with the
Trustee, under the terms of an irrevocable trust agreement satisfactory to the
Trustee, from amounts representing or acquired with collections on the
Receivables (allocable to the Defeased Series and available to purchase
additional Receivables) monies or Eligible Investments sufficient to make all
remaining scheduled interest and principal payments on the Defeased Series on
the dates scheduled for such payments and to pay all
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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.'
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.
DESCRIPTION OF THE PURCHASE AGREEMENTS
The following summary is qualified in its entirety by reference to the
Credco Purchase Agreement and 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 to be transferred to the Trust by
RFC II will be acquired by RFC II from Credco pursuant to the RFC II Purchase
Agreement. The Receivables to be 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
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Receivables have been sold to Credco by Centurion and that such Receivables
will be sold or transferred by Credco to RFC II.
Pursuant to the RFC II Purchase Agreement, Credco (the 'SELLER' under the
RFC II Purchase Agreement) will sell to RFC II all of its right, title and
interest in and to (i) all of the Receivables existing in the Accounts as of
the Initial Cut-Off Date and (ii) Recoveries allocable to such Receivables. In
addition, Credco may also sell the Receivables in Additional Accounts
designated from time to time for inclusion as Accounts as of the date of such
designation.
In connection with such sale of Receivables to RFC II, Credco will
indicate in its files that such Receivables have been sold to RFC II by Credco
and that such Receivables will be sold or transferred by RFC II to the Trust.
The records and agreements relating to the Accounts and Receivables may not be
segregated by Credco from other documents and agreements relating to other
credit accounts and receivables. Credco and RFC II will file UCC financing
statements meeting the requirements of applicable state law in each of the
jurisdictions necessary to perfect the ownership or security interest of RFC
II in such Receivables. See 'Risk Factors--Potential Priority of Certain
Liens' and '--Certain Matters Relating to the Insolvency or Receivership of a
Transferor or Other Holder of the Original Transferor Certificate' and
'Certain Legal Aspects of the Receivables.'
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.'
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 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.
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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.'
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 has transferred the Receivables to the Trust
free and clear of the lien of any third party, and each Transferor will covenant
that it will not sell, pledge, assign, transfer, or grant any lien on any
Receivables (or any interest therein) other than to the Trust. While TRS or an
affiliate of TRS is the Servicer, cash collections on the Receivables may be
held by TRS or an affiliate of TRS and commingled with its funds for brief
periods and, in the event of the bankruptcy, insolvency, receivership or
conservatorship of TRS or an affiliate of TRS, the Trust may not have a
perfected interest in such commingled collections.
CERTAIN MATTERS RELATING TO INSOLVENCY AND RECEIVERSHIP
Centurion has represented and warranted that the transfer of Receivables to
Credco pursuant to the Credco Purchase Agreement is a valid sale and assignment
of such Receivables from Centurion to Credco. Centurion also represents and
warrants in the Pooling and Servicing Agreement that the transfer of the
Receivables by it to the Trust pursuant to the Pooling and Servicing Agreement
is either a valid sale and assignment of such Receivables to the Trust or the
grant to the Trust of a security interest in the Receivables. The FDIA, as
amended, 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 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
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contrary position, such as requiring Credco or the Trustee to establish its
right to payments by submitting to and completing the administrative claims
procedures under the FDIA, or the conservator or receiver were to request a stay
of proceedings with respect to Centurion as provided under the FDIA, delays in
payment on outstanding Series of Certificates and possible reductions in the
amount of those payments could occur. In the event Centurion's transfer of
Receivables to the Trust or Centurion's sale of the Receivables to Credco, as
applicable, is deemed to constitute the creation of a security interest, such a
security interest, to the extent it was validly perfected before the insolvency
of Centurion and was not taken or granted in contemplation of insolvency, or
with the intent to hinder, delay or defraud Centurion, the FDIA provides that
such security interest should not be subject to avoidance by the FDIC, as
receiver or conservator. If, however, the FDIC were to assert a contrary
position, such as requiring Credco, RFC II or the Trustee to establish its right
to those payments by submitting to and completing the administrative claims
procedure under the FDIA, or the conservator or receiver were to request a stay
of proceedings with respect to Centurion as provided under the FDIA, delays in
payments on the Certificates and possible reductions in the amount of those
payments could occur. Upon the occurrence of an Insolvency Event with respect to
Centurion, if no Pay-Out Event other than such Insolvency Event exists, the FDIC
may have the power to continue to require Centurion to transfer new Principal
Receivables to the Trust and to prevent the early sale, liquidation, foreclosure
or disposition of the Receivables and the commencement of an Early Amortization
Period or Reinvestment Period. A conservator or receiver of Centurion may also
have the power to cause the early sale of the Receivables and the early
retirement of the Certificates of each Series. A receiver or conservator also
may disaffirm or repudiate Centurion's obligations under the Pooling and
Servicing Agreement to accept reassignment of Receivables from the Trust under
certain conditions.
In addition, if Credco were to become a debtor in a bankruptcy case and a
creditor or bankruptcy trustee of Credco or Credco as a debtor-in-possession
were to take the position that the sale of Receivables from Credco to RFC II
should be recharacterized as a pledge of such Receivables to secure a borrowing
by Credco, then delays in payments of collections of Receivables to RFC II (and
therefore to the Trust and the Certificateholders) could occur and possible
reductions in the amount of such payments could result.
In a case decided by the U.S. Court of Appeals for the Tenth Circuit,
Octagon Gas System, Inc. v. Rimmer, the court determined that 'accounts,' as
defined under the UCC, and which could include the Receivables, may properly be
included in the bankruptcy estate of a transferor regardless of whether the
transfer of such Receivables is treated as a sale or a secured loan. The
circumstances under which the Octagon ruling would apply are not fully known and
the extent to which the Octagon decision will be followed in other courts or
outside of the Tenth Circuit is not certain. Substantially all of Credco's
business is conducted outside the geographic area subject to the jurisdiction of
the Tenth Circuit. However, TRS has a credit card operation center in, and AEDC
is based in, Salt Lake City, 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
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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.'
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, AEDC and TRS--RFC II.'
Each Transferor will take all actions that are required under the UCC to
perfect the Trust's interest in the Receivables and each Transferor has
warranted to the Trust that the Trust will have a first-priority security
interest therein and, with certain exceptions, in the proceeds thereof.
Nevertheless, a tax or government lien or other non-consensual lien on property
of a Transferor arising prior to the time a Receivable is conveyed to the Trust
may have priority over the interest of the Trust in such Receivable. Pursuant to
the Pooling and Servicing Agreement, the Trustee will covenant that it will not
at any time institute against a Transferor any bankruptcy, reorganization,
liquidation, receivership, conservatorship or other proceedings under any
federal or state bankruptcy or similar law. Notwithstanding such steps, if a
Transferor were to become a debtor in a bankruptcy case, and a bankruptcy
trustee, receiver or conservator for such Transferor or a creditor of such
Transferor or the costs and liabilities such Transferor as a
debtor-in-possession were to take the position that the transfer of the
Receivables from such Transferor to the Trust should be recharacterized as a
pledge of such Receivables, then delays in payments on the Certificates and
possible reductions in the amount of such payments could result.
If an Insolvency Event occurs, the Transferors will promptly give notice
thereof to the Trustee and a Pay-Out Event or Reinvestment Event will occur with
respect to each Series. Pursuant to the Pooling and Servicing Agreement, newly
created Receivables will not be transferred to the Trust on and after any such
Insolvency Event unless the bankruptcy trustee, receiver or conservator
instructs otherwise. Following the occurrence of an Insolvency Event with
respect to any Transferor or holder of the Original Transferor Certificate, the
Trustee will proceed to sell, dispose of or otherwise liquidate the Receivables
in a commercially reasonable manner and on commercially reasonable terms, unless
within a specified period of time Certificateholders representing undivided
interests aggregating more than 50% of the Invested Amount of each Series of
Certificates issued and outstanding (or, with respect to any Series with two or
more Classes, 50% of the Invested Amount of each Class), each Transferor (or
other holder of the Original Transferor Certificate) not then subject to an
Insolvency Event, each holder of a Supplemental Certificate, and possibly
certain other persons designated by the Transferors to the Trustee prior to the
Insolvency Event instruct otherwise (assuming that the bankruptcy trustee,
conservator or receiver does not order such a sale despite such instructions).
The proceeds from the sale of the Receivables would be treated as collections of
the Receivables and deposited into the Collection Account and after distribution
of such amounts the Trust will terminate. This procedure could be delayed and
proceeds may be insufficient to pay Certificateholders in full, as described
above. In addition, upon the occurrence of an Insolvency Event with respect to
any Transferor or holder of the Original Transferor Certificate, if no Pay-Out
Event or Reinvestment Event other than such Insolvency Event exists, the
bankruptcy trustee, receiver or conservator for such Transferor or holder, or
such Transferor or holder as a debtor-in-possession, may have the power to
prevent the early sale, liquidation or disposition of the Receivables and the
commencement of the Early Amortization Period or Early Accumulation Period. See
'Description of the Certificates--Pay-Out Events and Reinvestment Events.'
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
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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.'
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.'
PROPOSED LEGISLATION
Congress and the states may enact new laws and amendments to existing laws
to regulate further the consumer revolving credit industry or to reduce finance
charges or other fees or charges applicable to consumer revolving credit
accounts. The potential effect of any such legislation could be to reduce the
yield on the Accounts. If such yield is reduced, a Pay-Out Event or Reinvestment
Event could occur, and the Early Amortization Period or Early Accumulation
Period would commence. See 'Description of the Certificates--Pay-Out Events and
Reinvestment Events.'
RECENT LITIGATION
Since October 1991, a number of lawsuits and administrative actions have
been filed in several states against out-of-state banks (both federally-insured
state chartered banks and federally-insured national banks) and other entities
that issue credit cards. These actions challenge a portion or all of various
fees and charges (such as late fees, over-credit-limit fees, returned payment
check fees and annual membership fees) assessed against residents of the states
in which such suits were filed, based on restrictions or prohibitions under such
states' laws alleged to be applicable to the out-of-state credit card issuers.
There can be no assurance that an Account Owner will not be named as a defendant
in any similar lawsuits or administrative actions. In addition, in October 1991,
a federal district court upheld a Massachusetts law that bars credit card
issuers from assessing late payment fees on credit card accounts of residents of
that state in a proceeding in which Centurion was not a party. However, in
August 1992 the court of appeals reversed the federal district court on the
grounds that Massachusetts law was pre-empted by applicable federal law. In
January 1993, the United States Supreme Court declined to review the decision of
the court of appeals. In December 1994, the Superior Court of Pennsylvania
reinstated a class action law suit, stating that not all of Pennsylvania's
consumer protection laws which purport to prohibit credit card fees and
contingent default charges have been pre-empted by federal law. This case has
been appealed to the Pennsylvania Supreme Court. In December 1995, a lawsuit was
filed against 'American Express Company Inc.' and other defendants not
affiliated with the Transferors in the Superior Court of New Jersey, Passaic
County. The case, which was removed to federal court in February 1996, is an
action in which the plaintiffs seek to recover from the defendants certain
credit card fees that the plaintiffs allege were improperly charged by the
defendants under state law. Further proceedings in the case have been stayed
pursuant to a stipulation among the parties thereto. The Supreme Courts of
California, Colorado and New Jersey have also recently handed down decisions in
similar actions. The California and Colorado Supreme Courts opined that federal
law governs late fees and found for the defendant credit card issuers, while the
New Jersey Supreme Court found that late payment fees are not interest and that,
therefore, state law is not preempted by federal law with respect to such fees.
On January 19, 1996, the United States Supreme Court accepted an appeal from the
California Supreme Court's decision, which found that the charge in question was
governed by federal law and was, therefore, proper. Such actions and
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similar actions which may be brought in other states as a result of such
actions, if resolved adversely to credit card issuers, or reversals of favorable
judicial decisions, could have the effect of limiting certain charges, other
than periodic finance charges, that could be assessed on credit card accounts of
residents of such states and could require credit card issuers such as Centurion
to pay refunds and civil penalties with respect to charges previously imposed on
account holders in such states. A potential effect of any such litigation
involving an Account Owner, if successful, would be to reduce the amount of late
charges and other ancillary fees and affect the collectibility of certain
Receivables and as a result may affect the yield on the Accounts. If such a
reduction occurs, a Pay-Out Event or Reinvestment Event may occur. See
'Description of the Certificates--Pay-Out Events and Reinvestment Events.'
Pursuant to the Pooling and Servicing Agreement, if the interest of the
Certificateholders in a Receivable is materially adversely affected by the
failure of the Receivable to comply in all material respects with applicable
requirements of law, the interest of such Certificateholders in all Receivables
in the affected Account will be reassigned to the Transferors. On each Series
Closing Date, the Transferors will make certain other representations and
warranties relating to the validity and enforceability of the Accounts and the
Receivables. The sole remedy, if any such representation or warranty is breached
and such breach has a material adverse effect on the interest of
Certificateholders in any Receivable and continues beyond the applicable cure
period, is that the interest of the Certificateholders in the Receivables
affected thereby will be reassigned to the Transferors or assigned to the
Servicer, as the case may be. In addition, in the event of the breach of certain
representations and warranties, the Transferors may be obligated to accept the
reassignment of all of the Receivables in the Accounts in the Trust portfolio.
See 'The Pooling and Servicing Agreement Generally--Representations and
Warranties' and '--Servicer Covenants' and 'Certain Legal Aspects of the
Receivables--Consumer Protection Laws.'
TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES--GENERAL
Set forth below is a discussion of certain material federal income tax
consequences to holders of the Certificates, which is based on the opinion of
Brown & Wood, special federal tax counsel to the Transferors and the Trust ('TAX
COUNSEL'). This discussion does not deal with all aspects of federal income
taxation that may be relevant to holders of the Certificates in light of their
personal investment circumstances, nor to certain types of holders subject to
special treatment under the federal income tax laws (for example, banks,
thrifts, regulated investment companies, real estate investment trusts, dealers
in securities or currencies, tax-exempt investors, life insurance companies,
tax-exempt organizations and investors that have a functional currency other
than the U.S. dollar or that hold their certificates as part of a hedge,
straddle or conversion transaction). PROSPECTIVE INVESTORS ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE FEDERAL INCOME TAX
CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF CERTIFICATES, AS WELL AS
THE TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY OR
OTHER JURISDICTION. THIS DISCUSSION IS BASED UPON PRESENT PROVISIONS OF THE
INTERNAL REVENUE CODE OF 1986 (THE 'CODE'), THE REGULATIONS PROMULGATED
THEREUNDER, AND JUDICIAL OR RULING AUTHORITY, ALL OF WHICH ARE SUBJECT TO
CHANGE, WHICH CHANGE MAY BE RETROACTIVE. NO RULING ON ANY OF THE ISSUES
DISCUSSED BELOW WILL BE SOUGHT FROM THE INTERNAL REVENUE SERVICE (THE 'IRS').
The discussion assumes that a Certificate is issued in registered form, has
all payments denominated in U.S. dollars and has a term that exceeds one year.
Moreover, the discussion assumes that the interest formula for the Certificate
meets the requirements for 'qualified stated interest' under Treasury
regulations (the 'OID REGULATIONS') relating to original issue discount ('OID'),
and that any OID on the Certificate (i.e., any excess of the principal amount of
the Certificate over its issue price) does not exceed a de minimis amount (i.e.,
1/4% of its principal amount multiplied by the number of full years until its
maturity date), all within the meaning of the OID regulations. Moreover, the
discussion assumes that the Certificates are a type which counsel is of the
opinion will be debt for federal income tax purposes. The applicable Prospectus
Supplement will set forth a discussion of any additional material tax
consequences with respect to Certificates not conforming to the foregoing
assumptions.
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Treatment of the Certificates as Indebtedness. The Transferors,
Certificateholders and Trustee will express in the Pooling and Servicing
Agreement the intent that for federal, state and local income and franchise tax
purposes, the Certificates will be indebtedness of the Transferors secured by
the Receivables. The Transferors, by entering into the Pooling and Servicing
Agreement, and each investor, by the acceptance of a Certificate, will agree to
treat the Certificates as indebtedness of the Transferors for federal, state and
local income and franchise tax purposes. However, because different criteria are
used in determining the nontax accounting treatment of the transaction, the
Transferors will treat the transfer of Receivables under the Pooling and
Servicing Agreement for certain nontax accounting purposes as a transfer of an
ownership interest in the Receivables, and not as creating a debt obligation of
the Transferors.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines the tax consequences. The characterization
for nontax purposes 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
nontax purposes.
The determination of whether the economic substance of a transfer of an
interest in property is a sale or, 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
transferee has obtained) substantial incidents of ownership in the property.
Among those factors, the primary factors examined are whether the transferee has
the opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based upon its analysis of such
factors, Brown & Wood, special federal tax counsel to the Transferor and the
Trust ('TAX COUNSEL'), has concluded that the holders of Certificates are not
the owners of the Receivables for federal income tax purposes. Moreover, in the
opinion of Tax Counsel, the Certificates will properly be characterized for
federal income tax purposes as indebtedness.
Treatment of the Trust. The Trust could be viewed for federal income tax
purposes either as (i) a collateral arrangement for debt issued directly by the
Transferors and other holders of the Transferor Certificate or (ii) as a
separate entity issuing its own debt and owned by the Transferors and all other
holders of the Transferor Certificate. However, in the opinion of Tax Counsel,
in the former event the Trust will be disregarded for federal income tax
purposes and in the latter event the Trust under current law would be a
partnership, rather than an association (or publicly traded partnership) taxable
as a corporation. Therefore, in the opinion of Tax Counsel, under current law
the Trust will not be subject to federal income tax.
Pending Legislation. During 1995, the United States Congress passed the
'Seven Year Balanced Budget Act of 1995,' H.R. 2491 (the 'BILL'). Although the
Bill was vetoed by President Clinton, it would have created a new type of entity
for federal income tax purposes called a 'financial asset securitization
investment trust' or 'FASIT,' and future legislation may include provisions
similar to the FASIT provisions of the Bill. If those provisions are
reintroduced and enacted in the form contained in the Bill, they generally will
enable certain arrangements similar to the Trust to elect to be treated as a
FASIT. Under the FASIT provisions of the Bill, a FASIT generally would 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
an election. See 'The Pooling and Servicing Agreement Generally--Amendments.'
However, there can be no assurance that FASIT provisions of the Bill will be
reintroduced and enacted, that they will be enacted in their present form, or
that they will permit an election to be made with respect to all or any portion
of the Trust. There also 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. However, if such an election is made, it may cause a holder to
recognize gain (but not loss) with respect to its Certificate, even though 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
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Servicing Agreement and any Supplement may have other tax and non-tax
consequences to Certificateholders. Accordingly, prospective Certificateholders
should consult their tax advisors with regard to the effects of any such
election and any permitted related amendments on them in their particular
circumstances.
FEDERAL INCOME TAX CONSEQUENCES--UNITED STATES INVESTORS
Interest Income to Certificateholders. Assuming the Certificates are debt
obligations for federal income tax purposes, they should not be considered
issued with more than de minimis OID (except as discussed in the applicable
Prospectus Supplement). Under this interpretation, interest thereon should be
taxable as ordinary interest income when received or accrued by holders
utilizing the cash or accrual methods of accounting, respectively. Under the OID
regulations, a holder of a Certificate issued with a de minimis amount of OID
must include such OID in income, on a pro rata basis, as principal payments are
made on the Certificate. A purchaser who buys a Certificate for more or less
than its principal amount will generally be subject, respectively, to the
premium amortization or market discount rules of the Code.
If, however, because of the limited remedies available to
Certificateholders in the event interest is not paid, the IRS determined that
interest on the Certificates does constitute 'qualified stated interest,'
Certificates would be considered to have OID. This would not have a significant
effect on holders of Certificates. However, cash basis holders would in effect
be required to report interest income as it accrues rather than when it is paid.
Moreover, all holders would be required to accrue any de minimis discount into
income over the life of the Certificates rather than when principal is paid. The
Transferor intends to take the position that interest on the Certificates
constitutes 'qualified stated interest' and that the above consequences do not
apply.
Market Discount and Premium. A holder of a Certificate that purchases an
interest in a Certificate at a discount that exceeds any unamortized OID may be
subject to the 'market discount' rules of sections 1276 through 1278 of the
Code. These rules provide, in part, that gain on the sale or other disposition
of a Certificate and partial principal payments on a Certificate are treated as
ordinary income to the extent of accrued market discount. A holder of a
Certificate may instead elect to accrue market discount into income on a current
basis. Unless such an election is made, interest deductions will be deferred
with respect to debt incurred to purchase or carry a Certificate that has market
discount.
A U.S. Certificateholder who purchases an interest in a Certificate at a
premium may elect to offset the premium against interest income over the
remaining term of the Certificate in accordance with the provisions of section
171 of the Code.
Under section 1272(a)(6) of the Code, special provisions apply to OID,
market discount and premium on 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.
Sale or Exchange of Certificates. Upon a sale or exchange of a
Certificate, a holder generally will recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and the
Certificateholder's adjusted basis in its interest in the Certificate. A taxable
exchange of a Certificate also could occur as a result of the Transferors'
substitution of money or investments for Receivables. See 'The Pooling and
Servicing Agreement Generally--Defeasance.' The adjusted basis in the interest
in the Certificate will equal its cost, increased by any market discount
includable 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.
Tax Reporting. The paying agent will be required to report annually to the
IRS, and to each Certificateholder of record, the amount of interest paid on
Certificates (and the amount of interest withheld for federal income taxes, if
any) for each calendar year, except as to exempt holders (generally, holders
that are corporations, tax-exempt organizations, qualified pension and
profit-sharing trusts, individual retirement accounts, or nonresident aliens who
provide certification as to their status as nonresidents). As long as the only
'Certificateholder' of record is Cede, as nominee for DTC, Certificateholders
and the IRS will receive tax and
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other information only from Participants and Indirect Participants rather than
the paying agent. Accordingly, each nonexempt Certificateholder will be required
to provide, under penalties of perjury, a certificate on IRS Form W-9 containing
the holder's name, address, correct federal taxpayer identification number and a
statement that such holder is not subject to backup withholding. If a nonexempt
Certificateholder fails to provide the required certification, the paying agent
(or the Participants or Indirect Participants) will be required to withhold (or
cause to be withheld) 31% of the interest (and principal) otherwise payable to
the holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
Possible Classification of the Certificates as Interests in a Partnership
or Association. Although, as described above, it is the opinion of Tax Counsel
that all Investor Certificates will properly be characterized as debt for
federal income tax purposes, such opinion is not binding on the IRS and thus no
assurance can be given that such a characterization will prevail. If the IRS
were to contend successfully that some or all of the Certificates were not debt
obligations for federal income tax purposes, the arrangement among the
Transferor, any other holders of the Transferor Certificate, the holders of such
Certificates and any other holders of other Certificates might be classified as
a partnership for federal income tax purposes, as an association taxable as a
corporation or as a 'publicly traded partnership' taxable as a corporation.
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
taxable as a corporation. Further, regulations published by the Treasury
Department on December 4, 1995 (the 'REGULATIONS') could cause the Trust to
constitute a publicly traded partnership even if all holders of interests in the
publicly offered Certificates are treated as holding debt. The Regulations
generally apply to taxable years beginning after December 31, 1995 and,
accordingly, 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
the grandfather period. If the Trust were classified as a publicly traded
partnership, whether by reason of the treatment of publicly offered Certificates
as equity or by reason of the Regulations, it would avoid taxation as a
corporation if its income was not derived in the conduct of a 'financial
business;' however, whether the income of the Trust would be so classified is
unclear.
Under the Code and the Regulations, a partnership will be classified as a
publicly traded partnership if equity interests therein are traded on an
'established securities market,' or are 'readily tradable' on a 'secondary
market' or its 'substantial equivalent.' The Transferors intend to take measures
designed to reduce the risk that the Trust could be classified as a publicly
traded partnership by reason of interests in the Trust other than the publicly
traded Certificates. Although the Transferors expect 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 partnership were nevertheless not taxable as a corporation (because
of the exception for an entity whose income is interest income that is not
derived in the conduct of a financial business) it would not be subject to
federal income tax. Rather, each item of income, gain, loss, deduction and
credit generated through the ownership of the Receivables by the partnership
would be passed through to the partners in such a partnership (including holders
of Certificates that are treated as equity interests in the partnership)
according to their respective interests therein. The timing and character of
income reportable by Certificateholders as partners in such a partnership could
differ from the timing and character of income reportable by Certificateholders
as holders of debt. For example, a cash basis Certificateholder treated as a
partner might be required to report income when it accrues to the partnership
rather than when it is received by the Certificateholder; however, the aggregate
amount of income recognized over time generally would be substantially the same,
although an individual Certificateholder's share of expenses of the partnership
would be miscellaneous itemized deductions that might not be deductible in whole
or in part, meaning that the holder might be taxed on a greater amount of income
than the stated interest on the Certificates. Finally, 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
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Certificates that are treated as equity could be treated as unrelated
debt-financed income under the Code taxable to the investor.
If, alternatively, some or all of the Certificates were treated as equity
interests in an association taxable as a corporation or a 'publicly traded
partnership' taxable as a corporation, the resulting entity would be subject to
federal income taxes at corporate tax rates on its taxable income generated by
ownership of the Receivables. Moreover, distributions by the entity on
Certificates so treated and the Transferor Certificate would not be deductible
in computing the entity's taxable income, and distributions to holders of such
Certificates would probably be treated as dividend income. Such an entity-level
tax could result in reduced distributions to all Certificateholders, and the
holders of Certificates that are treated as equity could also be liable for a
share of such a tax.
Since the Transferors will treat the Certificates as indebtedness for
federal income tax purposes, the Paying Agent (and Participants and Indirect
Participants) will not comply with the information reporting and other tax
requirements that would apply under those alternative characterizations of the
Certificates.
FEDERAL INCOME TAX CONSEQUENCES--NON-UNITED STATES INVESTORS
Tax Counsel has given its opinion that the Certificates will properly be
classified as debt for federal income tax purposes. If the Certificates are
treated as debt:
(a) interest paid to a nonresident alien or foreign corporation or
partnership would be exempt from U.S. withholding taxes (including backup
withholding taxes), provided the holder complies with applicable
identification requirements (and does not actually or constructively own
10% or more of the voting stock of American Express Company, is not a
controlled foreign corporation with respect to American Express Company and
does not bear certain relationships to holders of the Transferor
Certificate other than the Transferor). Applicable identification
requirements will be satisfied if there is delivered to a securities
clearing organization (or bank or other financial institution that holds
Certificates on behalf of the customer in the ordinary course of its trade
or business) (i) IRS Form W-8 signed under penalties of perjury by the
beneficial owner of the Certificates stating that the holder is not a U.S.
person and providing such holder's name and address, (ii) IRS Form 1001
signed by the beneficial owner of the Certificates or such owner's agent
claiming exemption from withholding under an applicable tax treaty, or
(iii) IRS Form 4224 signed by the beneficial owner of the Certificates or
such owner's agent claiming exemption from withholding of tax on income
connected with the conduct of a trade or business in the United States;
provided that in any such case (x) the applicable form is delivered
pursuant to applicable procedures and is properly transmitted to the United
States entity otherwise required to withhold tax and (y) none of the
entities receiving the form has actual knowledge that the holder is a U.S.
person or that any certification on the form is false;
(b) a holder of a Certificate who is a nonresident alien or foreign
corporation will not be subject to United States federal income tax on gain
on the sale, exchange or redemption of such Certificate, provided that (i)
such gain is not effectively connected to a trade or business carried on by
the holder in the United States, (ii) in the case of a holder that is an
individual, such holder is not present in the United States for 183 days or
more during the taxable year in which such sale, exchange or redemption
occurs, and (iii) in the case of gain representing accrued interest, the
conditions described in clause (a) are satisfied; and
(c) a Certificate held by an individual who at the time of death is a
nonresident alien will not be subject to United States federal estate tax
as a result of such individual's death if, immediately before his death,
(i) the individual did not actually or constructively own 10% or more of
the voting stock of American Express Company and does not bear certain
relationships to holders of the Transferor Certificate other than the
Transferors and (ii) the holding of such Certificate was not effectively
connected with the conduct by the decedent of a trade or business in the
United States.
If the IRS were to contend successfully that some or all of the
Certificates are equity interests in a partnership (not taxable as a
corporation), a holder of such a Certificate that is a nonresident alien or
foreign corporation might (i) be subject to tax on the gross amount of interest
on the Receivables allocable to it (and subject to withholding) at the rate of
30% unless such rate were reduced by an applicable treaty or (ii) be required to
file a U.S. individual or corporate income tax return and pay tax on its share
of partnership income at regular
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U.S. rates, including in the case of a corporation the branch profits tax (and
would be subject to withholding tax on its share of partnership income). If some
or all of the Certificates are recharacterized as equity interests in an
association taxable as a corporation or a 'publicly traded partnership' taxable
as a corporation, to the extent distributions on such Certificates were treated
as dividends, a nonresident alien individual or foreign corporation would
generally be taxed on the gross amount of such dividends (and subject to
withholding) at the rate of 30% unless such rate were reduced by an applicable
treaty.
STATE AND LOCAL TAX CONSEQUENCES
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the Certificateholders in all of the state taxing
jurisdictions in which they are already subject to tax. Certificateholders are
urged to consult their own tax advisors with respect to state income and
franchise taxes.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ('ERISA'), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan or an individual retirement account (a
'PLAN') from engaging in certain transactions involving 'plan assets' with
persons that are 'parties in interest' under ERISA or 'disqualified persons'
under the Code with respect to the Plan or account. A violation of these
'prohibited transaction' rules may generate excise tax and other liabilities
under ERISA and the Code for such persons. For example, a prohibited transaction
would arise, unless an exemption is applicable, if a Certificate were viewed as
debt of either Transferor and such Transferor were a party in interest or a
disqualified person with respect to a Plan that acquired the Certificate.
Moreover, additional prohibited transactions could arise if the Trust
Assets were deemed to constitute 'plan assets' of any Plan that owned
Certificates. The Department of Labor ('DOL') has issued a final regulation (the
'FINAL REGULATION') concerning the definition of what constitutes 'plan assets'
of a Plan subject to ERISA or Section 4975 of the Code. Under the Final
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 Final Regulation is applicable to the Trust.
The Final 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
Final Regulation contains an exception which provides that, if a Plan (or an
entity whose assets include plan assets) acquires a 'publicly-offered security,'
the issuer of the security is not deemed to hold 'plan assets.' A
publicly-offered security is a security which is (i) freely transferable, (ii)
part of a class of securities that is owned by 100 or more investors independent
of the issuer and of one another at the conclusion of the initial offering and
(iii) either is (A) part of a class of securities registered under Section 12(b)
or 12(g) of the Exchange Act, or (B) sold to the Benefit Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or such
later time as may be allowed by the 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 Exchange Act. Based on
information provided by any underwriter, agent or dealer involved in the
distribution of the Certificates offered hereby, the Transferors will notify the
Trustee as to whether or not the Certificates of any Series (or, if there is
more than one Class in a Series, each Class) will be expected to be held by at
least 100 separately named persons at the conclusion of the offering. The
Transferor will not, however, determine whether there will, in fact, be at least
100 separately named persons or whether the 100-investor requirement of the
exception for publicly offered securities is satisfied as to the Certificates of
such Series (or Class). Prospective purchasers may obtain a copy of the
notification described in the second preceding sentence from the Trustee at its
Corporate Trust Department.
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If the Certificates of a Series (or Class) fail to meet the criteria of
publicly-offered securities and the Trust Assets are deemed to include 'plan
assets,' transactions involving the Trust and parties in interest or
disqualified persons with respect to such Plans might be prohibited under
Section 406 of ERISA and Section 4975 of the Code unless an exemption is
applicable. Thus, for example, if a participant in any Plan holding Certificates
of such Series (or Class) is an Account holder of one of the Accounts, under a
DOL interpretation the purchase of such Certificates by such Plan could
constitute a prohibited transaction. The following five class exemptions issued
by the DOL could apply in such event: DOL Prohibited Transaction Class Exemption
('PTCE') 96-23 (Class Exemption for Plan Asset Transactions Determined by
In-House Asset Managers), 95-60 (Class Exemption for Certain Transactions
Involving Insurance Company General Accounts), PTCE 91-38 (Class Exemption for
Certain Transactions Involving Bank Collective Investment Funds), PTCE 90-1
(Class Exemption for Certain Transactions Involving Insurance Company Pooled
Separate Accounts) and PTCE 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers). There is no
assurance that these exemptions, even if all of the conditions specified therein
are satisfied, will apply to all transactions involving the Trust Assets.
Moreover, as discussed above, while (unless provided otherwise in the
applicable Prospectus Supplement) Tax Counsel has given its opinion that the
Certificates will properly be treated as debt for federal income tax purposes,
if any Certificates are treated as equity interests in a partnership in which
other Certificates are debt, all or part of a tax-exempt investor's share of
income from the Certificates that are treated as equity could be treated as
unrelated debt-financed income under the Code taxable to the investor.
In light of the foregoing, fiduciaries of Plans (or other entities whose
assets include 'plan assets') considering the purchase of Certificates should
consult their own counsel as to whether the acquisition of such Certificates
would be 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 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 a Plan. Furthermore, in that case, the Pooling and Servicing
Agreement, the Supplement and each such Certificate will provide that each
holder of such Certificate shall be deemed to have represented and warranted
that it is not a Plan and is not purchasing such Certificate on behalf of a Plan
or with assets that are treated as 'plan assets' of a Plan.
PLAN OF DISTRIBUTION
The Transferors may sell Certificates (a) through underwriters or dealers,
(b) directly to one or more purchasers, or (c) through agents. The related
Prospectus Supplement will set forth the terms of the offering of any
Certificates offered hereby, including, without limitation, the names of any
underwriters, the purchase price of such Certificates and the proceeds to the
Transferors from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in a sale of any Certificates of a Series offered
hereby, such Certificates will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of commitment
therefor. Such Certificates may be offered to the public either through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate, including by an underwriter directly to a trust or other
special purpose funding vehicle. Unless otherwise set forth in the related
Prospectus Supplement, the obligations of the underwriters to purchase such
Certificates will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of such Certificates if any of
such Certificates are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
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Certificates of a Series offered hereby may also be offered and sold, if so
indicated in the related Prospectus Supplement, in connection with a remarketing
upon their purchase, in accordance with a redemption or repayment pursuant to
their terms, by one or more firms ('REMARKETING FIRMS') acting as principals for
their own accounts or as agents for the Transferors. Any Remarketing Firm will
be identified and the terms of its agreement, if any, with the Transferors and
its compensation will be described in the related Prospectus Supplement.
Remarketing Firms may be deemed to be underwriters in connection with the
Certificates remarketed thereby.
Certificates may also be sold directly by the Transferors or through agents
designated by the Transferors from time to time. Any agent involved in the offer
or sale of Certificates will be named, and any commissions payable by the
Transferors to such agent will be set forth, in the related Prospectus
Supplement. Unless otherwise indicated in the related Prospectus Supplement, any
such agent will act on a best efforts basis for the period of its appointment.
Any underwriters, agents or dealers participating in the distribution of
Certificates may be deemed to be underwriters, and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions, under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Transferors
to indemnification by the Transferors against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be affiliates or customers of, engage in
transactions with, or perform services for, the Transferors or their affiliates
in the ordinary course of business.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Transferors and the Trust by Brown & Wood, New York, New York. Certain other
legal matters will be passed upon for the Transferors and the Trust by Orrick,
Herrington & Sutcliffe, Washington, D.C. Certain legal matters will be passed
upon for the Underwriters by Orrick, Herrington & Sutcliffe, Washington, D.C.
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 Brown & Wood, New York, New York.
75
<PAGE>
INDEX OF DEFINED TERMS
TERMS PAGE(S)
- ----- -------
Account Owner...................... 3
Account Owners..................... 3
Accounts........................... 1, 34
Additional Accounts................ 28
Additional Transferors............. 3, 44
Adverse Effect..................... 26
AEDC............................... 4, 32
Aggregate Addition................. 28
Aggregate Addition Accounts........ 27
American Express................... 3, 32
APR................................ 31
Assigned Assets.................... 33
Assumed Obligations................ 33
Assuming Entity.................... 34
Average Rate....................... 25
Bankruptcy Code.................... 20
Bill............................... 69
Cardmember......................... 29
Cash Collateral Account............ 58
Cash Collateral Guaranty........... 58
CEBA............................... 22
Cede............................... 2, 35
Cedel.............................. 9
Cedel Participants................. 37
Centurion.......................... 1, 3, 4, 32
Certificate Owners................. 2
Certificateholders' Interest....... 5
Certificates....................... 1, 5
Charge Card Account................ 29
Class.............................. 1
Code............................... 68
Collateral Interest................ 58
Collateral Invested Amount......... 5, 58
Collection Account................. 49
Commission......................... 2
Controlled Accumulation Amount..... 11
Controlled Accumulation Period..... 10
Controlled Amortization Amount..... 12
Controlled Amortization Period..... 12
Controlled Deposit Amount.......... 11
Controlled Distribution Amount..... 12
Cooperative........................ 37
Credco............................. 32
Credco Purchase Agreement.......... 7
Credit Enhancement................. 16
Credit Enhancer.................... 57
Date of Processing................. 17
Defaulted Amount................... 57
Defaulted Receivables.............. 57
Defeased Series.................... 61
Definitive Certificates............ 38
76
<PAGE>
TERMS PAGE(S)
- ----- -------
Depositaries....................... 36
Depository......................... 35
Determination Date................. 17
Disclosure Document................ 7
Discount Percentage................ 46
Discount Receivables............... 46
Distribution Date.................. 16
DOL................................ 73
DTC................................ 2
Early Accumulation Period.......... 11
Early Amortization Period.......... 12
Eligible Account................... 28
Eligible Institution............... 49
Eligible Investments............... 50
Eligible Receivable................ 42
ERISA.............................. 73
Euroclear.......................... 9
Euroclear Operator................. 37
Euroclear Participants............. 37
Euroclear Provisions............... 37
Excess Allocation Series........... 13
Excess Finance Charge
Collections...................... 55
Exchange Act....................... 2
Expected Final Payment Date........ 9
FASIT.............................. 69
FDIA............................... 20
FDIC............................... 19
Final Regulation................... 73
Finance Charge Receivables......... 8
FIRREA............................. 20
Floating Allocation Percentage..... 52
Full Invested Amount............... 15
Funding Period..................... 15
Group.............................. 5
Group Investor Additional
Amounts.......................... 53
Group Investor Default Amount...... 53
Group Investor Finance Charge
Collections...................... 53
Group Investor Monthly Fees........ 53
Group Investor Monthly Interest.... 53
Holders............................ 38
Indirect Participants.............. 36
Ineligible Receivables............. 42
Initial Accounts................... 8
Initial Cut-Off Date............... 7, 41
Insolvency Event................... 21
Interest Funding Account........... 9
Interest Payment Date.............. 48
Invested Amount.................... 48
Investor Default Amount............ 53
Investor Finance Charge
Collections...................... 53
IRS................................ 68
L/C Issuer......................... 58
MasterCard......................... 24
77
<PAGE>
TERMS PAGE(S)
- ----- -------
Monthly Period..................... 5
Monthly Servicing Fee.............. 41
Moody's............................ 21
New Accounts....................... 27
New Issuance....................... 48
OID................................ 68
OID regulations.................... 68
Optima Accounts.................... 29
Optima Card Account................ 29
Optima Line of Credit Account...... 29
Original Transferor Certificate.... 6
Paired Series...................... 14
Participants....................... 36
Participation Interests............ 4
Pay-Out Event...................... 40
Permitted Liens.................... 43
Plan............................... 73
Pooling and Servicing Agreement.... 1
Portfolio Yield.................... 25
Pre-Funding Account................ 15
Pre-Funding Amount................. 15
Premium Percentage................. 46
Premium Receivables................ 46
Prime Rate......................... 26
Principal Allocation Percentage.... 14, 52
Principal Commencement Date........ 9
Principal Funding Account.......... 11
Principal Receivables.............. 9
Principal Sharing Series........... 13
Principal Shortfalls............... 55
Principal Terms.................... 48
Prior Series....................... 14
Prospectus Supplement.............. 1, 3
PTCE............................... 74
Rating Agency...................... 18
Rating Agency Condition............ 26
Reallocated Investor Finance Charge
Collections...................... 52
Reallocation Group................. 13
Receivables........................ 1, 4
Receivables Purchase Agreement..... 3
Record Date........................ 35
Recoveries......................... 7
Regulations........................ 71
Reinvestment Events................ 41
Remarketing Firms.................. 75
Removed Accounts................... 8
Required Minimum Principal
Balance.......................... 45
Required Transferor Amount......... 6
Revolving Credit Accounts.......... 29
Revolving Period................... 10
RFC II............................. 1, 3, 32
RFC II Purchase Agreement.......... 7
S&P................................ 21
78
<PAGE>
TERMS PAGE(S)
- ----- -------
Securities Act..................... 2
Selection Date..................... 8
Seller............................. 63
Senior Certificates................ 25
Series............................. 1, 3
Series Adjusted Invested Amount.... 51
Series Allocable Defaulted
Amount........................... 51
Series Allocable Finance Charge
Collections...................... 51, 53
Series Allocable Principal
Collections...................... 51
Series Allocation Percentage....... 51
Series Closing Date................ 10
Series Cut-Off Date................ 10
Series Enhancement................. 4
Series Invested Amount............. 45
Series Required Transferor
Amount........................... 51
Series Termination Date............ 11
Service Transfer................... 59
Servicer........................... 1, 3
Servicer Default................... 60
Servicing Fee...................... 41
Shared Principal Collections....... 55
Sign & Travel Account.............. 29
Special Funding Account............ 56
Special Payment Date............... 40
Subordinated Certificates.......... 25
Supplement......................... 6
Supplemental Certificate........... 6, 44
Surviving Servicer Company......... 33
Surviving Transferor Company....... 33
Tax Counsel........................ 68, 69
Tax Opinion........................ 49
Termination Notice................. 59
Total Portfolio.................... 34
Transferor......................... 1, 3, 4
Transferor Amount.................. 6, 43
Transferor Certificates............ 6
Transferor Servicing Fee........... 41
Transferors' Interest.............. 5
TRS................................ 3, 32, 33
Trust.............................. 1, 3
Trust Adjusted Invested Amount..... 51
Trust Assets....................... 4
Trustee............................ 1, 3
Trust Portfolio.................... 34
UCC................................ 19
VISA............................... 24
79
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRANSFERORS. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE
ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER OR A SOLICITATION BY ANYONE IN
ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT QUALIFIED OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TRANSFERORS SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary of Series Terms........................ S-3
Risk Factors................................... S-13
Maturity Considerations........................ S-13
The Total Portfolio............................ S-15
The Receivables................................ S-17
Use of Proceeds................................ S-19
RFC II, Centurion, AEDC and Credco............. S-19
The Servicer................................... S-20
Series Provisions.............................. S-20
Underwriting................................... S-37
Index of Defined Terms......................... S-39
PROSPECTUS
Prospectus Supplement.......................... 2
Reports to Certificateholders.................. 2
Available Information.......................... 2
Incorporation of Certain Documents
by Reference................................. 2
Prospectus Summary............................. 3
Risk Factors................................... 19
Use of Proceeds................................ 28
The Trust...................................... 28
Centurion's Revolving Credit Businesses........ 29
RFC II, Credco, Centurion, AEDC and TRS........ 32
Merger or Consolidation of a Transferor or the
Servicer..................................... 33
Assumption of a Transferor's Obligations....... 33
The Accounts................................... 34
Description of the Certificates................ 35
The Pooling and Servicing Agreement
Generally.................................... 41
Description of the Purchase Agreements......... 62
Certain Legal Aspects of the Receivables....... 64
Tax Matters.................................... 68
ERISA Considerations........................... 73
Plan of Distribution........................... 74
Legal Matters.................................. 75
Index of Defined Terms......................... 76
UNTIL AUGUST 7, 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SERIES 1996-1 CERTIFICATES WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[LOGO] Recycled
Paper
------------------------------------------------------
------------------------------------------------------
AMERICAN EXPRESS
CREDIT ACCOUNT
MASTER TRUST
$865,000,000 CLASS A
SERIES 1996-1 6.80%
ASSET BACKED CERTIFICATES
$60,000,000 CLASS B
SERIES 1996-1 6.95%
ASSET BACKED CERTIFICATES
AMERICAN EXPRESS CENTURION BANK
AND
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL
RELATED SERVICES
COMPANY, INC.
SERVICER
[AMERICAN EXPRESS LOGO]
----------------------------------
PROSPECTUS SUPPLEMENT
----------------------------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS B CERTIFICATES
MERRILL LYNCH & CO.
LEHMAN BROTHERS
Dated May 9, 1996
------------------------------------------------------
------------------------------------------------------
EXHIBIT 5.1
<PAGE>
SPECIMEN
CLASS A CERTIFICATE
REGISTERED $___________
No. R-__ CUSIP No. 02582J AA8
Unless this Class A Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to American Express Centurion Bank and American Express
Receivables Finance Corporation II or their agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS A 6.80% ASSET BACKED CERTIFICATE
Expected Final Payment Date:
The May 2001 Distribution Date
Each $1,000 minimum denomination represents a
1/865,000 undivided interest
in Class A of the
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST, SERIES 1996-1
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists primarily of an interest in receivables generated from time to
time in the ordinary course of business in a portfolio of credit and charge
accounts serviced by
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
and other assets and interests constituting Trust Assets under the Pooling and
Servicing Agreement referred to below.
(Not an interest in or obligation of American Express Travel Related Services
Company, Inc., American Express Centurion Bank, American Express Receivables
Financing Corporation II or any of their respective affiliates)
This certifies that CEDE & CO. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to the Pooling and Servicing Agreement, dated as
of May 16, 1996 (as amended and supplemented, the "Agreement"), as supplemented
by the Series 1996-1 Supplement, dated as of May 16, 1996 (as amended and
supplemented, the "Supplement"), among American Express Centurion Bank and
American Express Receivables Financing Corporation II, as transferors (together,
the "Transferors"), American Express Travel Related Services Company, Inc., as
servicer, and The Bank of New York, a New York banking
<PAGE>
corporation, as trustee (the "Trustee"). The corpus of the Trust consists of (i)
the Transferors' ownership interest in a portfolio of receivables (the
"Receivables") existing in credit and charge accounts identified under the
Agreement from time to time (the "Accounts"), (ii) all Receivables generated
under the Accounts from time to time thereafter, (iii) funds collected or to be
collected from cardmembers in respect of the Receivables, (iv) all funds which
are from time to time on deposit in the Collection Account, the Special Funding
Account and any other Series Accounts and (v) all other assets and interests
constituting the Trust. The Holder of this Certificate is entitled to the
benefits of the subordination of the Class B Certificates and the Collateral
Interest to the extent provided in the Supplement. Although a summary of certain
provisions of the Agreement and the Supplement is set forth below and in the
Summary of Terms and Conditions attached hereto and made a part hereof, this
Class A Certificate does not purport to summarize the Agreement and the
Supplement and reference is made to the Agreement and the Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Supplement (without schedules) may
be requested from the Trustee by writing to the Trustee at the Corporate Trust
Office. To the extent not defined herein, the capitalized terms used herein have
the meanings ascribed to them in the Agreement or the Supplement, as applicable.
This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement and the Supplement, to which
Agreement and Supplement, each as amended and supplemented from time to time,
the Class A Certificateholder by virtue of the acceptance hereof assents and is
bound.
It is the intent of the Transferors and the Class A
Certificateholders that, for federal, state and local income and franchise tax
purposes, the Class A Certificates will qualify as indebtedness of the
Transferors secured by the Receivables. The Class A Certificateholder, by the
acceptance of this Class A Certificate, agrees to treat this Class A Certificate
for federal, state and local income and franchise tax purposes as debt of the
Transferors.
In general, payments of principal with respect to the Class A
Certificates are limited to the Class A Invested Amount, which may be less than
the unpaid principal balance of the Class A Certificates. The Expected Final
Payment Date is the May 2001 Distribution Date, but principal with respect to
the Class A Certificates may be paid earlier or later under certain
circumstances described in the Agreement and the Supplement. If for one or more
months during the Controlled Accumulation Period there are not sufficient funds
to pay the Controlled Deposit Amount, then to the extent that excess funds are
not available on subsequent Distribution Dates with respect to the Controlled
Accumulation Period to make up for such shortfalls, the final payment of
principal of the Class A Certificates will occur later than the Expected Final
Payment Date.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class A
Certificate shall not be entitled to any benefit under the Agreement or the
Supplement or be valid for any purpose.
(Signature page follows)
- 2 -
<PAGE>
IN WITNESS WHEREOF, the Transferors have caused this Class A
Certificate to be duly executed.
AMERICAN EXPRESS CENTURION BANK
By: /s/ Frank L. Skillern
-------------------------------
Name: Frank L. Skillern
Title: Chief Executive Officer
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II
By: /s/ Leslie R. Scharfstein
-------------------------------
Name: Leslie R. Scharfstein
Title: President
Dated: May 16, 1996
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the American Express Credit Account Master
Trust Series 1996-1 Class A Certificates described in the within-mentioned
Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee,
By:
-------------------------------
Authorized Officer
Dated: May 16, 1996
- 4 -
<PAGE>
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS A 6.80% ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise
generally from the purchase of goods and services and amounts advanced to
cardmembers as cash advances and Finance Charge Receivables. This Class A
Certificate is one of a Series of Certificates entitled American Express Credit
Account Master Trust, Series 1996-1 (the "Series 1996-1 Certificates"), and one
of a class thereof entitled Class A Series 1996-1 6.80% Asset Backed
Certificates, (the "Class A Certificates"), each of which represents a
fractional, undivided interest in certain assets of the Trust. The assets of the
Trust are allocated in part to the investor certificateholders of all
outstanding Series (the "Certificateholders' Interest") with the remainder
allocated to the Holders of the Transferor Certificates. The aggregate interest
represented by the Class A Certificates at any time in the Principal Receivables
in the Trust shall not exceed an amount equal to the Class A Invested Amount at
such time. The Class A Initial Invested Amount is $865,000,000. The Class A
Invested Amount on any date will be an amount equal to (a) the Class A Initial
Invested Amount, minus (b) the aggregate amount of principal payments made to
the Class A Certificateholders on or prior to such date, minus (c) the excess,
if any, of the aggregate amount of Class A Investor Charge-Offs for all prior
Distribution Dates over Class A Investor Charge-Offs reimbursed pursuant to
subsection 4.07(b) of the Supplement prior to such date.
Subject to the terms and conditions of the Agreement, the
Transferors may, from time to time, direct the Trustee, on behalf of the Trust,
to issue one or more new Series of Investor Certificates, which will represent
fractional, undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute
to each Class A Certificateholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class A Certificateholder's pro rata
share of such amounts (including amounts on deposit in the Collection Account)
as are payable to the Class A Certificateholders pursuant to the Agreement and
the Supplement. Distributions with respect to this Class A Certificate will be
made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Series 1996-1 Certificateholders in
accordance with the Agreement and the Supplement.
On any day occurring on or after the day on which the
Invested Amount is reduced to 5% or less of the Initial Invested Amount, the
Transferors have the option to repurchase the Series 1996-1 Certificateholders'
Interest in the Trust. The repurchase price will be equal to (a) if such day is
a Distribution Date, the Reassignment Amount for such Distribution Date or (b)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day. Following the deposit of the Reassignment
Amount in the Collection Account, Series 1996-1 Certificateholders will not have
any interest in the Receivables and the Series 1996-1 Certificates will
represent only the right to receive such Reassignment Amount.
- 5 -
<PAGE>
This Class A Certificate does not represent an obligation
of, or an interest in, the Transferors or the Servicer or any affiliate of any
of them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class A
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth hereinabove and in the Agreement and the Supplement.
The Class A Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000. The transfer of this
Class A Certificate shall be registered in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class A Certificateholder or
such Class A Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class A Certificates of
authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates evidencing like aggregate fractional, undivided interests
as requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Trustee, the Paying Agent, the
Transfer Agent and Registrar, nor any agent of any of them, shall be affected by
notice to the contrary except in certain circumstances described in the
Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
- 6 -
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee ________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto -------------------------------------
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ____________ ______________________(1)
Signature Guaranteed:
----------------------
- --------
(1) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
- 7 -
<PAGE>
SPECIMEN
CLASS B CERTIFICATE
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT
OF A BENEFIT PLAN (AS DEFINED BELOW)
REGISTERED $____________
No. R-__ CUSIP No. 02582J AB6
Unless this Class B Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to American Express Centurion Bank and American Express
Receivables Financing Corporation II or their agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS B 6.95% ASSET BACKED CERTIFICATE
Expected Final Payment Date:
The May 2001 Distribution Date
Each $1,000 minimum denomination represents a
1/60,000 undivided interest
in Class B of the
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST, SERIES 1996-1
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists primarily of an interest in receivables generated from time to
time in the ordinary course of business in a portfolio of credit and charge
accounts serviced by
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
and other assets and interests constituting Trust Assets under the Pooling and
Servicing Agreement referred to below.
(Not an interest in or obligation of American Express Travel Related Services
Company, Inc., American Express Centurion Bank, American Express Receivables
Financing Corporation II or any of their respective affiliates)
1
<PAGE>
This certifies that CEDE & CO. (the "Class B Certificateholder") is the
registered owner of a fractional, undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Pooling and Servicing Agreement,
dated as of May 16, 1996 (as amended and supplemented, the "Agreement"), as
supplemented by the Series 1996-1 Supplement, dated as of May 16, 1996 (as
amended and supplemented, the "Supplement"), among American Express Centurion
Bank and American Express Receivables Financing Corporation II, as transferors
(together, the "Transferors"), American Express Travel Related Services Company,
Inc., as servicer, and The Bank of New York, a New York banking corporation, as
trustee (the "Trustee"). The corpus of the Trust consists of (i) the
Transferors' ownership interest in a portfolio of receivables (the
"Receivables") existing in credit and charge accounts identified under the
Agreement from time to time (the "Accounts"), (ii) all Receivables generated
under the Accounts from time to time thereafter, (iii) funds collected or to be
collected from cardmembers in respect of the Receivables, (iv) all funds which
are from time to time on deposit in the Collection Account, the Special Funding
Account, and the other Series Accounts and (v) all other assets and interests
constituting the Trust. The Holder of this Certificate is entitled to the
benefits of the subordination of the Collateral Interest to the extent provided
in the Supplement. Although a summary of certain provisions of the Agreement and
the Supplement is set forth below and in the Summary of Terms and Conditions
attached hereto and made a part hereof, this Class B Certificate does not
purport to summarize the Agreement and the Supplement and reference is made to
the Agreement and the Supplement for information with respect to the interests,
rights, benefits, obligations, proceeds and duties evidenced hereby and the
rights, duties and obligations of the Trustee. A copy of the Agreement and the
Supplement (without schedules) may be requested from the Trustee by writing to
the Trustee at the Corporate Trust Office. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement or the Supplement, as applicable.
This Class B Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement and the Supplement, to
which Agreement and Supplement, each as amended and supplemented from time to
time, the Class B Certificateholder by virtue of the acceptance hereof assents
and is bound.
This Class B Certificate may not be acquired by or for the
account of any employee benefit plan, trust or account, including an individual
retirement account, that is subject to the Employee Retirement Income Security
Act of 1974, as amended, or that is described in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended, or an entity whose underlying assets
include plan assets by reason of a plan's investment in such entity (a "Benefit
Plan"). By accepting and holding this Class B Certificate, the Holder hereof
shall be deemed to have represented and warranted that it is not a Benefit Plan.
By acquiring any interest in this Class B Certificate , the applicable
Certificate Owner or Owners shall be deemed to have represented and warranted
that it or they are not Benefit Plans.
THIS CLASS B CERTIFICATE IS SUBORDINATED TO THE EXTENT
NECESSARY TO FUND PAYMENTS ON THE CLASS A CERTIFICATES TO THE EXTENT
SPECIFIED IN THE SUPPLEMENT.
It is the intent of the Transferors and the Class B
Certificateholders that, for federal, state and local income and franchise tax
purposes, the Class B Certificates will qualify as indebtedness of the
Transferors secured by the Receivables. The Class B Certificateholder, by the
acceptance of this Class B Certificate, agrees to treat this Class B Certificate
for federal, state and local income and franchise tax purposes as debt of the
Transferors.
In general, payments of principal with respect to the Class
B Certificates are limited to the Class B Invested Amount, which may be less
then the unpaid principal balance of the Class B Certificates. The Expected
Final Payment Date is the May 2001 Distribution Date, but principal with respect
to the Class B Certificates may be paid earlier or later under certain
circumstances described in the Agreement and the Supplement. If for one or more
months during the Controlled Accumulation
2
<PAGE>
Period there are not sufficient funds to pay the Controlled Deposit Amount, then
to the extent that excess funds are not available on subsequent Distribution
Dates with respect to the Accumulation Period to make up for such shortfalls,
the final payment of principal of the Certificates will occur later than the
Expected Final Payment Date.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class B
Certificate shall not be entitled to any benefit under the Agreement or the
Supplement or be valid for any purpose.
(Signature page follows)
3
<PAGE>
IN WITNESS WHEREOF, the Transferors have caused this Class B
Certificate to be duly executed.
AMERICAN EXPRESS CENTURION BANK
By: /s/ Frank L. Skillern
---------------------------------
Name: Frank L. Skillern
Title: Chief Executive Officer
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
By: /s/ Leslie R. Scharfstein
---------------------------------
Name: Leslie R. Scharfstein
Title: President
Dated: May 16, 1996
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the American Express Credit Account Master
Trust Series 1996-1 Class B Certificates described in the within mentioned
Agreement and Supplement.
THE BANK OF NEW YORK,
as Trustee
By:
---------------------------------
Authorized Signatory
Dated: May 16, 1996
5
<PAGE>
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1
CLASS B 6.95% ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise
generally from the purchase of goods and services and amounts advanced to
cardmembers as cash advances and Finance Charge Receivables. This Class B
Certificate is one of a Series of Certificates entitled American Express Credit
Account Master Trust, Series 1996-1 (the "Series 1996-1 Certificates"), and one
of a class thereof entitled Class B Series 1996-1 6.95% Asset Backed
Certificates, (the "Class B Certificates"), each of which represents a
fractional, undivided interest in certain assets of the Trust. The assets of the
Trust are allocated in part to the investor certificateholders of all
outstanding Series (the "Certificateholders' Interest") with the remainder
allocated to the Holders of the Transferor Certificates. The aggregate interest
represented by the Class B Certificates at any time in the Principal Receivables
in the Trust shall not exceed an amount equal to the Class B Invested Amount at
such time. The Class B Initial Invested Amount is $60,000,000. The Class B
Invested Amount on any date will be an amount equal to (a) the Class B Initial
Invested Amount, minus (b) the aggregate amount of principal payments made to
the Class B Certificateholders prior to such date, minus (c) the aggregate
amount of Class B Investor Charge-Offs for all prior Distribution Dates, minus
(d) the amount of Reallocated Principal Collections allocated on all prior
Distribution Dates pursuant to subsection 4.08(a) of the Supplement (excluding
any Reallocated Principal Collections that have resulted in a reduction in the
Collateral Invested Amount pursuant to Section 4.08), minus (e) an amount equal
to the amount by which the Class B Invested Amount has been reduced to cover the
Class A Investor Default Amount on all prior Distribution Dates, and plus (f)
the amount of Excess Spread and Excess Finance Charge Collections allocated to
Series 1996-1 and applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Class B Invested Amount may not be reduced below
zero.
Subject to the terms and conditions of the Agreement, the
Transferors may, from time to time, direct the Trustee, on behalf of the Trust,
to issue one or more new Series of Investor Certificates, which will represent
fractional, undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute
to each Class B Certificateholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class B Certificateholder's pro rata
share of such amounts (including amounts on deposit in the Collection Account)
as are payable to the Class B Certificateholders pursuant to the Agreement and
the Supplement. Distributions with respect to this Class B Certificate will be
made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class B
Certificate) except that with respect to Class B Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and surrender of this
Class B Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Series 1996-1 Certificateholders in
accordance with the Agreement and the Supplement.
6
<PAGE>
On any day occurring on or after the day on which the
Invested Amount is reduced to 5% or less of the Initial Invested Amount, the
Transferors have the option to repurchase the Series 1996-1 Certificateholders'
Interest in the Trust. The repurchase price will be equal to (a) if such day is
a Distribution Date, the Reassignment Amount for such Distribution Date or (b)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date next following such day. Following the deposit of the
Reassignment Amount in the Collection Account, Series 1996-1 Certificateholders
will not have any interest in the Receivables and the Series 1996-1 Certificates
will represent only the right to receive such Reassignment Amount.
This Class B Certificate does not represent an obligation
of, or an interest in, the Transferors or the Servicer or any affiliate of any
of them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class B
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth hereinabove and in the Agreement and the Supplement.
The Class B Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000. The transfer of this
Class B Certificate shall be registered in the Certificate Register upon
surrender of this Class B Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class B Certificateholder or
such Class B Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class B Certificates of
authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, Class B Certificates are exchangeable for new
Class B Certificates evidencing like aggregate fractional undivided interests as
requested by the Class B Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Trustee, the Paying Agent, the
Transfer Agent and Registrar, nor any agent of any of them, shall be affected by
notice to the contrary except in certain circumstances described in the
Agreement.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
7
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee ____________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto -----------------------------------------------
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: __________________________________(1)
Signature Guaranteed:
----------------------------------
- --------
(1) NOTE: The signature to this Assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
8
<PAGE>
THIS TRANSFEROR CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS TRANSFEROR CERTIFICATE NOR
ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION PROVISIONS.
THIS TRANSFEROR CERTIFICATE IS NOT PERMITTED TO BE
TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN
COMPLIANCE WITH THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
No. R-1 One Unit
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST
IN CERTAIN ASSETS OF THE
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
Evidencing an interest in a trust, the corpus of which consists primarily of an
interest in receivables generated from time to time in the ordinary course of
business in a portfolio of credit and charge accounts transferred by American
Express Centurion Bank and American Express Receivables Financing Corporation II
(the "Transferors").
(Not an interest in or obligation of the Transferors
or any affiliate thereof)
This certifies that AMERICAN EXPRESS CENTURION BANK and
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II are the registered owners
of a fractional interest in the assets of a trust (the "Trust") not allocated to
the Certificateholders' Interest or the interest of any Holder of a Supplemental
Certificate pursuant to the Pooling and Servicing Agreement, dated as of May 16,
1996 (as amended and supplemented, the "Agreement"), among American Express
Centurion Bank, a Delaware banking corporation, and American Express Receivables
Financing Corporation II, a Delaware corporation, as Transferors, American
Express Travel Related Services Company, Inc., a New York corporation, as
Servicer (the "Servicer") and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee"). The corpus of the Trust consists of (i)
the Transferor's ownership interest in a portfolio of certain receivables (the
"Receivables") existing in the credit and charge accounts identified under the
Agreement from time to time (the "Accounts"), (ii) all Receivables generated
under the Accounts from time to time thereafter, (iii) all funds collected or to
be collected from accountholders in respect of the Receivables, (iv) all funds
which are from time to time on deposit in the Collection Account, Special
Funding Account and in any other Series Accounts, (v) the benefits of any Series
Enhancements issued and to be issued by Series Enhancers with respect to one or
more Series of Investor Certificates and (vi) all other assets and interests
constituting the Trust, including Recoveries allocated to the Trust pursuant to
the Agreement and any Supplement. Although a summary of certain provisions of
the Agreement is set forth below, this Certificate does not purport to summarize
the Agreement and reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of the Trustee. A copy
of the Agreement may be requested from the Trustee by writing to the Trustee at
the Corporate Trust Office. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the Agreement.
<PAGE>
This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement, as
amended and supplemented from time to time, the Transferor by virtue of the
acceptance hereof assents and is bound.
The Receivables consist of Principal Receivables which arise
generally from the purchase of merchandise and services and amounts advanced to
cardholders as cash advances and Finance Charge Receivables which arise
generally from Periodic Rate Finance Charges, Late Fees and other fees and
charges with respect to the Accounts.
This Certificate is the Transferor Certificate, which
represents the Transferors' interest in certain assets of the Trust, including
the right to receive a portion of the Collections and other amounts at the times
and in the amounts specified in the Agreement. The aggregate interest
represented by the Transferor Certificate at any time in the Receivables in the
Trust shall not exceed the Transferors' Interest at such time. In addition to
the Transferor Certificate, (i) Investor Certificates will be issued to
investors pursuant to the Agreement, which will represent the
Certificateholders' Interest, and (ii) Supplemental Certificates may be issued
pursuant to the Agreement, which will represent that portion of the Transferors'
Interest not allocated to the Transferors. This Transferor Certificate shall not
represent any interest in the Collection Account, the Special Funding Account or
the Series Accounts, except as expressly provided in the Agreement, or any
Series Enhancements.
Unless otherwise specified in a Supplement with respect to a
particular Series the Transferors have entered into the Agreement, and this
Certificate is issued, with the intention that, for federal, state and local
income and franchise tax purposes, (i) the Investor Certificates of each Series
which are characterized as indebtedness at the time of their issuance will
qualify as indebtedness secured by the Receivables and (ii) the Trust shall not
be treated as an association taxable as a corporation. The Transferors, by
entering into the Agreement and by the acceptance of this Transferor
Certificate, agree to treat the Investor Certificates for federal, state and
local income and franchise tax purposes as indebtedness of the Transferors.
Subject to certain conditions and exceptions specified in
the Agreement, the obligations created by the Agreement and the Trust created
thereby shall terminate upon the earlier of (i) May 1, 2017, (ii) the day
following the Distribution Date on which the Invested Amount and Enhancement
Invested Amount for each Series is zero (provided the Transferors have delivered
a written notice to the Trustee electing to terminate the Trust) and (iii) the
time provided in Section 9.01 of the Agreement.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Transferor
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
2
<PAGE>
IN WITNESS WHEREOF, the Transferors have caused this
Transferor Certificate to be duly executed.
AMERICAN EXPRESS CENTURION BANK
By: _______________________________
Name:
Title:
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
By: _______________________________
Name:
Title:
Dated: May 16, 1996
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the American Express Credit Account Master Trust
Series 1996-1 Transferor Certificate described in the within-mentioned
Agreement.
THE BANK OF NEW YORK,
as Trustee,
By:
--------------------------------
Authorized Officer
Dated: May 16, 1996
4
