1
Filed Pursuant to Rule 424B5
Registration No. 333-38650
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 12, 2001
[FLEET LOGO]
FLEET CREDIT CARD MASTER TRUST II
ISSUER
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
$684,000,000 CLASS A 5.60% ASSET-BACKED CERTIFICATES, SERIES 2001-B
$48,000,000 CLASS B 5.90% ASSET-BACKED CERTIFICATES, SERIES 2001-B
CLASS A CERTIFICATES CLASS B CERTIFICATES
-------------------- --------------------
Certificate rate 5.60% annually 5.90% annually
Interest paid Monthly, beginning Monthly, beginning
August 15, 2001 August 15, 2001
Expected final distribution date June 15, 2006 June 15, 2006
Legal final maturity December 15, 2008 December 15, 2008
Price to public per certificate 99.92181% 99.99465%
Underwriting discount per 0.275% 0.300%
certificate
Proceeds to seller per certificate 99.64681% 99.69465%
The total price to public is $731,462,612. The total amount of the underwriting
discount is $2,025,000. The total amount of proceeds plus accrued interest and
before deduction of expenses is $729,437,612.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-6 IN THIS PROSPECTUS
SUPPLEMENT AND PAGE 8 IN THE PROSPECTUS.
The certificates are not deposits and neither the certificates nor the
underlying accounts or receivables are insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of Fleet Bank (RI), National Association
or any of its affiliates.
CREDIT ENHANCEMENT:
- - The Class B certificates will be subordinated to the Class A certificates.
- - The trust is also issuing a collateral interest in the amount of $68,000,000.
The collateral interest will be subordinated to both the Class A certificates
and the Class B certificates.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus supplement and the accompanying prospectus may be used by Fleet
Securities, Inc. or another affiliate of the bank in connection with offers and
sales of the certificates in market-making transactions.
Underwriters of the Class A Certificates
JPMORGAN
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
FLEET SECURITIES, INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
Underwriters of the Class B Certificates
JPMORGAN FLEET SECURITIES, INC.
JUNE 12, 2001
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
your series and (b) this prospectus supplement, which describes the specific
terms of your series. This prospectus supplement may be used to sell the Class A
certificates and the Class B certificates only if accompanied by the prospectus.
This prospectus supplement and the prospectus relate to the offering of
Class A certificates and Class B certificates only. The collateral interest is
not offered by this prospectus supplement and prospectus.
IF THE TERMS OF YOUR CERTIFICATES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT
VARY FROM THE TERMS DESCRIBED IN THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
We include cross references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents in the accompanying prospectus provide the pages on which these
captions are located.
You can find a listing of the pages where terms used in this prospectus
supplement and the accompanying prospectus are defined under the caption "Index
of Principal Terms" beginning on page S-48 in this document and under the
caption "Index of Principal Terms" on page 71 in the accompanying prospectus.
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TABLE OF CONTENTS
PAGE
----
Summary of Terms...................... S-1
The Trust........................... S-1
The Trustee......................... S-1
Seller And Servicer................. S-1
Seller........................... S-1
Servicer......................... S-1
The Bank......................... S-1
The Receivables..................... S-1
Offered Securities.................. S-1
Certificates..................... S-1
Distribution Dates............... S-1
Interest......................... S-2
Principal........................ S-2
The Collateral Interest............. S-2
Credit Enhancement.................. S-2
Subordination of Classes......... S-2
The Sellers' Interest............... S-2
Allocations......................... S-3
Among Series..................... S-3
Among Classes.................... S-3
Application of Collections.......... S-3
Finance Charge Collections....... S-3
Excess Spread and Excess Finance
Charges........................ S-3
Principal Collections............ S-4
Pay Out Events...................... S-4
Optional Repurchase................. S-5
Registration........................ S-5
Tax Status.......................... S-5
ERISA Considerations................ S-5
Certificate Ratings................. S-5
Exchange Listing.................... S-5
Additional Information.............. S-5
Risk Factors.......................... S-6
Ability To Resell Series 2001-B
Certificates Not Assured......... S-6
Credit Enhancement May Not Be
Sufficient To Prevent Loss....... S-6
Class B Certificates Are
Subordinated To The Class A
Certificates; Trust Assets May Be
Diverted From Class B To Pay
Class A.......................... S-6
Ratings Can Be Lowered Or Withdrawn
After You Purchase Your
Certificates And The Market Value
Of Your Certificates May Be
Reduced.......................... S-7
Introduction.......................... S-8
PAGE
----
The Bank's Credit Card Activities..... S-9
General............................. S-9
Finance Charges..................... S-9
Delinquency and Loss Experience..... S-9
Interchange......................... S-10
Litigation.......................... S-11
The Receivables....................... S-11
Maturity Assumptions.................. S-14
Receivable Yield Considerations....... S-16
Description of the Certificates....... S-17
General............................. S-18
Registration of Certificates........ S-19
Interest Payments................... S-19
Principal Payments.................. S-21
Postponement of Accumulation
Period........................... S-23
Subordination....................... S-24
Allocation Percentages.............. S-24
Reallocation of Cash Flows.......... S-28
Application of Collections.......... S-29
Principal Funding Account........... S-35
Reserve Account..................... S-35
Paired Series....................... S-36
Shared Collections of Principal
Receivables...................... S-37
Allocation of Investor Default
Amount........................... S-37
Optional Repurchase................. S-39
Pay Out Events...................... S-39
Servicing Compensation and Payment
of Expenses...................... S-41
Federal Income Tax Consequences....... S-42
ERISA Considerations.................. S-42
General............................. S-42
Class A Certificates................ S-42
Class B Certificates................ S-44
Consultation with Counsel........... S-45
Underwriting.......................... S-45
Legal Matters......................... S-47
Index of Principal Terms.............. S-48
ANNEX I: OTHER SERIES ISSUED.......... I-1
ANNEX II: RECEIVABLES IN ADDITIONAL
ACCOUNTS CONVEYED TO THE TRUST...... II-1
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SUMMARY OF TERMS
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. This summary provides general, simplified descriptions of
matters which, in some cases, are highly technical and complex. More detail is
provided in other sections of this document and in the prospectus.
Do not rely upon this summary for a full understanding of the matters you need
to consider in connection with any potential investment in the certificates. To
understand all of the terms of the offering of the Series 2001-B certificates,
read carefully this entire document and the accompanying prospectus.
THE TRUST
Fleet Credit Card Master Trust II will issue the certificates.
The trust has issued numerous series of certificates, will issue the Series
2001-B certificates and expects to issue additional series. The certificates of
each series will represent an ownership interest in the assets of the trust.
THE TRUSTEE
The trustee is Bankers Trust Company. You may obtain information regarding the
certificates by telephoning the trustee at (800) 735-7777.
SELLER AND SERVICER
SELLER
Fleet Bank (RI), National Association originates and acquires credit card
accounts. As seller, the bank sells the receivables to the trust.
To preserve sale treatment for the transfer of receivables to the trust under
Financial Accounting Standards Board Statement No. 140, the bank expects to
amend the pooling and servicing agreement and other relevant documents prior to
December 31, 2001. We expect that the amendments will provide for a transfer of
receivables from the bank to a special purpose entity and then to the trust.
This would result in the addition of a new special purpose entity as the direct
seller to the trust. These amendments will be made without certificateholder
consent. See "Description of the Certificates--Amendments" in the accompanying
prospectus.
SERVICER
The bank also is the servicer. As the servicer, the bank collects payments on
the receivables and allocates the collections among the interests in the trust.
THE BANK
The bank is a special purpose credit card bank. Its principal offices are
located at 111 Westminster Street, Providence, Rhode Island 02903. The telephone
number is (401) 278-5451.
THE RECEIVABLES
The primary assets of the trust are receivables in VISA(R) and MasterCard(R)(1)
revolving credit card accounts. The receivables consist of principal receivables
and finance charge receivables.
The following information is as of April 30, 2001:
- - Principal receivables in the trust: $10,536,146,672.
- - Finance charge receivables in the trust: $284,399,131.
- - Accounts designated to the trust: 6,741,575.
See "The Receivables" in this prospectus
supplement.
OFFERED SECURITIES
CERTIFICATES
Fleet Credit Card Master Trust II is offering:
- - $684,000,000 of Class A certificates; and
- - $48,000,000 of Class B certificates.
The Series 2001-B certificates include both Class A and Class B.
Beneficial interests in these certificates may be purchased in minimum
denominations of $1,000 and integral multiples of $1,000.
The seller expects that the trust will issue the Series 2001-B certificates on
June 27, 2001.
DISTRIBUTION DATES
The first distribution date will be August 15, 2001.
Distribution dates for the Series 2001-B certificates will be the 15th day of
each month if the 15th day is a business day. If the 15th is not a business day,
the distribution date will be the following business day.
- ---------------
(1) VISA(R) and MasterCard(R) are federally registered servicemarks of VISA
U.S.A., Inc. and MasterCard International, respectively.
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INTEREST
Interest on the Series 2001-B certificates will be paid on each distribution
date.
Class A
The Class A certificates will bear interest at 5.60% per annum.
Class B
The Class B certificates will bear interest at 5.90% per annum.
PRINCIPAL
The seller expects that principal on the Series 2001-B certificates will be
distributed on the date noted below; however, principal may, in fact, be
distributed earlier or later. You will not be entitled to any premium for early
or late payment of principal.
If certain adverse events known as pay out events occur, principal may be
distributed earlier than expected.
If collections of the credit card receivables are less than expected or are
collected more slowly than expected, then principal repayment may be delayed.
Class A
The seller expects that principal of the Class A certificates will be
distributed on the June 2006 distribution date.
Class B
The seller expects that principal of the Class B certificates will be
distributed on the June 2006 distribution date; however, no principal will be
paid on the Class B certificates unless the Class A certificates are paid in
full.
Accumulation Period
We are scheduled to begin accumulating collections of principal receivables on
September 1, 2005 for later distribution to you. The servicer may, however,
elect to delay the beginning of the accumulation period to a date not later than
May 1, 2006.
See "Description of the Certificates--Principal Payments," and "--Postponement
of Accumulation Period" in this prospectus supplement.
Legal Final Maturity
If the Series 2001-B certificates are not paid on their expected final
distribution dates, collections of receivables will continue to be used to pay
principal on the Series 2001-B certificates until the certificates are paid or
until December 15, 2008, whichever occurs first. December 15, 2008 is the legal
final maturity date for Series 2001-B.
See "Maturity Assumptions," and "Description of the Certificates--Allocation
Percentages," and "--Principal Payments" in this prospectus supplement.
THE COLLATERAL INTEREST
At the same time as the Series 2001-B certificates are issued, the trust will
issue an undivided interest in the trust called a collateral interest in the
amount of $68,000,000 as part of Series 2001-B. The holder of the collateral
interest will have voting and certain other rights as if the collateral interest
were a subordinated class of certificates. The collateral interest is not
offered by this document.
CREDIT ENHANCEMENT
SUBORDINATION OF CLASSES
The collateral interest and the Class B certificates are subordinated to the
Class A certificates.
The collateral interest is also subordinated to the Class B certificates.
See "Description of the Certificates--Reallocation of Cash Flow" and
"--Allocation of Investor Default Amount" in this prospectus supplement.
THE SELLERS' INTEREST
The interest in the trust not represented by your series or by any other series
is the sellers' interest. The sellers' interest is held by the bank. The bank
may sell a portion of the sellers' interest to other investors. If a portion of
the sellers' interest is sold to anyone other than the seller or its affiliates,
the interest will be represented by a supplemental certificate. No supplemental
certificates are currently outstanding.
The sellers' interest does not provide credit enhancement for your series or any
other series.
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ALLOCATIONS
AMONG SERIES
Each month the bank, as servicer, will allocate collections received among:
- - Series 2001-B;
- - other outstanding series; and
- - the sellers' interest in the trust.
The amount allocated to your series will generally be determined based upon the
ratio of the invested amount of your series to the total amount of principal
receivables in the trust and any balances in the trust's excess funding account.
You are entitled to receive payments of interest and principal only from
collections and other trust assets allocated to your series.
The invested amount is the primary basis for allocations to your series. The
invested amount is the sum of the Class A invested amount, the Class B invested
amount and the collateral invested amount.
At the time of issuance of the Series 2001-B certificates, the invested amount
for Series 2001-B will be $800,000,000.
AMONG CLASSES
From the amounts allocated to your series, the servicer will further allocate
among the Class A certificates, the Class B certificates and the collateral
interest on the basis of the invested amount of each class and the invested
amount of the collateral interest. Initially the invested amount of each class
will be equal to the original principal amount of that class and the initial
invested amount of the collateral interest will be equal to the original
principal amount of the collateral interest.
See "Description of the Certificates--Allocation Percentages" in this prospectus
supplement.
The invested amount of a series or a class will decline as a result of the
accumulation of principal collections in the principal funding account or
principal payments. The invested amount also may decline if collections of
receivables allocated to your series are not sufficient to make certain required
payments and to cover your series share of receivables that are written off as
uncollectible. If the invested amount of your series or class declines, there
may be a reduction in amounts allocated and available for payment to you.
For a description of the events which may lead to these reductions, see
"Description of the Certificates--Reallocation of Cash Flows" and "--Allocation
of Investor Default Amount" in this prospectus supplement.
APPLICATION OF COLLECTIONS
FINANCE CHARGE COLLECTIONS
- - Collections of finance charge receivables and certain other amounts allocated
to the Class A certificates will be used to pay interest on the Class A
certificates, to pay Class A's portion of the servicing fee and to cover Class
A's portion of receivables that are written off as uncollectible. Any
remaining amount will become excess spread and be applied as described below.
- - Collections of finance charge receivables allocated to the Class B
certificates will be used to pay interest on the Class B certificates and to
pay Class B's portion of the servicing fee. Any remaining amount will become
excess spread and be applied as described below.
- - Collections of finance charge receivables allocated to the collateral interest
will be used to pay the collateral interest's portion of the servicing fee if
the bank or the trustee is no longer the servicer. Any remaining amount will
become excess spread and be applied as described below.
See "Description of the Certificates--Application of Collections--Payment of
Interest, Fees and Other Items" in this prospectus supplement.
EXCESS SPREAD AND EXCESS FINANCE CHARGES
Each month the excess spread and excess finance charges will be used in the
following order of priority:
- - first to make up deficiencies for Class A,
- - then to make up deficiencies for Class B, including covering Class B's portion
of receivables written off as uncollectible,
- - then to pay interest on the collateral interest at the collateral minimum
interest rate,
- - then to pay the collateral interest's portion of the servicing fee, or, if the
bank or the trustee is no longer the servicer, then to pay any portion of the
collateral interest's servicing fee not paid as described above under
"--Finance Charge Collections,"
S-3
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- - then to cover the collateral interest's portion of receivables that are
written off as uncollectible,
- - then to reimburse any previous reductions in the collateral invested amount,
- - then, in limited circumstances, to fund a reserve account to cover interest
payment shortfalls for Class A, and
- - finally to make payments to the holder of the collateral interest.
See "Description of the Certificates--Application of Collections--Excess Spread;
Excess Finance Charges" in this prospectus supplement.
PRINCIPAL COLLECTIONS
So long as no pay out event has occurred, your series' share of principal
collections, including shared principal collections from other series, will be
applied each month as follows:
- - First, principal collections allocated to the collateral interest and the
Class B certificates may be reallocated, if necessary, to make required
payments on the Class A certificates and the Class B certificates which were
not made from finance charge collections, excess spread or excess finance
charges.
- - During the revolving period, no principal will be paid to you or accumulated
in a trust account.
- - During the accumulation period, principal collections allocated or available
to the Class A certificates and the Class B certificates will be deposited in
the principal funding account, up to a controlled deposit amount, for payment
first to the Class A certificateholders and then to the Class B
certificateholders on the expected final distribution date.
- - Upon payment in full of the Class A certificates and the Class B certificates,
principal collections allocated or available to the collateral interest, up to
the collateral invested amount, will be paid to the collateral interest
holder.
- - Any remaining principal collections will be first made available to other
series and then paid to the holders of the sellers' interest or deposited in
the excess funding account.
If a pay out event occurs, the rapid amortization period will begin and all of
the principal collections allocated or available to the Class A certificates and
the Class B certificates, except amounts required to be reallocated, will be
applied each month to pay principal on your series. Class A will be paid first,
and then Class B.
See "Description of the Certificates--Principal Payments," "--Application of
Collections" and "--Shared Collections of Principal Receivables" in this
prospectus supplement.
PAY OUT EVENTS
Pay out events are adverse events that result in the end of the revolving period
or the accumulation period and the beginning of a rapid amortization period.
The following are pay out events for your series:
- - the seller fails to make required payments, fails to make required deposits,
or violates other covenants and agreements;
- - the representations and warranties of the seller are materially incorrect;
- - the seller does not transfer additional assets to the trust when required;
- - the percentage obtained from your series allocation of the yield on the trust
portfolio and investment earnings from the principal funding account and
withdrawals from the reserve account, after taking into account the amount of
the receivables that are written off as uncollectible allocated to Series
2001-B, averaged over any three consecutive months is less than the weighted
average interest rate for Series 2001-B, calculated by taking into account the
interest rate for Class A, Class B and the collateral minimum interest rate,
plus the servicing fee rate for Series 2001-B averaged over the same three
months;
- - certain defaults of the servicer; or
- - the Class A certificates, the Class B certificates or the collateral interest
are not paid in full on their expected final distribution date.
The following are pay out events for the trust:
- - the occurrence of certain events of insolvency or receivership relating to the
seller, including any additional sellers;
- - the seller is unable to transfer receivables to the trust as required under
the pooling and servicing agreement; or
- - the trust becomes an "investment company" under the Investment Company Act of
1940.
S-4
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For a more detailed discussion of the pay out events, see "Description of the
Certificates--Pay Out Events" in this prospectus supplement. In addition, see
"Description of the Certificates--Trust Pay Out Events" in the accompanying
prospectus.
OPTIONAL REPURCHASE
The bank has the option to repurchase your certificates when the investor amount
for your series has been reduced to 5% or less of the initial invested amount.
See "Description of the Certificates--Optional Repurchase" in this prospectus
supplement and "Risk Factors--If Optional Repurchase Occurs, it Will Result in
an Early Return of Principal and a Reinvestment Risk" in the accompanying
prospectus.
REGISTRATION
The Series 2001-B certificates will be in book-entry form and will be registered
in the name of Cede & Co., as the nominee of The Depository Trust Company.
Except in certain limited circumstances, you will not receive a definitive
certificate representing your interest.
See "Description of the Certificates--Definitive Certificates" in the
accompanying prospectus.
You may elect to hold your certificates through DTC in the United States, or
Clearstream Banking, societe anonyme or the Euroclear System in Europe.
See "Description of the Certificates--Book-Entry Registration" and "--Definitive
Certificates" in the accompanying prospectus.
TAX STATUS
Orrick, Herrington & Sutcliffe LLP, as special tax counsel to the bank, is of
the opinion that under existing law your certificates will be characterized as
debt for federal income tax purposes. By your acceptance of a Series 2001-B
certificate, you will agree to treat your certificates as debt for federal,
state and local income and franchise tax purposes.
See "Federal Income Tax Consequences" in the accompanying prospectus for
additional information concerning the application of federal income tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the Class A
certificates are eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts.
For the reasons discussed under "ERISA Considerations" in this prospectus
supplement and the accompanying prospectus, the Class B certificates are not
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts other than an insurance company investing assets
of its general account.
CERTIFICATE RATINGS
The Class A certificates will be rated in the highest rating category by at
least one nationally recognized rating organization and the Class B certificates
will be rated in one of the three highest rating categories by at least one
nationally recognized rating organization.
See "Risk Factors--Ratings Can Be Lowered or Withdrawn After You Purchase Your
Certificates And The Market Value Of Your Certificates May Be Reduced" in this
prospectus supplement.
EXCHANGE LISTING
We will apply to list the Class A certificates and the Class B certificates on
the Luxembourg Stock Exchange. We cannot guaranty that the application for the
listing will be accepted. You should consult with Deutsche Bank Luxembourg S.A.,
the Luxembourg listing agent for the certificates, 14 Boulevard F.D. Roosevelt,
L-2450 Luxembourg, phone number (352) 46 02 41, to determine whether or not the
Series 2000-D certificates are listed on the Luxembourg Stock Exchange.
ADDITIONAL INFORMATION
For more information, you can call (215) 444-6800 and direct your inquiries to
the Fleet Credit Card Securitization Department.
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RISK FACTORS
In the accompanying prospectus you will find a section called "Risk
Factors." The information in that section applies generally to all series,
including yours. The information in this section applies more specifically to
your series.
You should consider the risk factors discussed under the caption "Risk
Factors" in the prospectus and the risk factors discussed below in this section
before deciding whether to purchase any of the Series 2001-B certificates.
ABILITY TO RESELL SERIES 2001-B If you purchase Series 2001-B certificates, you may not
CERTIFICATES NOT ASSURED be able to sell them. There is currently no secondary
market for the certificates. A secondary market for your
certificates may not develop. If a secondary market does
develop, it may not continue or it may not provide
sufficient liquidity to allow you to resell all or a
part of your certificates if you want to do so. The
underwriters of the Class A certificates and the
underwriters of the Class B certificates may assist in
resales of the certificates, but they are not required
to do so.
CREDIT ENHANCEMENT MAY NOT BE SUFFICIENT Credit enhancement provided for your series of
TO PREVENT LOSS certificates is limited. The only sources of payment for
your certificates are the assets of the trust allocated
to your series. If problems develop with the
receivables, such as an increase in losses on the
receivables or if there are problems in the collection
and transfer of the receivables to the trust, it is
possible that you may not receive the full amount of
interest and principal that you would otherwise receive.
See "Description of the Certificates--Subordination,"
"--Allocation Percentages," "--Reallocation of Cash
Flows" and "--Allocation of Investor Default Amount" in
this prospectus supplement.
CLASS B CERTIFICATES ARE SUBORDINATED TO If you purchase a Class B certificate, your right to
THE CLASS A CERTIFICATES; TRUST ASSETS MAY receive principal payments is subordinated to the
BE DIVERTED FROM CLASS B TO PAY CLASS A payment in full of the Class A certificates. No
principal will be paid to you until the full amount of
principal has been paid on the Class A certificates.
In addition, if Class A's share of collections of
finance charge receivables and certain other amounts
allocated to Series 2001-B, excess spread, excess
finance charges and the collateral interest's share of
principal collections are not sufficient to make all
required payments for the Class A certificates,
collections of principal receivables allocated to Class
B may be diverted to Class A. If this occurs, the Class
B invested amount and future allocations to Class B
would be reduced.
Also, if Class A's share of losses on the receivables
exceeds the collections and credit enhancement available
to cover those losses, and the collateral invested
amount is reduced to zero, the Class B invested amount
will be reduced to avoid reducing the Class A invested
amount. If this occurs, the Class B invested amount and
future allocations to Class B would be reduced.
S-6
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As a result of the subordination, you may receive
payments of interest or principal later than you expect
or you may not receive the full amount of expected
principal and interest.
RATINGS CAN BE LOWERED OR WITHDRAWN AFTER The ratings assigned to the Series 2001-B certificates
YOU PURCHASE YOUR CERTIFICATES AND THE are based upon many factors, including the credit
MARKET VALUE OF YOUR CERTIFICATES MAY BE quality of the receivables and the amount of credit
REDUCED enhancement provided. The ratings are not a
recommendation to purchase, hold or sell any of the
Series 2001-B certificates. The ratings also are not
intended and should not be relied upon to determine the
marketability of the Series 2001-B certificates, the
market value of the Series 2001-B certificates or
whether the Series 2001-B certificates are a suitable
investment for you.
Any rating agency may lower its rating or withdraw its
rating entirely if, in the sole judgment of the rating
agency, the credit quality of the certificates has
declined or is in question. If any rating assigned to
your certificates is lowered or withdrawn, the market
value of your certificates may be reduced.
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INTRODUCTION
The following provisions of this prospectus supplement contain more
detailed information concerning the asset-backed certificates offered hereby.
The certificates will be issued by Fleet Credit Card Master Trust II (the
"TRUST") pursuant to the terms of a Pooling and Servicing Agreement dated as of
December 1, 1993. The Pooling and Servicing Agreement was amended and restated
as of May 23, 1994 and has been amended six times since that date. The Pooling
and Servicing Agreement, as amended, is in this prospectus supplement called the
"MASTER POOLING AND SERVICING AGREEMENT." The Master Pooling and Servicing
Agreement is between Fleet Bank (RI), National Association, as seller and
servicer, and Bankers Trust Company, as trustee. Fleet Bank (RI), National
Association (the "BANK"), in its capacity as seller under the Master Pooling and
Servicing Agreement and the series supplement, is referred to as the seller,
and, in its capacity as servicer, the bank is referred to as the servicer. The
term "seller" also includes any additional sellers as described under the
caption "Description of the Certificates--The Bank Certificate; Additional
Sellers" in the accompanying prospectus. The term "servicer" also refers to any
successor to the bank, as servicer.
The bank is an indirect, wholly-owned subsidiary of FleetBoston Financial
Corporation ("FLEET"). Fleet is the bank holding company which came into
existence on October 1, 1999 as a result of the merger of Fleet Financial Group,
Inc. and BankBoston Corporation. Prior to the merger of Fleet Financial Group,
Inc. and the BankBoston Corporation, the bank was an indirect wholly-owned
subsidiary of Fleet Financial Group, Inc. See "The Bank and FleetBoston
Financial Corporation" in the accompanying prospectus.
The trust will issue $684,000,000 of its Class A 5.60% Asset-Backed
Certificates, Series 2001-B (the "CLASS A CERTIFICATES") and $48,000,000 of its
Class B 5.90% Asset-Backed Certificates, Series 2001-B (the "CLASS B
CERTIFICATES"). There will also be created, as part of Series 2001-B, a third
class of interests in the trust which shall be in the amount of $68,000,000 and
be known as the Collateral Interest, Series 2001-B ("COLLATERAL INTEREST").
The Class A Certificates and the Class B Certificates are, collectively,
the "SERIES 2001-B CERTIFICATES." The registered holders of the Class A
Certificates are referred to as the "CLASS A CERTIFICATEHOLDERS." The registered
holders of the Class B Certificates are referred to as the "CLASS B
CERTIFICATEHOLDERS." The registered holder of the Collateral Interest is the
"COLLATERAL INTEREST HOLDER." The Class A Certificateholders and the Class B
Certificateholders, together with the Collateral Interest Holder are,
collectively, the "SERIES 2001-B HOLDERS." The Series 2001-B Certificates and
the Collateral Interest are, collectively, the "SERIES 2001-B INTERESTS." The
series in which the Series 2001-B Interests are issued is known as "SERIES
2001-B." The closing date on which the Series 2001-B Interests will be issued is
expected to be June 27, 2001.
The Series 2001-B Interests will be issued pursuant to the Master Pooling
and Servicing Agreement and a series supplement designated as the Series 2001-B
Supplement. The Master Pooling and Servicing Agreement together with the series
supplement is, in this prospectus supplement, the "POOLING AND SERVICING
AGREEMENT."
Series 2001-B will be the twenty-eighth series issued by the trust. Of
these series, fifteen, including Series 2001-B, will be outstanding on the
closing date. Series 2001-B will be the fifteenth series outstanding included in
the group of series issued by the trust from time to time and designated as
Group One. See Annex I. Annex I is hereby incorporated into this prospectus
supplement by reference. Additional series are expected to be issued from time
to time by the trust.
The certificates offered by this prospectus supplement and the accompanying
prospectus are investment grade asset-backed securities within the meaning of
the Securities Act of 1933, as amended, and the rules promulgated under it.
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THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The bank was the survivor of a merger on November 14, 1997 between the bank
and Fleet Bank (Delaware), National Association. The bank's credit card
portfolio at that time consisted of credit card accounts originated or acquired
by the bank or its predecessor. As discussed in the accompanying prospectus
under the caption "Transfer and Assignment" and "The Bank's Credit Card
Activities," on February 20, 1998, Advanta National Bank transferred to the bank
the ownership interest in substantially all of the accounts in the Advanta
consumer credit card portfolio. The bank's credit card portfolio existing at the
time of the transfer plus the consumer credit card portfolio acquired from
Advanta National Bank plus new originations or acquisitions made since February
20, 1998 constitute the "FLEET CREDIT CARD PORTFOLIO."
Accounts have been designated for inclusion in the trust from time to time
as set forth in Annex II. Annex II is hereby incorporated into this prospectus
supplement by reference.
The bank is a member of VISA U.S.A., Inc. and MasterCard International.
FINANCE CHARGES
The majority of the accounts in the Fleet Credit Card Portfolio are subject
to finance charges at London interbank offered rate indexed variable rates
ranging from 0.0% to 28.9% for purchases, balance transfers and cash advances.
There is also a portion of the portfolio subject to finance charges set at a
fixed rate for purchases only. For more information, see "The Bank's Credit Card
Activities--Billing and Payments" in the accompanying prospectus.
DELINQUENCY AND LOSS EXPERIENCE
The following tables show the delinquency and loss experience for the Fleet
Credit Card Portfolio.
The trust portfolio is made up of the accounts which have been designated
to the trust and the receivables in these accounts as of any date of
determination. In each case, the accounts designated to the trust must be
Eligible Accounts. See "Description of the Certificates--Representations,
Warranties and Covenants" and "--Addition of Accounts" in the accompanying
prospectus. See also "The Receivables" in this prospectus supplement.
The trust portfolio is only a portion of the Fleet Credit Card Portfolio;
therefore, actual delinquency and gross charge-off experience for the
receivables in the trust may be different from that shown in the following
tables which include information for the entire Fleet Credit Card Portfolio.
There can be no assurance that the delinquency and loss experience for the
receivables in the trust will be similar to the historical experience shown in
the following tables.
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DELINQUENCY EXPERIENCE
FLEET CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
AS OF
MARCH 31, AS OF DECEMBER 31,
----------- ---------------------------------------
2001 2000 1999 1998
----------- ----------- ----------- -----------
Receivables Outstanding(1)(2)............... $14,018,125 $14,685,814 $14,278,212 $14,524,541
Receivables Contractually Delinquent as a
Percentage of Receivables Outstanding(1):
30-59 days................................ 1.29% 1.52% 1.44% 1.58%
60-89 days................................ 1.02% 1.13% 1.09% 1.07%
90 or more days........................... 2.54% 2.40% 2.35% 2.29%
----------- ----------- ----------- -----------
Total....................................... 4.85% 5.05% 4.88% 4.94%
=========== =========== =========== ===========
- ------------
(1) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1998. Receivables Outstanding and Receivables Contractually Delinquent as a
Percentage of Receivables Outstanding related to the credit card portfolio
acquired by Fleet as a result of the merger of Fleet Financial Group, Inc.
and BankBoston Corporation are included as of March 31, 2000.
(2) Receivables Outstanding consists of all amounts due from cardholders as
posted to the accounts.
LOSS EXPERIENCE
FLEET CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------ -------------------------------------------
2001 2000 1999 1998
------------------ ----------- ----------- -----------
Average Receivables
Outstanding(1)(2).......... $14,275,729 $14,199,216 $13,065,414 $14,380,316
Gross Losses(1)(3)........... $ 219,597 $ 863,922 $ 967,611 $ 1,034,996
Recoveries(1)................ $ 19,809 $ 74,400 $ 75,883 $ 91,664
Net Losses................... $ 199,788 $ 789,522 $ 891,728 $ 943,332
Net Losses as a Percentage of
Average Receivables
Outstanding................ 5.60%(4)(5) 5.56%(4) 6.83%(4) 6.56%(4)
- ------------
(1) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1998. Average Receivables Outstanding, Gross Losses and Recoveries related
to the credit card portfolio acquired by Fleet as a result of the merger of
Fleet Financial Group, Inc. and BankBoston Corporation are included as of
March 31, 2000.
(2) Average Receivables Outstanding is the sum of receivables outstanding at the
beginning and end of each month during the period indicated, divided by
twice the number of months in the period indicated.
(3) Gross Losses are presented net of adjustments made pursuant to the bank's
normal servicing procedures, including removal of incorrect or disputed
finance charges and reversal of annual cardholder fees on cardholder
accounts which have been closed. Losses do not include accrued finance
charges that have been charged-off or fraud losses.
(4) As, of October 1, 1998, the bank implemented a revised policy relating to
the charge-off of bankrupt credit card accounts and the charge-off of
delinquent accounts. See "The Bank's Credit Card Activities--Delinquencies"
in the accompanying prospectus.
(5) Annualized.
INTERCHANGE
In respect of interchange attributed to the cardholder charges for
merchandise and services in those accounts included in the trust, the bank is
required to transfer to the trust each month prior to the
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distribution date an amount equal to one-twelfth of 1.25% of the outstanding
balance of the principal receivables allocable to Series 2001-B at the end of
the preceding month.
LITIGATION
On January 22, 1999, Fleet Financial Group, Inc. (the predecessor to
FleetBoston Financial Corporation), Fleet National Bank, Fleet Bank (RI),
National Association, Fleet Credit Card Services, L.P. and Fleet Credit Card
Holdings, Inc. brought suit against Advanta Corp., and certain of its
subsidiaries. The action arose out of a February 1998 transaction in which Fleet
Financial Group, Inc. and Fleet Credit Card LLC, the predecessor in interest to
Fleet Credit Card Services, L.P., acquired most of the consumer credit card
business of Advanta National Bank. The Advanta entities answered the Fleet
entities' complaint, denying the principal allegations and asserting a variety
of counterclaims. This litigation is presently in the discovery process. Due to
the nature of the Advanta entities' pleadings and the general unpredictability
of the litigation process, it is impossible, at this time, to predict the
ultimate outcome of the litigation. However, the Fleet entities intend to
vigorously pursue their claims and contest the claims asserted by the Advanta
entities. Fleet does not expect the resolution of this action to have a material
adverse impact on its business.
THE RECEIVABLES
The receivables in the initial accounts designated to the trust were
conveyed to the trust on December 3, 1993. Since that date, accounts have been
added to the trust from time to time as set forth in Annex II. The additional
accounts were selected from the Advanta consumer credit card portfolio prior to
February 20, 1998, and from the Fleet Credit Card Portfolio on and after
February 20, 1998.
The bank has broad discretion in selecting accounts that will be designated
as additional accounts; however, each additional account must, as of the
relevant cut-off date for those accounts, qualify as an Eligible Account. In
order to be an Eligible Account, each account must on the relevant cut-off date,
among other things, be in existence and maintained by the bank, have a
cardholder with a billing address in the United States, its territories or
possessions or a military address, and, except under limited circumstances, not
be an account the credit card or cards for which have been reported as having
been lost or stolen. See "Description of the Certificates--Representations,
Warranties and Covenants" in the accompanying prospectus.
Cardholders whose accounts are included in the Fleet Credit Card Portfolio
have billing addresses in all 50 states, the District of Columbia, Puerto Rico,
Guam, the Virgin Islands and certain foreign countries. As noted above, Eligible
Accounts must, as of the relevant cut-off date, have a billing address in the
United States, its territories or possessions or a military address. As of April
30, 2001, 99.9% of the accounts designated to the trust and 99.9% of the
receivables in the trust had billing addresses in one of the 50 states or the
District of Columbia.
Pursuant to the Pooling and Servicing Agreement, the seller may be
obligated to designate additional accounts to the trust and to convey all
receivables of these additional accounts to the trust. Also, the seller may in
its discretion, from time to time, designate additional accounts to the trust.
In each case, all of the receivables in the designated accounts are conveyed to
the trust whether these receivables are then existing or are subsequently
created. See "Description of the Certificates--General" and "--Addition of
Accounts" in the accompanying prospectus. As of the relevant cut-off date and on
the date any new receivables are created, the seller represents and warrants
that the receivables in the accounts are Eligible Receivables. See "Description
of Certificates--Representations, Warranties and Covenants" in the accompanying
prospectus.
As of the date of this prospectus supplement, the accounts from which the
receivables in the trust arise are the existing VISA and MasterCard accounts.
However, any new accounts designated to the trust are not required to be VISA
and MasterCard accounts.
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15
The receivables in the trust including receivables in additional accounts
the receivables of which have been or are expected to be conveyed to the trust
during the period from April 30, 2001 through the date of issuance of the Series
2001-B Certificates, as of April 30, 2001, totaled $11,549,333,126 in 7,012,662
accounts. The accounts had an average credit limit of $7,483. The percentage of
the aggregate total receivables balance to the aggregate total credit limit was
22.0%. The average age of the accounts designated to the trust was approximately
47.7 months.
The receivables balance in the trust as of April 30, 2001 totaled (not
including receivables to be added to the trust thereafter) $10,820,545,803. The
receivables balance in the trust as of June 7, 2001 totaled $11,188,659,903. As
of June 7, 2001 the balance of receivables in the trust which were 30 days or
more contractually delinquent was $500,236,058.
The following tables summarize the trust portfolio, by various criteria as
of the close of business on April 30, 2001 including receivables in additional
accounts the receivables of which have been or are expected to be conveyed to
the trust during the period from April 30, 2001 through the date of issuance of
the Series 2001-B Certificates. Because the future composition of the trust
portfolio may change over time, these tables are not necessarily indicative of
future results.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- --------- ---------- --------------- -----------
Credit balance........................... 105,557 1.5% $ (10,196,857) (0.1)%
$0.00.................................... 3,365,091 48.0 0 0.0
$0.01 to $1,000.00....................... 1,080,503 15.4 374,203,541 3.3
$1,000.01 to $2,500.00................... 669,116 9.5 1,147,175,293 9.9
$2,500.01 to $5,000.00................... 902,566 12.9 3,340,717,311 28.9
$5,000.01 to $7,500.00................... 520,938 7.4 3,190,170,498 27.6
Over $7,500.00........................... 368,891 5.3 3,507,263,340 30.4
--------- ----- --------------- -----
Total.................................... 7,012,662 100.0% $11,549,333,126 100.0%
========= ===== =============== =====
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- -------------------- --------- ---------- --------------- -----------
$0.00 to $2,500.00....................... 515,032 7.3% $ 277,899,863 2.4%
$2,500.01 to 3,500.00.................... 390,311 5.6 434,425,784 3.8
$3,500.01 to 5,000.00.................... 1,085,970 15.5 1,276,360,540 11.0
$5,000.01 to 7,500.00.................... 1,798,574 25.6 2,496,740,134 21.6
$7,500.01 to 10,000.00................... 1,836,662 26.2 3,081,195,517 26.7
$10,000.01 to 12,500.00.................. 964,488 13.8 2,494,700,491 21.6
Over $12,500.01.......................... 421,625 6.0 1,488,010,797 12.9
--------- ----- --------------- -----
Total.......................... 7,012,662 100.0% $11,549,333,126 100.0%
========= ===== =============== =====
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COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------- --------- ---------- --------------- -----------
Not Delinquent........................... 6,804,503 97.0% $10,613,506,015 91.9%
1 to 29 days............................. 106,538 1.5 417,360,312 3.6
30 to 59 days............................ 30,809 0.5 140,849,160 1.2
60 to 89 days............................ 20,744 0.3 104,082,838 0.9
90 to 119 days........................... 16,494 0.2 86,027,768 0.8
120 to 149 days.......................... 13,818 0.2 72,867,966 0.6
150 to 179 days.......................... 12,257 0.2 66,345,859 0.6
180 or more.............................. 7,499 0.1 48,293,208 0.4
--------- ----- --------------- -----
Total.................................... 7,012,662 100.0% $11,549,333,126 100.0%
========= ===== =============== =====
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
AGE (IN MONTHS) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- --------------- --------- ---------- --------------- -----------
Not more than 6 Months................... 478,762 6.8% $ 1,271,875,513 11.0%
Over 6 to 12 Months...................... 628,642 9.0 1,497,107,587 13.0
Over 12 to 24 Months..................... 1,574,476 22.5 2,971,343,136 25.7
Over 24 to 36 Months..................... 901,808 12.9 991,456,543 8.6
Over 36 to 48 Months..................... 1,099,390 15.7 1,146,018,129 9.9
Over 48 to 60 Months..................... 389,192 5.5 531,445,950 4.6
Over 60 to 84 Months..................... 1,026,044 14.6 1,699,406,659 14.7
Over 84 Months........................... 914,348 13.0 1,440,679,609 12.5
--------- ----- --------------- -----
Total.................................... 7,012,662 100.0% $11,549,333,126 100.0%
========= ===== =============== =====
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GEOGRAPHIC DISTRIBUTION OF ACCOUNTS AND RECEIVABLES
TRUST PORTFOLIO(1)
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- --------- ---------- --------------- -----------
California............................... 865,103 12.3% $ 1,332,329,489 11.5%
New York................................. 624,860 8.9 970,621,737 8.4
Texas.................................... 450,282 6.4 794,454,789 6.9
Florida.................................. 440,789 6.3 746,614,821 6.5
Pennsylvania............................. 315,761 4.5 500,939,130 4.3
Ohio..................................... 262,693 3.8 448,994,315 3.9
Illinois................................. 272,158 3.9 431,655,941 3.7
New Jersey............................... 280,342 4.0 423,197,012 3.7
Massachusetts............................ 280,741 4.0 415,653,121 3.6
Michigan................................. 219,516 3.1 372,408,280 3.2
Others(2)................................ 3,000,417 42.8 5,112,464,491 44.3
--------- ----- --------------- -----
Total.................................... 7,012,662 100.0% $11,549,333,126 100.0%
========= ===== =============== =====
- ---------------
(1) All data as of April 30, 2001 including receivables then in the trust and
receivables in additional accounts to be added thereafter through the date
of issuance of the Series 2001-B Certificates.
(2) No state or other jurisdiction in this category represented more than 3% of
the total number of accounts or more than 3% of the receivables.
MATURITY ASSUMPTIONS
The Pooling and Servicing Agreement provides that, unless a Pay Out Event
occurs, the Class A Certificateholders will not receive payments of principal
until the June 2006 distribution date (the "CLASS A EXPECTED FINAL DISTRIBUTION
DATE"). The bank expects that the full principal amount of the Class A
Certificates will be paid on the Class A Expected Final Distribution Date.
However, if a Pay Out Event occurs, principal payments may begin prior to that
date.
The Pooling and Servicing Agreement also provides that the Class B
Certificateholders will not receive payments of principal until the June 2006
distribution date (the "CLASS B EXPECTED FINAL DISTRIBUTION DATE"). The bank
expects that the full principal amount of the Class B Certificates will be paid
on the Class B Expected Final Distribution Date. However, if a Pay Out Event
occurs, principal payments may begin prior to that date.
No principal payments will be made to the Class B Certificateholders unless
the Class A Investor Amount is paid in full.
Series 2001-B will have a period of time called the "ACCUMULATION PERIOD"
when monthly deposits are made into the principal funding account. During the
accumulation period, amounts deposited in the principal funding account will
accumulate in an amount calculated to be sufficient to pay the Class A
Certificates on the Class A Expected Final Distribution Date and to pay the
Class B Certificates on the Class B Expected Final Distribution Date. Unless and
until a Pay Out Event occurs, on each distribution date for the accumulation
period, monthly deposits of principal will be made into the principal funding
account in an amount equal to the least of:
(a) Available Investor Principal Collections;
(b) the sum of:
(1) the Controlled Accumulation Amount for that distribution date;
and
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(2) any Deficit Controlled Accumulation Amount for the immediately
preceding distribution date; or
(c) the Invested Amount.
It is anticipated that a single principal payment will be made to Class A
Certificateholders in an amount equal to the Class A Investor Amount on the
Class A Expected Final Distribution Date and that a single principal payment
will also be made to Class B Certificateholders in an amount equal to the Class
B Investor Amount on the Class B Expected Final Distribution Date. However,
payment rates vary and we cannot assure you that Available Investor Principal
Collections will always be sufficient to make required payments to the principal
funding account or to make payments on your certificates when you expect.
On the other hand, the occurrence of a Pay Out Event may result in
principal being paid to you earlier than expected.
Pay Out Events which apply to all series are described in the accompanying
prospectus. See "Description of the Certificates--Trust Pay Out Events" in the
accompanying Prospectus.
Series Pay Out Events for Series 2001-B are described in this prospectus
supplement under the caption "Description of the Certificates--Pay Out Events."
There can be no assurance that a Pay Out Event will not occur. See
"Description of the Certificates--Pay Out Events" in this Prospectus Supplement.
Upon the occurrence of a Pay Out Event which applies to Series 2001-B or to
all series, a "RAPID AMORTIZATION PERIOD" will begin. The rapid amortization
period means the period beginning with the occurrence of a Pay Out Event and
ending on the earlier of:
(a) the payment in full of the Class A Investor Amount, the Class B
Investor Amount and the Collateral Invested Amount; and
(b) the Series 2001-B Termination Date.
During the rapid amortization period, first the Class A Certificateholders
and then, following the payment in full of the Class A Investor Amount, the
Class B Certificateholders will be entitled to receive monthly payments of
principal. The monthly payments will be equal to the Available Investor
Principal Collections received by the trust during the related monthly period,
plus the principal amount on deposit in the principal funding account, until the
Class A Investor Amount or Class B Investor Amount, as applicable, is paid in
full.
Allocations of collections of principal receivables will be made to Series
2001-B based on the Principal Allocation Percentage. See "Description of the
Certificates--Allocation Percentages" in this Prospectus Supplement.
The following table shows the highest and lowest cardholder monthly payment
rates and the average of the cardholder monthly payment rates for the Fleet
Credit Card Portfolio. The rates are calculated as a percentage of the total
opening monthly account balances during the periods shown. Payments shown in the
table include amounts which would be deemed payments of principal receivables
and finance charge receivables on the accounts.
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MONTHLY PAYMENT RATES
FLEET CREDIT CARD PORTFOLIO (1)
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- -----------------------------
2001 2000 1999 1998
------------- ------- ------- -------
Lowest............................................. 11.17% 11.12% 11.20% 10.84%
Highest............................................ 12.90% 12.93% 13.64% 12.36%
Monthly Average.................................... 12.22% 12.07% 12.06% 11.57%
- ---------------
(1) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1998. Collections related to the credit card portfolio acquired by Fleet as
a result of a merger of Fleet Financial Group, Inc. and BankBoston
Corporation are included as of March 31, 2000.
The amount of collections on receivables from the trust may vary from month
to month due to seasonal variations, general economic conditions, changes in tax
law and payment habits of individual cardholders. There can be no assurance that
collections of principal receivables from the trust portfolio, and thus the rate
at which you can expect to accumulate or receive payments of principal on your
certificates during the accumulation period or the rapid amortization period,
will be similar to the historical experience set forth above. In addition, the
ability to pay the Class A Investor Amount or the Class B Investor Amount on the
Class A Expected Final Distribution Date and the Class B Expected Final
Distribution Date, respectively, may be dependent upon the availability of
Shared Principal Collections.
Since the trust, as a master trust, may issue additional series from time
to time, there can be no assurance that the issuance of additional series or the
terms of any additional series might not have an impact on the timing of
payments made to you. Further, if a Pay Out Event occurs, the average life and
maturity of the Series 2001-B Certificates could be significantly reduced.
RECEIVABLE YIELD CONSIDERATIONS
The following table provides yield information for the three months ended
March 31, 2001 and each of the years ended December 31, 2000, 1999 and 1998.
The historical yield figures in the table are calculated on an accrual
basis. Collections on the receivables in the trust will be on a cash basis and
may not reflect the historical yield experience in the table. For example,
during periods of increasing delinquencies accrual yields may exceed cash yields
as amounts collected on credit card receivables lag behind amounts accrued and
billed to cardholders. Conversely, as delinquencies decrease, cash yields may
exceed accrual yields as amounts collected in a current period may include
amounts accrued during prior periods. Yield on both an accrual and a cash basis
will be affected by numerous factors, including the finance charges on the
receivables in the trust, the amount of the annual cardholder fees and other
fees and charges, changes in the delinquency rate on the receivables in the
trust, the percentage of cardholders who pay their balances in full each month
and do not incur finance charges and any restrictions which may be imposed by
future legislation or regulations. There can be no assurance that the revenue
from finance charges and fees for the receivables in the trust will be similar
to the historical experience set forth below. See "Risk Factors" in the
accompanying Prospectus.
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REVENUE FROM FINANCE CHARGES AND FEES
FLEET CREDIT CARD PORTFOLIO
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ------------------------------
2001 2000 1999 1998
------------ ------ ------ ------
Average Monthly Accrued Fees and
Charges(2)(3)(4)........................... $44.11(6) $44.74(6) $42.76(6) $36.07(1)
Average Account Balance(2)(5)................ $2,969 $2,882 $2,699 $2,798
Yield From Fees and Charges(3)(4)............ 17.83%(6) 18.63%(6) 19.01%(6) 15.47%(1)
- ---------------
(1) The amount shown for the year ended December 31, 1998 does not include
revenue attributed to interchange.
(2) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1998. Fees, charges and account balances related to the credit card
portfolio acquired by Fleet as a result of the merger of Fleet Financial
Group, Inc. and BankBoston Corporation are included as of March 31, 2000.
(3) Fees and Charges for the year ended December 31, 1998 are comprised of
finance charges, annual cardholder fees and certain other service charges.
Fees and Charges for the three-month period ended March 31, 2001 and for the
years ended December 31, 2000 and 1999 are comprised of finance charges,
annual cardholder fees and all other service charges plus revenue attributed
to interchange.
(4) Average Monthly Accrued Fees and Charges and Yield From Fees and Charges are
presented net of adjustments made pursuant to normal servicing procedures,
including removal of incorrect or disputed finance charges and reversal of
finance charges accrued on charged-off accounts.
(5) Average Account Balance includes purchases, cash advances and billed and
unpaid finance and other charges, and is calculated based on the average of
the opening monthly account balances for accounts with balances during the
periods shown.
(6) Beginning January 1, 1999 revenue from interchange and fees not previously
included have been included in fees and charges and in calculating the yield
from fees and charges. For the three months ended March 31, 2001 and the
years ended December 31, 2000 and 1999, if fees and charges had not included
revenue attributed to interchange and the additional fees, the Average
Monthly Accrued Fees and Charges would have been $37.81, $38.11 and $36.84,
respectively, and the Yield From Fees and Charges would have been 15.28%,
15.87% and 16.38%, respectively.
The yields shown in the above table are comprised of three components:
finance charges, annual cardholder fees and other service charges, such as late
charges. In addition, for the three months ended March 31, 2001 and for the
years ended December 31, 2000 and 1999, the yield includes interchange and fees
not previously included. The yield related to annual cardholder fees, on those
accounts that assess annual fees, and other service charges varies with the type
and volume of activity in and the balance of each account. The bank currently
assesses annual cardholder fees of $10 to $50 for some of its credit card
accounts. Most accounts included in the Fleet Credit Card Portfolio and
originated since March 1987 do not carry an annual cardholder fee. See "The
Bank's Credit Card Activities" in the accompanying Prospectus. As account
balances increase, an annual cardholder fee, which remains constant, represents
a smaller percentage of the aggregate account balance.
The increase in yields demonstrated in the above table from December 31,
1998 to December 31, 1999 is the result of several changes implemented by the
bank. As of January 1, 1999, the bank, in calculating fees and charges has
included interchange and service charges not previously included. Other factors
affecting the increase include the bank's continued use of risk based repricing.
DESCRIPTION OF THE CERTIFICATES
The following summary, together with information contained elsewhere in
this Prospectus Supplement and the Prospectus, describes the material terms of
the certificates contained in the Pooling and Servicing Agreement. The following
summary is qualified in its entirety by reference to the Pooling and Servicing
Agreement.
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GENERAL
The Series 2001-B Certificates and the Collateral Interest will represent
undivided interests in the assets of the Fleet Credit Card Master Trust II. See
"--Allocation Percentages" in this Prospectus Supplement. The rights represented
by the Series 2001-B Certificates and the Collateral Interest include the right
to a percentage of the collections of the receivables in the trust. The
percentage used to allocate collections to Series 2001-B is the "SERIES
PERCENTAGE." When allocating finance charge receivables and defaulted
receivables, the Series Percentage is the Floating Allocation Percentage. When
allocating principal receivables, the Series Percentage is the Principal
Allocation Percentage.
For any monthly period, the portion of the principal receivables and any
amounts in the excess funding account represented by the Series 2001-B
Certificates and the Collateral Interest will be equal to:
- $800,000,000, which will be the "INITIAL INVESTED AMOUNT" of the
certificates and the Collateral Interest on the date of issuance of
Series 2001-B; minus
- the principal amount on deposit in the principal funding account; minus
- the amount of principal payments paid to the certificateholders and the
Collateral Interest Holder; and minus
- any unreimbursed reductions in the Invested Amount.
See "Description of the Certificates--Defaulted Receivables; Rebates and
Fraudulent Charges" in the accompanying Prospectus and "Description of the
Certificates--Allocation of Investor Default Amount" in this Prospectus
Supplement.
Each Series 2001-B Certificate represents the right to receive monthly
payments of interest at the Class A Certificate Rate or Class B Certificate
Rate, as applicable, from:
- collections of finance charge receivables;
- amounts withdrawn from the reserve account; provided, that amounts
withdrawn from the reserve account will be available only to the Class A
Certificates; and
- reallocated principal collections.
The Series 2001-B Certificates also represent the right to deposits or
payments of principal during the accumulation period or the rapid amortization
period. Deposits to the principal funding account to be used to pay principal on
the Class A Certificates and the Class B Certificates or amounts otherwise used
to pay principal on the Class A Certificates or the Class B Certificates will be
funded from Available Investor Principal Collections. During the accumulation
period, Available Investor Principal Collections will include collections of
principal receivables otherwise allocable to other series, but which are not
needed by the other series.
The seller holds the interest in the principal receivables and the amounts
in the excess funding account not represented by the Series 2001-B Certificates,
the Collateral Interest or the certificates and uncertificated interests
represented by other series. The interest held by the seller is the "SELLERS'
INTEREST." The sellers' interest includes an undivided interest in the assets of
the trust including the right to a percentage of collections of receivables. The
seller percentage of receivables is 100% minus both the Series Percentage for
Series 2001-B and the series percentages for all other series.
During the Revolving Period, the Invested Amount will remain constant
except in limited circumstances. See "Description of the Certificates--Defaulted
Receivables; Rebates and Fraudulent Charges" in the accompanying prospectus and
"Description of the Certificates--Allocation of Investor Default Amount" in this
prospectus supplement. The amount of principal receivables, however, will vary
each day as new principal receivables are created and others are paid. The
"SELLER AMOUNT," being the amount of principal receivables and amounts in the
excess funding account not represented by the investor certificates of any
series, will fluctuate daily to reflect the changes in the amount of the
principal receivables. During the accumulation period or the rapid amortization
period, the Invested Amount will
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decline for each monthly period as cardholder payments of principal receivables
are collected and deposited in the principal funding account or paid to the
certificateholders or the Collateral Interest Holder.
The interest of the certificateholders in the trust will terminate
following the "SERIES 2001-B TERMINATION DATE," which is the earliest of:
- the day after the distribution date on which the Investor Amount is paid
in full;
- the December 2008 distribution date; and
- the termination of the trust.
All principal and interest on your certificates will be due and payable no later
than the Series 2001-B Termination Date. See "Description of the
Certificates--Final Payment of Principal and Interest; Termination" in the
accompanying prospectus.
REGISTRATION OF CERTIFICATES
The certificates initially will be represented by certificates registered
in the name of Cede & Co., as the nominee of The Depository Trust Company. No
person acquiring a beneficial interest in the certificates--called a
"CERTIFICATE OWNER"--will be entitled to receive a "DEFINITIVE CERTIFICATE"
representing the person's interest, except in the event that definitive
certificates are issued to certificate owners under the limited circumstances
described in the prospectus. Investor certificateholders may elect to hold their
investor certificates through The Depository Trust Company, in the United States
or Clearstream Banking or Euroclear, in Europe. See "Description of the
Certificates--Definitive Certificates" in the accompanying prospectus.
INTEREST PAYMENTS
Interest will accrue on the certificates at the applicable Class A
Certificate Rate or Class B Certificate Rate from the date of the initial
issuance of the certificates. Interest payments on the certificates will be made
on distribution dates. The "DISTRIBUTION DATES" will be August 15, 2001 and the
15th day of each month, or if the 15th day is not a business day, on the next
succeeding business day.
Interest payments on the certificates on any distribution date will be
calculated on the outstanding principal amount of the Class A Certificates or
the Class B Certificates, as applicable, as of the preceding record date or, in
the case of the first distribution date, as of the date of issuance of Series
2001-B. Class A Monthly Interest and Class B Monthly Interest due but not paid
on any distribution date will be payable on the next succeeding distribution
date together with additional interest on the due and unpaid amount at the Class
A Certificate Rate or Class B Certificate Rate, as applicable, plus 2.0%.
Interest on the Class A Certificates and the Class B Certificates will be
calculated on the basis of a 360-day year of twelve months having 30 days in
each month; provided, however that interest on the Class A Certificates for the
August 15, 2001 distribution date will be $5,107,200 and interest on the Class B
Certificates for the August 15, 2001 distribution date will be $377,600. The
Class A Certificates will bear interest at the rate of 5.60% per annum (the
"CLASS A CERTIFICATE RATE"). The Class B Certificates will bear interest at the
rate of 5.90% per annum (the "CLASS B CERTIFICATE RATE").
The "INTEREST PERIOD" for any distribution date will be the period from the
previous distribution date through the day preceding that distribution date,
each of which will be deemed to be one 30-day month, except that the initial
interest period will be the period from the date of issuance of Series 2001-B
through August 14, 2001, the day preceding the initial distribution date.
The term "BUSINESS DAY" means any day other than a Saturday, Sunday or day
on which banking institutions in New York, New York, Providence, Rhode Island or
any other state where the principal
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executive offices of the bank or any additional seller or the trustee are
located, are authorized or obligated by law, executive order or governmental
decree to be closed.
The "MONTHLY PERIOD" for any distribution date will be the immediately
preceding calendar month, except for the initial monthly period, which will
begin on the date of issuance of Series 2001-B and end on July 31, 2001.
The "RECORD DATE" for any distribution date will be the last business day
of the month preceding that distribution date.
On each distribution date, Class A Monthly Interest and Class A Monthly
Interest previously due but not distributed to the Class A Certificateholders
will be paid to the Class A Certificateholders from Class A Available Funds for
the related monthly period. To the extent Class A Available Funds for the
related monthly period are insufficient to pay the interest, then one or all of
the following will be used to make the interest payments due on the Class A
Certificates:
- Excess Spread;
- if necessary, Excess Finance Charges; and
- if necessary, Reallocated Principal Collections first from amounts
allocated to the Collateral Invested Amount and then from amounts
allocated to the Class B Invested Amount.
"CLASS A AVAILABLE FUNDS" means, for any monthly period, the sum of:
- the Class A Floating Percentage of collections of finance charge
receivables allocated to the Series 2001-B Certificates for the related
monthly period, including other amounts that are to be treated as
collections of finance charge receivables in accordance with the Pooling
and Servicing Agreement;
- the amount of earnings on the principal funding account, if any, for the
related distribution date; and
- the amount of funds, if any, to be withdrawn from the reserve account and
included in Class A Available Funds for the distribution date.
"CLASS A MONTHLY INTEREST" means, for any distribution date, an amount
equal to one-twelfth of the product of:
- the Class A Certificate Rate; and
- the outstanding principal amount of the Class A Certificates as of the
preceding record date;
provided however, for the first distribution date, the Class A Monthly Interest
will be equal to $5,107,200.
On each distribution date, Class B Monthly Interest and Class B Monthly
Interest previously due but not distributed to the Class B Certificateholders
will be paid to Class B Certificateholders from Class B Available Funds for the
related monthly period. To the extent Class B Available Funds for the related
monthly period are insufficient to pay the interest, then one or all of the
following, to the extent not used to make distributions for the Class A
Certificates, will be used to make the interest payments due on the Class B
Certificates:
- Excess Spread;
- if necessary, Excess Finance Charges allocated to Series 2001-B; and
- if necessary, Reallocated Principal Collections allocable to the
collateral invested amount.
"CLASS B AVAILABLE FUNDS" means, for any monthly period, an amount equal to
the Class B Floating Percentage of collections of finance charge receivables
allocated to the Series 2001-B Certificates for the related monthly period,
including other amounts that are to be treated as collections of finance charge
receivables in accordance with the Pooling and Servicing Agreement.
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"CLASS B MONTHLY INTEREST" means, for any distribution date, an amount
equal to one-twelfth of the product of:
- the Class B Certificate Rate; and
- the outstanding principal amount of the Class B Certificates as of the
preceding record date;
provided however, for the first distribution date, the Class B Monthly Interest
will be equal to $377,600.
"COLLATERAL AVAILABLE FUNDS" means, for any monthly period, an amount equal
to the Collateral Floating Percentage of the collections of finance charge
receivables allocated to Series 2001-B including any amounts that are to be
treated as collections of finance charge receivables in accordance with the
Pooling and Servicing Agreement.
"COLLATERAL MINIMUM MONTHLY INTEREST" means, for any distribution date, an
amount equal to the product of:
- (a) a fraction, the numerator of which is the actual number of days in
the period 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 that distribution date and the
denominator of which is 360; times
(b) the Collateral Minimum Interest Rate; and
- the outstanding principal amount of the Collateral Interest.
"COLLATERAL MINIMUM INTEREST RATE" means the London interbank offered rate
for one-month United States dollar deposits plus 2.0% per annum, or such lesser
amount as may be designated in the agreement between the bank and the Collateral
Interest Holder relating to the transfer of the Collateral Interest to the
Collateral Interest Holder.
"EXCESS FINANCE CHARGES" are collections of finance charge receivables for
a monthly period which are allocated to series in Group One other than Series
2001-B and are, under the documents governing the other series, designated as
Excess Finance Charges.
PRINCIPAL PAYMENTS
During the Series 2001-B revolving period no principal payments will be
made to or for the benefit of the certificateholders or deposited into the
principal funding account to be accumulated and subsequently paid to the
certificateholders. During the revolving period, collections of principal
receivables allocable to Series 2001-B will, except to the extent used as
Reallocated Principal Collections, be treated as Shared Principal Collections.
Any Shared Principal Collections will be made available to other series in Group
One which are in an amortization period. If the collections of principal
receivables allocable to Series 2001-B during the revolving period are not
needed by other series, the collections will be paid to the holders of the
sellers' interest or, if required by the Pooling and Servicing Agreement,
retained in the excess funding account.
See "Description of the Certificates--Shared Principal Collections" in the
accompanying prospectus.
The accumulation period for the Series 2001-B Interests is scheduled to
begin at the close of business on August 31, 2005. The beginning of the
accumulation period may, however, be delayed to no later than the close of
business on April 31, 2006. The first principal payment will be made to the
Class A Certificateholders on the earlier of (i) the June 2006 distribution
date, the "CLASS A EXPECTED FINAL DISTRIBUTION DATE" or (ii) the distribution
date in the month following the month in which the rapid amortization period
begins. Principal is also expected to be paid to the Class B Certificateholders
on the June 2006 distribution date, the "CLASS B EXPECTED FINAL DISTRIBUTION
DATE"; however, if the amount on deposit in the principal funding account is not
sufficient to pay the certificates in full, it will be applied first to pay the
Class A Certificates. No principal will be payable to the Class B
Certificateholders unless
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the Class A Investor Amount is paid in full or funds in the principal funding
account are sufficient to make the full payment to the Class A
Certificateholders.
On each distribution date for the accumulation period, prior to the date on
which the Class A Investor Amount and the Class B Investor Amount are paid in
full, an amount equal to the least of one of the following will be deposited in
the principal funding account:
- Available Investor Principal Collections on deposit in the collection
account for the distribution date;
- the applicable Controlled Deposit Amount for the distribution date; and
- the sum of the Class A Invested Amount and the Class B Invested Amount.
Amounts deposited into the principal funding account during the accumulation
period will be paid first to the Class A Certificateholders and then the Class B
Certificateholders, on the Class A Expected Final Distribution Date and the
Class B Expected Final Distribution Date or, if earlier, the first distribution
date for the rapid amortization period.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" means, for any monthly period,
an amount equal to the sum of:
- (a) an amount equal to the Principal Allocation Percentage of all
collections of principal receivables received during the related
monthly period; minus
(b) the amount of Reallocated Principal Collections for the related
monthly period used to fund the Class A Required Amount or the Class
B Required Amount; plus
- any Shared Principal Collections from other series in Group One that are
allocated to Series 2001-B; plus
- any other amounts which pursuant to the series supplement are to be
treated as Available Investor Principal Collections for the related
distribution date.
On each distribution date for the rapid amortization period until the Class
A Investor Amount is paid in full or the Series 2001-B Termination Date occurs,
the Class A Certificateholders will be entitled to receive Available Investor
Principal Collections in an amount up to the Class A Investor Amount. After
payment in full of the Class A Investor Amount, the Class B Certificateholders
will be entitled to receive, on each distribution date, Available Investor
Principal Collections until the earlier of the date the Class B Investor Amount
is paid in full and the Series 2001-B Termination Date.
"CLASS A MONTHLY PRINCIPAL" for any distribution date for the accumulation
period or the rapid amortization period will equal the least of:
- Available Investor Principal Collections on deposit in the collection
account for that distribution date;
- for each distribution date for the accumulation period, on or prior to
the Class A Expected Final Distribution Date, the Controlled Deposit
Amount for that distribution date; and
- the Class A Invested Amount on the related distribution date.
"CLASS B MONTHLY PRINCIPAL" for any distribution date, beginning with the
first distribution date for the accumulation period on which the full amount of
the Class A Investor Amount is on deposit in the principal funding account or
has been paid to the Class A Certificateholders or, if earlier, the first
distribution date in the rapid amortization period, will equal the least of:
- the Available Investor Principal Collections on deposit in the collection
account for that distribution date, minus the portion of the Available
Investor Principal Collections applied to Class A Monthly Principal on
that distribution date;
- for each distribution date with respect to the accumulation period, the
Controlled Deposit Amount for that distribution date, minus the portion
of the Controlled Deposit Amount for that distribution date applied to
Class A Monthly Principal; and
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- the Class B Invested Amount on that distribution date.
"COLLATERAL MONTHLY PRINCIPAL" means beginning with the later of the
Collateral Expected Final Distribution Date and the distribution date on which
the Class B Investor Amount is paid in full, or, if earlier, the first
distribution date in the rapid amortization period, an amount equal to the
lesser of:
- that Available Investor Principal Collections for that distribution date,
minus the portion of the Available Investor Principal Collections applied
to Class A Monthly Principal and Class B Monthly Principal on that
distribution date; and
- the Collateral Invested Amount for that distribution date.
"CONTROLLED ACCUMULATION AMOUNT" means for any distribution date for the
accumulation period, the sum of the Class A Initial Invested Amount and the
Class B Initial Invested Amount divided by nine, subject to adjustment if the
beginning of the accumulation period is postponed.
"DEFICIT CONTROLLED ACCUMULATION AMOUNT" means:
- on the first distribution date for the accumulation period the excess, if
any, of the Controlled Accumulation Amount for that distribution date
over the amount distributed from the collection account as Class A
Monthly Principal and Class B Monthly Principal for that distribution
date; and
- on each subsequent distribution date for the accumulation period the
excess, if any, of the Controlled Deposit Amount for the subsequent
distribution date over the amount distributed from the collection account
as Class A Monthly Principal and Class B Monthly Principal for the
subsequent distribution date.
"CONTROLLED DEPOSIT AMOUNT" means, for any distribution date relating to
the accumulation period, an amount equal to the sum of:
- the Controlled Accumulation Amount on that distribution date; and
- any Deficit Controlled Accumulation Amount for the immediately preceding
distribution date.
POSTPONEMENT OF ACCUMULATION PERIOD
The servicer may elect to postpone the start of the accumulation period and
extend the length of the revolving period. The servicer may make this election
only if the length of the accumulation period is less than nine months. On each
determination date, until the accumulation period begins, the servicer will
determine the number of months expected to be required to fully fund the
principal funding account and be able to pay the Class A Investor Amount no
later than the Class A Expected Final Distribution Date and the Class B Investor
Amount no later than the Class B Expected Final Distribution Date. The servicer
will determine the length of the period required on the basis of:
- the monthly collections of principal receivables expected to be
distributable to the certificateholders of all principal sharing series
in Group One, assuming a principal payment rate no greater than the
lowest monthly principal payment rate on the receivables for the
preceding 12 months; and
- the amount of principal expected to be distributable to
certificateholders of principal sharing series in Group One which are not
expected to be in their revolving periods during the accumulation period.
If the servicer determines that the period needed to fully fund the principal
funding account is less than nine months, the servicer may, at its option,
postpone the start of the accumulation period so that the number of months
included in the accumulation period will be equal to or exceed the period
needed. The effect of the foregoing calculation is to permit the reduction of
the length of the accumulation period based on the investor interest of certain
other principal sharing series in Group One that are scheduled to be in their
revolving periods during the accumulation period and on increases in the
principal payment rate occurring after the date of issuance of Series 2001-B.
The length of the accumulation period will not be less than one month.
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SUBORDINATION
The Class B Certificateholders' interest and the Collateral Interest will
be subordinated to the extent necessary to fund certain payments for the Class A
Certificates. In addition, the Collateral Interest will be subordinated to the
extent necessary to fund certain payments for the Class B Certificates. Also
collections of principal receivables 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, collections of principal
receivables 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. 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 this reduction in the Class B Invested
Amount is not reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. See "--Allocation Percentages,"
"--Reallocation of Cash Flows," and "--Application of Collections--Excess
Spread; Excess Finance Charges" in this prospectus supplement.
ALLOCATION PERCENTAGES
The servicer will allocate among the Class A Certificates, the Class B
Certificates, the Collateral Interest, the Certificateholders' interest for all
other outstanding series and the sellers' interest, all collections of finance
charge receivables, principal receivables and the defaulted amount for each
monthly period.
Collections of finance charge receivables and the defaulted amount for any
monthly period will be allocated to Series 2001-B based on the Floating
Allocation Percentage. The "FLOATING ALLOCATION PERCENTAGE" means, for any
monthly period, the percentage equivalent, which shall never exceed 100%, of a
fraction, the numerator of which is the Invested Amount as of the last day of
the preceding monthly period, or for the first monthly period, the Initial
Invested Amount as of the date of issuance of Series 2001-B, and the denominator
of which is the greater of:
(1) the sum of:
- the total amount of principal receivables in the trust as of the last
day of the monthly period, or, for the first monthly period, the total
amount of principal receivables in the trust on the date of issuance
of Series 2001-B; and
- the principal amount on deposit in the excess funding account as of
the last day of the monthly period; and
(2) the sum of the numerators used to calculate the series percentages
for finance charge receivables or defaulted receivables, for all
series of certificates then outstanding;
provided however, that this ratio is subject to adjustment to give effect to
designations of additional accounts.
These amounts will be further allocated among 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, for 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 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, the Class A Initial Invested Amount and the
denominator of which is equal to the Invested Amount as of the close of business
on that day or for the first monthly period, the Initial Invested Amount.
The "CLASS B FLOATING PERCENTAGE" means, for 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 Invested
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Amount as of the close of business on the last day of the preceding monthly
period, or with respect to the first monthly period, the Class B Initial
Invested Amount and the denominator of which is equal to the Invested Amount as
of the close of business on that day or for the first monthly period, the
Initial Invested Amount.
The "COLLATERAL FLOATING PERCENTAGE" means, for 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, the Collateral Initial Invested Amount and
the denominator of which is equal to the Invested Amount as of the close of
business on that day, or for the first monthly period, the Initial Invested
Amount.
Collections of principal receivables will be allocated to Series 2001-B
based on a percentage equivalent to a fraction, for any monthly period, called
the "PRINCIPAL ALLOCATION PERCENTAGE."
(a) The numerator of the fraction is:
- during the revolving period, the Invested Amount as of the last day of
the immediately preceding monthly period, or, if it is the first
monthly period, then the date of issuance of Series 2001-B; and
- during the accumulation period or the rapid amortization period, the
invested amount as of the last day of the revolving period or if the
numerator has been reduced during an accumulation period as described
in the following paragraph and a rapid amortization period begins, the
Invested Amount as of the last day of the accumulation period; and
(b) the denominator of the fraction is the greater of:
- the sum of the total amount of principal receivables in the trust as
of the last day of the immediately preceding monthly period and the
principal amount on deposit in the excess funding account as of the
same day, or, if it is the first monthly period, as of the date of
issuance of Series 2001-B; and
- the sum of the numerators used to calculate the series percentage
applicable to principal receivables for all series outstanding as of
the date for which the determination is being made.
During the accumulation period, on any date, at the option of the servicer,
the numerator of the Principal Allocation Percentage may be reduced below the
numerator used in the previous monthly period, to an amount not less than the
greater of:
- the Invested Amount as of the last day of the immediately preceding
monthly period, less the amount of any distributions of principal
deposited in the principal funding account since the last day of the
immediately preceding monthly period; and
- an amount that if used as the numerator of the Principal Allocation
Percentage for the remainder of the accumulation period, based on
assumptions set forth in the series supplement, would assure that
Available Investor Principal Collections for Series 2001-B would equal at
least 125% of the Controlled Accumulation Amount for each monthly period
for so long as the Invested Amount is greater than zero.
The Principal Allocation Percentage is also subject to adjustment to give
effect to designations of additional accounts.
Amounts allocated to Series 2001-B on the basis of the Principal Allocation
Percentage will be further allocated among 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.
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The "CLASS A PRINCIPAL PERCENTAGE" means, for any monthly period:
(1) during the revolving period, the percentage equivalent 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, if
it is the first monthly period, as of the date of issuance of
Series 2001-B, and the denominator of which is the Invested Amount
as of the last day of the preceding monthly period, or, if it is
the first monthly period, the date of issuance of Series 2001-B;
and
(2) after the revolving period, the percentage equivalent of a
fraction, the numerator of which is the Class A Invested Amount as
of the last day of the revolving period, and the denominator of
which is the Invested Amount as of that last day.
The "CLASS B PRINCIPAL PERCENTAGE" means, for any monthly period:
(1) during the revolving period, the percentage equivalent 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, if
it is the first monthly period, the date of issuance of Series
2001-B and the denominator of which is the Invested Amount as of
the last day of the preceding monthly period, or, in the case of
the first monthly period, the date of issuance of Series 2001-B;
and
(2) after the revolving period, the percentage equivalent of a
fraction, the numerator of which is the Class B Invested Amount as
of the last day of the revolving period, and the denominator of
which is the Invested Amount as of the same day.
"COLLATERAL PRINCIPAL PERCENTAGE" means, for any monthly period:
(1) during the revolving period, the percentage equivalent 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 the last day
of the preceding monthly period; and
(2) after the revolving period, the percentage equivalent of a
fraction, the numerator of which is the Collateral Invested Amount
as of the last day of the revolving period, and the denominator of
which is the Invested Amount as of the same day.
As used in this prospectus supplement, the following terms have the
meanings indicated:
"CLASS A INVESTED AMOUNT" for any date means:
(1) $684,000,000, the "CLASS A INITIAL INVESTED AMOUNT;" minus
(2) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to the date; minus
(3) 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 the date; and minus
(4) the principal amount on deposit in the principal funding account
on the date, but not in excess of the Class A Initial Invested
Amount.
"CLASS B INVESTED AMOUNT" for any date means:
(1) $48,000,000, the "CLASS B INITIAL INVESTED AMOUNT;" minus
(2) the aggregate amount of principal payments made to Class B
Certificateholders on or prior to the date; minus
(3) the excess, if any, of the aggregate amount of Class B Investor
Charge-Offs for all prior distribution dates over the aggregate
amount of any reimbursements of Class B Investor Charge-Offs for
all distribution dates prior to the date; minus
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(4) the aggregate amount of Reallocated Principal Collections for all
prior distribution dates which have been used to fund the Class A
Required Amount for prior distribution dates, excluding any
Reallocated Principal Collections that have resulted in a
reduction of the Collateral Invested Amount; minus
(5) the amount by which the Class B Invested Amount has been reduced
to fund the Class A Investor Default Amount on all prior
distribution dates as described under "--Allocation of Investor
Default Amount," in this prospectus supplement; plus
(6) the aggregate amount of Excess Spread and Excess Finance Charges
allocated to Series 2001-B and applied on all prior distribution
dates for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (3), (4) and (5); and minus
(7) the positive difference, if any, between the principal funding
account balance and the Class A Investor Amount on the date;
provided however, that the Class B Invested Amount may not be reduced below
zero.
"COLLATERAL INVESTED AMOUNT" for any date means:
(1) $68,000,000, the "COLLATERAL INITIAL INVESTED AMOUNT;" minus
(2) the aggregate amount of principal payments made on the Collateral
Interest prior to the date; minus
(3) the aggregate amount of Reallocated Principal Collections
allocable to the Collateral Invested Amount for all prior
distribution dates which have been used to fund the Class A
Required Amount or the Class B Required Amount; minus
(4) 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 "--Allocation of Investor Default Amount," in this
prospectus supplement; minus
(5) an amount equal to the product of the Collateral Floating
Percentage and the Investor Default Amount (the "COLLATERAL
DEFAULT AMOUNT") for any distribution date that is not funded out
of Excess Spread and Excess Finance Charges allocated to Series
2001-B and available for this purpose on that distribution date;
and plus
(6) the aggregate amount of Excess Spread and Excess Finance Charges
allocated and available to reimburse amounts deducted pursuant to
the foregoing clauses (3), (4) and (5);
provided however, that the Collateral Invested Amount may not be reduced below
zero.
The "INVESTED AMOUNT," for any date means the sum of the Class A Invested
Amount, the Class B Invested Amount and the Collateral Invested Amount.
The "INITIAL INVESTED AMOUNT," means $800,000,000 the Invested Amount on
the date of issuance of Series 2001-B.
"CLASS A INVESTOR AMOUNT" for any date means the sum of the Class A
Invested Amount plus the principal amount on deposit in the principal funding
account, but not in excess of the Class A Initial Invested Amount.
"CLASS B INVESTOR AMOUNT" for any date means the sum of the Class B
Invested Amount plus the positive difference, if any, between the principal
amount on deposit in the principal funding account, and the Class A Investor
Amount on that date but not in excess of the Class B Initial Invested Amount.
"INVESTOR AMOUNT," for any date means the sum of the Class A Investor
Amount, the Class B Investor Amount and the Collateral Invested Amount.
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"SERIES INVESTOR AMOUNT," for any date means the numerator of the Principal
Allocation Percentage on that date.
REALLOCATION OF CASH FLOWS
On each determination date, the servicer will determine the "CLASS A
REQUIRED AMOUNT" which will be the amount, if any, by which the sum of the
following exceeds the Class A Available Funds for the distribution date:
- Class A Monthly Interest for the distribution date;
- any Class A Monthly Interest previously due but not paid to the Class A
Certificateholders on a prior distribution date;
- any Class A Additional Interest and any Class A Additional Interest
previously due but not paid to the Class A Certificateholders on a prior
distribution date;
- the Class A Servicing Fee for the distribution date and any unpaid Class
A Servicing Fee; and
- the Class A Investor Default Amount, if any, for the distribution date.
If the Class A Required Amount is greater than zero, Excess Spread and Excess
Finance Charges allocated to Series 2001-B and available for this purpose will
be used to fund the Class A Required Amount for the distribution date. If the
Excess Spread and Excess Finance Charges are insufficient to fund the Class A
Required Amount, collections of principal receivables allocable first to the
Collateral Interest and then to the Class B Certificates for the related monthly
period will then be used to fund the remaining Class A Required Amount.
"REALLOCATED PRINCIPAL COLLECTIONS" means an amount of collections of
principal receivables with respect to any monthly period equal to the product
of:
- the Principal Allocation Percentage for the monthly period;
- the aggregate amount of collections of principal receivables for the
monthly period; and
- the sum of the Class B Principal Percentage and the Collateral Principal
Percentage for the monthly period.
If Reallocated Principal Collections for a related monthly period together
with Excess Spread and Excess Finance Charges allocated to Series 2001-B are
insufficient to fund the Class A Required Amount for the related monthly period,
then the Collateral Invested Amount will be reduced by the amount of this
excess, but not by more than the Class A Investor Default Amount for the
distribution date. In the event that this 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.
However, the Class B Invested Amount cannot be reduced by more than the excess
of the Class A Investor Default Amount, if any, for the distribution date over
the amount of the reduction, if any, of the Collateral Invested Amount on the
distribution date. In the event that the 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.
However, the Class A Invested Amount cannot be reduced by more than the excess,
if any, of the Class A Investor Default Amount for the distribution date over
the amount of the reductions, if any, of the Collateral Invested Amount and the
Class B Invested Amount with respect to the distribution date as described
above. Any such reduction in the Class A Invested Amount may have the effect of
slowing or reducing the return of principal and interest to the Class A
Certificateholders. In this case, the Class A Certificateholders will directly
bear the credit and other risks associated with their interest in the trust. See
"--Allocation of Investor Default Amount" in this prospectus supplement.
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On each determination date, the servicer will determine the "CLASS B
REQUIRED AMOUNT," which will be the sum of the Class B Investor Default Amount
for the distribution date plus the amount, if any, by which the following
amounts exceed the Class B Available Funds for the distribution date:
- Class B Monthly Interest for the distribution date;
- any Class B Monthly Interest previously due but not paid to the Class B
Certificateholders on a prior distribution date;
- any Class B Additional Interest and any Class B Additional Interest
previously due but not paid to the Class B Certificateholders on a prior
distribution date; and
- the Class B Servicing Fee for the distribution date and any unpaid Class
B Servicing Fee.
If the Class B Required Amount is greater than zero, Excess Spread and
Excess Finance Charges allocated to Series 2001-B 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 for that distribution date.
If the Excess Spread and Excess Finance Charges available to fund the
remaining Class B Required Amount for that distribution date are insufficient to
pay the Class B Required Amount, then Reallocated Principal Collections
allocable to the Collateral Interest and not required to pay the Class A
Required Amount will be used to fund the remaining Class B Required Amount.
If the Reallocated Principal Collections allocable to the Collateral
Interest are insufficient to fund the remaining Class B Required Amount, then
the Collateral Invested Amount remaining after any adjustments made for the
benefit of the Class A Certificateholders will be reduced by the amount of the
insufficiency, but not by more than the Class B Investor Default Amount for the
distribution date. In the event that this 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.
However the Class B Invested Amount cannot be reduced by more than the excess of
the Class B Investor Default Amount for the distribution date over the amount of
the reduction of the Collateral Invested Amount. Any reduction in the Class B
Invested Amount may have the effect of slowing or reducing the return of
principal and interest to the Class B Certificateholders. In this case, the
Class B Certificateholders will directly bear the credit and other risks
associated with their interests in the trust. See "--Allocation of Investor
Default Amount" in this prospectus supplement.
Reductions of the Class A Invested Amount or Class B Invested Amount will
then be reimbursed and the Class A Invested Amount or Class B Invested Amount
increased to the extent of Excess Spread and Excess Finance Charges available
for these purposes on each distribution date. See "--Application of
Collections--Excess Spread; Excess Finance Charges" in this prospectus
supplement. When these reductions of the Class A Invested Amount and Class B
Invested Amount have been fully reimbursed, reductions of the Collateral
Invested Amount will be reimbursed until reimbursed in full in a similar manner.
APPLICATION OF COLLECTIONS
Application of Collections to the Collection Account. Except under the
conditions described in the accompanying prospectus under "Description of the
Certificates--Application of Collections," the servicer will apply, or will
instruct the trustee to apply, on or prior to the close of business on the
second business day following the date of processing of any collections, all
collections and other funds to be deposited into the collection account that are
allocated to the Series 2001-B Certificates and the Collateral Interest as
follows:
(1) during the revolving period, an amount equal to the Floating
Allocation Percentage of the collections of finance charge
receivables processed on that date will be allocated to the
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Series 2001-B Holders, and of that allocation, the difference
between the following amount will be deposited and retained in the
collection account:
(a) monthly interest for the related distribution date plus, if the
bank is not the servicer, the Monthly Servicing Fee for the
monthly period; and
(b) the amounts previously deposited in the collection account for
the monthly period pursuant to this clause (1);
(2) during the accumulation period or rapid amortization period, an
amount equal to the Floating Allocation Percentage of the
collections of finance charge receivables processed on this date
will be allocated to the Series 2001-B Holders and deposited and
retained in the collection account;
(3) during the revolving period, an amount equal to the Principal
Allocation Percentage of collections of principal receivables
processed on that date will be allocated to the Series 2001-B
Holders. If any other principal sharing series in Group One is
outstanding and in an amortization period or accumulation period,
then it will be retained in the collection account for application,
to the extent necessary, to other series in Group One on the related
distribution date. Any remaining funds will be paid to the holders
of the sellers' interest. However, these remaining funds will be
paid to the holders of the sellers' interest only if the Seller
Amount is greater than the Required Seller Amount and the aggregate
amount of principal receivables in the trust is greater than the
Required Principal Balance. If this is not the case, these remaining
funds be will be deposited in the excess funding account until the
Seller Amount is greater than the Required Seller Amount and the
aggregate amount of principal receivables is greater than the
required principal balance. Any remaining funds will be paid to the
holders of the sellers' interest;
(4) during the accumulation period, an amount, called a "PERCENTAGE
ALLOCATION" for any date, equal to the Principal Allocation
Percentage of collections of principal receivables processed on that
date will be allocated to the Series 2001-B Holders and deposited
and retained in the collection account. However, if the sum of
Percentage Allocations for the same monthly period exceeds the
Controlled Deposit Amount for the related distribution date, or the
Collateral Invested Amount on the Collateral Expected Final
Distribution Date, then this excess shall not be treated as a
Percentage Allocation and shall be:
(a) retained in the collection account for application, as necessary,
as Shared Principal Collections to other series in Group One on
the related distribution date, if any other principal sharing
series in Group One is outstanding and in its amortization period
or accumulation period; and
(b) paid to the holders of the sellers' interest only if the Seller
Amount, on the date of processing, is greater than the Required
Seller Amount and the aggregate amount of principal receivables
in the trust is greater than the Required Principal Balance and
otherwise will be deposited in the excess funding account until
the Seller Amount is greater than the Required Seller Amount and
the aggregate amount of principal receivables in the trust is
greater than the Required Principal Balance and the remainder
will be paid to the holders of the sellers' interest; and
(5) during the rapid amortization period, an amount equal to the
Principal Allocation Percentage of the collections of principal
receivables processed on that date will be allocated to the Series
2001-B Holders and deposited and retained in the collection account.
However, after the date on which an amount of the collections equal
to the Invested Amount has been
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deposited into the collection account and allocated to the Series
2001-B Holders, the amount in excess of the Invested Amount will be:
(a) retained in the collection account for application, as necessary,
as Shared Principal Collections to other series in Group One on
the related distribution date, if any other principal sharing
series in Group One is outstanding and in its amortization period
or accumulation period; and
(b) paid to the holders of the sellers' interest only if the Seller
Amount is greater than the Required Seller Amount and the
aggregate amount of principal receivables in the trust is greater
than the Required Principal Balance and otherwise will be
deposited in the excess funding account until the Seller Amount
is greater than the Required Seller Amount and the aggregate
amount of principal receivables in the trust is greater than the
Required Principal Balance and the remainder will be paid to the
holders of the sellers' interest.
Withdrawals from Series Accounts. On or before each distribution date, the
servicer will direct the trustee to make the following withdrawals from the
following series accounts:
(1) on each distribution date all principal funding account investment
proceeds then on deposit in the principal funding account will be
withdrawn and deposited into the collection account for distribution
as a portion of Class A Available Funds for that distribution date;
(2) on each distribution date after the reserve account funding date,
all net investment income accrued since the preceding distribution
date on the reserve account will be retained in the reserve account
to the extent that the amount on deposit in the reserve account is
less than the required reserve account amount and the balance, if
any, will be deposited in the collection account for distribution as
collections of finance charge receivables allocable to the
certificateholders and the Collateral Interest Holder; and
(3) on or before each distribution date for the accumulation period and
on the first distribution date for the rapid amortization period, if
applicable, an amount equal to the lesser of:
(a) the available reserve account amount for such distribution date;
and
(b) the excess, if any, of a portion of the Class A Monthly Interest
determined in accordance with the series supplement over the
principal funding account investment proceeds for that
distribution date
will be withdrawn from the reserve account and deposited in the
collection account for distribution as a portion of Class A Available
Funds for that distribution date; provided, that the amount of the
withdrawal from the reserve account under this clause (3) will be
reduced to the extent that funds otherwise would be available to be
deposited in the reserve account on such distribution date.
Payment of Interest, Fees and Other Items. The trustee, acting pursuant to
the servicer's instructions, will apply the Class A Available Funds, Class B
Available Funds and Collateral Available Funds in the following priority:
(1) On each distribution date, an amount equal to the Class A Available
Funds for the distribution date will be withdrawn from the
collection account and distributed in the following priority:
(a) the Class A Monthly Interest for the distribution date, plus the
amount of any Class A Monthly Interest previously due but not
paid to the Class A Certificateholders on a prior distribution
date, plus any additional interest with respect to Class A
Monthly Interest that was due but not paid to the Class A
Certificateholders on a prior distribution date at a rate equal
to the Class A Certificate Rate plus 2% per annum (the "CLASS A
ADDITIONAL INTEREST") and any Class A Additional Interest
previously due
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but not distributed to the Class A Certificateholders on a prior
distribution date will be distributed to the Class A
Certificateholders;
(b) the Class A Servicing Fee for the 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;
(c) the Class A Investor Default Amount for the distribution date
will be treated as a portion of Available Investor Principal
Collections for the distribution date; and
(d) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread;
Excess Finance Charges" below.
(2) On each distribution date, an amount equal to the Class B Available
Funds for the distribution date will be withdrawn from the
collection account and distributed in the following priority:
(a) the Class B Monthly Interest for the distribution date, plus the
amount of any Class B Monthly Interest previously due but not
paid to the Class B Certificateholders on a prior distribution
date, plus any additional interest with respect to Class B
Monthly Interest that was due but not paid to the Class B
Certificateholders on a prior distribution date at a rate equal
to the Class B Certificate Rate plus 2% per annum (the "CLASS B
ADDITIONAL INTEREST") and any Class B Additional Interest
previously due but not distributed to the Class B
Certificateholders on a prior distribution date will be
distributed to the Class B Certificateholders;
(b) the Class B Servicing Fee for the 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
(c) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread;
Excess Finance Charges" below.
(3) On each distribution date, an amount equal to the Collateral
Available Funds for the distribution date will be withdrawn from the
collection account and distributed in the following priority:
(a) if the bank or the trustee is no longer the servicer, the
Collateral Servicing Fee for the distribution date, plus the
amount of any Collateral Servicing Fee previously due but not
distributed to the servicer on a prior distribution date, will be
distributed to the servicer; and
(b) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread;
Excess Finance Charges" below.
"EXCESS SPREAD" means, for any distribution date, the sum of the amounts
described in clause (1)(d) above, clause (2)(c) above and clause (3)(b)
immediately above.
Excess Spread; Excess Finance Charges. On each distribution date, the
trustee, acting pursuant to the servicer's instructions, will apply Excess
Spread and Excess Finance Charges allocated to Series 2001-B for the related
monthly period to make the following distributions in the following priority:
(1) an amount equal to any deficiency pursuant to clauses (1)(a), (b)
and (c) above under "--Payment of Interest, Fees and Other Items"
will be used to fund the deficiency, provided, that in the event
the deficiency exceeds the amount of Excess Spread and Excess
Finance Charges allocated to Series 2001-B, the Excess Spread and
Excess Finance Charges shall be applied:
(a) first, to pay amounts due on the distribution date pursuant to
clause (1)(a) above under "--Payment of Interest, Fees and Other
Items;"
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(b) second, to pay the Class A Servicing Fee pursuant to clause
(1)(b) above under "--Payment of Interest, Fees and Other Items;"
and
(c) third, to pay the Class A Investor Default Amount for the
distribution date pursuant to clause (1)(c) above under
"--Payment of Interest, Fees and Other Items;"
(2) 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 Investor Principal Collections
for the distribution date as described under "--Payments of
Principal" below;
(3) an amount equal to any deficiency pursuant to clauses (2)(a) and
(b) above under "--Payment of Interest, Fees and Other Items" will
be used to fund this deficiency, provided, that in the event the
deficiency for this distribution date exceeds the remaining amount
of Excess Spread and Excess Finance Charges allocated to Series
2001-B, the Excess Spread and Excess Finance Charges will be
applied first to pay amounts due on the distribution date pursuant
to clause (2)(a) above under "--Payment of Interest, Fees and Other
Items," and second to pay the Class B Servicing Fee pursuant to
clause (2)(b) above under "--Payment of Interest, Fees and Other
Items;"
(4) an amount equal to the Class B Investor Default Amount for the
distribution date will be treated as a portion of Available
Investor Principal Collections for the distribution date as
described under "--Payments of Principal" below;
(5) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (3), (4) and
(5) of the definition of "Class B Invested Amount" under
"--Allocation Percentages" above, (but not in excess of the
aggregate amount of the reductions which have not been previously
reimbursed), will be treated as a portion of Available Investor
Principal Collections for the distribution date;
(6) an amount equal to the Collateral Minimum Monthly Interest for the
distribution date, plus the amount of any Collateral Minimum
Monthly Interest previously due but not paid to the Collateral
Interest Holder on a prior Distribution Date, plus any additional
interest with respect to Collateral Minimum Monthly Interest that
was due but not paid to the Collateral Interest Holder on a prior
distribution date at a rate equal to the Collateral Minimum
Interest Rate (the "COLLATERAL ADDITIONAL INTEREST") 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;
(7) an amount equal to the Collateral Servicing Fee for the
distribution date or if neither the bank nor the trustee is the
servicer, the amount of any Collateral Servicing Fee due but not
paid from Collateral Available Funds and the amount of any
Collateral Servicing Fee due but not paid to the servicer on a
prior distribution date will be paid to the servicer;
(8) an amount equal to the Collateral Default Amount for the
distribution date will be treated as a portion of Available
Investor Principal Collections for the distribution date;
(9) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses (3), (4) and
(5) of the definition of "Collateral Invested Amount" under
"--Allocation Percentages" above, but not in excess of the
aggregate amount of those reductions which have not been previously
reimbursed, will be treated as a portion of Available Investor
Principal Collections for the distribution date;
(10) an amount up to the excess, if any, of the Required Reserve Account
Amount over the principal amount on deposit in the reserve account
will be deposited in the reserve account; and
(11) the balance, if any, will be distributed to the Collateral Interest
Holder.
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Reallocated Principal Collections. On or before each distribution date
after giving effect to the distributions above under "--Excess Spread; Excess
Finance Charges," the trustee, acting pursuant to the servicer's instructions,
will apply Reallocated Principal Collections for the related monthly period to
make the following distributions in the following priority:
(1) if the amount of Excess Spread and Excess Finance Charges allocated
to Series 2001-B for the related monthly period is less than the
Class A Required Amount, Reallocated Principal Collections, up to
the amount of the deficiency, will be withdrawn from the collection
account and distributed to fund the deficiency in the order of
priority set forth in clause (1) above under "--Excess Spread;
Excess Finance Charges;"
(2) if the amount of Excess Spread and Excess Finance Charges allocated
to Series 2001-B for the related monthly period and not required to
fund 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 not
required to fund the Class A Required Amount, up to the amount of
the deficiency, will be withdrawn from the collection account and
distributed to fund the deficiency in the order of priority set
forth in clauses (3) and (4) above under "--Excess Spread; Excess
Finance Charges."
Payments of Principal. On each distribution date, the trustee, acting
pursuant to the servicer's instructions, will distribute Available Investor
Principal Collections in the following priority:
(1) on each distribution date for the revolving period, all the
Available Investor Principal Collections will be treated as Shared
Principal Collections and applied as described under "Description of
the Certificates--Shared Principal Collections" in the accompanying
prospectus;
(2) on each distribution date for the accumulation period or the rapid
amortization period, all Available Investor Principal Collections
will be distributed or deposited in the following priority:
(a) an amount equal to Class A Monthly Principal will, during the
accumulation period, be deposited in the principal funding
account for payment to the Class A Certificateholders on each
distribution date beginning on the earlier of the Class A
Expected Final distribution date and the first distribution date
for the rapid amortization period, and will, during the rapid
amortization period, be paid to the Class A Certificateholders;
(b) after giving effect to the distribution referred to in clause (a)
above, an amount equal to the Class B Monthly Principal will,
during the accumulation period, be deposited in the principal
funding account for payment to the Class B Certificateholders on
each distribution date beginning on the earlier of the Class B
Expected Final Payment Date, but only if the Class A Investor
Amount is paid in full on that date, and the first distribution
date for the rapid amortization period on which the Class A
Investor Amount is paid in full, and will, during the rapid
amortization period, be paid to the Class B Certificateholders;
(c) after giving effect to the distributions referred to in clauses
(a) and (b) above, an amount equal to Collateral Monthly
Principal will be paid to the Collateral Interest Holder on each
distribution date beginning on the earlier of the Collateral
Expected Final Distribution Date, but only if the Class B
Investor Amount is paid in full on or prior to that date, and the
first distribution date for the rapid amortization period on
which the Class B Investor Amount is paid in full; and
(d) the balance, if any, will be treated as Shared Principal
Collections and applied as described under "Description of the
Certificates--Shared Principal Collections" in the accompanying
prospectus.
The "COLLATERAL EXPECTED FINAL DISTRIBUTION DATE" is the July 2006
Distribution Date.
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PRINCIPAL FUNDING ACCOUNT
Pursuant to the series supplement, the servicer will establish and maintain
the "PRINCIPAL FUNDING ACCOUNT" as a segregated trust account held for the
benefit of the Class A Certificateholders and the Class B Certificateholders.
During the accumulation period, the trustee at the direction of the servicer
will transfer Available Investor Principal Collections to the principal funding
account as described under "--Application of Collections--Payments of Principal"
in this prospectus supplement.
Funds on deposit in the principal funding account will be invested by the
trustee at the direction of the servicer in eligible investments. Investment
earnings, net of investment losses and expenses, on the principal funding
account, referred to as the "PRINCIPAL FUNDING ACCOUNT INVESTMENT PROCEEDS" will
be included in Class A Available Funds for each distribution date.
RESERVE ACCOUNT
Pursuant to the series supplement, the servicer will establish and maintain
the "RESERVE ACCOUNT" as a segregated trust account held for the benefit of the
Class A Certificateholders. The reserve account is established to assist with
the distribution of interest on the Class A Certificates during the accumulation
period. For each distribution date from and after the reserve account funding
date, 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 Charges allocated to Series 2001-B, as described above under
"--Application of Collections--Excess Spread; Excess Finance Charges," to
increase the amount on deposit in the reserve account, to the extent this amount
is less than the Required Reserve Account Amount.
The "RESERVE ACCOUNT FUNDING DATE" will be the distribution date for the
monthly period which begins no later than three months prior to the monthly
period in which, as of the related determination date, the accumulation period
is scheduled to begin.
The "REQUIRED RESERVE ACCOUNT AMOUNT" for any distribution date on or after
the reserve account funding date will be
(1) the product of:
- 0.5% of the Class A Investor Amount as of the preceding distribution
date after giving effect to all applicable changes in the Class A
Investor Amount on that date; and
- a fraction, the numerator of which is the number of monthly periods
scheduled to be included in the accumulation period as of that date,
and the denominator of which is nine, provided, that if this numerator
is one, the Required Reserve Account Amount will be zero; or
(2) any other amount designated by the seller, provided, that if the
designation is of a lesser amount, the seller shall have provided
the servicer and the trustee with evidence that each rating agency
rating the certificates or the Collateral Interest has notified the
seller that such action will not result in a reduction or withdrawal
of its rating of any outstanding series or class and the seller
shall have delivered to the trustee a certificate of an authorized
officer to the effect that, based on the facts known to the officer
at that time, in the reasonable belief of the seller, the
designation will not cause a Pay Out Event or an event that, after
the giving of notice or the lapse of time, would cause a Pay Out
Event to occur.
On each distribution date, after giving effect to any deposit to be made to
and any withdrawal to be made from the reserve account, the trustee will
withdraw from the reserve account the excess, if any, of the amount on deposit
in the reserve account over the Required Reserve Account Amount and will pay
that amount to the Collateral Interest Holder.
Provided that the reserve account has not terminated as described below,
all amounts on deposit in the reserve account with respect to any distribution
date, after giving effect to any deposits to, or withdrawals from, the reserve
account to be made on the distribution date will be invested by the trustee
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at the direction of the servicer in eligible investments. The interest and other
investment income, net of investment expenses and losses, earned on the
investments will be retained in the reserve account, to the extent the amount on
deposit 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 2001-B.
On the determination date before each distribution date for the
accumulation period and on the first distribution date for the rapid
amortization period, a withdrawal will be made from the reserve account, and the
amount of this withdrawal will be deposited in the collection account and
included in Class A Available Funds in an amount equal to the lesser of:
- the available reserve account amount for the distribution date; and
- the excess, if any, of a portion of the Class A Monthly Interest
determined in accordance with the Pooling and Servicing Agreement over
the principal funding account investment proceeds for the distribution
date;
provided, that the amount of the withdrawal shall be reduced to the extent that
funds otherwise would be available to be deposited in the reserve account on the
distribution date.
On each distribution date, the "AVAILABLE RESERVE ACCOUNT AMOUNT" will be
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 the distribution date, and
the Required Reserve Account Amount for the distribution date.
The reserve account will be terminated following the earliest of:
- the termination of the trust pursuant to the Pooling and Servicing
Agreement;
- the date on which the Class A Investor Amount is paid in full; and
- if the accumulation period has not begun, the occurrence of a Pay Out
Event or, if the accumulation period has begun, the earlier of the first
distribution date with respect to the rapid amortization period and the
Class A Expected Final Distribution Date.
Upon the termination of the reserve account, all amounts on deposit after
giving effect to any withdrawal from the reserve account on that date as
described above will be distributed to the Collateral Interest Holder. Any
amounts withdrawn from the reserve account and distributed to the Collateral
Interest Holder will not be available for distribution to the
certificateholders.
PAIRED SERIES
The Series 2001-B Certificates are subject to being paired on or after the
beginning of the accumulation period or the rapid amortization period with one
or more later issued series. Any later series which is paired with Series 2001-B
is called a "PAIRED SERIES." A paired series may be pre-funded with an initial
deposit to a funding account or may have a variable principal amount. Any
funding account created in connection with a paired series will be held for the
benefit of the paired series and not for the benefit of the holders of the
Series 2001-B Certificates. Upon payment in full of the Series 2001-B
Certificates, assuming that there have been no unreimbursed charge-offs for any
related paired series, the aggregate investor amount of the paired series will
have been increased by an amount up to an aggregate amount equal to the Investor
Amount. The issuance of a paired series will be subject to the conditions
described under "Description of the Certificates--New Issuances" in the
accompanying prospectus.
There can be no assurance that the terms of any paired series might not
have an impact on the calculation of the Series Percentage or the timing or
amount of payments received by a certificateholder. The full extent by which the
timing or amount of payments received by a holder of a Series 2001-B Certificate
may be affected will be dependent on a number of factors and will not be readily
determinable by the change that may occur in the Series Percentage.
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SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES
To the extent that collections of principal receivables allocated to the
Series 2001-B are not needed to make payments to or for the benefit of the
certificateholders or the Collateral Interest Holder, the collections may be
applied to cover principal payments due to or for the benefit of other principal
sharing series in Group One. Any application of principal collections to other
series will not result in a reduction of the Invested Amount of the Series
2001-B Certificates or the Collateral Interest.
Similarly, collections of principal receivables allocated to other
principal sharing series in Group One, to the extent these collections, are not
needed to make payments to or for the benefit of the holders of the certificates
and other interests of the other series, will be applied, if necessary, to cover
payments of principal due to holders of the Series 2001-B Certificates during
the accumulation period. The collections of principal receivables allocated to
other series and not needed by other series are "SHARED PRINCIPAL COLLECTIONS."
There can be no assurance that Shared Principal Collections will be available to
cover payments of principal or deposits due on any distribution date for the
accumulation period. If no Shared Principal Collections were available to the
certificates, the Class A Investor Amount might not be paid in full by the Class
A Expected Final Distribution Date and the Class B Investor Amount might not be
paid in full by the Class B Expected Final Distribution Date. These Shared
Principal Collections may also be allocated to other series either currently
outstanding or to be issued by the trust in the future. To the extent the Shared
Principal Collections are allocated to other series, the pro rata share of the
Shared Principal Collections allocated to Series 2001-B will be reduced.
Series 2001-B will be included in a group of series designated as "GROUP
ONE." Series 2001-B will be the fifteenth series outstanding and included in
Group One.
ALLOCATION OF INVESTOR DEFAULT AMOUNT
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 distribution date, the product of:
(1) the defaulted amount for the related monthly period; and
(2) the Floating Allocation Percentage for the related monthly period.
For a description of the defaulted amount, see "Description of the
Certificates--Defaulted Receivables; Rebates and Fraudulent Charges" in the
accompanying prospectus.
A portion of the Investor Default Amount will be allocated to the Class A
Certificateholders on each distribution date. The amount to be allocated to the
Class A Certificateholders is the "CLASS A INVESTOR DEFAULT AMOUNT" and for each
distribution date is an amount equal to the product of the Class A Floating
Percentage applicable during the related monthly period and the Investor Default
Amount for the related monthly period. A portion of the Investor Default Amount
will also be allocated to the Class B Certificateholders. The amount to be
allocated to the Class B Certificateholders is the "CLASS B INVESTOR DEFAULT
AMOUNT" and for each distribution date is an amount equal to the product of the
Class B Floating Percentage applicable during the related monthly period and the
Investor Default Amount for that monthly period. A portion of the Investor
Default Amount will be allocated to the Collateral Interest Holder on each
distribution date. The amount to be allocated to the Collateral Interest is the
"COLLATERAL DEFAULT AMOUNT" and for each distribution date is an amount equal to
the product of the Collateral Floating Percentage applicable during the related
monthly period and the Investor Default Amount for the related 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 Charges allocated to Series 2001-B and Reallocated Principal Collections
and applied as described above under "--Application of collections--payment of
interest, fees and other Items," "--Application of Collections--Excess Spread;
Excess Finance Charges" and "--Reallocation of Cash Flows."
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An amount equal to the Class B Investor Default Amount for each monthly
period will be paid from Excess Spread and Excess Finance Charges allocated to
Series 2001-B and Reallocated Principal Collections allocable to the Collateral
Invested Amount and applied as described above under "--Application of
Collections--Excess Spread; Excess Finance Charges" and "--Reallocation of Cash
Flows."
An amount equal to the Collateral Default Amount for each monthly period
will be paid from Excess Spread and Excess Finance Charges allocated to Series
2001-B as described above under "--Application of Collections--Excess Spread;
Excess Finance Charges."
On each distribution date, if the Class A Required Amount for the
distribution date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 2001-B and Reallocated Principal Collections, the Collateral
Invested Amount will be reduced by the amount of that excess, but not by more
than the Class A Investor Default Amount for the distribution date. In the event
that this 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 the distribution date over the
amount of the reduction, if any, of the Collateral Invested Amount for the
distribution date. In the event that this 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 the
distribution date over the amount of the reductions, if any, of the Collateral
Invested Amount and the Class B Invested Amount for the distribution date as
described above. A reduction in the Class A Invested Amount occurring as
described in the preceding sentence is a "CLASS A INVESTOR CHARGE-OFF."
If a Class A Investor Charge-Off occurs this may have the effect of slowing
or reducing the return of principal to the Class A Certificateholders. If the
Class A Invested Amount has been reduced by Class A Investor Charge-Offs, it
will subsequently 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 Charges allocated to Series 2001-B and available to
reimburse Class A Investor Charge-Offs as described above under "--Application
of Collections--Excess Spread; Excess Finance Charges."
On each distribution date, if the Class B Required Amount for the
distribution date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 2001-B and not required to pay the Class A Required Amount
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 that excess. If this 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 the distribution date over the amount of such
reduction, if any, of the Collateral Invested Amount. A reduction in the Class B
Invested Amount occurring as described in the preceding sentence is a "CLASS B
INVESTOR CHARGE-OFF."
If a Class B Investor Charge-Off occurs this may have the effect of slowing
or reducing the return of principal to the Class B Certificateholders. If the
Class B Invested Amount has been reduced by the Class B Investor Charge-Offs, it
will thereafter be increased on any distribution date, but not by an amount in
excess of the aggregate Class B Investor Charge-Offs, by the amount of Excess
Spread and Excess Finance Charges allocated to Series 2001-B and available to
reimburse Class B Investor Charge-Offs as described above under "--Application
of Collections--Excess Spread; Excess Finance Charges" in this prospectus
supplement.
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OPTIONAL REPURCHASE
On any date occurring on or after the date that the Investor Amount is
reduced to 5% or less of the Initial Invested Amount, the seller will have the
option, to be exercised in its sole discretion, to repurchase the certificates.
The purchase price of the certificates and the Collateral Interest will be equal
to the Invested Amount on the distribution date on which the purchase occurs, if
the purchase is on a distribution date and, if not, the invested amount for the
distribution date following the repurchase. Plus, in each case, accrued and
unpaid interest on the certificates plus accrued and unpaid interest on the
Collateral Interest. Following a repurchase, the certificateholders will have no
further rights to the receivables; provided, however, that the repurchase in no
way impacts the certificateholders' rights under the federal securities law.
Any optional repurchase may result in an early repayment of your investment
without any prepayment penalty and there can be no assurance that you will be
able to invest the early repayment amount at a similar rate of return.
PAY OUT EVENTS
The revolving period for Series 2001-B will continue through the close of
business on August 31, 2005 or a later date resulting from the postponement of
the accumulation period, unless a Pay Out Event occurs prior to that date. A
"PAY OUT EVENT" for Series 2001-B refers to any of the following events, which
are applicable only to Series 2001-B although other series may have similar or
identical Pay Out Events:
(a) failure of the seller:
- to make any payment or deposit on the date required under the Pooling
and Servicing Agreement on or before the date occurring five business
days after the date the payment or deposit is required to be made; or
- duly to observe or perform in any material respect any other covenants
or agreements of the seller in the Pooling and Servicing Agreement,
which failure has a material adverse effect on the Series 2001-B
Holders which determination will be made without reference to whether
any funds are available pursuant to any credit enhancement and
provided that the failure continues unremedied for 60 days after
written notice has been given to the seller by the trustee, or to the
seller and the trustee by Series 2001-B Holders aggregating not less
than 50% of the outstanding principal balance of the Series 2001-B
Interests;
(b) any representation or warranty made by the seller in the Pooling and
Servicing Agreement or any information required to be given by the
servicer on behalf of the seller 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 60 days
after written notice has been given to the seller by the trustee, or
to the seller and the trustee by holders of the certificates
aggregating not less than 50% of the outstanding principal balance
of the Series 2001-B Certificates and as a result the interests of
the certificateholders are materially and adversely affected, which
determination shall be made without reference to whether any funds
are available pursuant to any credit enhancement; provided, however,
that a Pay Out Event shall not be deemed to have occurred under this
subparagraph (b) if the seller has accepted reassignment of the
related receivable or all such receivables, if applicable, during
the 60 day period after notice, or a longer period if specified by
the trustee, in accordance with the provisions of the Pooling and
Servicing Agreement;
(c) with respect to the end of any monthly period:
- for which the Seller Amount is less than the Required Seller Amount,
the failure of the seller to convey receivables in additional accounts
to the trust on or prior to the tenth business day following the
related determination date so that the Seller Amount is at least equal
to the Required Seller Amount; or
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- for which the aggregate principal receivables in the trust are less
than the Required Principal Balance, the failure of the seller to
convey receivables in additional accounts to the trust on or prior to
the tenth business day following the related determination date so
that the aggregate principal receivables in the trust are at least
equal to the Required Principal Balance;
(d) the Net Portfolio Yield averaged over three consecutive monthly
periods is less than the Base Rate averaged over the same period;
(e) any servicer default occurs which would have a material adverse
effect on the certificateholders, which determination shall be
made without reference to whether any funds are available pursuant
to any credit enhancement; or
(f) the Class A Investor Amount is not paid in full on the Class A
Expected Final Distribution Date or the Class B Investor Amount is
not paid in full on the Class B Expected Final Distribution Date
or the Collateral Invested Amount shall not be paid in full on the
Collateral Expected Final Distribution Date.
A Pay Out Event for all series refers to any of the following events, which
are applicable to Series 2001-B and other series:
(g) an insolvency event relating to any seller or additional seller;
(h) the trust becomes an "investment company" within the meaning of
the Investment Company Act of 1940, as amended; or
(i) the inability of any seller or additional seller for any reason
to transfer receivables to the trust in accordance with the
provisions of the Pooling and Servicing Agreement.
In the case of any event described in subparagraphs (a), (b) or (e), a Pay
Out Event will be deemed to have occurred only if, after any applicable grace
period described in these clauses, the trustee or Series 2001-B Holders
evidencing undivided interests aggregating more than 50% of the aggregate unpaid
principal amount of the Series 2001-B Interests, by written notice to the seller
and the servicer, and to the trustee if given by the Series 2001-B Holders,
declare that a Pay Out Event has occurred with respect to Series 2001-B. In the
case of any event described in subparagraphs (c), (d), (f), (g), (h), or (i), a
Pay Out Event will be deemed to have occurred immediately upon the occurrence of
the event without any notice or other action on the part of the trustee, or the
Series 2001-B Holders.
Upon the occurrence of a Pay Out Event, the rapid amortization period will
begin. In this event, distributions of principal to the certificateholders will
begin on the first distribution date following the month in which the Pay Out
Event occurred.
The term "NET PORTFOLIO YIELD" for any month, means the annualized
percentage equivalent of a fraction:
(a) the numerator of which is the sum of:
(1) the amount of collections of finance charge receivables during
the month allocable to the Series 2001-B Certificates and to
the Collateral Interest, including any other amounts that are
to be treated as collections of finance charge receivables
under the Pooling and Servicing Agreement, after subtracting
therefrom the Investor Default Amount for the related month;
plus
(2) the amount of any net earnings on the principal funding account
for the related distribution date; plus
(3) the amount of funds, if any, to be withdrawn from the reserve
account and included in Class A Available Funds for the related
distribution date; and
(b) and the denominator of which is the Investor Amount as of the last
day of the prior calendar month.
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For any month, the "BASE RATE" will be equal to the annualized percentage
equivalent of a fraction:
(a) the numerator of which is equal to the sum of the following, each
for the related distribution date:
(1) the Class A Monthly Interest;
(2) the Class B Monthly Interest;
(3) the Collateral Minimum Monthly Interest; and
(4) the Monthly Servicing Fee, and
(b) the denominator of which is the Investor Amount as of the last day
of the preceding month.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the fee payable to the servicer allocable to the Series 2001-B
Interests for any distribution date (the "MONTHLY SERVICING FEE") will be equal
to one-twelfth of the product of (a) 2% and (b) the Invested Amount as of the
last day of the monthly period preceding the distribution date; provided,
however, with respect to the first distribution date, the Monthly Servicing Fee
will be $1,133,333.
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders for any distribution date, called the "CLASS A SERVICING
FEE," will be one-twelfth of the product of:
(1) the Class A Floating Percentage;
(2) 2%; and
(3) the Invested Amount as of the last day of the monthly period
preceding the distribution date;
provided, however, that for the first distribution date, the Class A Servicing
Fee will be $969,000.
The share of the Monthly Servicing Fee allocable to the Class B
Certificateholders for any distribution date, called the "CLASS B SERVICING
FEE," will be equal to one-twelfth of the product of:
(1) the Class B Floating Percentage;
(2) 2%; and
(3) the Invested Amount as of the last day of the monthly period
preceding the distribution date;
provided, however, that for first distribution date, the Class B Servicing Fee
will be $68,000.
The share of the Monthly Servicing Fee allocable to the Collateral Interest
Holder for any distribution date, called the "Collateral Servicing Fee," will be
equal to one-twelfth of the product of:
(1) the Collateral Floating Percentage;
(2) 2%; and
(3) the Invested Amount as of the last day of the monthly period
preceding the distribution date;
provided, however, that for the first distribution date, the Collateral
Servicing Fee will be $96,333.
The Class A Servicing Fee, the Class B Servicing Fee and the Collateral
Servicing Fee shall be payable to the servicer solely to the extent amounts are
available for distribution as described under "--Application
Collections--Payment of Interest, Fees and Other Items" and "Excess Spread;
Excess Finance Charges" in this prospectus supplement.
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FEDERAL INCOME TAX CONSEQUENCES
Based on the application of existing law to the facts as set forth in the
Pooling and Servicing Agreement and other relevant documents, special tax
counsel to the bank, Orrick, Herrington & Sutcliffe LLP, is of the opinion that
the certificates will properly be treated as indebtedness for federal income tax
purposes. See "Federal Income Tax Consequences" in the accompanying prospectus.
ERISA CONSIDERATIONS
GENERAL
Subject to the considerations described below and in the accompanying
prospectus, the Class A Certificates may be purchased by, on behalf of, or with
"plan assets" of any employee benefit or other plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended. Any plan fiduciary that proposes
to cause a plan to acquire any of the certificates should consult with its
counsel with respect to the potential consequences under ERISA and the Internal
Revenue Code of the plan's acquisition and ownership of the certificates. See
"ERISA Considerations" in the accompanying prospectus.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit
plans from engaging in certain transactions involving "plan assets" with persons
that are parties in interest with respect to the plan. A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and Section 4975 of the Internal Revenue Code for these persons,
unless a statutory, regulatory or administrative exemption is available. Plans
that are governmental plans, as defined in Section 3(32) of ERISA, and some
church plans, as defined in Section 3(33) of ERISA, are not subject to ERISA
requirements.
CLASS A CERTIFICATES
The U.S. Department of Labor has issued an individual exemption, Prohibited
Transaction Exemption 99-39 (Exemption Application No. D-10643), 64 Fed. Reg.
53,736 (October 4, 1999), to the seller relating to (1) the initial purchase,
the holding and the subsequent resale by plans of senior certificates
representing an undivided interest in a credit card trust with respect to which
the seller is the sponsor; and (2) the servicing, operation and management of
the trust, provided that the general conditions and certain other conditions set
forth in this exemption are satisfied. This exemption will apply to the
acquisition, holding and resale of the Class A Certificates by, on behalf of, or
with "plan assets" of a plan, provided that the conditions specified in the
exemption, some of which are described below, are met.
Among the conditions which must be satisfied for this exemption to apply
are the following:
(1) The acquisition of the Class A Certificates by a plan is on
terms, including the price for the Class A Certificates, that are
at least as favorable to the investing plan as they would be in
an arm's-length transaction with an unrelated party;
(2) The rights and interests evidenced by the Class A Certificates
acquired by the plan are not subordinated to the rights and
interests evidenced by other certificates of the trust;
(3) The Class A Certificates acquired by the plan have received a
rating at the time of the acquisition in one of the two highest
generic rating categories from a rating agency, provided that,
notwithstanding such rating, credit support is provided to the
Class A Certificates through a senior- subordinated structure or
other form of third-party credit support which, at a minimum,
represents 5% of the outstanding principal balance of the Class A
Certificates at the time of the acquisition;
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(4) The trustee is not an affiliate of a restricted group including
the underwriters, the seller, the servicer, any obligor whose
receivables constitute more than 0.5% of the fair market value of
the aggregate undivided interest in the trust allocated to Series
2001-B, or any of their respective affiliates;
(5) The sum of all payments made to and retained by the underwriters
in connection with the distribution of the Class A Certificates
represents not more than reasonable compensation for underwriting
the Class A Certificates; the consideration received by the
seller as a consequence of the assignment of receivables to the
trust, to the extent allocable to the Class A Certificates,
represents not more than the fair market value of the
receivables; and the sum of all payments made to and retained by
the servicer, to the extent allocable to the Class A
Certificates, represents not more than reasonable compensation
for the servicer's services under the agreement and reimbursement
of the servicer's reasonable expenses in connection therewith;
(6) The plan investing in the Class A Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of
1933, as amended;
(7) The trustee is a substantial financial institution or trust
company experienced in trust activities, is familiar with its
duties, responsibilities and liabilities as a fiduciary under
ERISA and, as the legal owner of, or holder of a perfected
security interest in, the receivables, enforces all the rights
created in favor of the certificateholders, including plans;
(8) Prior to the issuance of any new series, confirmation is received
from the rating agencies that the issuance will not result in the
reduction or withdrawal of the then current rating of the Class A
Certificates held by any plan pursuant to the Fleet exemption;
(9) To protect against fraud, chargebacks or other dilution of the
receivables, the Pooling and Servicing Agreement and the rating
agencies require the seller to maintain a sellers' interest of
not less than 2% of the principal balance of the receivables
contained in the trust;
(10) Each receivable is an eligible receivable, based on criteria of
the rating agencies and as specified in the Pooling and Servicing
Agreement, and the Pooling and Servicing Agreement requires that
any change in the terms of the cardholder agreements must be made
applicable to the comparable segment of accounts owned or
serviced by the seller which are part of the same program or have
the same or substantially similar characteristics;
(11) The Pooling and Servicing Agreement limits the number of newly
originated accounts to be designated to the trust, unless the
rating agencies otherwise consent in writing, to the following:
(a) with respect to any three-month period commencing in January,
April, July and October of each calendar year, 15% of the
number of existing accounts designated to the trust as of the
first day of the calendar year during which the monthly period
commenced; and
(b) with respect to any calendar year, 20% of the number of
existing accounts designated to the trust as of the first day
of the calendar year;
(12) The Pooling and Servicing Agreement requires the seller to
deliver an opinion of counsel confirming the validity and
perfection of the transfer of receivables in newly originated
accounts to the trust for each interim addition; and
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(13) The Pooling and Servicing Agreement requires the seller and the
trustee to receive confirmation from each rating agency that the
rating agency will not reduce or withdraw its then current rating
of the Class A Certificates as a result of:
(a) an addition of accounts that is required to be made because
either the Seller Amount is less than the Required Seller
Amount or the principal receivables are less than the Required
Principal Balance, and the addition exceeds the limits set
forth in paragraph (11) above; or
(b) a restricted addition of accounts made at the discretion of the
seller as described in the accompanying prospectus under the
caption "Description of the Certificates--Addition of
Accounts--Conditions to Required and Restricted Additions."
The trust also must meet the following requirements:
(1) The corpus of the trust must consist only of receivables of the
type which have been included in other investment pools;
(2) Certificates evidencing interests in other investment pools have
been rated in one of the two highest generic rating categories by
at least one of the rating agencies for at least one year prior to
the plan's acquisition of the Class A Certificates; and
(3) Certificates evidencing an interest in such other investment pools
have been purchased by investors other than plans for at least one
year prior to any plan's acquisition of the Class A Certificates.
Moreover, the Prohibition Transaction Exemption provides relief from
certain self-dealing/conflict of interest prohibited transactions that may occur
when a plan fiduciary causes a plan to acquire the Class A Certificates if the
fiduciary or its affiliate is an obligor on the receivables held in the trust,
provided that, among other requirements:
(1) in the case of an acquisition in connection with the initial
issuance of the Class A Certificates, at least 50% of each class
of certificates in which plans have invested is acquired by
persons independent of the restricted group and at least 50% of
the aggregate interest in the trust is acquired by persons
independent of the restricted group;
(2) the fiduciary, or its affiliate, is an obligor with respect to
0.5% or less of the fair market value of the obligations contained
in the trust;
(3) the plan's investment in the Class A Certificates does not exceed
25% of all of the Class A Certificates outstanding after the
acquisition; and
(4) no more than 25% of the asset of the plan are invested in
securities representing an interest in one or more trusts
containing assets sold or serviced by the same entity.
The seller believes that the Fleet exemption will apply to the acquisition
and holding of the Class A Certificates by plans and that all conditions of the
Fleet exemption, other than those within the control of the investors, will be
met.
CLASS B CERTIFICATES
The U.S. Department of Labor has designated the Fleet exemption an
"underwriter exemption." As a result, an insurance company investing solely
assets of its general account may be able to acquire and hold the Class B
Certificates, provided that:
(1) Class A Certificates are eligible for relief under the Fleet
exemption; and
(2) the acquisition and holding satisfies the conditions applicable
under Sections I and III of U.S. Department of Labor Prohibited
Transaction Class Exemption 95-60.
S-44
48
Accordingly, the Class B Certificates may not be acquired or held by, on behalf
of, or with "plan assets" of any plan, other than an insurance company investing
assets of its general account. By its acceptance of a Class B certificate, each
Class B certificateholder will be deemed to have represented and warranted that
either:
(1) it is not and will not be a plan; or
(2) it is an insurance company, it acquired and will hold the Class B
Certificates solely with assets of its general account, and such
acquisition and holding satisfies the conditions applicable under
Sections I and III of PTCE 95-60. See "--Class A Certificates" above
and "ERISA Considerations" in the accompanying prospectus.
CONSULTATION WITH COUNSEL
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the certificates on behalf of or with "plan assets" of any plan
should consult their own counsel regarding whether the trust assets represented
by the certificates would be considered "plan assets," the consequences that
would apply if the trust's assets were considered "plan assets," and the
availability of exemptive relief from the prohibited transaction rules, in the
case of the Class A Certificates, under the Fleet exemption or, in the case of
the Class B Certificates and only with respect to an insurance company general
account investor, the Fleet exemption and Sections I and III of PTCE 95-60.
Finally, plan fiduciaries and other plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
plan's particular circumstances before authorizing an investment of a portion of
the plan's assets in the certificates. Accordingly, among other factors, plan
fiduciaries and other plan investors should consider whether the investment:
(1) satisfies the diversification requirement of ERISA or other
applicable law;
(2) is in accordance with the plan's governing instruments; and
(3) is prudent in light of the "Risk Factors" and other factors
discussed in the accompanying prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the Class A Certificates and the Class B Certificates, the bank has
agreed to sell to the underwriters named below and each of the "CLASS A
UNDERWRITERS" has agreed to purchase from the bank, the principal amount of
Class A Certificates set forth opposite its name below:
PRINCIPAL
AMOUNT OF
CLASS A
CLASS A UNDERWRITERS CERTIFICATES
- -------------------- ------------
J.P. Morgan Securities Inc. ................................ $114,000,000
Banc of America Securities LLC.............................. $114,000,000
Credit Suisse First Boston Corporation...................... $114,000,000
Fleet Securities, Inc. ..................................... $114,000,000
Lehman Brothers Inc. ....................................... $114,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $114,000,000
------------
Total....................................................... $684,000,000
============
The seller has been advised by the Class A Underwriters that the Class A
Underwriters propose initially to offer the Class A Certificates to the public
at the price set forth on the cover page of this prospectus supplement and to
certain dealers at such price less a concession not in excess of 0.165% of the
S-45
49
principal amount of the Class A Certificates. The Class A Underwriters may allow
and the dealers may reallow a concession not in excess of 0.100% of the
principal amount of the Class A Certificates to certain other dealers. After the
initial public offering, the public offering price and the concessions may be
changed.
Subject to the terms and conditions set forth in the underwriting
agreement, the bank has agreed to sell to the "CLASS B UNDERWRITERS" named below
and each of the Class B Underwriters has agreed to purchase from the bank, the
principal amount of Class B Certificates set forth opposite its name below:
PRINCIPAL
AMOUNT OF
CLASS B
CLASS B UNDERWRITERS CERTIFICATES
- -------------------- ------------
J.P. Morgan Securities Inc. ................................ $24,000,000
Fleet Securities, Inc. ..................................... $24,000,000
-----------
Total....................................................... $48,000,000
===========
The seller has been advised by the Class B Underwriters that the Class B
Underwriters propose initially to offer the Class B Certificates to the public
at the price set forth on the cover page of this prospectus supplement and to
certain dealers at this price less a concession not in excess of 0.180% of the
principal amount of the Class B Certificates. The Class B Underwriters may allow
and the dealers may reallow a concession not in excess of 0.110% of the
principal amount of the Class B Certificates to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed.
The underwriters will be compensated as set forth in the following table:
UNDERWRITERS' AMOUNT
DISCOUNTS AND PER $1,000
COMMISSIONS OF PRINCIPAL TOTAL AMOUNT
------------- ------------ ------------
$684,000,000 of the Class A Certificates...... 0.275% $2.75 $1,881,000
$48,000,000 of the Class B Certificates....... 0.300% $3.00 $ 144,000
----------
$2,025,000
==========
Additional offering expenses are estimated to be $800,000.
The seller has agreed that it will indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the underwriters may be required to make in
respect thereof.
The seller will indemnify the placement agent against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or
contribute to payments the placement agent may be required to make in respect
thereof.
Each underwriter has represented and agreed that:
(a) it has complied and will comply with all applicable provisions of
the Financial Services Act of 1986 and the Public Offers of Securities
Regulations 1995 with respect to anything done by it in relation to the
certificates in, from or otherwise involving the United Kingdom;
(b) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the certificates to a person who is of a kind described in Article 11(3)
of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on;
(c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United
S-46
50
Kingdom the scheme described in this prospectus supplement and the
prospectus if that person is of a kind described either in Section 76(2) of
the Financial Services Act 1986 or in Regulation 1.04 of the Financial
Services (Promotion of Unregulated Schemes) Regulations 1991; and
(d) it is a person of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996.
The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the certificates in accordance with Regulation M under the Securities Exchange
Act of 1934. Over-allotment transactions involve syndicate sales in excess of
the offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the certificates so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering transactions involve
purchases of the certificates in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
certificates originally sold by such syndicate member are purchased in a
syndicate covering transaction. These over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the certificates to be higher than they would otherwise be in the
absence of the transactions. Neither the bank nor the underwriters represents
that the underwriters will engage in any such transactions or that these
transactions, once commenced, will not be discontinued without notice at any
time.
This prospectus supplement and the accompanying prospectus, may be used by
Fleet Securities, Inc. or another affiliate of the bank, in connection with
offers and sales of an indeterminate amount of the certificates in market-making
transactions. In these transactions, Fleet Securities, Inc. or another affiliate
may act as a principal or an agent and the sales will be at negotiated prices
related to prevailing market prices at the time of the sale.
LEGAL MATTERS
Certain legal matters relating to the issuance of the certificates will be
passed upon for the seller by Linda Morris, Esq., Vice President, Secretary and
General Counsel, Fleet Bank (RI), National Association, and by Orrick,
Herrington & Sutcliffe LLP, Washington, D.C., special counsel to the seller. In
addition certain legal matters, including matters related to Rhode Island law,
will be passed upon for the seller by Edwards & Angell, Boston, Massachusetts.
Certain legal matters relating to the federal tax consequences of such issuance
will be passed upon for the seller by Orrick, Herrington & Sutcliffe LLP,
Washington, D.C. Certain matters relating to the issuance of the certificates
will be passed upon for the underwriters by Mayer, Brown & Platt, Chicago,
Illinois.
S-47
51
INDEX OF PRINCIPAL TERMS
A
accumulation period............... S-14
Available Investor Principal
Collections..................... S-22
Available Reserve Account
Amount.......................... S-36
B
bank.............................. S-8
Base Rate......................... S-41
business day...................... S-19
C
Certificate Owner................. S-19
Class A Additional Interest....... S-31
Class A Available Funds........... S-20
Class A Certificate Rate.......... S-19
Class A Certificateholders........ S-8
Class A Certificates.............. S-8
Class A Expected Final
Distribution Date............... S-14, S-21
Class A Floating Percentage....... S-24
Class A Initial Invested Amount... S-26
Class A Invested Amount........... S-26
Class A Investor Amount........... S-27
Class A Investor Charge-Off....... S-38
Class A Investor Default Amount... S-37
Class A Monthly Interest.......... S-20
Class A Monthly Principal......... S-22
Class A Principal Percentage...... S-26
Class A Required Amount........... S-28
Class A Servicing Fee............. S-41
Class A Underwriters.............. S-45
Class B Additional Interest....... S-32
Class B Available Funds........... S-20
Class B Certificate Rate.......... S-19
Class B Certificateholders........ S-8
Class B Certificates.............. S-8
Class B Expected Final
Distribution Date............... S-14, S-21
Class B Floating Percentage....... S-24
Class B Initial Invested Amount... S-26
Class B Invested Amount........... S-26
Class B Investor Amount........... S-27
Class B Investor Charge-Off....... S-38
Class B Investor Default Amount... S-37
Class B Monthly Interest.......... S-21
Class B Monthly Principal......... S-22
Class B Principal Percentage...... S-26
Class B Required Amount........... S-29
Class B Servicing Fee............. S-41
Class B Underwriters.............. S-46
Collateral Additional Interest.... S-33
Collateral Available Funds........ S-21
Collateral Default Amount......... S-27, S-37
Collateral Expected Final
Distribution Date............... S-34
Collateral Floating Percentage.... S-25
Collateral Initial Invested
Amount.......................... S-27
Collateral Interest............... S-8
Collateral Interest Holder........ S-8
Collateral Invested Amount........ S-27
Collateral Minimum Interest
Rate............................ S-21
Collateral Minimum Monthly
Interest........................ S-21
Collateral Monthly Principal...... S-23
Collateral Principal Percentage... S-26
Controlled Accumulation Amount.... S-23
Controlled Deposit Amount......... S-23
D
Deficit Controlled Accumulation
Amount.......................... S-23
definitive certificate............ S-19
distribution dates................ S-19
E
Excess Finance Charges............ S-21
Excess Spread..................... S-32
F
Fleet............................. S-8
Fleet Credit Card Portfolio....... S-9
Floating Allocation Percentage.... S-24
G
Group One......................... S-37
I
Initial Invested Amount........... S-18, S-27
interest period................... S-19
Invested Amount................... S-27
Investor Amount................... S-27
Investor Default Amount........... S-37
M
Master Pooling and Servicing
Agreement....................... S-8
monthly period.................... S-20
Monthly Servicing Fee............. S-41
S-48
52
N
Net Portfolio Yield............... S-40
P
paired series..................... S-36
Pay Out Event..................... S-39
Percentage Allocation............. S-30
Pooling and Servicing Agreement... S-8
Principal Allocation Percentage... S-25
principal funding account......... S-35
principal funding account
investment proceeds............. S-35
R
rapid amortization period......... S-15
Reallocated Principal
Collections..................... S-28
record date....................... S-20
Required Reserve Account Amount... S-35
reserve account................... S-35
reserve account funding date...... S-35
S
Seller Amount..................... S-18
sellers' interest................. S-18
Series 2001-B..................... S-8
Series 2001-B Certificates........ S-8
Series 2001-B Holders............. S-8
Series 2001-B Interests........... S-8
Series 2001-B Termination Date.... S-19
Series Investor Amount............ S-28
Series Percentage................. S-18
Shared Principal Collections...... S-37
T
trust............................. S-8
S-49
53
ANNEX I
OTHER SERIES ISSUED
The certificates will be the twenty-eighth series to be issued by the
trust. The table below sets forth the principal characteristics of the fifteen
other series heretofore issued by the trust and currently outstanding. These
series are the Series 1995-C Certificates, the Series 1996-A Certificates, the
Series 1996-B Certificates, the Series 1996-C Certificates, the Series 1996-D
Certificates, the Series 1996-E Certificates, the Series 1999-A Certificates,
the Series 1999-B Certificates, the Series 1999-C Certificates, the Series
1999-D Certificates, the Series 2000-A Certificates, the Series 2000-B
Certificates, the Series 2000-C Certificates, the Series 2000-D Certificates and
the Series 2001-A Certificates. As of June 15, 2001, Series 1996-C will no
longer be outstanding. Solely for purposes of this Annex I, "LIBOR" shall mean
London interbank offered quotations for United States dollar deposits determined
as set forth in the related series supplements.
SERIES 1995-C
Initial Invested Amount.............................. $375,000,000
Initial Pre-Funded Amount............................ $200,000,000
Investor Amount as of May 31, 2001................... $575,000,000
Class A Certificate Rate............................. Three Month LIBOR plus .20% per annum
Class B Certificate Rate............................. Three Month LIBOR plus .34% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $60,375,000
Series Servicing Fee Rate............................ 2% per annum
Stated Series 1995-C Termination Date................ January 1, 2005
Series Issuance Date................................. April 27, 1995
SERIES 1996-A
Initial Invested Amount.............................. $400,000,000
Initial Pre-Funded Amount............................ $100,000,000
Investor Amount as of May 31, 2001................... $500,000,000
Class A-1 Certificate Rate........................... 6.0% per annum
Class A-2 Certificate Rate........................... One Month LIBOR plus .23% per annum
Class B Certificate Rate............................. One Month LIBOR plus .35% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $43,750,000
Series Servicing Fee Rate............................ 2% per annum
Series 1996-A Termination Date....................... November 2005 Distribution Date
Series Issuance Date................................. January 18, 1996
SERIES 1996-B
Initial Invested Amount.............................. $750,000,000
Investor Amount as of May 31, 2001................... $750,000,000
Class A Certificate Rate............................. Three Month LIBOR plus .230% per annum
Class B Certificate Rate............................. Three Month LIBOR plus .375% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $75,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1996-B Termination Date....................... January 2007 Distribution Date
Series Issuance Date................................. March 26, 1996
I-1
54
SERIES 1996-C
Initial Invested Amount.............................. $700,000,000
Investor Amount as of May 31, 2001................... $42,700,000
Class A Certificate Rate............................. Three Month LIBOR plus .120% per annum
Class B Certificate Rate............................. Three Month LIBOR plus .250% per annum
Collateral Rate...................................... No higher than Three Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $70,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1996-C Termination Date....................... November 2003 Distribution Date
Series Issuance Date................................. May 13, 1996
SERIES 1996-D
Initial Invested Amount.............................. $575,000,000
Initial Pre-Funded Amount............................ $125,000,000
Investor Amount as of May 31, 2001................... $700,000,000
Class A Certificate Rate............................. One Month LIBOR plus .15% per annum
Class B Certificate Rate............................. One Month LIBOR plus .30% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $70,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1996-D Termination Date....................... June 2005 Distribution Date
Series Issuance Date................................. June 18, 1996
SERIES 1996-E
Initial Invested Amount.............................. $450,000,000
Initial Pre-Funded Amount............................ $50,000,000
Investor Amount as of May 31, 2001................... $500,000,000
Class A Certificate Rate............................. One Month LIBOR plus .10% per annum
Class B Certificate Rate............................. One Month LIBOR plus .33% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $50,000,000
Series Servicing Fee rate............................ 2% per annum
Series 1996-E Termination Date....................... May 2004 Distribution Date
Series Issuance Date................................. November 1, 1996
SERIES 1999-A
Initial Invested Amount.............................. $600,000,000
Investor Amount as of May 31, 2001................... $600,000,000
Class A Certificate Rate............................. One Month LIBOR plus .11% per annum
Class B Certificate Rate............................. One Month LIBOR plus .33% per annum
Class C Interest..................................... No higher than One Month LIBOR
plus 2.00% per annum
Initial Enhancement Amount........................... $66,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1999-A Termination Date....................... September 2004 Distribution Date
Series Issuance Date................................. March 23, 1999
SERIES 1999-B
Initial Invested Amount.............................. $500,000,000
Investor Amount as of May 31, 2001................... $500,000,000
Class A Certificate Rate............................. One Month LIBOR plus .20% per annum
Class B Certificate Rate............................. One Month LIBOR plus .39% per annum
I-2
55
Collateral Rate...................................... No higher than One Month LIBOR
plus 2.00% per annum
Initial Enhancement Amount........................... $55,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1999-B Termination Date....................... January 2007 Distribution Date
Series Issuance Date................................. July 22, 1999
SERIES 1999-C
Initial Invested Amount.............................. $300,000,000
Investor Amount as of May 31, 2001................... $300,000,000
Class A Certificate Rate............................. 6.90% per annum
Class B Certificate Rate............................. 7.20% per annum
Collateral Minimum Interest Rate..................... No higher than One Month LIBOR
plus 2.00% per annum
Initial Enhancement Amount........................... $27,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1999-C Termination Date....................... April 2007 Distribution Date
Series Issuance Date................................. November 3, 1999
SERIES 1999-D
Initial Invested Amount.............................. $600,000,000
Investor Amount as of May 31, 2001................... $600,000,000
Class A Certificate Rate............................. One Month LIBOR plus 0.22% per annum
Class B Certificate Rate............................. One Month LIBOR plus 0.50% per annum
Collateral Minimum Interest Rate..................... Not to exceed 9.5% per annum
Initial Enhancement Amount........................... $66,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1999-D Termination Date....................... April 2007 Distribution Date
Series Issuance Date................................. November 3, 1999
SERIES 2000-A
Initial Invested Amount.............................. $750,000,000
Investor Amount as of May 31, 2001................... $750,000,000
Class A Certificate Rate............................. One Month LIBOR plus 0.13% per annum
Class B Certificate Rate............................. One Month LIBOR plus 0.33% per annum
Collateral Minimum Interest Rate..................... Not to exceed 9.5% per annum
Initial Enhancement Amount........................... $82,500,000
Series Servicing Fee Rate............................ 2% per annum
Series 2000-A Termination Date....................... July 2005 Distribution Date
Series Issuance Date................................. February 2, 2000
SERIES 2000-B
Initial Invested Amount.............................. $650,000,000
Investor Amount as of May 31, 2001................... $650,000,000
Class A Certificate Rate............................. One Month LIBOR plus 0.11% per annum
Class B Certificate Rate............................. One Month LIBOR plus 0.31% per annum
Collateral Minimum Interest Rate..................... No higher than One Month LIBOR plus 2.00%
per annum
Initial Enhancement Amount........................... $71,500,000
Series Servicing Fee Rate............................ 2% per annum
Series 2000-B Termination Date....................... September 2005 Distribution Date
Series Issuance Date................................. April 4, 2000
SERIES 2000-C
Initial Invested Amount.............................. $650,000,000
Investor Amount as of May 31, 2001................... $650,000,000
I-3
56
Class A Certificate Rate............................. 7.02% per annum
Class B Certificate Rate............................. One Month LIBOR plus 0.39% per annum
Collateral Minimum Interest Rate..................... No higher than One Month LIBOR plus 2.00%
per annum
Initial Enhancement Amount........................... $71,500,000
Series Servicing Fee Rate............................ 2% per annum
Series 2000-C Termination Date....................... February 2008 Distribution Date
Series Issuance Date................................. August 25, 2000
SERIES 2000-D
Initial Invested Amount.............................. $900,000,000
Investor Amount as of May 31, 2001................... $900,000,000
Class A Certificate Rate............................. One Month LIBOR plus 0.14% per annum
Class B Certificate Rate............................. One Month LIBOR plus 0.38% per annum
Collateral Minimum Interest Rate..................... No higher than One Month LIBOR plus 2.00%
per annum
Initial Enhancement Amount........................... $99,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 2000-D Termination Date....................... May 2008 Distribution Date
Series Issuance Date................................. November 15, 2000
SERIES 2001-A
Initial Invested Amount.............................. $950,000,000
Investor Amount as of May 31, 2001................... $950,000,000
Class A Certificate Rate............................. One Month LIBOR plus 0.15% per annum
Class B Certificate Rate............................. No higher than One Month LIBOR plus 0.50%
per annum
Collateral Minimum Interest Rate..................... No higher than One Month LIBOR plus 2.00%
per annum
Initial Enhancement Amount........................... $99,750,000
Series Servicing Fee Rate............................ 2% per annum
Series 2001-A Termination Date....................... August 2008 Distribution Date
Series Issuance Date................................. February 23, 2001
I-4
57
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS
CONVEYED TO THE TRUST
NUMBER OF RECEIVABLES
ASSIGNMENT DATE RECEIVABLES ADDITIONAL IN ADDITIONAL
NUMBER TRANSFERRED TO TRUST RELEVANT CUT-OFF DATE ACCOUNTS(1) ACCOUNTS(1)
- ---------- -------------------- --------------------- ----------- --------------
1 May 16, 1994 March 31, 1994 276,371 $ 367,091,261
2 July 1, 1994 May 31, 1994 157,629 $ 202,859,562
3 August 17, 1994 July 31, 1994 226,342 $ 351,961,171
4 September 23, 1994 August 31, 1994 192,815 $ 299,924,106
5 November 18, 1994 October 31, 1994 332,866 $ 406,625,727
6 January 6, 1995 November 30, 1994 217,320 $ 316,458,944
7 March 15, 1995 February 28, 1995 291,057 $ 348,693,399
8 April 18, 1995 March 31, 1995 143,714 $ 168,739,171
9 May 23, 1995 April 30, 1995 98,330 $ 137,485,579
10 July 18, 1995 June 30, 1995 322,271 $ 432,984,240
11 August 15, 1995 July 31, 1995 126,338 $ 188,302,827
12 August 31, 1995 August 11, 1995 67,968 $ 94,548,321
13 November 21, 1995 October 25, 1995 285,122 $ 491,863,655
14 December 15, 1995 November 26, 1995 265,376 $ 369,389,253
15 January 18, 1996 December 26, 1995 182,985 $ 330,263,251
16 February 19, 1996 January 31, 1996 269,467 $ 560,543,656
17 March 26, 1996 February 29, 1996 150,460 $ 330,531,723
18 May 1, 1996 March 31, 1996 68,056 $ 251,797,517
19 May 13, 1996 March 31, 1996 219,150 $ 499,241,938
20 June 18, 1996 April 30, 1996 244,770 $ 636,632,670
21 June 30, 1996 May 31, 1996 73,771 $ 200,155,226
22 September 1, 1996 July 31, 1996 217,130 $ 640,152,919
23 November 1, 1996 September 30, 1996 151,051 $ 500,113,079
24 November 1, 1996 September 30, 1996 30,631 $ 100,564,456
25 November 15, 1996 October 31, 1996 100,603 $ 250,370,356
26 January 17, 1997 December 31, 1996 118,232 $ 368,278,729
27 February 14, 1997 January 31, 1997 111,777 $ 307,635,708
28 March 14, 1997 February 28, 1997 169,598 $ 400,826,266
29 April 18, 1997 March 31, 1997 204,546 $ 450,500,767
30 May 14, 1997 April 30, 1997 155,299 $ 450,053,037
31 June 13, 1997 May 31, 1997 148,940 $ 241,091,790
32 June 29, 1997 May 31, 1997 5,757 $ 10,065,454
33 September 12, 1997 August 31, 1997 250,570 $ 499,607,860
34 September 30, 1997 August 31, 1997 218,401 $ 301,830,170
35 November 14, 1997 October 31, 1997 167,351 $ 322,443,973
36 December 12, 1997 November 30, 1997 228,234 $ 203,845,007
37 January 30, 1998 December 31, 1997 492,821 $ 729,961,299
38 February 13, 1998 January 31, 1998 246,990 $ 363,909,199
39 April 14, 1998 March 31, 1998 227,285 $ 907,447,235
40 May 14, 1998 April 30, 1998 249,490 $ 602,772,032
41 July 1, 1998 May 31, 1998 284,855 $ 582,539,789
42 September 1, 1998 July 31, 1998 209,559 $ 500,442,550
II-1
58
NUMBER OF RECEIVABLES
ASSIGNMENT DATE RECEIVABLES ADDITIONAL IN ADDITIONAL
NUMBER TRANSFERRED TO TRUST RELEVANT CUT-OFF DATE ACCOUNTS(1) ACCOUNTS(1)
- ---------- -------------------- --------------------- ----------- --------------
43 October 1, 1998 August 31, 1998 126,098 $ 364,789,653
44 November 13, 1998 October 31, 1998 276,577 $ 648,197,959
45 December 14, 1998 November 30, 1998 65,326 $ 166,800,025
46 December 31, 1998 November 30, 1998 79,855 $ 210,815,757
47 January 28, 1999 December 31, 1998 77,427 $ 197,913,305
48 January 31, 1999 December 31, 1998 312,662 $ 704,718,352
49 February 16, 1999 January 31, 1999 189,409 $ 393,818,299
50 March 10, 1999 January 31, 1999 145,162 $ 248,815,264
51 March 24, 1999 February 28, 1999 152,894 $ 206,886,377
52 April 14, 1999 March 31, 1999 56,776 $ 105,666,192
53 April 16, 1999 March 31, 1999 124,643 $ 304,064,904
54 May 14, 1999 April 30, 1999 95,437 $ 123,248,542
55 June 1, 1999 April 30, 1999 400,682 $ 925,598,651
56 July 19, 1999 May 31, 1999 89,208 $ 118,401,838
57 July 23, 1999 June 30, 1999 182,395 $ 332,801,715
58 September 21, 1999 August 31, 1999 399,265 $ 920,892,601
59 October 15, 1999 September 30, 1999 147,493 $ 300,519,356
60 January 17, 2000 December 31, 1999 495,186 $1,345,216,825
61 April 17, 2000 March 31, 2000 203,644 $ 586,536,013
62 June 22, 2000 May 31, 2000 58,635 $ 184,408,447
63 July 7, 2000 May 31, 2000 219,294 $ 675,770,391
64 August 14, 2000 July 31, 2000 241,291 $ 685,961,799
65 November 1, 2000 September 30, 2000 196,306 $ 631,241,897
66 November 16, 2000 October 31, 2000 128,811 $ 401,480,403
67 March 9, 2001 January 31, 2001 108,228 $ 328,911,152
68 April 13, 2001 February 28, 2001 132,424 $ 360,469,883
69 June 1, 2001 April 30, 2001 271,087 $ 728,787,323
- ------------
(1) The amounts shown are as of the relevant Cut-Off Date.
II-2
59
Prospectus
[FLEET LOGO]
FLEET CREDIT CARD MASTER TRUST II
ISSUER
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
ASSET-BACKED CERTIFICATES
THE TRUST--
- - may periodically issue asset-backed certificates in one or more series with
one or more classes; and
- - will own--
- receivables in a portfolio of revolving credit card accounts;
- payments due on those receivables; and
- other property described in this prospectus and in the accompanying
prospectus supplement.
THE CERTIFICATES--
- - will represent interests in the trust and will be paid only from the trust
assets;
- - offered with this prospectus will be rated in one of the four highest rating
categories by at least one nationally recognized rating organization;
- - may have one or more forms of enhancement; and
- - will be issued as part of a designated series which may include one or more
classes of certificates and enhancement.
THE CERTIFICATEHOLDERS--
- - will receive interest and principal payments from a varying percentage of
credit card account collections.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 IN THIS PROSPECTUS.
A certificate is not a deposit and neither the certificates nor the underlying
accounts or receivables are insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of Fleet Bank (RI), National Association
or any of its affiliates.
This prospectus may be used to offer and sell certificates of a series only if
accompanied by the prospectus supplement for that series.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
JUNE 12, 2001
60
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to a particular series
of certificates, including your series, and (b) the accompanying prospectus
supplement, which will describe the specific terms of your series of
certificates, including:
- the terms, including interest rates, for each class;
- the timing of interest and principal payments;
- information about the receivables;
- information about credit enhancement, if any, for each class; and
- the method for selling the certificates.
IF THE DESCRIPTION OF THE TERMS OF A PARTICULAR SERIES OF CERTIFICATES
VARIES BETWEEN THE DESCRIPTION CONTAINED IN THIS PROSPECTUS AND THE DESCRIPTION
IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN
THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
We include cross references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
You can find a listing of the pages where terms used in this prospectus are
defined under the caption "Index of Principal Terms," on page 71 in this
prospectus.
2
61
TABLE OF CONTENTS
PAGE
----
Prospectus Summary...................... 5
The Trust............................. 5
Trust Assets.......................... 5
Servicer.............................. 5
Allocation of Trust Assets............ 6
Interest Payments On the
Certificates....................... 6
Principal Payments On the
Certificates....................... 6
Revolving Period................... 6
Accumulation and Amortization
Periods.......................... 6
Effect of Pay Out Event............ 6
Shared Excess Finance Charge
Collections........................ 7
Shared Principal Collections.......... 7
Credit Enhancement.................... 7
Certificate Ratings................... 7
Risk Factors............................ 8
Competition in the Credit Card
Industry Could Lead to Early
Payment of Your Certificates....... 8
A Change in the Terms of the
Receivables May Adversely Affect
the Amount or Timing of Collections
and May Cause an Early Payment of
Your Certificates or a Downgrade... 8
Failure to Perfect Trust's Interests
May Cause a Delay or Reduction of
Payment of Your Certificates....... 8
If a Conservator or Receiver Is
Appointed for the Bank, Payment of
Your Certificates May Be Delayed or
Reduced............................ 9
Consumer Protection Laws May Restrict
the Bank's Ability to Collect
Receivables and Maintain Yield on
the Portfolio and May Lead to an
Early Pay Out or Inability to Pay
Certificates in Full............... 11
Principal May Be Paid Earlier Than
Expected Creating a Reinvestment
Risk to Certificateholders or Later
Than Expected Resulting in a
Failure to Receive Payment When
Expected........................... 11
Social, Economic and Geographic
Factors Affect Credit Card Payments
and Are Unpredictable and May Cause
a Delay or Default in Payment...... 12
Credit Ratings Assigned to Your
Certificates Are Limited in
Nature............................. 12
Credit Quality of Trust Assets May Be
Eroded By the Addition of New
Assets............................. 13
Credit Card Rates May Decline or
Certificate Rates May Increase
Without a Corresponding Change in
Amounts Needed to Pay
Certificates....................... 13
PAGE
----
Issuance of Additional Series by the
Trust May Adversely Affect Your
Payments or Rights................. 14
If Optional Repurchase Occurs, It May
Result in an Early Return of
Principal and a Reinvestment
Risk............................... 14
If Credit Card Account Holders Are
Concentrated in One State or
Geographic Location, Laws, Economic
Downturn or Natural Disasters in
that Area May Adversely Affect
Collections of Receivables......... 14
If the Bank Elects to Treat a Portion
of Principal Receivables as Finance
Charge Receivables, Principal
Payments Could Be Delayed.......... 14
Amounts In Prefunding Account Not
Invested in Receivables May Result
in Early Return of Principal and
Reinvestment Risk.................. 15
You Will Not Be Recognized as the
Owner of Certificates on the
Records of the Trustee and Will Not
Be Able to Exercise Rights Directly
as a Certificateholder............. 15
Trust Assets May Be Allocated to One
or More Specific Series or Groups
and Not Be Available to Your
Series............................. 15
Formation of the Trust.................. 16
Transfer and Assignment................. 17
The Transfer.......................... 17
Amendment to Pooling and Servicing
Agreement.......................... 17
Assignment and Assumption Agreement... 18
Rights Agreement...................... 18
The Bank's Credit Card Activities....... 18
General............................... 18
Supplemental Information.............. 19
Acquisition and Use of Credit Cards... 19
Billing and Payments.................. 20
Description of First Data Resources,
Inc................................ 21
Delinquencies......................... 21
Interchange........................... 22
Use of Proceeds......................... 22
The Bank and FleetBoston Financial
Corporation........................... 23
Material Legal Aspects of the
Receivables........................... 23
Matters Relating to the Transfer of
Receivables........................ 23
3
62
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Matters Relating to Conservatorship
and Receivership................... 24
Consumer Protection Laws.............. 25
Description of the Certificates......... 25
General............................... 26
Book-Entry Registration............... 28
Definitive Certificates............... 31
The Bank Certificate; Additional
Sellers............................ 32
Interest Payments..................... 33
Principal Payments.................... 33
Shared Principal Collections.......... 34
Sharing of Excess Finance Charge
Collections........................ 34
Companion Series...................... 34
New Issuances......................... 35
Transfer and Assignment of
Receivables........................ 37
Liquidation of Receivables............ 37
Representations, Warranties and
Covenants.......................... 38
Addition of Accounts.................. 43
Acquisition of Participation
Interest........................... 44
Automatic Account Additions........... 45
Removal of Accounts................... 46
Servicing Procedures.................. 47
Discount Option....................... 47
Trust Accounts........................ 48
Series Percentage and Seller
Percentage......................... 49
Application of Collections............ 49
Operation of Excess Funding Account... 50
Defaulted Receivables; Rebates and
Fraudulent Charges................. 50
Final Payment of Principal and
Interest; Termination.............. 51
Trust Pay Out Events.................. 51
Servicing Compensation and Payment of
Expenses........................... 52
Matters Regarding the Servicer........ 53
Indemnification....................... 54
Servicer Default...................... 55
Report to Certificateholders.......... 56
Evidence as to Compliance............. 56
PAGE
----
Amendments............................ 57
Defeasance............................ 58
List of Certificateholders............ 58
The Trustee........................... 59
Enhancement............................. 59
General............................... 59
Subordination......................... 60
Letter of Credit...................... 60
Cash Collateral Guaranty or Account... 60
Collateral Interest................... 60
Swap Agreements....................... 61
Surety Bond or Insurance Policy....... 61
Spread Account........................ 61
Certificate Rating...................... 61
Federal Income Tax Consequences......... 62
General............................... 62
Treatment of the Certificate as
Debt............................... 62
Treatment of the Trust................ 63
Taxation of Interest Income of U.S.
Certificate Owners................. 64
Sale or Exchange of Certificates...... 65
Foreign Certificate Owners............ 65
Backup Withholding and Information
Reporting.......................... 66
State and Local Taxation.............. 67
ERISA Considerations.................... 67
Plan of Distribution.................... 69
Underwriting............................ 69
Legal Matters........................... 70
Reports to Certificateholders........... 70
Where You Can Find More Information..... 70
Index of Principal Terms................ 71
Global Clearance, Settlement and Tax
Documentation Procedures.............. A-1
4
63
PROSPECTUS SUMMARY
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
certificates, read carefully this entire document and the accompanying
prospectus supplement.
This summary provides an overview of the trust assets including, in particular,
the receivables and how these receivables will be allocated and other
information to aid your understanding and is qualified by the full description
of such information in this prospectus and the accompanying prospectus
supplement.
THE TRUST
Fleet Credit Card Master Trust II was formed in 1993 pursuant to a pooling and
servicing agreement. The pooling and servicing agreement is between Fleet Bank
(RI), National Association, as seller and servicer, and Bankers Trust Company,
as trustee.
- - The trust is a master trust in which multiple series of certificates may be
issued. Each series is issued pursuant to a supplement to the pooling and
servicing agreement. The terms of a series are described in the series
supplement.
- - Some classes or series may not be offered by this prospectus; for example,
they may be offered in a private placement.
See "Formation of the Trust" and "Transfer and Assignment" in this prospectus.
TRUST ASSETS
The bank and its predecessors have transferred to the trust the receivables in
designated VISA(R) and MasterCard(R)(1) revolving credit card accounts. All
new receivables generated in those accounts will be transferred automatically to
the trust. The receivables transferred to the trust are the primary trust
assets. The bank will periodically designate additional accounts to the trust.
Receivables in these additional accounts will be transferred to the trust and
receivables generated in the new accounts will be transferred automatically to
the trust. The total amount of receivables in the trust will fluctuate daily as
new receivables are generated and payments are received on accounts. Additional
assets may be transferred to the trust.
See "The Bank's Credit Card Activities" and "Description of the
Certificates--Addition of Accounts" in this prospectus.
Additional trust assets may include:
- - monies and investments in the trust's bank accounts;
- - revolving credit card accounts affiliated with programs other than VISA and
MasterCard or credit card accounts in programs created for a specific company;
- - participations in other pools of revolving credit card receivables or consumer
loan receivables, secured and unsecured arising as a result of advances made
on bank cards, private label cards, corporate cards and unsecured revolving
lines of credit; and
- - instruments and rights providing credit enhancement to a series or class.
SERVICER
The bank services the receivables under the terms of the pooling and servicing
agreement. In limited cases, the bank may resign or be removed and either the
trustee or a third party may be appointed as the new servicer. The servicer
receives a servicing fee from the trust. Each series is obligated to pay a
portion of the servicing fee.
See "Description of the Certificates--Servicing Compensation and Payment of
Expenses" and "--Matters Regarding the Servicer" in this prospectus.
- ---------------
(1) VISA(R) and MasterCard(R) are federally registered servicemarks of VISA
U.S.A., Inc. and MasterCard International, respectively.
5
64
ALLOCATION OF TRUST ASSETS
The trust assets are allocated among the series of certificates outstanding and
the interest of the bank, as holder of the sellers' interest. The interest in
the assets of the trust not represented by the certificates and other interests
issued by the trust to investors is called the sellers' interest.
Certificateholders are only entitled to amounts allocated to their series and
only to the extent of interest and principal payments due on their certificates.
See "Description of the Certificates--Series Percentage and Seller Percentage"
in this prospectus.
INTEREST PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
interest as described in the prospectus supplement for that series. If a series
of certificates consists of more than one class, each class may differ in, among
other things, priority of payments, payment dates, interest rates, method for
computing interest and rights to credit enhancement.
Each class of certificates may have fixed, floating or any other type of
interest rate. Generally, interest will be paid monthly, quarterly or on other
scheduled dates over the life of the certificates.
See "Description of the Certificates--Interest Payments" and "Enhancement" in
this prospectus.
PRINCIPAL PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
principal as described in the prospectus supplement prepared for that series. If
a series of certificates consists of more than one class, each class may differ
in, among other things, the amounts allocated for principal payments, priority
of payments, payment dates, maturity, and rights to series enhancement.
REVOLVING PERIOD
Each series of certificates will begin with a period during which the trust will
not pay or accumulate principal for payment to the certificateholders. The
period when no principal is paid or accumulated is known as the revolving
period. The trust, during the revolving period, will usually pay available
principal to the bank as holder of the sellers' interest, but may pay amounts
due to holders of certificates of other series.
ACCUMULATION AND AMORTIZATION PERIODS
Following the revolving period, each class of certificates will have one or a
combination of the following periods in which:
- - principal is accumulated in specified amounts per month and paid on a
scheduled date;
- - principal is paid in fixed amounts at scheduled intervals;
- - principal is paid in varying amounts at scheduled intervals;
- - principal is paid, at the option of the bank, in amounts and on dates
designated by the bank;
- - principal is accumulated in varying amounts each month based on the amount of
principal receivables collected following a pay out event; or
- - principal is paid in varying amounts each month based on the amount of
principal receivables collected following a pay out event.
The time at which principal payments or principal accumulation will begin and
the period over which principal payments or principal accumulation will occur
will vary from one series to another and within a series from one class to
another. The principal payment provisions for each series and class will be
included in the prospectus supplement prepared for the related series.
EFFECT OF PAY OUT EVENT
If any pay out event occurs, then for each affected series, the revolving period
will end and either a rapid amortization period or a rapid accumulation period
will begin. Within a series, the rapid amortization period may apply to one or
more classes of the series and a rapid accumulation period may apply to another
class or classes of the series. In a rapid amortization period, the trust will
pay all available principal to the certificateholders of that series or class on
each distribution date. In a rapid accumulation period, the trust will place all
available principal for that series or class into an account to be held until
the expected final distribution date for that series or class. Principal
accumulated during a rapid accumulation period will, in most cases, be paid to
6
65
the certificateholders of the series or class for which it was accumulated on
the expected final distribution date. For both a rapid amortization period and a
rapid accumulation period, if the series has more than one class, then each
class may have a different priority for payment or accumulation.
A pay out event may affect one or more series.
See "Description of Certificates--Trust Pay Out Events" in this prospectus for a
discussion of the events that might lead to a rapid amortization period.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series may be included in a group of series. If specified in the related
prospectus supplement, amounts designated as excess spread for a series and not
needed for that series, will be excess finance collections which may be applied
to cover shortfalls of other series in the same group.
See "Description of the Certificates--Sharing of Excess Finance Charge
Collections" "--Applications of Collections" and "--Defaulted Receivables;
Rebates and Fraudulent Charges" in this prospectus.
SHARED PRINCIPAL COLLECTIONS
If specified in the accompanying prospectus supplement, collections of principal
receivables allocated to a series and not needed for that series, may be applied
to cover principal needs for other series in the same group.
See "Description of the Certificates--Shared Principal Collections" in this
prospectus.
CREDIT ENHANCEMENT
Each class of a series may be entitled to credit enhancement.
Credit enhancement for the certificates of any class may take the form of one or
more of the following:
- - subordination
- - collateral interest
- - insurance policy
- - cash collateral guaranty or account
- - letter of credit
- - surety bond
- - spread account
- - reserve account
- - swap arrangements
The type, characteristics and amount of any credit enhancement will be:
- - based on several factors, including the characteristics of the receivables and
accounts at the time a series of certificates is issued and the structure of
the series; and
- - established based on the requirements of the rating agencies.
See "Enhancement" in this prospectus.
CERTIFICATE RATINGS
Any certificate offered by this prospectus and an accompanying prospectus
supplement will be rated in one of the four highest rating categories by at
least one nationally recognized rating organization.
A rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning agency. Each rating should be
evaluated independently of any other rating.
See "Risk Factors--Credit Ratings Assigned to Your Certificates Are Limited in
Nature" in this prospectus.
7
66
RISK FACTORS
You should consider the following factors before you decide whether or not to
purchase the certificates.
COMPETITION IN THE CREDIT
CARD INDUSTRY COULD LEAD TO
EARLY PAYMENT OF YOUR
CERTIFICATES The bank credit card industry is highly
competitive. As the bank's competitors strive to
expand their market share, the bank's use of
effective advertising, target marketing and
pricing strategies becomes extremely important.
The bank has remained competitive by offering low
rate balance transfer options, lower fixed annual
percentage rate cards, no-annual-fee cards, and
other cards that offer savings or other rewards
to the borrower.
In light of recent mergers and consolidations of
banking and financial services companies, there
are fewer card issuers with greater economies of
scale and brand recognition. Also, the use of
debit cards associated with the VISA or
MasterCard logo competes with traditional credit
card usage.
The increase in competition and the use of lower
annual percentage rate offers may lead to a
reduction in yield on the bank's portfolio. The
lower rates also may reduce the amount of finance
charge collections available to pay interest on
the certificates. Increased competition resulting
from consolidations and mergers may also impact
the bank's ability to originate new accounts and
generate new receivables. If the origination of
new accounts or the generation of new receivables
decreases significantly, the bank may not be able
to designate additional accounts to the trust
when required and a pay out event and early
amortization may occur. If your series provides
for rapid amortization upon the occurrence of a
series pay out event, these events may cause your
principal to be paid back earlier than expected.
A CHANGE IN THE TERMS OF THE
RECEIVABLES MAY ADVERSELY
AFFECT THE AMOUNT OR TIMING OF
COLLECTIONS AND MAY CAUSE AN
EARLY PAYMENT OF YOUR
CERTIFICATES OR A DOWNGRADE As owner of the accounts, the bank retains the
right to change various account terms including
finance charges, other fees and the required
monthly minimum payment. The changes may be
voluntary on the part of the bank or may be
forced by law or market conditions. Changes in
interest and fees could decrease the effective
yield on the accounts. If your series provides
for rapid amortization upon the occurrence of a
series pay out event, this could result in an
early amortization of your certificates. Changes
could also cause a reduction in the credit
ratings of your certificates.
See "Description of the
Certificates--Representations, Warranties and
Covenants" in this prospectus.
FAILURE TO PERFECT TRUST'S
INTERESTS MAY CAUSE A DELAY
OR REDUCTION OF PAYMENT OF
YOUR CERTIFICATES The bank will represent and warrant that its
transfer of receivables to the trust is either
(i) an absolute sale of those receivables or (ii)
the grant of a security interest in those
receivables.
The bank will take steps under the UCC to perfect
the trust's interest in the receivables.
Nevertheless, if the UCC does not govern these
transfers or if some other action is required
under applicable law and has not been taken,
payments to you could be delayed or reduced.
The bank will represent, warrant, and covenant
that its transfer of receivables to the trust is
perfected and free and clear of the lien or
8
67
interest of any other entity, except for certain
tax liens. If this is not true, the trust's
interest in the receivables could be impaired,
and payments to you could be delayed or reduced.
For instance:
- a prior or subsequent transferee of receivables
could have an interest in the receivables
superior to the interest of the trust;
- a tax, governmental, or other nonconsensual
lien that attaches to the property of the bank
could have priority over the interest of the
trust in the receivables;
- the administrative expenses of a conservator or
receiver for the bank could be paid from
collections on the receivables before the trust
receives any payments; and
- if insolvency proceedings were commenced by or
against the bank, or if certain time periods
were to pass, the trust may lose any perfected
interest in collections held by the bank and
commingled with other funds.
IF A CONSERVATOR OR RECEIVER
IS APPOINTED FOR THE BANK,
PAYMENT OF YOUR CERTIFICATES
MAY BE DELAYED OR REDUCED The bank is chartered as a national banking
association and is regulated and supervised by
the Office of the Comptroller of the Currency,
which is authorized to appoint the Federal
Deposit Insurance Corporation as conservator or
receiver for the bank if certain events occur
relating to the bank's financial condition or the
propriety of its actions. In addition, the FDIC
could appoint itself as conservator or receiver
for the bank.
Although the bank will treat its transfer of the
receivables to the trust as a sale for accounting
purposes, the transfer may constitute the grant
of a security interest under general applicable
law. Nevertheless, the FDIC has issued
regulations surrendering certain rights under the
Federal Deposit Insurance Act, as amended by the
Financial Institutions Reform, Recovery and
Enforcement Act of 1989, to reclaim, recover, or
recharacterize a financial institution's transfer
of financial assets such as the receivables if:
- the transfer involved a securitization of the
financial assets and meets specified conditions
for treatment as a sale under relevant
accounting principles,
- the financial institution received adequate
consideration for the transfer,
- the parties intended that the transfer
constitute a sale for accounting purposes, and
- the financial assets were not transferred
fraudulently, in contemplation of the financial
institution's insolvency, or with the intent to
hinder, delay, or defraud the financial
institution or its creditors.
The pooling and servicing agreement and the
bank's transfer of the receivables are intended
to satisfy all of these conditions.
If a condition required under the FDIC's
regulations were found not to have been met,
however, the FDIC could reclaim, recover, or
recharacterize the bank's transfer of the
receivables. The FDIA would limit the damages in
this event to "actual direct compensatory
damages" determined as of the date that the FDIC
was appointed as conservator or receiver for the
bank. The FDIC,
9
68
moreover, could delay its decision whether to
reclaim, recover, or recharacterize the bank's
transfer of the receivables for a reasonable
period following its appointment as conservator
or receiver for the bank. Therefore, if the FDIC
were to reclaim, recover, or recharacterize the
bank's transfer of the receivables, payments to
you could be delayed or reduced.
Even if the conditions set forth in the
regulations were satisfied and the FDIC did not
reclaim, recover, or recharacterize the bank's
transfer of the receivables, you could suffer a
loss on your investment if:
- the pooling and servicing agreement or the
bank's transfer of the receivables were found
to violate the regulatory requirements of the
FDIA,
- the trust or the trustee were required to
comply with the claims process established
under the FDIA in order to collect payments on
the receivables,
- the FDIC were to request a stay of any action
by the trust or the trustee to enforce the
pooling and servicing agreement or the
certificates, or
- the FDIC were to repudiate other parts of the
pooling and servicing agreement, such as any
obligation to collect payments on or otherwise
service the receivables.
In addition, regardless of the terms of the
pooling and servicing agreement, and regardless
of the instructions of those authorized to direct
the trustee's actions, the FDIC as conservator or
receiver for the bank may have the power:
- to prevent or require the commencement of an
early amortization period or early accumulation
period,
- to prevent, limit, or require the early
liquidation of receivables and termination of
the trust, or
- to require, prohibit, or limit the continued
transfer of receivables.
Furthermore, regardless of the terms of the
pooling and servicing agreement, the FDIC:
- could prevent the appointment of a successor
servicer or
- could authorize the bank to stop servicing the
receivables.
If any of these events were to occur, payments to
you could be delayed or reduced.
10
69
CONSUMER PROTECTION LAWS MAY
RESTRICT THE BANK'S ABILITY
TO COLLECT RECEIVABLES AND
MAINTAIN YIELD ON THE
PORTFOLIO AND MAY LEAD TO
AN EARLY PAY OUT OR INABILITY
TO PAY CERTIFICATES IN FULL Federal and state consumer protection laws
regulate the creation and enforcement of consumer
loans, including credit card accounts and
receivables. New legislation and regulatory
changes affecting consumer loans and, in many
cases, specifically aimed at the credit card
industry, are always under consideration both at
the federal and state levels.
If implemented, some of the legislative changes
which have been proposed would:
- limit the bank's ability to increase finance
charges;
- restrict or cap interest rates on credit card
accounts;
- limit the bank's ability to impose or increase
fees; and
- require increased disclosure and reporting to
cardholders and applicants for credit cards.
It is not clear whether any of these proposals
will become law or, if enacted, what form they
would take. However, you should be aware that
legislative and regulatory changes can be
expected from time to time. These changes may
make it more difficult for the servicer to
collect the receivables or may restrict the
finance charges and fees that the bank can
charge.
If, as a result of legislative or regulatory
changes, the bank were required to reduce its
finance charges and fees, or, if the bank were
not permitted to increase finance charges and
fees when needed, this could cause a pay out
event to occur.
The bank makes representations and warranties
relating to compliance with the requirements of
law. The bank also makes representations and
warranties in the pooling and servicing agreement
relating to the validity and enforceability of
the accounts and the receivables and agrees to
indemnify the trust for, among other things, any
liability arising from the violation of laws.
However, the trustee will not make any
examination of the receivables or the records
relating to the receivables for the purpose of
establishing the presence or absence of defects,
compliance with the representations and
warranties, or for any other purpose. If a
representation or warranty is breached, the only
remedy is that the seller or the servicer must
accept the transfer and reassignment of
receivables affected by the violation.
See "Description of the
Certificates--Representation, Warranties and
Covenants" and "Material Legal Aspects of the
Receivables--Consumer Protection Laws" in this
prospectus.
PRINCIPAL MAY BE PAID EARLIER
THAN EXPECTED CREATING A
REINVESTMENT RISK TO
CERTIFICATEHOLDERS OR LATER
THAN EXPECTED RESULTING IN A
FAILURE TO RECEIVE PAYMENT
WHEN EXPECTED The receivables in the trust may be paid at any
time and there is no assurance that new
receivables will be generated or will be
generated at levels needed to maintain the trust.
To prevent the occurrence of a pay out event, new
receivables must be generated and added to the
trust. The trust is required to maintain a
certain minimum amount of receivables. The
generation of new receivables is affected in
part, by the bank's ability to compete in the
current industry environment and by customers'
changing borrowing and payment patterns. If there
is a decline in the generation of new receivables
you may be repaid your principal prior to the
expected date.
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One development which affects the level of
finance charge collections is the increased
convenience use of credit cards. Convenience use
means that the customers pay their account
balances in full on or prior to the due date. The
customer, therefore, avoids all finance charges
on his account. This decreases the effective
yield on the accounts and could cause the
occurrence of a pay out event. Convenience use is
more common among cardholders who are not
assessed an annual fee than among those who pay
these fees. A substantial majority of the
cardholders on the accounts designated to the
trust are not charged an annual cardholder fee.
The pooling and servicing agreement requires that
the balance of principal receivables in the trust
not fall below a specified level. If the level of
principal receivables does fall below the
required level, a pay out event will occur. To
maintain the level of principal receivables in
the trust, the bank periodically adds receivables
through the designation of additional accounts
for inclusion in the trust. If the bank is not
able to add additional accounts when required, a
pay out event will occur.
See "Description of the Certificates--Trust Pay
Out Events" in this prospectus and "Description
of the Certificates--Pay Out Events" in the
accompanying prospectus supplement.
Changes in finance charges also will affect
payment patterns on the receivables and thus may
result in a decline in yield. During the
amortization periods, this may adversely affect
the repayment of principal.
See "Receivable Yield Considerations" in the
accompanying prospectus supplement.
SOCIAL, ECONOMIC AND
GEOGRAPHIC FACTORS AFFECT
CREDIT CARD PAYMENTS AND
ARE UNPREDICTABLE AND MAY
CAUSE A DELAY OR DEFAULT
IN PAYMENT Changes in credit card use, payment patterns and
the rate of defaults by cardholders may result
from a variety of social, economic and geographic
factors. Social factors include changes in
consumer confidence levels and attitude toward
incurring debt, the public's perception of the
use of credit cards and changing attitudes
regarding the stigma of personal bankruptcy.
Economic factors include the rate of inflation,
the unemployment rates and relative interest
rates offered for various types of loans.
Moreover, adverse changes in economic conditions
in states where cardholders are located could
have a direct impact on the timing and amount of
payments on the certificates of any series.
See "The Bank's Credit Card Activities" in this
prospectus and the accompanying prospectus
supplement.
CREDIT RATINGS ASSIGNED TO
YOUR CERTIFICATES ARE
LIMITED IN NATURE Each credit rating assigned to your certificates
reflects the rating agency's assessment only of
the likelihood that interest and principal will
be paid when required under the pooling and
servicing agreement, not when expected. These
ratings are based on the rating agencies'
determination of the value of receivables in the
trust and the availability of any credit
enhancement.
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The ratings do not address the following:
- the likelihood that the principal or interest
on your certificate will be prepaid, paid on a
scheduled date or paid on any particular date
before the termination date of your series;
- the possibility that your certificates will be
paid early or the possibility of the imposition
of United States withholding tax for non-U.S.
Certificateholders;
- the marketability of the certificates, or any
market price; or
- that an investment in the certificates is a
suitable investment for you.
A rating is not a recommendation to purchase,
hold or sell certificates of a series or class of
a series.
CREDIT QUALITY OF TRUST
ASSETS MAY BE ERODED BY
THE ADDITION OF NEW ASSETS The bank expects that it will periodically add
additional accounts to the trust and may at times
be obligated to add additional accounts.
Additional accounts may include accounts which
were originated using criteria that are different
than those applicable to the accounts currently
designated to the trust. There are many reasons
which could cause these differences, including
the fact that the additional accounts were
originated at a different date or were acquired
from an institution which used different
underwriting standards or procedures.
Consequently, there is no assurance that future
additional accounts will have the same credit
quality as those currently designated to the
trust.
In addition, the pooling and servicing agreement
allows the bank to add participation interests in
other assets to the trust. The addition of these
participation interests and of additional
accounts will be subject to the satisfaction of
conditions described in this prospectus under
"Description of the Certificates--Addition of
Accounts" and "--Automatic Account Additions."
CREDIT CARD RATES MAY DECLINE
OR CERTIFICATE RATES MAY
INCREASE WITHOUT A
CORRESPONDING CHANGE
IN AMOUNTS NEEDED TO PAY
CERTIFICATES The majority of accounts have finance charges set
at a rate above the London interbank offered rate
or the prime rate. Certificates may bear interest
at a fixed-rate or at a floating-rate based on
another specified index. Thus, if the London
interbank offered rate or other specified rate
declines, finance charge collections will
decline; however, there may not be a
corresponding decrease in the interest rates on
the certificates. The effect of lower finance
charges without a corresponding reduction in the
rates on the certificates could cause a pay out
event to occur which may cause your certificates
to be paid early.
On the other hand, a portion of the accounts have
finance charges set at a fixed rate.
If the rates on the certificates increase there
will be no corresponding increase in the finance
charges on the fixed-rate accounts. If a
significant portion of the accounts have
fixed-rate finance charges in the future, an
increase in interest rates on the certificates
could cause a pay out event to occur which may
cause your certificates to be paid early.
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ISSUANCE OF ADDITIONAL SERIES
BY THE TRUST MAY ADVERSELY
AFFECT YOUR PAYMENTS OR
RIGHTS The trust is a master trust and has issued other
series of certificates and is expected to issue
additional series from time to time. All
certificates are payable from the receivables in
the trust. The trust may issue additional series
with terms that are different from your series
without the prior review or consent of any
certificateholders. It is a condition to the
issuance of each new series that each rating
agency that has rated an outstanding series,
confirms in writing that the issuance of the new
series will not result in a reduction or
withdrawal of its rating. However, the terms of a
new series could affect the timing and amounts of
payments on any other outstanding series,
including your series. The owners of the
certificates of any new series will have voting
rights which will reduce the percentage interest
represented by your series. The affected voting
rights may relate to the ability to approve
waivers and give consents. The actions which may
be affected include directing the appointment of
a successor servicer following a servicer
default, amending the pooling and servicing
agreement and directing a reassignment of the
entire portfolio of accounts.
See "Description of the Certificates--New
Issuances" in this prospectus.
IF OPTIONAL REPURCHASE
OCCURS, IT MAY RESULT IN AN
EARLY RETURN OF PRINCIPAL
AND A REINVESTMENT RISK When the amount of certificates of a series is
reduced to a stated percentage of that series'
original amount, the bank may repurchase the
remaining certificates of the series. It is
possible, if so provided in the applicable series
supplement, that the repurchase option could be
exercised when 10% or more of the principal
amount of the series remains outstanding. A
repurchase may result in an early return of your
investment. It is not expected that any premium
will be paid in the event of the exercise of the
repurchase option and there can be no assurance
that you will be able to invest any early
repayment amount at a similar rate of return.
IF CREDIT CARD ACCOUNT
HOLDERS ARE CONCENTRATED IN
ONE STATE OR GEOGRAPHIC
LOCATION, LAWS, ECONOMIC
DOWNTURN OR NATURAL
DISASTERS IN THAT AREA MAY
ADVERSELY AFFECT COLLECTIONS
OF RECEIVABLES If the trust contains a high concentration of
receivables relating to cardholders located
within a single state or region of the United
States, events in that state or region may have a
magnified effect on the trust due to the
concentration. The prospectus supplement of a
series will contain a then-current detailed
geographic breakdown of the number of accounts
and the amount of receivables relating to
cardholders with addresses in each applicable
state.
See "The Receivables--Geographic Distribution of
Accounts and Receivables" in the accompanying
prospectus supplement.
The bank has no way of predicting how a future
geographic event or a change in the geographic
distribution of the receivables may affect the
certificates.
IF THE BANK ELECTS TO TREAT A
PORTION OF PRINCIPAL
RECEIVABLES AS FINANCE
CHARGE RECEIVABLES, PRINCIPAL
PAYMENTS COULD BE DELAYED The documents relating to the certificates permit
the bank to cause a percentage of principal
receivables to be discounted as principal
receivables and treated as finance charge
receivables. The bank may elect to use the
discount and may decide, without notice to or the
consent of any holders of certificates, to reduce
the discount or discontinue the use of the
discount. Any election by the bank to discount
the principal receivables will result in an
increase in the amount of finance charge
receivables and a reduction in the amount of
principal receivables and the collection of
principal receivables
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from that which would otherwise occur. This may
result in delayed principal payments on the
certificates. Use of the discount will also
reduce the sellers' interest in the trust,
thereby making pay out events based in part on
the amount of collections of finance charge
receivables less likely to occur and increasing
the likelihood that the bank will have to
designate more accounts to the trust or that a
pay out event will occur based on the sellers'
interest or the amount of principal receivables
in the trust. Any subsequent reduction or
withdrawal of the percent used in discounting the
principal receivables would have the opposite
effect.
AMOUNTS IN PREFUNDING ACCOUNT
NOT INVESTED IN RECEIVABLES
MAY RESULT IN EARLY RETURN
OF PRINCIPAL AND REINVESTMENT
RISK The bank may, in connection with any series,
create a prefunding account and deposit a portion
of the proceeds of the series into the account.
Moneys in the account will be invested in
additional principal receivables. However, any
money in the prefunding account not used by a
specific date must be paid to the holders of the
certificates of that series. This will result in
an early return of principal. The bank does not
expect to pay a prepayment penalty or premium in
that event. If you receive an early payment you
may not be able to reinvest at a rate equivalent
to the rate on the certificates which were paid
early.
YOU WILL NOT BE RECOGNIZED AS
THE OWNER OF CERTIFICATES ON
THE RECORDS OF THE TRUSTEE
AND WILL NOT BE ABLE TO
EXERCISE RIGHTS DIRECTLY
AS A CERTIFICATEHOLDER If so stated in the accompanying prospectus
supplement, the certificates of that series
initially will be represented by one or more
certificates registered in the name of Cede, the
nominee for DTC, and will not be registered in
the names of the certificate owners or their
nominees. Unless definitive certificates are
issued for a series, certificate owners of that
series will not be recognized by the trustee as
certificateholders, as that term is used in the
governing documents. As a result you will only be
able to exercise the rights of certificateholders
indirectly through DTC, Clearstream or Euroclear
and their participating organizations.
See "Description of Certificates--Book-Entry
Registration" and "--Definitive Certificates" in
this prospectus.
TRUST ASSETS MAY BE ALLOCATED
TO ONE OR MORE SPECIFIC SERIES
OR GROUPS AND NOT BE AVAILABLE
TO YOUR SERIES A series supplement or an amendment to the
pooling and servicing agreement may provide that
portions of the receivables or participation
interests in the trust be allocated to one or
more series or groups. If such an allocation were
to occur, and if the allocation was not to your
series or a group in which your series is
included, your series would not be able to
benefit from such receivables or participation
interests. Such an allocation is dependent upon:
- written confirmation, from each rating agency
rating any outstanding series, that the
allocation will not result in that rating
agency reducing or withdrawing its rating of
any outstanding series or class of
certificates, and
- delivering an officer's certificate to the
trustee by the servicer that states that the
servicer reasonably believes that the
allocation will not have an adverse effect.
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FORMATION OF THE TRUST
Fleet Credit Card Master Trust II was formed, in accordance with the laws
of the State of New York, pursuant to a Pooling and Servicing Agreement dated as
of December 1, 1993. The Pooling and Servicing Agreement was amended and
restated on May 23, 1994, and the amended and restated agreement was amended by
amendments dated July 1, 1994, October 6, 1995, February 20, 1998, May 14, 1999,
December 29, 2000 and March 30, 2001. The Pooling and Servicing Agreement is
between Fleet Bank (RI), National Association (the "BANK"), as seller and
servicer, and Bankers Trust Company, as trustee. The Pooling and Servicing
Agreement, as originally executed, was between Colonial National Bank USA and
the trustee. Colonial National Bank USA subsequently changed its name to Advanta
National Bank USA and following a merger into it by Advanta National Bank,
Advanta National Bank USA changed its name to Advanta National Bank. Advanta
National Bank was replaced, as described in this prospectus, as seller and
servicer on February 20, 1998 by Fleet Bank (RI), National Association.
The trust, from time to time, issues series of asset-backed securities.
Each series is issued pursuant to the terms of a series supplement to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement and any
series supplement are sometimes collectively referred to as the "POOLING AND
SERVICING AGREEMENT."
All of the asset-backed securities which have been issued and which will be
issued under the Pooling and Servicing Agreement represent undivided interests
in the assets of the Fleet Credit Card Master Trust II. The assets of the trust
consist primarily of receivables in consumer revolving credit card accounts
designated to the trust. The "RECEIVABLES" represent the amounts outstanding on
the accounts and owed by the credit card holders.
When the trust was created in 1993, the original seller designated the
initial accounts to the trust and transferred to the trust the receivables in
those initial accounts, including future receivables arising in those accounts
after the designation. Since the initial designation, the seller or sellers
under the Pooling and Servicing Agreement have, from time to time, designated
additional accounts and transferred to the trust the receivables in the
additional accounts and the receivables arising in the accounts after the
designation.
The receivables include principal receivables and finance charge
receivables.
The "PRINCIPAL RECEIVABLES" are the amounts charged by cardholders for
merchandise, services and cash advances. The "FINANCE CHARGE RECEIVABLES" are
the periodic finance charges, annual membership fees and annual service charges,
late fees, overlimit fees, cash advances fees, all other fees and charges for an
account. Finance charge receivables also include other amounts which the seller
designates to be included as finance charge receivables and also include amounts
recovered as a result of efforts to collect amounts which were owed as principal
receivables and which were charged-off as defaulted receivables.
The trust assets consist of and will consist of:
- the receivables in those accounts designated to the trust;
- all monies due or to become due on the receivables and all amounts
received as collections of the receivables and all proceeds of the
receivables;
- "RECOVERIES," meaning the net amounts subsequently recovered with respect
to principal receivables after the principal receivables have been
charged-off;
- the right to receive a portion of the "INTERCHANGE," meaning specified
fees received by the bank as a creditor participating in the VISA and
MasterCard International associations as partial compensation for taking
credit risk, absorbing fraud losses and funding receivables for a limited
period prior to initial billing, attributed to charges for merchandise
and services in the accounts; the amount of the interchange included in
the trust assets for a series will be designated in the respective series
supplement;
- proceeds of credit insurance policies relating to the receivables;
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- all monies and other property constituting eligible investments in bank
accounts of the trust; and
- the benefits of any series enhancements issued for any series; the series
enhancement will, however, only be available to certificateholders of the
series for which it is provided.
The trust assets may also include participations, including 100%
participations, representing undivided interests in a pool of assets consisting
of revolving credit card receivables or consumer loan receivables, secured or
unsecured, arising as a result of advances made on bank cards, private label
cards, corporate cards and unsecured revolving lines of credit.
The investor certificates and interests in the trust which are treated as
investor certificates, including the certificates offered by this prospectus and
the accompanying prospectus supplement, represent undivided interests in the
trust. Certificates of a series represent the right to receive, to the extent
necessary to make the required payments on the certificates, the following:
- a portion of collections allocable to the certificateholders of that
series;
- funds on deposit in the collection account and in the excess funding
account allocable to certificateholders of that series;
- funds on deposit in any deposit, trust, escrow or similar account
maintained for the benefit of that series or any class of that series;
and
- funds available pursuant to any enhancement for that series.
The rights and interests of the certificateholders listed above for all
series are collectively the "CERTIFICATEHOLDERS' INTEREST."
"CERTIFICATEHOLDERS" are the registered owners of the certificates or the
bearer of any certificates in bearer form. See "Description of the Certificates"
in this prospectus.
The trust has not and will not engage in any activity other than acquiring
and holding the receivables, issuing and making payments on certificates and
certain uncertificated interests with respect to each series issued by the trust
and the sellers' interest, obtaining series enhancement applicable to any series
and other related activities. As a consequence, the trust is not expected to
have any need for, or sources of, capital resources other than the assets of the
trust.
TRANSFER AND ASSIGNMENT
THE TRANSFER
The trust was created in 1993 and from this formation until February 20,
1998 was known as ADVANTA Credit Card Master Trust II and Advanta National Bank
was seller and servicer under the Pooling and Servicing Agreement. On February
20, 1998, Fleet Financial Group Inc. and some of its subsidiaries and Advanta
Corp. and some of its subsidiaries including Advanta National Bank, transferred
to Fleet Bank (RI), National Association, certain assets and liabilities
relating to their respective credit card businesses including their credit card
accounts and the assets and liabilities of Advanta National Bank relating to the
trust.
AMENDMENT TO POOLING AND SERVICING AGREEMENT
Immediately prior to the transfer described in the preceding paragraph, the
Pooling and Servicing Agreement was amended to provide, among other things,
that:
- Advanta National Bank could assign and delegate to the bank all of
Advanta National Bank's rights and obligations as seller and servicer
under the Pooling and Servicing Agreement and each series supplement; and
- the name of the trust would be changed to Fleet Credit Card Master Trust
II.
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ASSIGNMENT AND ASSUMPTION AGREEMENT
Under the terms of an assignment and assumption agreement also dated
February 20, 1998, the bank accepted and assumed all of Advanta National Bank's
liabilities under the Pooling and Servicing Agreement and the series
supplements. The bank also assumed and agreed to perform each and every covenant
and obligation of the seller and of the servicer contained in the Pooling and
Servicing Agreement and the series supplements. Pursuant to the assignment and
assumption agreement, the bank certificate was assigned and transferred to the
bank, Advanta National Bank was released as seller and servicer and has no
further obligations or liabilities under the Pooling and Servicing Agreement or
the series supplements and the bank became the sole seller and servicer.
In addition, under the assignment and assumption agreement, ownership of
the accounts in the trust was transferred to the bank, and the bank transferred
to the trustee on behalf of the trust, for the benefit of the
certificateholders, all of the bank's right, title and interest in and to the
receivables in those accounts. The bank has also granted to the trustee on
behalf of the trust for the benefit of the certificateholders, a first priority
perfected security interest in all of the bank's right, title and interest in
and to the receivables in the accounts designated to the trust.
RIGHTS AGREEMENT
In connection with the transfer, the bank and Fleet Credit Card, LLC
entered into a rights agreement dated as of February 20, 1998. Under the rights
agreement, the bank assigned and transferred to Fleet Credit Card, LLC all
economic rights and interests in the assets of the bank acquired as a result of
the transfer. Also under the rights agreement, the bank transferred to Fleet
Credit Card, LLC an economic interest in all liabilities assumed by the bank as
a result of the transfer. The rights agreement states that the economic
interests thereby transferred is the transfer of contractual rights between the
bank and Fleet Credit Card, LLC to receive payments or to pay obligations and
not an ownership interest in or a lien on any of the assets of the trust. The
rights agreement states that the transfer of economic interest is subject to any
and all rights, liens and security interests granted to the trustee pursuant to
the Pooling and Servicing Agreement.
Subsequent to the transfer, Fleet Credit Card, LLC converted into a limited
partnership which is known as the Fleet Credit Card Services, L.P. A subsidiary
of the bank is the general partner of Fleet Credit Card Services, L.P.
THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The bank currently is the seller and the servicer under the Pooling and
Servicing Agreement.
The bank was the survivor of a merger on November 14, 1997 between the bank
and Fleet Bank (Delaware), National Association. The bank's credit card
portfolio at that time consisted of credit card accounts originated or acquired
by the bank or its predecessor. As discussed in this prospectus under "Transfer
and Assignment," on February 20, 1998, Advanta National Bank transferred to the
bank the ownership interest in substantially all of the accounts in the Advanta
consumer credit card portfolio. This Advanta consumer credit card portfolio and
the accounts owned by the bank prior to the February 20, 1998 transfer, in
addition to originations or acquisitions made since the transfer, constitute the
"FLEET CREDIT CARD PORTFOLIO."
The accounts in the Fleet Credit Card Portfolio include premium and
standard accounts with either VISA or MasterCard affiliation. Both premium and
standard accounts undergo the same credit analysis, but premium accounts have
higher initial credit limits because of the higher incomes and better credit
quality of the cardholders. In addition, premium accounts generally offer a
wider variety of services to the cardholders and charge a higher annual fee.
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Servicing of the Fleet Credit Card Portfolio is performed primarily by the
bank through its subsidiary Fleet Credit Card Services, L.P. However, certain
data processing and administrative functions associated with the servicing of
the Fleet Credit Card Portfolio are currently performed on behalf of the bank by
First Data Resources, Inc. See "--Description of First Data Resources, Inc." in
this prospectus.
SUPPLEMENTAL INFORMATION
Information relating to the credit card activities of the bank is described
in this prospectus. In addition, the accompanying prospectus supplement may
update or supplement this information.
To the extent the trust assets include any participation interests or
receivables other than those of the type described in this prospectus, the
accompanying prospectus supplement will describe the nature and characteristics
of these participation interests or receivables.
ACQUISITION AND USE OF CREDIT CARDS
Growth Strategy and Origination. The bank acquires credit card accounts
through several programs. The programs include balance transfer programs,
partnership programs, value added programs and the acquisition of credit card
portfolios from other financial institutions. These programs target desirable
consumers based on pre-established criteria and use national direct mail,
telemarketing and the internet as channels to market the bank's products. The
bank carefully targets consumers through various data-mining methods and
targeting models in its direct mail and telemarketing solicitations. The bank
aligns the product offering with the target customer segment along with the
number and sequence of offers in order to maximize market penetration, response
rates and usage while controlling for risk.
Management of the bank believes that these account origination programs and
varied products help to create and maintain a balanced portfolio and provide a
process to sustain growth for the bank.
Substantially all new accounts are generated through direct mail, the
internet, bank branches and telemarketing solicitation of potential cardholders.
Solicitations are either prequalified or non-prequalified. Substantially all of
the credit cards originated are unsecured. For prequalified solicitations, the
bank engages a third-party service to identify those individuals who meet the
bank's credit and demographic criteria. Once a list of these individuals is
obtained, the bank delivers the list to third party vendors who prepare the
solicitation materials. If an individual responds to a prequalified
solicitation, the bank obtains a second credit bureau report and offers a credit
card to the applicant only if that report confirms the applicant's eligibility.
For responses to non-prequalified solicitations, credit bureau reports are
obtained for all applicants.
Underwriting Procedures. The bank uses internally developed credit scoring
models as well as proprietary scoring models developed by Fair, Isaac and Co.,
Inc., an independent firm experienced in developing credit scoring models, in
evaluating the credit risk of each applicant. Credit scoring models are
developed by statistically evaluating common characteristics and their
correlation with credit risk. Application of a credit scoring system is intended
to provide a general indication, based on the information available, of an
applicant's willingness and ability to repay his or her obligations, and an
estimate of the credit risk associated with the applicant. The bank uses
proprietary scoring models as a supplement to the credit scoring models.
Most applications are scored on the basis of information received from
independent credit reporting agencies. In some cases, in accordance with
criteria established by bank management, employment and earnings are verified by
telephone. Credit limits are determined from various credit and profitability
models.
For prequalified solicitations, the bank generally purchases the names of
potential cardholders who meet established credit criteria from credit bureaus.
These lists of potential cardholders are matched against internal and external
sources and edited to ensure optimal quality and accuracy. The bank then mails
prequalified solicitation packages requiring only the signature and brief amount
of information from
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the potential cardholder. Notwithstanding the prequalifications, some
applications are rejected upon receipt of information from the applicant and the
results of the applicant's most recent credit scores.
For non-prequalified solicitations, the bank purchases the names of
potential cardholders from a variety of sources and then edits the list using
internal and external sources to ensure quality and accuracy. The potential
cardholders on the final list are mailed solicitation packages which include
applications. Respondents to these solicitations are approved or declined based
on criteria which are substantially similar to the criteria used to approve or
decline respondents to prequalified solicitations.
Cardholders must meet credit standards established by the bank to receive a
specific credit limit. Cardholders not meeting the minimum standards for the
initial product offering are offered a reduced credit limit for which they
qualify. The bank generally offers an initial credit line of $3,500 for standard
cards and $7,500 for premium cards although higher and lower limits are also
offered for these cards. Generally, platinum card accounts have credit lines
which are not significantly different than the credit lines offered on other
premium accounts with similar credit quality.
Cardholders may request to have their credit line increased upon completion
of a full application. After a review of the full application and credit bureau
report, the bank decides whether to extend additional credit. Also, the bank may
initiate credit line increases for cardholders meeting minimum standards for
usage and payment history established by the bank. Credit line increases are
granted to accountholders who have demonstrated good credit behavior and
appropriate usage patterns. Credit line decreases are also imposed on
accountholders who have demonstrated deteriorating credit behavior.
Accounts are opened with an initial term of one to two years. At the
anniversary date, accounts which meet certain criteria for usage and payment
history are reissued for one- to three-year terms.
Terms and Uses of Credit Cards. Each cardholder is subject to an agreement
governing the terms and conditions of the related VISA or MasterCard account.
Under the agreements with VISA and MasterCard, the bank reserves the right, upon
advance notice to the cardholder, to change or terminate any terms, conditions,
services or features of its VISA and MasterCard accounts at any time. Changes
may include increasing or decreasing finance charges, other fees and charges and
minimum payment terms. The agreement with each cardholder provides that the bank
may apply changes, when applicable, to current outstanding balances as well as
to future transactions. See "Risk Factors--Consumer Protection Laws May Restrict
the Bank's Ability to Collect Receivables and Maintain Yield on the Portfolio
and May Lead to an Early Pay Out or Inability to Pay Certificates in Full" and
"Material Legal Aspects of the Receivables--Consumer Protection Laws" in this
prospectus.
A cardholder may use the credit card for purchases, balance transfers and
cash advances. Cardholders make purchases when using the credit card to buy
goods or services. Balance transfers result when cardholders request to move
balances from other credit cards or loans to the credit card account held with
the bank. A cash advance is made when a credit card is used to obtain cash from
a financial institution or an automated teller machine or when the cardholder
uses special drafts issued by the bank to draw against the cardholder's credit
line. The bank generally limits the amount of credit available for cash advances
on new accounts to 30% to 50% of the total credit line.
BILLING AND PAYMENTS
The bank, using First Data Resources, Inc., as its service bureau,
generates and mails to cardholders monthly statements summarizing account
activity. For the majority of accounts, cardholders receive a 25-day grace
period on purchases. Currently, a majority of the cardholders are required to
make a monthly payment equal to 2% of their total balance with a minimum payment
of $10.
All fees, charges and credit insurance premiums assessed by the bank are
automatically charged to an account and are included in the account balance at
the end of each billing cycle. The accrued and unpaid periodic finance charges
assessed by the bank are calculated by multiplying the average daily balances of
purchases and cash advances on an account by the applicable daily periodic rate,
then multiplying the resulting product by the number of days in the billing
cycle. Most accounts are also subject to daily
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compounding of interest. Finance charges are not assessed in most circumstances
on purchases if all balances shown in the billing statement are paid by the due
date. Under certain conditions related to customer performance, the bank may
immediately convert the annual percentage rate applicable to existing and future
balances to a higher or lower rate.
The bank primarily offers cards to customers without an annual fee. The
bank assesses miscellaneous transaction fees, including cash advance and draft
fees, late and overlimit charges, and returned check, returned draft, draft stop
payment charges and balance transfer fees. Prior to June 1997, miscellaneous
fees did not constitute a material portion of finance charge receivables.
However, since June 1997, these fees have represented a greater portion of
finance charge receivables.
DESCRIPTION OF FIRST DATA RESOURCES, INC.
Certain data processing and administrative functions associated with the
servicing of the Fleet Credit Card Portfolio are currently being performed on
behalf of the bank by First Data Resources, Inc. First Data Resources, Inc. was
established in 1969 as the data processing unit of Mid-America Bankcard
Association. In 1980, American Express acquired First Data Resources, Inc. and
in 1992, First Data Resources, Inc. became an independent company as a
subsidiary of First Data Corp. According to First Data Resources, Inc., it is a
leading global provider of comprehensive transaction processing products and
services to credit, debit, commercial, private label and oil card issuers.
First Data Resources, Inc.'s home office in the United States is located in
Omaha, Nebraska.
DELINQUENCIES
The following discussion regarding delinquencies relates to the policies
currently in effect for accounts designated to the trust. The bank may, from
time to time, further revise its policies relating to the accounts including its
policies concerning delinquencies.
Currently, for accounts designated to the trust, each account is billed
monthly on or about the same day of the month. An account is "contractually
delinquent" if the minimum payment indicated on the cardholder's statement is
not received by the due date. For purposes of determining the delinquency of an
account, the period from one monthly billing statement to the next (a "CYCLE")
is considered a period of 30 days, regardless of the actual number of days
elapsed.
Efforts to collect contractually delinquent credit card receivables
currently are made by the bank's service center personnel or the bank's
designees. Collections activities include statement messages, formal collection
letters and telephone calls. The intensity at which collection activity is
pursued depends on the risk the account presents to the bank, which is
determined by behavioral scoring and adaptive control techniques. In the event
that initial contact fails to resolve the delinquency, the bank continues to
contact the cardholder by telephone and by mail. Although these arrangements are
made infrequently, the bank may also enter into arrangements with cardholders to
extend or otherwise change payment schedules due to hardship situations.
Delinquency levels are monitored by management of both the collections and
credit policy departments of the bank and information is reported daily to
senior management.
The following chart summarizes the bank's charge-off policy for delinquent
accounts:
PERIOD IN EFFECT CHARGE-OFF POLICY
- ---------------- -----------------
October 1, 1998 to Present.................................. 180 days delinquent(1)
Prior to October 1, 1998.................................... 186 days delinquent
- ---------------
(1) For purposes of determining the delinquency of an account, the period from
one monthly billing statement to the next is considered a period of 30 days,
regardless of the actual number of days elapsed. The charge-off is taken in
the month in which the 180 day time period elapses. This is technically
seven cycles and one day delinquent, where the first cycle represents
nondelinquent cardholders.
When accounts are charged-off as delinquent, the charged-off accounts which
are non-bankrupt accounts are generally sold or outsourced to third parties.
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Accounts are also charged-off due to the death of the accountholder or
fraud in the account. The accounts of deceased accountholders are charged-off
when the loss is determined, but not later than the normal charge-off policy
requires. Accounts which are charged-off due to fraud are charged-off within a
90-day investigative period following notice of fraudulent activity in the
account.
The following chart summarizes the bank's charge-off policy for accounts of
bankrupt cardholders:
PERIOD IN EFFECT CHARGE-OFF POLICY
- ---------------- -----------------
October 1, 1998 to Present................... Earlier of 60 days after notice; or 180 days
delinquent(1)
From August 1996 to October 1, 1998.......... Earlier of 90 days after notice; or 186 days
delinquent
- ---------------
(1) For purposes of determining the delinquency of an account, the period from
one monthly billing statement to the next is considered a period of 30 days,
regardless of the actual number of days elapsed. The charge-off is taken in
the month in which the 180 day time period elapses. This is technically
seven cycles and one day delinquent, where the first cycle represents
nondelinquent cardholders.
The credit evaluation, servicing and charge-off policies and collection
practices of the bank may change from time to time in accordance with the bank's
business judgment and applicable laws and regulations.
Information concerning the delinquency and loss experience of the Fleet
Credit Card Portfolio is contained in the accompanying prospectus supplement.
This information shows delinquencies grouped by the number of days the
receivables are delinquent and the percentage of the portfolio which is
delinquent. The loss experience information shows the receivables outstanding,
the charge-offs in dollars and as a percentage of the receivables outstanding.
In addition, the accompanying prospectus supplement will include information on
the composition of the trust portfolio by period of delinquency.
INTERCHANGE
Creditors, including the bank, participating in the VISA and MasterCard
International associations receive fees, called "INTERCHANGE," as partial
compensation for taking credit risk, absorbing fraud losses and funding
receivables for a limited period prior to initial billing. Under the VISA and
MasterCard International systems, a portion of the interchange attributed to
cardholder charges for merchandise and services is passed from banks which clear
the transactions for merchants to credit card-issuing banks. Interchange ranges
from 1.0% to 2.0% of the transaction amount. VISA and MasterCard International
may from time to time change the amount of interchange reimbursed to banks
issuing their credit cards. Collections of finance charge receivables will be
deemed to include interchange attributed to the cardholder charges for
merchandise and services in the accounts, as calculated pursuant to the related
series supplement for any series.
USE OF PROCEEDS
The net proceeds from the sale of each series offered by this prospectus
and the related prospectus supplement will be paid to the seller. The seller
will use these proceeds for general corporate purposes which will include
issuing more credit card loans.
The seller will not receive any of the proceeds from the sale of
certificates in market-making transactions by Fleet Securities, Inc. or any
other affiliate of the bank.
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THE BANK AND FLEETBOSTON FINANCIAL CORPORATION
The bank is the surviving bank of a merger consummated on November 14,
1997, between the bank and Fleet Bank (Delaware), National Association. The bank
is a limited purpose credit card bank chartered under the laws of the United
States. The bank is a wholly-owned subsidiary of Fleet National Bank. Fleet
National Bank is a wholly-owned subsidiary of FleetBoston Financial Corporation
("FLEET"). Fleet is the bank holding company which came into existence on
October 1, 1999 as a result of the merger of Fleet Financial Group, Inc. and
BankBoston Corporation. Prior to the merger of Fleet Financial Group, Inc. and
the BankBoston Corporation, the bank was an indirect wholly-owned subsidiary of
Fleet Financial Group, Inc.
The bank is subject to the supervision and regulation of the Office of the
Comptroller of the Currency. The bank's deposits are insured by FDIC and the
bank is a member of the Federal Reserve Bank of Boston.
Fleet is the seventh largest financial holding company in the United
States. A diversified financial services company with assets exceeding $200
billion, Fleet offers a comprehensive array of innovative financial solutions to
20 million customers in more than 20 countries and territories. Among Fleet's
key lines of business are: retail banking, with nearly 1,700 branches and more
than 3,800 ATMs in the northeastern portion of the United States; commercial
banking, including capital markets/investment banking and commercial finance;
investment services, including nationwide brokerage and full-service banking
through more than 250 offices in Latin America. Fleet is headquartered in Boston
and listed on the New York Stock Exchange (NYSE: FBF) and the Boston Stock
Exchange (BSE: FBF).
The principal executive office of the bank is located at 111 Westminster
Street, Providence, Rhode Island 02093.
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
MATTERS RELATING TO THE TRANSFER OF THE RECEIVABLES
The bank will represent and warrant that its transfer of receivables to the
trust is either (i) an absolute sale of those receivables or (ii) the grant of a
security interest in those receivables. For a description of the trust's rights
if these representations and warranties are not true, see "Description of the
Certificates--Representations, Warranties and Covenants" in this prospectus.
The bank will take steps under the UCC to perfect the trust's interest in
the receivables. Nevertheless, if the UCC does not govern these transfers or if
some other action is required under applicable law and has not been taken,
payments to you could be delayed or reduced.
The bank will represent, warrant, and covenant that its transfer of
receivables to the trust is perfected and free and clear of the lien or interest
of any other entity, except for certain tax liens. If this is not true, the
trust's interest in the receivables could be impaired, and payments to you could
be delayed or reduced. For instance,
- a prior or subsequent transferee of receivables could have an interest in
the receivables superior to the interest of the trust;
- a tax, governmental, or other nonconsensual lien that attaches to the
property of the bank could have priority over the interest of the trust
in the receivables;
- the administrative expenses of a conservator or receiver for the bank
could be paid from collections on the receivables before the trust
receives any payments; and
- if insolvency proceedings were commenced by or against the bank, or if
certain time periods were to pass, the trust may lose any perfected
interest in collections held by the bank and commingled with other funds.
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MATTERS RELATING TO CONSERVATORSHIP AND RECEIVERSHIP
The bank is chartered as a national banking association and is regulated
and supervised by the Office of the Comptroller of the Currency, which is
authorized to appoint the Federal Deposit Insurance Corporation as conservator
or receiver for the bank if certain events occur relating to the bank's
financial condition or the propriety of its actions. In addition, the FDIC could
appoint itself as conservator or receiver for the bank.
Although the bank will treat its transfer of the receivables to the trust
as a sale for accounting purposes, the transfer may constitute the grant of a
security interest under general applicable law. Nevertheless, the FDIC has
issued regulations surrendering certain rights under the Federal Deposit
Insurance Act, as amended by the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (the "FDIA"), to reclaim, recover, or recharacterize a
financial institution's transfer of financial assets such as the receivables if:
- the transfer involved a securitization of the financial assets and meets
specified conditions for treatment as a sale under relevant accounting
principles,
- the financial institution received adequate consideration for the
transfer,
- the parties intended that the transfer constitute a sale for accounting
purposes, and
- the financial assets were not transferred fraudulently, in contemplation
of the financial institution's insolvency, or with the intent to hinder,
delay, or defraud the financial institution or its creditors.
The Pooling and Servicing Agreement and the bank's transfer of the receivables
are intended to satisfy all of these conditions.
If a condition required under the FDIC's regulations were found not to have
been met, however, the FDIC could reclaim, recover, or recharacterize the bank's
transfer of the receivables. The FDIA would limit the damages in this event to
"actual direct compensatory damages" determined as of the date that the FDIC was
appointed as conservator or receiver for the bank. The FDIC, moreover, could
delay its decision whether to reclaim, recover, or recharacterize the bank's
transfer of the receivables for a reasonable period following its appointment as
conservator or receiver for the bank. Therefore, if the FDIC were to reclaim,
recover, or recharacterize the bank's transfer of the receivables, payments to
you could be delayed or reduced.
Even if the conditions set forth in the regulations were satisfied and the
FDIC did not reclaim, recover, or recharacterize the bank's transfer of the
receivables, you could suffer a loss on your investment if:
- the Pooling and Servicing Agreement or the bank's transfer of the
receivables were found to violate the regulatory requirements of the
FDIA,
- the trust or the trustee were required to comply with the claims process
established under the FDIA in order to collect payments on the
receivables,
- the FDIC were to request a stay of any action by the trust or the trustee
to enforce the Pooling and Servicing Agreement or the certificates, or
- the FDIC were to repudiate other parts of the Pooling and Servicing
Agreement, such as any obligation to collect payments on or otherwise
service the receivables.
In addition, regardless of the terms of the Pooling and Servicing
Agreement, and regardless of the instructions of those authorized to direct the
trustee's actions, the FDIC as conservator or receiver for the bank may have the
power:
- to prevent or require the commencement of an early amortization period or
early accumulation period,
- to prevent, limit, or require the early liquidation of receivables and
termination of the trust, or
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- to require, prohibit, or limit the continued transfer of receivables.
Furthermore, regardless of the terms of the Pooling and Servicing
Agreement, the FDIC:
- could prevent the appointment of a successor servicer or
- could authorize the bank to stop servicing the receivables.
If any of these events were to occur, payments to you could be delayed or
reduced.
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is extensively
regulated by Federal and state consumer protection laws. With respect to credit
cards issued by the bank, the most significant of these laws include the Federal
Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act,
Fair Debt Collection Practice Act, Electronic Funds Transfer Act and National
Bank Act, as well as any relevant Rhode Island laws and comparable statutes in
the states in which cardholders reside. These statutes impose disclosure
requirements when a credit card account is advertised, when it is opened, at the
end of monthly billing cycles, upon account renewal for accounts on which annual
fees are assessed and at year end. The statutes also limit cardholder liability
for unauthorized use, prohibit specified discriminatory practices in extending
credit and impose limitations on the type of account-related charges that may be
assessed. Federal legislation requires credit card issuers to disclose to
consumers the interest rates, annual cardholder fees, grace periods and balance
calculation methods associated with their credit card accounts. Cardholders are
entitled under current law to have payments and credits applied to the credit
card account promptly, to receive prescribed notices and to have billing errors
resolved promptly.
The trust may be liable for certain violations of consumer protection laws
that apply to the receivables, either as assignee of the seller with respect to
obligations arising before transfer of the receivables to the trust or as a
party directly responsible for obligations arising after the transfer. In
addition, a cardholder may be entitled to assert these violations by way of
set-off against his obligation to pay the amount of receivables owing. The
seller covenants in the Pooling and Servicing Agreement to accept the transfer
of all receivables in an account, under certain circumstances, if any receivable
in the account has not been created in compliance with the requirements of the
consumer protection laws. The seller has also agreed in the Pooling and
Servicing Agreement to indemnify the trust for, among other things, any
liability arising from these violations. See "Description of the
Certificates--Representations, Warranties and Covenants" in this prospectus.
Application of federal and state bankruptcy and debtor relief laws would
adversely affect the interests of the certificateholders if these laws result in
any receivables being charged-off as uncollectible. See "Description of the
Certificates--Defaulted Receivables; Rebates and Fraudulent Charges" and "Risk
Factors--Consumer Protection Laws May Restrict the Bank's Ability to Collect
Receivables and Maintain Yield on the Portfolio and May Lead to an Early Pay Out
or Inability to Pay Certificates in Full" in this prospectus.
DESCRIPTION OF THE CERTIFICATES
The certificates will be issued in series pursuant to the Pooling and
Servicing Agreement and series supplements to the Pooling and Servicing
Agreement. Under the Pooling and Servicing Agreement, the seller may execute
further series supplements among the seller, the servicer and the trustee in
order to issue additional series. See "--New Issuances" in this prospectus. The
trustee will provide a copy of the Pooling and Servicing Agreement, without
exhibits or schedules, including any series supplement for a series, to
certificateholders of that series without charge upon written request. A copy of
the form of Pooling and Servicing Agreement has been filed with the Securities
and Exchange Commission as an exhibit to the registration statement of which
this prospectus is a part.
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The following summaries describe provisions common to all series of
certificates. Information specific to a series will be contained in the related
prospectus supplement.
GENERAL
There is no limit to the amount of certificates that can be issued under
the Pooling and Servicing Agreement. The aggregate principal amount of each
series of certificates issued by the trust will be described by the series
supplement for that series.
Each series of certificates may consist of one or more classes, one or more
of which may be floating or fixed rate certificates or other type of
certificates as specified in the related prospectus supplement. A series may
include a class or classes which are subordinated in right of payment of
principal and/or interest to another class or other classes in the same series
or in any other series. Each series will be issued in the minimum denominations
for each class specified in the related prospectus supplement.
For each series, the investor certificates issued by the trust represent
the right to receive, to the extent necessary to make payments on the
certificates of that series:
- the portion of the collections allocable to that series;
- funds and other property constituting eligible investments in the
collection account and the excess funding account allocable to that
series;
- funds and other property constituting eligible investments in any
deposit, trust, escrow or similar account maintained for the benefit of
that series; and
- funds available pursuant to any related series enhancement.
The collections of receivables will be allocated to each series on the
basis of the percentages described in the related prospectus supplement.
The trust assets will be allocated among:
- the certificateholders' interest of each series, including providers of
series enhancement holding uncertificated subordinated interests; and
- the sellers' interest.
The sellers' interest represents the right to the assets of the trust not
allocated to the certificateholders' interest. The term "SELLER AMOUNT" refers
to an amount equal to:
- the aggregate amount of principal receivables in the trust at the time of
determination; plus
- the principal amount on deposit in the excess funding account at the same
time, minus
- the sum of the amount of principal receivables and the amount on deposit
in the excess funding account allocated to each outstanding series.
The Seller Amount will fluctuate as the amount of principal receivables in
the trust changes from time to time.
The term "INVESTOR AMOUNT" for a series, as described in that series
supplement and the related prospectus supplement, generally refers to the
principal amount of the certificateholders' interest in the assets of the trust.
The term "INVESTED AMOUNT" for a series, as described in that series supplement
and the related prospectus supplement, generally refers to the investor amount
less, to the extent provided in the series supplement, amounts held in a
principal funding account, prefunding account or other account specified in the
series supplement.
Each series will commence with a period of time called a "REVOLVING PERIOD"
which begins on the date that series is issued and continues to the day
immediately preceding the commencement of an amortization period for that
series. During the revolving period, no principal will be paid on the
certificates of that series and no amounts will be accumulated to pay principal
on that series. The revolving period for
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a series shall end, and an amortization period shall begin, either as scheduled
or upon the occurrence of a "PAY OUT EVENT," meaning a trust Pay Out Event or a
series Pay Out Event for that series.
The term "AMORTIZATION PERIOD" refers to the period during which
collections of principal receivables are to be used to pay principal on the
certificates of any series or are to be accumulated in an account to be used at
a future date to pay principal on the certificates of that series. An
amortization period includes an accumulation period as well as any controlled
amortization period, principal amortization period, rapid amortization period,
optional amortization period, limited amortization period or, for a series, any
other amortization period provided in the related series supplement.
An "ACCUMULATION PERIOD" is a period during which collections of principal
receivables are deposited into an account to be used at a future date to make
payments on the certificates.
A "RAPID AMORTIZATION PERIOD" begins upon the occurrence of a Pay Out Event
and means the resulting period during which available collections of principal
receivables are used, on a monthly basis, to pay principal on the certificates
of those series affected by the Pay Out Event. A rapid amortization period
continues until the earlier of the payment in full of the certificates of the
series affected by the Pay Out Event or the occurrence of the series termination
date.
A "RAPID ACCUMULATION PERIOD" means a period during which available
collections of principal receivables are, on a monthly basis, placed in a
principal funding account and accumulated to be used to pay the certificates of
the affected class or series on their expected final distribution date. A rapid
accumulation period is not a feature of all series. For those series in which a
rapid accumulation period may occur, it may occur for one or more classes only
or for all classes of the series. If a series or a class is subject to the
occurrence of a rapid accumulation period, that feature of the series will be
described in the applicable prospectus supplement. A rapid accumulation period
occurs in lieu of a rapid amortization period and begins upon the occurrence of
a Pay Out Event. During the rapid accumulation period, the funds in the
principal funding account may be invested in permitted investments, subject to a
guaranteed rate agreement or placed in some other arrangement that assures a
minimum return on the investment of the funds. Investment earnings on the funds
in the principal funding account may be used to pay the interest on the related
series certificates. On the expected final distribution date of the affected
class or series, distributions of principal from the principal funding account
will be made to the certificateholders in the manner described in the related
prospectus supplement. In order to enhance the likelihood of payment in full of
principal at the end of the rapid accumulation period for a series, the series
may be subject to a principal guaranty or some other similar arrangement.
A "SCHEDULED AMORTIZATION DATE" means, for any series, the date on which
principal payments on the certificates are scheduled to begin or the date on
which deposits are scheduled to begin to be made into an account to be
accumulated and used to pay principal on the certificates in the future.
During the revolving period for any series, the invested amount for that
series will generally remain constant except in certain limited circumstances or
unless otherwise specified in the related prospectus supplement. See
"--Defaulted Receivables; Rebates and Fraudulent Charges" in this prospectus.
The amount of principal receivables, however, will vary each day as new
principal receivables are created and others are paid. The Seller Amount will
fluctuate daily to reflect the changes in the amount of the principal
receivables.
When a series is amortizing, the invested amount for the series will
generally decline for each monthly period as principal receivables allocated to
the series are collected and distributed to the certificateholders or deposited
in a series account for the benefit of the series or a class of the series for
payment to the applicable certificateholders when due. As a result, the Seller
Amount will generally increase each month to reflect the reductions in the
invested amount of a series and will also change to reflect the variations in
the amount of principal receivables.
Interest on the certificates for each interest period for a series will be
distributed as set forth in the related prospectus supplement. Interest payments
of a series will generally be funded from the portion of finance charge
receivables collected during the related monthly period allocable to a series
and, if
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necessary and if specified in the related prospectus supplement, from any series
enhancement available for that series. The terms "INTEREST PERIOD" and "MONTHLY
PERIOD" for a series have the meanings specified in the related prospectus
supplement. See "--Interest Payments" in this prospectus.
If referred to in the related prospectus supplement, certificates of that
series initially will be represented by certificates registered in the name of
the nominee of The Depository Trust Company, or any other depository or any
successor depository selected by the seller. The Depository Trust Company or any
other depository selected for a series by the seller is a "DEPOSITORY." If
referred to in the related prospectus supplement, beneficial interests in the
certificates of that series will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof in
book-entry form only.
The seller has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede is expected to be the holder of record of each series of
certificates and will therefore, be the only certificateholder for purposes of
the Pooling and Servicing Agreement. Those entities, including most or all
investors in the certificates, will acquire only a beneficial interest in the
certificates and will not be the registered holders of the certificates. A
beneficial owner is called a "CERTIFICATE OWNER." You, as a beneficial owner,
will not be entitled to receive a certificate representing your interest in the
certificates.
Unless and until, under the limited circumstances described in this
prospectus, certificates in fully registered, certificated form are issued:
- all references in this prospectus to actions by certificateholders shall
refer to actions taken by DTC upon instructions from its participants;
and
- the trustee will not consider a Certificate Owner to be a
certificateholder, as defined in the Pooling and Servicing Agreement, and
all references in this prospectus to distributions, notices, reports and
statements to certificateholders shall refer to distributions, notices,
reports and statements to DTC or Cede, as the registered holder of the
certificates, as the case may be, for distribution to Certificate Owners
in accordance with DTC procedure.
See "--Book-Entry Registration" and "--Definitive Certificates" in this
prospectus. Distributions will be made to DTC in immediately available funds.
If so specified in the related prospectus supplement application will be
made to list the certificates of the related series, or all or a portion of any
class thereof, on the Luxembourg Stock Exchange or any other specified exchange.
BOOK-ENTRY REGISTRATION
If specified in the related prospectus supplement, certificateholders of a
series may hold their certificates through DTC, in the United States, or
Clearstream or Euroclear, in Europe, if they are participants of these systems.
Cede, as nominee for DTC, will hold the global certificates. Clearstream
and Euroclear will hold omnibus positions on behalf of the Clearstream customers
and the Euroclear participants, respectively, through customers' securities
accounts in Clearstream's and Euroclear's names on the books of their respective
depositaries, collectively, the "DEPOSITARIES," which in turn will hold these
positions in customers' securities accounts in the depositaries' names on the
books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold securities
for its participating organizations and facilitate the clearance and 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 securities brokers and
dealers, who may include the underwriters of any series of certificates, banks,
trust companies and clearing corporations and
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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 participants either
directly or indirectly.
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Clearstream customers and Euroclear participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, other than Clearstream customers and Euroclear participants, on the
one hand, and directly or indirectly through Clearstream customers or Euroclear
participants, on the other, will be effected in DTC in accordance with DTC rules
on behalf of the relevant European international clearing system by its
depositary. However, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in the system in accordance with its rules and procedures and
within its established European time deadline. 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. Clearstream customers and Euroclear
participants may not deliver instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Clearstream or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and these credits or any transactions in the
securities settled during this processing will be reported to the relevant
Clearstream customer or Euroclear participant on that business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream customer or a Euroclear participant to a DTC participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC.
Certificate Owners 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, Certificate Owners of a series will receive all distributions of
principal of and interest on the certificates from the paying agent through the
participants who in turn will receive them from DTC. Under a book-entry system,
Certificate Owners of a series may experience some delay in their receipt of
payments, since these payments will be forwarded by the trustee to Cede, as
nominee for DTC. DTC will forward these payments to its participants, who,
afterwards, will forward the payments to indirect participants or Certificate
Owners of the related series.
It is anticipated that the only certificateholder of any series will be
Cede, as nominee of DTC. Certificate Owners of a series will not be recognized
by the trustee as certificateholders of that series for purposes of the Pooling
and Servicing Agreement. Certificate Owners of a series will only be permitted
to exercise the rights of certificateholders indirectly through DTC and its
participants, who in turn will exercise the rights of certificateholders through
DTC.
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 of a series and is
required to receive and transmit distributions of principal of and interest on
the certificates of the series. Participants and indirect participants with
which Certificate Owners of a series have accounts similarly are required to
make book-entry transfers and receive and transmit these payments on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates, Certificate Owners will receive payments and will
be able to transfer their interests.
Because DTC may only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a Certificate
Owner to pledge certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of the certificates, may be
limited due to the lack of a physical certificate for the certificates.
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DTC has advised the servicer that it will take any action permitted to be
taken by a certificateholder of a series under the Pooling and Servicing
Agreement only at the direction of one or more participants to whose account
with DTC the certificates are credited. Additionally, DTC has advised the
servicer that DTC will take these actions with respect to specified percentages
of the applicable investor amount only at the direction of and on behalf of
participants whose holdings include undivided interests that constitute these
specified percentages. DTC may take conflicting actions with respect to other
undivided interests to the extent that these actions are taken on behalf of
participants whose holdings include these undivided interests.
Clearstream Banking, societe anonyme is incorporated under the laws of
Luxembourg. Clearstream holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Clearstream customers through electronic book-entry changes in accounts of
Clearstream customers, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Clearstream in any of 36
currencies, including United States dollars. Clearstream provides to its
Clearstream customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interfaces with domestic
securities markets in over 30 countries through established depository and
custodial relationships. Clearstream is registered as a bank in Luxembourg, and
as such is subject to regulation by the Commission de Surveillance du Secteur
Financier, which supervises Luxembourg banks. Clearstream's customers are
world-wide financial institutions including underwriters, securities brokers and
dealers, banks trust companies, clearing corporations and certain other
organizations and may include the underwriters of any Series of Securities.
Clearstream's U.S. Customers are limited to securities brokers and dealers and
banks. Currently, Clearstream has approximately 2,000 customers located in over
80 countries, including all major European countries, Canada and the United
States. Indirect access to Clearstream is also available to other institutions
that clear through or maintain a custodial relationship with an account holder
of Clearstream. Clearstream has established an electronic bridge with Euroclear
Bank S.A./N.V. as the operator of the Euroclear System in Brussels to facilitate
settlement of trades between Clearstream and Euroclear.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System 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 34 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in more
than 25 countries generally similar to the arrangements for cross-market
transfers with DTC described above.
The Euroclear System is operated by Euroclear Bank S.A./N.V. as the
Euroclear operator. All operations are conducted by the Euroclear operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear operator. Euroclear participants include banks,
including central banks, securities brokers and dealers and other professional
financial intermediaries and may include the underwriters of any series of
certificates. Indirect access to the Euroclear System is also available to other
firms that maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
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. These terms and conditions
govern transfers of securities and cash within the Euroclear System, withdrawal
of securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear operator acts under the
terms and conditions only on behalf of Euroclear participants and has no record
of or relationship with persons holding through Euroclear participants.
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Distributions with respect to certificates held through Clearstream or
Euroclear will be credited to the cash accounts of Clearstream customers or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. These distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Federal Income Tax Consequences" in this prospectus.
Clearstream 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 on behalf of a Clearstream customer or Euroclear participant
only in accordance with its relevant rules and procedures and subject to its
depositary's ability to effect these actions on its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among participants
of DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform those procedures and may discontinue the procedures at any
time.
See Annex I for additional information concerning global clearance,
settlement and tax documentation procedures. Annex I is hereby incorporated into
this prospectus by reference.
In the event that any of DTC, Clearstream or Euroclear should discontinue
its services, the seller would seek an alternative depository, if available, or
cause the issuance of definitive certificates to Certificate Owners or their
nominees in the manner described under "--Definitive Certificates" in this
prospectus.
DEFINITIVE CERTIFICATES
We refer to certificates issued in fully registered, certificated form as
"DEFINITIVE CERTIFICATES." Definitive certificates will be issued to you as a
Certificate Owner or your nominee rather than to DTC or its nominee, only if:
(1) the seller advises the trustee in writing that DTC is no longer
willing or able properly to discharge its responsibilities as
depository for the certificates of your series or your class, and
the trustee or the seller is unable to locate a qualified
successor;
(2) the seller, at its option, advises the trustee that it elects to
terminate the book-entry system with respect to your series or
class through DTC; or
(3) after the occurrence of a Servicer Default, Certificate Owners of
your series or class evidencing more than 50% of the aggregate
unpaid principal amount of your series or class advise the trustee
and DTC through participants in writing that the continuation of a
book-entry system through DTC, or its successor, is no longer in
the best interest of the Certificate Owners of the certificates.
Upon the occurrence of any of the events described in clauses (1), (2) or
(3) above, DTC is required to notify all participants of the availability
through DTC of definitive certificates of the affected series. Upon surrender by
DTC of the definitive certificates and instructions for re-registration, the
seller will execute and the trustee will authenticate and deliver the definitive
certificates to the Certificate Owners. Subsequently, the trustee will recognize
the holders of the definitive certificates as holders under the Pooling and
Servicing Agreement.
If definitive certificates have been issued to you and you are recognized
by the trustee as a register certificateholder, then distributions of principal
and interest on the definitive certificates will be made by the paying agent
directly to you in accordance with the procedures described in this prospectus
and in the Pooling and Servicing Agreement. Interest payments and any principal
payments on each distribution date will be made to holders in whose names the
definitive certificates were registered at the close of business on the related
record date. If you hold a definitive certificate, distributions will be made by
check mailed to your address as it appears on the register maintained by the
trustee. However, the final payment on any definitive certificate, will be made
only upon presentation and surrender of the certificate at the office or agency
specified in the notice of final distribution to respective certificateholders.
The trustee will provide
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this notice to registered certificateholders of the series not later than the
fifth day of the month of the related final distribution.
Definitive certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar for the related series. No service
charge will be imposed for any registration of transfer or exchange, but the
transfer agent and registrar of the series may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
THE BANK CERTIFICATE; ADDITIONAL SELLERS
The sellers' interest in the trust is, as of the date of this prospectus,
held by the bank, as the seller. At the discretion of the seller, the seller may
hold its interest in the sellers' interest either in uncertificated form or in
certificated form. If the seller holds its interest in certificated form, it
will be held in one certificate and known as the "BANK CERTIFICATE." The seller
may transfer a portion of the sellers' interest to another entity, in which case
any interest in the sellers' interest not held by the seller will be represented
by a certificate known as a "SUPPLEMENTAL CERTIFICATE." The Bank Certificate
together with any Supplemental Certificates are, collectively, the "SELLER
CERTIFICATES."
If the seller holds its interest in the form of the Bank Certificate, then
the seller may transfer interests in the sellers' interest by surrender of the
Bank Certificate to the trustee in exchange for a newly issued Bank Certificate
and one or more Supplemental Certificates.
If the seller elects to have its interest in the sellers' interest be in
uncertificated form, then the seller may transfer interests in the sellers'
interest by assigning a portion of the sellers' interest to another entity and
directing the trustee, with respect to the interest transferred, to issue one or
more Supplemental Certificates.
If any seller elects to exchange all or a portion of its interest in the
sellers' interest for a Supplemental Certificate, the following conditions must
be satisfied:
(1) the seller shall have given written notice to each rating agency
of the exchange;
(2) the Seller Amount, excluding the interest represented by any
Supplemental Certificate, shall not be less than 2% of the total
amount of principal receivables in the trust as of the date of,
and after giving effect to, the exchange; and
(3) if any series of certificates are outstanding that were
characterized as debt at the time of their issuance, the seller
shall deliver to the trustee and each rating agency a tax opinion
addressing matters specified in the Pooling and Servicing
Agreement.
Any subsequent transfer or exchange of a Supplemental Certificate is subject to
the conditions set forth in clauses (2) and (3) above.
The Bank Certificate, any interest in the Bank Certificate, the
uncertificated interest of the seller in the sellers' interest or any interest
in the uncertificated interest of the seller in the sellers' interest, may be
transferred to an entity that is a member of the "affiliated group" of which
Fleet is the "common parent," as these terms are defined in Section 1504(a) of
the Internal Revenue Code of 1986; provided, that:
- if any series of certificates are outstanding that were characterize as
debt at their time of issuance, the seller shall have delivered to the
trustee and each rating agency a tax opinion to the effect that the
transfer will not adversely affect the tax characterization of any
certificates which were characterized as debt; and
- any transferee will be deemed to be a "seller" for purposes of the
provisions of the Pooling and Servicing Agreement regarding the seller
indemnification and liquidation of the receivables upon the occurrence of
an insolvency event.
See "--Liquidation of Receivables" and "--Indemnification" in this prospectus.
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The bank may designate affiliates of the bank to be included as a seller,
called "ADDITIONAL SELLERS," under the Pooling and Servicing Agreement by means
of an amendment to the Pooling and Servicing Agreement. An amendment made to
name an additional seller will not require the consent of any certificateholder.
See "--Amendments" in this prospectus. In connection with the designation of an
additional seller, the following conditions shall apply:
- if any series of certificates are outstanding that were characterized as
debt at the time of their issuance, the seller shall deliver to the
trustee and each rating agency a tax opinion to the effect that the
transfer will not adversely affect the tax characterization of any
certificates which were characterized as debt; and
- any applicable conditions described in "--Addition of Accounts" in this
prospectus shall have been satisfied with respect to the transfer of
receivables or participation interests by any additional seller to the
trust.
Following the inclusion of an additional seller, the additional seller will
be treated in the same manner as the seller and will have the same obligations
and rights as the seller.
INTEREST PAYMENTS
Each class of a series will accrue interest at the rate per annum specified
in, or in the manner described in, the related prospectus supplement. Interest
on all certificates will be due and payable on the distribution dates. The
"DISTRIBUTION DATE" for a series will be the fifteenth day of each month or, if
the fifteenth is not a business day, the next business day, or another date
specified in the series supplement for the series. If so specified in the
related prospectus supplement, interest for a class of a series will be
calculated based on the outstanding principal amount of the class at the end of
the rate determination period preceding the applicable distribution date.
To the extent provided in the related prospectus supplement, a series may
include one or more classes of floating rate certificates. The interest rate on
floating rate certificates will be a variable or adjustable rate. It is the
bank's present intention, subject to changing market conditions, that the
floating interest rate formula or index be based on an established financial
index in the national or international financial markets. The distribution dates
for floating rate certificates will be set forth in the related prospectus
supplement and need not be the same as the distribution dates for the other
certificates of the related series, but may be either more or less frequent. For
each class of floating rate certificates, the related prospectus supplement will
describe:
- the initial floating rate certificate interest rate, or the method of
determining it;
- the dates or the method of determining the dates on which the floating
rate certificate interest rate is adjusted; and
- the formula, index or other method by which the interest rate is
determined.
PRINCIPAL PAYMENTS
The revolving period for a series of certificates begins on the date of
issuance of the series, and ends on the day before an amortization period begins
for that series. On each distribution date for the revolving period, collections
of principal receivables allocable to the certificateholders' interest of a
series will, subject to permitted uses provided in the series supplement, be
paid to the holders of the sellers' interest or to amortizing or accumulating
series or deposited in the excess funding account. See "Description of the
Certificates--Principal Payments" in the accompanying prospectus supplement.
After an amortization period, which term includes any applicable
accumulation period, begins for any class of a series, collections of principal
receivables allocable to the class will no longer be paid to the holders of the
sellers' interest, to other amortizing or accumulating series or deposited in
the excess funding account. When an amortization period begins for a class,
collections of principal receivables allocable to the class will generally
either be deposited in the collection account or a series account to be
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distributed to certificateholders on a date or dates specified in the related
prospectus supplement or paid to the certificateholders on the distribution
dates specified in the related prospectus supplement.
To the extent that collections of principal receivables are available,
subject to any controlled distribution amount or controlled deposit amount or
other limitation set forth in the related prospectus supplement, payments of
principal will be paid to certificateholders of a class until the investor
amount of the related class has been paid in full or accumulated in an account
until the full amount of the investor amount is on deposit in that account.
However, if one or more classes is subordinated in right of payment of principal
to another class or classes, payment to or accumulation of accounts for payment
to certificateholders of the subordinated class or classes will occur only after
the investor amount of the senior class or classes has been paid in part or in
full or has been accumulated. The extent of subordination of a class of
subordinated certificates may be limited as described in the related prospectus
supplement.
Funds on deposit in the collection account, series account including any
principal funding account or other accumulation account, may be subject to a
guaranteed rate agreement or guaranteed investment contract or other mechanism
specified in the related prospectus supplement intended to assure a minimum rate
of return on the investment of these funds. In order to enhance the likelihood
of the payment in full of the principal amount of a class of certificates at the
end of an accumulation period, the related class of certificates may be subject
to a maturity guaranty or other similar mechanism specified in the applicable
prospectus supplement.
SHARED PRINCIPAL COLLECTIONS
Each series may include provisions which allow collections of principal
receivables allocated to that series but not needed for that series to be shared
with other series. Each series may also contain provisions for determining if a
principal shortfall exist for that series. On each distribution date the shared
principal collections from all series will be combined and used to cover
principal shortfalls or otherwise distributed as described in the following
provisions.
On each distribution date:
- the servicer will allocate shared principal collections among the series
entitled to shared principal collections, pro rata, in proportion to the
principal shortfalls, if any, of each series; and
- the servicer will withdraw from the collection account and pay to the
holders of the sellers' interest the amount of the shared principal
collections not used to cover principal shortfalls;
provided however, that if on any distribution date the Seller Amount is less
than or equal to the Required Seller Amount, the servicer will not distribute
any shared principal collections to the holders of the sellers' interest, but
will deposit these funds in the excess funding account.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
Collections of finance charge receivables allocable to any series in a
group in excess of the amounts necessary to make required payments on that
series may, if specified in the related series supplement, be applied to cover
shortfalls in amounts payable from collections of finance charge receivables
allocable to any other series in the group.
COMPANION SERIES
If specified in the prospectus supplement relating to a series, one series
of certificates may be paired with one or more other series or a portion of one
or more other series previously issued by the trust, so that a reduction in the
invested amount of one series results in an increase in the invested amount of
the other series. In general, a series may be issued as a paired series or
companion series to an existing prior series to enable the trust to fund the
amount by which the prior series has amortized and will amortize in the future.
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If a Pay Out Event occurs which affects the prior series or the new series
issued as the companion series when the prior series is in an amortization
period, the series percentage for the allocation of collections of principal
receivables for the prior series may be reset to a lower percentage and the
amortization period for the prior series may be lengthened. The full extent by
which the amortization period for the prior series may be lengthened will be
dependent on a variety of factors and will not be readily determinable by the
extent by which the series percentage has been changed. See "Risk
Factors--Principal May Be Paid Earlier Than Expected Creating a Reinvestment
Risk to Certificateholders or Later Than Expected Resulting in a Failure to
Receive Payment When Expected" in this prospectus and "Maturity Assumptions" in
the accompanying prospectus supplement for a discussion of these factors.
NEW ISSUANCES
The Pooling and Servicing Agreement authorizes three types of certificates
or interests:
- one or more series of investor certificates and interests which are
treated as investor certificates which are transferable and have the
characteristics described below;
- a Bank Certificate or an uncertificated interest registered to the seller
and in either case, evidencing the bank's interest as seller, which will
initially be held by the bank and which is transferable in certain
circumstances to members of the affiliated group of which Fleet is the
common parent; and
- Supplemental Certificates delivered to an entity other than a seller but
representing a portion of the sellers' interest.
The ownership interest in the remainder of the trust assets not allocated
pursuant to the Pooling and Servicing Agreement to the certificateholders'
interest is the "SELLERS' INTEREST."
For each new series, the series supplement for that series will specify:
- the name or designation of the series;
- the initial investor amount and series investor amount, or method for
calculating these amounts;
- the certificate rate, or method for its determination;
- the payment date or dates and the date or dates from which interest shall
accrue;
- the method for allocating collections to certificateholders of the
series;
- the designation of any series accounts to be used by the series and the
terms governing the operation of any of these series accounts;
- the method of calculating the servicing fee;
- the terms of any form of series enhancement;
- the terms on which the certificates of the series may be exchanged for
certificates of another series, repurchased by the seller or remarketed
to other investors;
- the stated series termination date of the series;
- the number of classes of the series and, if the series consists of more
than one class, the rights and priorities of each class;
- the extent to which the certificates of the series will be issuable in
temporary or permanent global form and the depositary for any global
certificate or certificates, the terms and conditions, if any, upon which
the 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;
- whether the certificates may be issued as bearer certificates and any
limitations imposed on them;
- the priority of the series with respect to any other series;
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- the group, if any, to which the series belongs;
- whether or not the series is a principal sharing series; and
- any other terms of the series.
Neither the seller, the servicer, the trustee nor the trust is required or
intends to obtain the consent of any certificateholder of any outstanding series
to issue any additional series.
The seller may offer any series under a prospectus or other disclosure
document in transactions either registered under the Securities Act of 1933, as
amended, or exempt from registration thereunder, directly, through one or more
underwriters or placement agents, in fixed-price offerings or in negotiated
transactions or otherwise. A series may be issued in fully registered or
book-entry form in minimum denominations determined by the seller.
The Pooling and Servicing Agreement permits each new series to have a
period during which amortization or accumulation of the principal amount is
intended to occur but which may have a different length and begin on a different
date than periods for any other series. Further, one or more series may be in an
amortization period while other series are not. Thus, certain series may not be
amortizing or accumulating, while other series are amortizing or accumulating.
Moreover, one or more series, or classes of a series, may have the benefits of
series enhancement different from the forms of series enhancement available to
another class or classes of any other series. Under the Pooling and Servicing
Agreement, the trustee will hold any form of series enhancement only on behalf
of the certificateholders of the series, or class, to which it relates.
Collections allocated to finance charge receivables not used to pay
interest on the certificates of a series will be allocated as provided in the
related series supplement.
There is no limit to the number of new issuances that the seller may
perform under the Pooling and Servicing Agreement. The trust will terminate only
as provided in the Pooling and Servicing Agreement.
The following are conditions to the issuance of a new series:
(1) on or before the fifth day immediately preceding the relevant
closing date, the seller shall give the trustee and the servicer
notice of a new issuance and its date; and on or before the tenth
day immediately preceding the relevant closing date, the seller
shall give each rating agency notice of a new issuance and its
date; and
(2) the seller shall deliver to the trustee:
- a related series supplement specifying the principal terms of the
new series;
- any agreement relating to series enhancement for the series;
- written confirmation from each rating agency rating any
outstanding series that the new issuance will not result in that
rating agency reducing or withdrawing its rating of any
outstanding series or class of certificates;
- an officer's certificate from the seller stating that the seller
reasonably believes that a new issuance will not cause a Pay Out
Event to occur for any series; and
- if any series of certificates are outstanding that were
characterized as debt at the time of their issuance, an opinion
of counsel to the effect that for federal tax purposes, the new
issuance will not adversely affect that characterization and that
the trust will not be deemed to be an association or publicly
traded partnership taxable as a corporation and that the new
issuance will not cause an event in which gain or loss would be
recognized by any certificateholders of the trust.
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TRANSFER AND ASSIGNMENT OF RECEIVABLES
The seller has transferred and assigned to the trust all of its right,
title and interest in and to specifically identified receivables existing in the
accounts owned by the seller on the day of the relevant transfer and assignment
and in and to all receivables created in future accounts and all future
proceeds.
In connection with a transfer of the receivables to the trust, the seller
annotates and indicates in its computer files that the receivables have been
conveyed to the trust for the benefit of the certificateholders. In addition,
the seller provides to the trustee a computer file or a microfiche list
containing a true and complete list of all accounts owned by the seller, the
receivables of which have been assigned to the trust. The list specifies for
each account, its account number, the aggregate amount outstanding and the
aggregate amount of principal receivables outstanding as of the cut-off date
selected by the seller. The seller will not deliver to the trustee any other
records or agreements relating to the accounts or the receivables.
The records and agreements maintained by the seller or servicer relating to
the accounts designated to the trust and the receivables in the trust will not
be segregated by the seller or the servicer from other documents and agreements
relating to other credit card accounts and receivables and will not be stamped
or marked to reflect the transfer of the receivables to the trust. The seller
has filed and will file UCC financing statements meeting the requirements of
applicable state law with respect to the receivables. See "Material Legal
Aspects of the Receivables" in this prospectus.
LIQUIDATION OF RECEIVABLES
If an insolvency event occurs which involves the seller, the Pooling and
Servicing Agreement requires that the seller will immediately cease to transfer
principal receivables to the trust and promptly notify the trustee.
Notwithstanding any cessation of the transfer of additional principal
receivables to the trust, principal receivables transferred to the trust prior
to the occurrence of the insolvency event, collections of the principal
receivables transferred prior to the insolvency event and collections of finance
charge receivables whenever created, accrued in respect of the principal
receivables in the trust, shall continue to be a part of the trust. Within 15
days after receipt of the notice by the trustee of the occurrence of the
insolvency event, the trustee shall:
- publish a notice in an authorized newspaper that an insolvency event has
occurred and that the trustee intends to liquidate the receivables; and
- give notice to the certificateholders and request instructions from the
certificateholders.
The trustee shall promptly liquidate the receivables in a commercially
reasonable manner and on commercially reasonable terms, unless the trustee has
received instructions within 90 days from the date notice is first published:
- from certificateholders evidencing more than 50% of the investor amount
of each series or, for any series with two or more classes, of each
class, to the effect that the certificateholders disapprove of the
liquidation of the receivables and wish to continue having principal
receivables transferred to the trust; and
- if at that time there is more than one seller, from any seller which is
not the subject of the insolvency event, and from any holder of a
Supplemental Certificate and any other parties specified in the series
supplements, also disapproving the liquidation.
The trustee may obtain a prior determination from any applicable
conservator, receiver or liquidator that the terms and manner of any proposed
liquidation are commercially reasonable.
If a conservator or receiver is appointed for the seller and no Pay Out
Event other than the conservatorship or receivership or insolvency of the seller
exists, the conservator or receiver may have the power to prevent the early
liquidation of the receivables.
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The proceeds from the liquidation of the receivables shall be immediately
deposited in the collection account. The trustee shall determine conclusively
the amount of the proceeds which are deemed to be finance charge receivables and
which are deemed to be principal receivables.
The proceeds shall be allocated and distributed to certificateholders in
accordance with the terms of each series supplement, and the trust shall then
terminate immediately.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The seller makes representations and warranties as of each date on which
certificates are issued and, with respect to receivables in additional accounts,
as of the related addition date, to the effect, among other things, that:
(1) the Pooling and Servicing Agreement, each series supplement and, in
the case of additional accounts, the related assignment document,
constitute legal, valid and binding obligations of the seller
enforceable against the seller in accordance with their terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting the
enforcement of creditors' rights in general and the rights of
creditors of national banks under United States law and except as
this enforceability may be limited by general principles of equity,
whether considered in a suit at law or in equity;
(2) the schedule of accounts referred to in the Pooling and Servicing
Agreement is an accurate and complete listing in all material
respects of the accounts owned by the seller and designated to the
trust as of the related cut-off date and the information contained
in the schedule concerning the identity of these accounts and the
receivables existing in the accounts is true and correct in all
material respects as of the related cut-off date;
(3) each receivable conveyed to the trust by the seller has been
conveyed to the trust free and clear of any lien other than liens
permitted by the Pooling and Servicing Agreement;
(4) all authorizations, consents, orders or approvals of or
registrations or declarations with any governmental authority
required to be obtained, effected or given by the seller in
connection with the conveyance by the seller of receivables to the
trust have been duly obtained, effected or given and are in full
force and effect;
(5) either the Pooling and Servicing Agreement or, in the case of
additional accounts, the related assignment document, constitutes a
valid sale, transfer and assignment to the trust of all right,
title and interest of the seller in the receivables conveyed to the
trust by the seller and the proceeds thereof or, if the Pooling and
Servicing Agreement or the related assignment document does not
constitute a sale of the property, it constitutes a grant of a
"security interest," as defined in the UCC, in the property to the
trust, which, in the case of receivables then existing and the
proceeds of the receivables, is enforceable upon execution and
delivery of the Pooling and Servicing Agreement or the related
assignment document as of the applicable date and which will be
enforceable with respect to receivables created in future accounts
in the future and the related future proceeds and that upon the
filing of financing statements required by the Pooling and
Servicing Agreement, the trust shall have a first priority
perfected security or ownership interest in the property and
proceeds except for:
- liens permitted under the Pooling and Servicing Agreement;
- the interest of the seller or any holder of any Supplemental
Certificate; and
- the seller's right to receive interest accruing on and investment
earnings, if any, in respect of the collection account or any
series account, as provided in the Pooling and Servicing Agreement
or the related series supplement;
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(6) except as otherwise expressly provided in the Pooling and Servicing
Agreement or the related series supplement, neither the seller nor
any person claiming through or under the seller has any claim to or
interest in the collection account, the excess funding account, any
series account or any series enhancement;
(7) as of the related cut-off date, each initial account or additional
account is an Eligible Account;
(8) as of the related cut-off date, each receivable contained in the
accounts being added to the trust is an Eligible Receivable;
(9) as of the date of the creation of any new receivable in an account
designated to the trust, the new receivable is an Eligible
Receivable; and
(10) no selection procedure has been used by the seller which it
reasonably believes would result in the selection of an account
that would be materially adverse to the interests of
certificateholders of any series.
The seller shall accept reassignment of the receivable in the event:
(a) any representation or warranty of the seller contained in clause
(2), (3), (4), (7), (8), (9) or (10) above is not true and correct
in any material respect as of the specified date with respect to any
receivable transferred to the trust or an account and, as a result
of the breach, any receivables in the related account become
defaulted receivables, or the trust's rights in, to or under the
receivables or the proceeds of the receivable are impaired or the
proceeds are for any reason not available to the trust free and
clear of any lien, unless the breach is cured within 60 days or a
longer period not in excess of 150 days agreed to by the trustee
after the earlier to occur of the discovery of the breach by the
seller or receipt by the seller of notice of the breach given by the
trustee; or
(b) a receivable in the trust is determined to be ineligible because it
is evidenced by an instrument or chattel paper.
The receivables subject to reassignment will be "INELIGIBLE RECEIVABLES."
The receivables will not, however, be deemed ineligible receivables and will not
be reassigned to the seller if, on any day prior to the end of the 60-day or
longer cure period:
(1) either (A) in the case of an event described in clause (a) above the
relevant representation and warranty shall be true and correct in
all material respects as if made on that day or (B) in the case of
an event described in clause (b) above the circumstances causing the
receivable to become an ineligible receivable shall no longer exist;
and
(2) the seller shall have delivered to the trustee an officer's
certificate describing the nature of the breach and the manner in
which the relevant representation and warranty became true and
correct.
Ineligible receivables which are to be removed from the trust shall be
automatically removed from the trust by the servicer deducting the portion of
the ineligible receivables reassigned to the seller which are principal
receivables from the aggregate amount of principal receivables used to calculate
the Seller Amount, the series percentages and any other percentage used to
allocate within or among series. If following the exclusion of the principal
receivables from the calculation of the Seller Amount, the Seller Amount would
be less than the Required Seller Amount, then on the first distribution date
following the monthly period in which the reassignment obligation arises, the
seller shall make a deposit into the excess funding account. The amount
deposited shall be an amount equal to the amount by which the Seller Amount
would be reduced below the Required Seller Amount, but, not in an amount greater
than the amount of the principal receivables reassigned to the seller.
Upon the deposit, if any, required to be made to the excess funding account
and the reassignment of ineligible receivables, the trustee shall automatically
be deemed to convey to the seller or its designee,
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without recourse, representation or warranty, all the right, title and interest
of the trust in and to the ineligible receivables, all moneys due or to become
due and all amounts and proceeds received.
The obligation of the seller to accept reassignment of any ineligible
receivables, and to make the deposits, if any, required to be made to the excess
funding account shall constitute the sole remedy respecting the event giving
rise to the obligation available to certificateholders, or the trustee on behalf
of the certificateholders. The obligations of the seller or any additional
seller to accept reassignment of the receivables will be several and not joint
with respect to the receivables transferred by the seller to the trust.
The seller also makes representations and warranties to the trust to the
effect, among other things, that as of each date on which certificates are
issued:
(1) it is a national banking association or corporation duly organized
and validly existing in good standing under the laws of the
jurisdiction of its organization or incorporation;
(2) it is duly qualified or is exempt from the requirements 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 render any cardholder agreement relating to an
account owned by it or any receivable transferred to the trust by it
unenforceable by the seller, the servicer or the trustee or would
have a material adverse effect on the certificateholders of any
series;
(3) the execution and delivery of the Pooling and Servicing Agreement
and each series supplement by the seller and the execution and
delivery to the trustee of the certificates by the bank and the
consummation by the seller of the transactions provided for in the
Pooling and Servicing Agreement and each series supplement have been
duly authorized by the seller;
(4) the execution and delivery by the seller of the Pooling and
Servicing Agreement, each series supplement and the certificates,
the performance by the seller of the transactions contemplated by
the Pooling and Servicing Agreement and each series supplement and
the fulfillment by the seller of their terms, will not conflict
with, result in any breach of any of the material terms and
provisions of any instrument to which the seller is a party or by
which it or any of its properties are bound;
(5) the execution and delivery by the seller of the Pooling and
Servicing Agreement, each series supplement and the certificates,
the performance by the seller of the transactions contemplated by
the Pooling and Servicing Agreement and each series supplement and
the fulfillment by the seller of their terms will not conflict with
or violate any requirements of law applicable to the seller;
(6) there are no proceedings or investigations, pending or, to the best
knowledge of the seller, threatened against it, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality seeking any determination or ruling
that, in the reasonable judgment of the seller, would materially and
adversely affect the performance by it of its obligations with
respect to any series under the Pooling and Servicing Agreement or
any series supplement;
(7) no insolvency event with respect to the seller has occurred and the
transfer of the receivables by the seller to the trust has not been
made in contemplation of the occurrence of an insolvency event; and
(8) the seller is either an insured institution for the purposes of the
Federal Deposit Insurance Act or is a bankruptcy-remote entity.
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Upon discovery by the seller, the servicer or the trustee of a breach of
any of the representations and warranties by the seller described above, the
party discovering the breach will give prompt written notice to the others and
the seller will cooperate with the servicer and the trustee in attempting to
cure the breach.
An "ELIGIBLE ACCOUNT" is defined in the Pooling and Servicing Agreement to
mean a revolving credit card account owned by the seller and which account is
identified by the seller as of the related cut-off date as having the following
characteristics:
- is in existence and maintained by the seller;
- is payable in United States dollars;
- except as provided below, has not been identified as an account the
credit card or cards with respect to which have been reported to the
seller as having been lost or stolen;
- the obligor of which has provided as his or her billing address an
address located in the United States, or its territories or possessions
or a military address;
- the obligor of which has not been identified by the seller as an employee
of the seller or any affiliate of the seller;
- except as provided below, does not include any receivables which are
defaulted receivables; and
- except as provided below, does not include any receivables which have
been identified by the seller or the relevant obligor as having been
incurred as a result of fraudulent use of a credit card.
The Pooling and Servicing Agreement provides that an Eligible Account may
include receivables which have been charged-off, or may be an account with an
obligor which the seller believes is bankrupt, or may include accounts
containing receivables that have been identified by the obligor as having been
incurred as a result of fraudulent use of a credit card, or as to which any
credit cards have been reported to the seller as lost or stolen, in each case as
of the related cut-off date; provided, that:
- the balance of all receivables included in those accounts is reflected on
the books and records of the seller, and is treated for purposes of the
Pooling and Servicing Agreement, as "zero"; and
- charging privileges with respect to those accounts have been canceled.
An "ELIGIBLE RECEIVABLE" is defined in the Pooling and Servicing Agreement
to mean each receivable:
- which has arisen under an Eligible Account;
- which was created in compliance with all requirements of law applicable
to the seller, the failure to comply with which would have a material
adverse effect upon certificateholders, and under a credit card agreement
which complies with all requirements of law applicable to the seller, the
failure to comply with which would have a material adverse effect upon
certificateholders;
- with respect to which all material consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
governmental authority required to be obtained or given by the seller in
connection with the creation of such receivable or the execution,
delivery and performance by the seller of its obligations, if any, under
the related credit card agreement have been duly obtained or given and
are in full force and effect as of the date of creation of the
receivable;
- as to which, at the time of its transfer to the trust, the seller or the
trust will have good and marketable title, free and clear of all liens,
encumbrances, charges and security interests, except for certain tax
liens permitted by the Pooling and Servicing Agreement;
- which has been the subject of either:
(a) a valid transfer and assignment from the seller to the trust of
all of the seller's right, title and interest in the receivable;
or
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(b) the grant of a first priority perfected security interest in the
receivable and in the proceeds of the receivable;
- which at and after the time of transfer to the trust is the legal, valid
and binding payment obligation of the obligor thereon, legally
enforceable against the obligor in accordance with its terms, except as
the enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and except as the
enforceability may be limited by general principles of equity;
- which constitutes either an "account" or a "general intangible" under and
as defined in Article 9 of the UCC;
- which, at the time of its transfer to the trust, has not been waived or
modified except as permitted in accordance with the credit card
guidelines and which waiver or modification is reflected in the
servicer's computer file of revolving credit card accounts;
- which, at the time of its transfer to the trust, is not subject to any
right of rescission, setoff, counterclaim or any other defense of the
obligor, including the defense of usury, other than defenses arising out
of applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in general
and except as the enforceability may be limited by general principles of
equity, or as to which the servicer is required by the Pooling and
Servicing Agreement to make an adjustment;
- as to which, at the time of its transfer to the trust, the seller has
satisfied all obligations to be fulfilled by the seller at that time; and
- as to which, at the time of its transfer to the trust, the seller has not
taken any action which, or failed to take any action the omission of
which, would, at the time of its transfer to the trust, impair the rights
of the trust or the certificateholders.
The trustee will not 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, compliance with the seller's
representations and warranties or for any other purpose. The servicer, however,
has agreed to deliver to the trustee on or before March 31 of each year an
opinion of counsel with respect to the validity of the security interest of the
trust in and to the receivables and other matters related to the trust.
The seller covenants in the Pooling and Servicing Agreement that, except as
otherwise required by law, or as is deemed by the seller in its sole discretion
to be necessary in order for the seller to maintain its lending business on a
competitive basis, based on a good faith assessment by the seller of the nature
of the competition in the lending business, it will not at any time reduce the
annual percentage rate at which periodic finance charges are assessed on any
receivable or the other fees and charges assessed on the accounts owned by it
if, as a result of the reduction, either:
- the seller's reasonable expectation is that the reduction would cause a
series Pay Out Event to occur; or
- the reduction is not also applied to any comparable segments of consumer
revolving credit card accounts owned by the seller which have
characteristics the same as, or substantially similar to, the accounts
designated to the trust.
The seller also covenants that it may only change the terms relating to any
of the accounts owned by it and designated to the trust if in the reasonable
judgment of the seller the change is also made applicable to the comparable
segment of the other consumer revolving credit card accounts which have not been
designated to the trust but are owned by the seller and have characteristics the
same as, or substantially similar to, the accounts in the trust, subject to
compliance with all requirements of law.
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ADDITION OF ACCOUNTS
The seller may from time to time designate additional accounts to the
trust. Also, if specified tests are not met, the seller will be required to
designate additional accounts. In each case, the seller will convey to the trust
all receivables in the additional accounts, whether these receivables are then
existing or later created. The date on which additional accounts are transferred
to the trust is an "ADDITION DATE."
Each additional account must be an Eligible Account as of the related
cut-off date. No selection procedures believed by the seller to be adverse to
the interests of the certificateholders are to be used in selecting additional
accounts from the available Eligible Accounts in the Fleet Credit Card
Portfolio. Nevertheless, there is no assurance that additional accounts will be
of the same credit quality as the accounts in the trust as of the date of this
prospectus. Additional accounts may have been originated at a different time or
using different credit criteria or may have been acquired from another credit
card issuer that had different credit criteria.
Required Additions. Generally, the seller will be required to designate
additional Eligible Accounts to the trust in a sufficient amount so that, after
giving effect to the addition, the Seller Amount is at least equal to the
Required Seller Amount and the aggregate amount of principal receivables in the
trust exceeds the Required Principal Balance, if either:
(1) the Seller Amount is less than the Required Seller Amount; or
(2) the aggregate amount of principal receivables in the trust is less
than the Required Principal Balance.
In lieu of, or in addition to, designating additional accounts, the seller
may, subject to the conditions specified below and in the Pooling and Servicing
Agreement, convey to the trust participations, including 100% participations,
representing undivided interests in a pool of assets consisting of revolving
credit card receivables or consumer secured and unsecured loan receivables
arising as a result of advances made on bank cards, private label cards,
corporate cards, and unsecured revolving lines of credit, and any interests in
the receivables.
"REQUIRED SELLER AMOUNT" means, as of any date, the product of the Required
Seller Percentage and the aggregate amount of principal receivables in the
trust.
"REQUIRED SELLER PERCENTAGE" currently means 5%; however, the Required
Seller Percentage may be reduced to as low as 2% if the seller delivers an
officer's certificate stating that the reduction will not result in the
occurrence of a Pay Out Event or materially adversely affect the amount or
timing of distributions to be made to any series or class and the rating
agencies have notified the seller that the reduction will not result in a
reduction or withdrawal of any outstanding rating on a series or class of
certificates.
"REQUIRED PRINCIPAL BALANCE" means, as of any date, the sum of the Series
Investor Amounts for all series minus the amount on deposit in the excess
funding account.
"SERIES INVESTOR AMOUNT" means, for any series, the amount stated in the
related series supplement and, in the prospectus supplement for that series,
but, generally, will be an amount equal to the numerator used in the calculation
of the Series Percentage used in allocating collections of principal receivables
to that series.
Restricted Additions. The seller may from time to time, at its sole
discretion, subject to the conditions specified below, designate additional
Eligible Accounts to the trust or designate participation interests to be
included as trust assets.
Conditions to Required and Restricted Additions. The following are
conditions to the addition of accounts or participation interests to the trust
under the required addition provisions and the restricted addition provisions:
(1) on or before the tenth business day immediately preceding the
addition date, the seller shall give the trustee, the servicer and
each rating agency written notice of the addition;
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(2) the seller shall deliver to the trustee copies of UCC-1 financing
statements covering the additional accounts, if necessary to perfect
the trust's interest in the receivables;
(3) as of each of the related cut-off date and the addition date, no
insolvency event affecting the seller shall have occurred nor shall
the transfer to the trust be made in contemplation of the occurrence
of an insolvency event;
(4) except in the case of a limited amount of required additions, the
rating agencies have notified the seller that the addition will not
result in a reduction or withdrawal of any outstanding rating in a
series or class of certificates shall have been satisfied;
(5) the seller shall deliver to the trustee an officer's certificate,
dated the addition date, stating that:
(a) as of the applicable related cut-off, any additional accounts are
Eligible Accounts;
(b) to the extent applicable, the conditions set forth in clauses (2)
through (4) above have been satisfied; and
(c) the seller reasonably believes that:
- the addition of the receivables arising in the additional
accounts to the trust or of the interests in the trust
participations will not, based on the facts known to the
officer at the time of the addition, then or in the future
cause a Pay Out Event to occur with respect to any series; and
- no procedure was used in selecting additional accounts that
would be materially adverse to the interests of the
certificateholders of any series as of the addition date;
(6) the seller shall deliver to the trustee and each rating agency an
opinion of counsel stating the validity and perfection of the
transfer of the receivables created in the additional accounts to
the trustee;
(7) in the case of designation of additional accounts, the seller shall
deliver to the trustee:
(a) the computer file or microfiche list containing a true and
complete list of the additional accounts; and
(b) a duly executed, written assignment; and
(8) unless each rating agency otherwise consents, the number of
additional accounts designated as required additions during any of
the three consecutive monthly periods commencing in January, April,
July and October of each calendar year, shall not exceed 15% of the
number of accounts designated to the trust as of the first day of
the calendar year during which the monthly periods begin and the
number of additional accounts designated as required additions
during any calendar year shall not exceed 20% of the number of
accounts designated to the trust as of the first day of the calendar
year.
ACQUISITION OF PARTICIPATION INTEREST
If the seller designates a participation interest to be included in the
trust and these interests are issued by an entity other than the seller or any
affiliate of the seller, then these interests will:
(1) either:
(a) have been previously registered under the Securities Act of
1933, as amended; or
(b) are eligible for sale under Rule 144(k); and
(2) will be acquired in bona fide secondary market transactions not
from the seller or an affiliate.
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AUTOMATIC ACCOUNT ADDITIONS
(1) The seller may from time to time, at its sole discretion, subject to
and in compliance with the limitations specified in clause (2) below
and the applicable conditions specified in clauses (3) through (7)
below, designate additional Eligible Accounts to the trust without
meeting some of the conditions applicable to other additions. These
additions are "AUTOMATIC ADDITIONS." Under the automatic addition
provisions, accounts to be added will be deemed to be Eligible
Accounts only if the accounts are consumer revolving credit card
accounts originated by the seller or any affiliate of the seller.
(2) Unless each rating agency then rating any series of certificates
otherwise consents, the number of accounts designated under the
automatic addition provisions shall be limited as follows:
- in any three consecutive monthly periods commencing in January,
April, July and October of a calendar year, the number of accounts
added shall not exceed 15% of the number of accounts as of the
first day of the calendar year during which the monthly periods
commence; and
- in any calendar year, the number of accounts designated under the
automatic addition provisions will not exceed 20% of the number of
accounts as of the first day of the calendar year.
(3) Within 30 days after the addition date for the automatic addition
the seller will deliver to the trustee and each rating agency an
opinion of counsel, confirming the validity and perfection of the
transfer of the accounts. If the opinion of counsel is not received,
the ability of the seller to designate automatic additional accounts
will be suspended until each rating agency otherwise consents in
writing. If the seller is unable to deliver an opinion of counsel
for any automatic additional account, that inability shall be deemed
to be a breach of the representations with respect to the
receivables in the additional accounts, and the cure period for such
breach will not exceed 30 days.
(4) The seller shall deliver to the trustee copies of UCC-1 financing
statements covering the additional accounts, if necessary to perfect
the trust's interest in the arising receivables.
(5) As of each of the related cut-off date and the addition date, no
insolvency event with respect to the seller shall have occurred nor
shall the transfer of the receivables arising in the additional
accounts to the trust be made in contemplation of the occurrence of
an insolvency event.
(6) The seller shall deliver to the trustee an officer's certificate,
dated the addition date, stating that:
- as of the applicable related cut-off date, the automatic additional
accounts are all Eligible Accounts;
- to the extent applicable, the conditions described in clauses (2)
through (5) above have been satisfied; and
- the seller reasonably believes that (a) the addition of the
receivables arising in the automatic additional accounts will not,
based on the facts known to the officer at the time of the
addition, then or in the future cause a Pay Out Event to occur with
respect to any series, and (b) no selection procedure was used in
selecting automatic additional accounts that would be materially
adverse to the interests of the certificateholders of any series as
of the addition date.
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(7) The seller shall deliver to the trustee:
- a computer file or microfiche list containing a true and complete
list of the accounts being added; and
- a duly executed assignment of the receivables arising in the
additional accounts.
REMOVAL OF ACCOUNTS
During any monthly period, subject to the restrictions described in the
following paragraph, the seller 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 in the future created, all moneys due or
to become due and all amounts and proceeds received in or with respect to
specified accounts or participation interests, upon satisfaction of the
following conditions:
(1) on or before the fifth business day immediately preceding the
removal date, the seller shall give the trustee, the servicer, each
rating agency then rating any series of certificates and the
provider of any series enhancement written notice of the removal;
(2) with respect to the accounts being removed, on or prior to the date
that is ten business days after the removal date, the seller will
deliver to the trustee a computer file or microfiche list containing
a true and complete list of the removed accounts specifying for each
account, its account number, the aggregate amount outstanding in the
account and the aggregate amount of principal receivables
outstanding in the account;
(3) the seller shall represent and warrant as of the removal date that
the list of removed accounts delivered pursuant to clause (2) above,
as of the removal cut-off date, is true and complete in all material
respects;
(4) the rating agencies shall have notified the seller that the removal
will not result in a reduction or withdrawal of any outstanding
rating on a series or class of certificates;
(5) the seller shall deliver to the trustee an officer's certificate to
the effect that the seller reasonably believes that:
- this removal will not, based on the facts known to the officer at
the time of the certification, then or in the future cause a Pay
Out Event to occur with respect to any series; and
- no selection procedure was used in selecting the accounts or
interests in the trust participations to be removed that would be
materially adverse to the interests of the certificateholders of
any series as of the removal date; and
(6) as of the removal cut-off date, no more than 10% of the receivables
in the trust are more than thirty days contractually delinquent.
In addition to the conditions described in the preceding paragraph, the
seller's ability to remove accounts and the receivables in those accounts from
the trust is, for the most part, limited in that (1) no more than one removal
per calendar month is permitted, (2) the accounts to be removed must be selected
at random and (3) the amount of principal receivables removed from the trust in
any month may not exceed the excess, if any, of the Seller Amount over the
Required Seller Amount. The Pooling and Servicing Agreement does permit the
removal of some accounts at any time without the restrictions described in this
paragraph. The accounts which can be removed without the restrictions in this
paragraph include, but are not limited to, accounts containing defaulted
receivables, accounts with a zero balance and accounts originated under an
affinity agreement that has terminated at the option of, by the default of or
the failure to extend by a party other than the seller or its affiliates or
agents.
Upon satisfaction of the conditions and subject to the restrictions above,
the trustee will execute and deliver to the seller or its designee a written
reassignment and will be deemed to sell, transfer, assign, set
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over and otherwise convey to the seller 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 interests in the trust participations
removed from the trust or receivables arising in the removed accounts, all
moneys due and to become due and all amounts and proceeds received.
SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the servicer will be
responsible for servicing and administering the receivables in the trust in
accordance with the servicer's customary and usual servicing procedures for
servicing credit card receivables comparable to the receivables in the trust and
in accordance with its credit card guidelines.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that the seller may designate
a "DISCOUNT PERCENTAGE" at any time and from time to time. A discount percentage
may be a fixed percentage or a variable percentage based on a formula. If the
seller specifies a discount percentage, then that percentage of all of the
principal receivables or of any specified portion of principal receivables
created after the date designated by the seller will be treated as finance
charge receivables, rather than principal receivables. If this option is
exercised by the seller, the principal receivables will be treated as having
been transferred to the trust at a discount. The seller also has the option of
reducing or discontinuing the discount percentage, at any time and from time to
time. The Pooling and Servicing Agreement requires the seller to provide to the
servicer, the trustee and any rating agency then rating any series of
certificates 30 days' prior written notice that the discount percentage is to be
applied to the principal receivables. If this notice is provided, then the
discount will become effective:
- unless such designation, in the reasonable belief of the seller, would
cause a Pay Out Event for any series to occur or would cause the
occurrence of an event which, with notice or the lapse of time or both,
would constitute a Pay Out Event for any series; and
- if the rating agencies then rating any series of certificates notify the
seller that the implementation of the discount will not result in a
reduction or withdrawal of any outstanding rating on a series or class of
certificates.
On the date of processing of any collections, on or after the discount
becomes effective, the product of the discount percentage and collections of
receivables, which receivables arose on or after the effective date and which
would otherwise be principal receivables, will be deemed "DISCOUNT OPTION
RECEIVABLE COLLECTIONS." An amount equal to the product of the Series Percentage
with respect to finance charge receivables for each series of certificates and
the amount of the discount option receivables collections will be deposited by
the servicer into the collection account. The amount of discount option
receivable collections deposited into the collection account will be applied as
finance charge receivables. An amount equal to the product of the Seller
Percentage and the amount of the discount option receivable collections will be
paid to the holders of the sellers' interest.
The seller may have different reasons to designate a discount percentage.
For example, since the majority of the accounts have finance charges indexed to
specific variable rates, the finance charges on the accounts, and the
collections of finance charge receivables on the accounts, may decline as
interest rates decline. The certificates of a series may have interest rates
that are fixed or that are indexed to a different variable rate. If the finance
charges on the accounts are significantly reduced without a corresponding
reduction in the interest rate on a series of certificates, a series Pay Out
Event based in part on the amount of collections of finance charge receivables
and the interest rate on the certificates could occur. The seller could avoid
the occurrence of a series Pay Out Event by designating a discount percentage,
thereby causing an increase in the amount of collections of finance charge
receivables.
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The seller, however, is under no obligation to designate a discount
percentage at any time, and there can be no assurance that the seller would
designate a discount percentage to avoid the occurrence of a Pay Out Event.
TRUST ACCOUNTS
The servicer has caused to be established and maintained, in the name of
the trustee, for the benefit of certificateholders of all series, an account
designated as the "COLLECTION ACCOUNT," which at all times is required to be
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 the account, so long as any of the
securities of the depository institution shall have an investment
grade credit rating.
An account satisfying the requirements of (a) or (b) above is an "ELIGIBLE
DEPOSIT ACCOUNT."
The servicer has also caused to be established and maintained, in the name
of the trustee, an account designated as the "EXCESS FUNDING ACCOUNT," which
also is required to be an eligible deposit account.
An "ELIGIBLE INSTITUTION" is defined as:
(a) a depository institution, which may be the trustee, organized under
the state or federal laws of the United States, including the
District of Columbia, or any domestic branch of a foreign bank,
which at all times:
- has either (1) a long-term unsecured debt rating of A1 or better by
Moody's Investors Service Inc. or (2) a certificate of deposit rating
of P-1 by Moody's;
- has either (1) a long-term unsecured debt rating of AAA by Standard &
Poor's Ratings Services or (2) a certificate of deposit rating of A-1+
by Standard & Poor's; and
- is a member of the FDIC; or
(b) any other institution that is acceptable to each rating agency then
rating a series of certificates.
If so qualified, the trustee or the servicer may be considered an eligible
institution.
Other accounts may also be created in connection with any series and for
the benefit of that series. Accounts created for a specific series are "SERIES
ACCOUNTS."
Funds in the collection account and the excess funding account will be
invested, at the direction of the servicer, in "ELIGIBLE INVESTMENTS" consisting
of book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest 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 state or
federal laws of the United States of America, 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, the short-term debt rating of the depository
institution or trust company shall be in the highest investment
category of each rating agency then rating a series of certificates;
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(c) commercial paper or other short-term obligations having, at the time
of the trust's investment or contractual commitment to invest, a
rating from each rating agency in its highest investment category;
(d) notes or bankers' acceptances, having original maturities of no more
than 365 days, issued by any depository institution or trust company
described in clause (b) above;
(e) investments in money market funds rated in the highest investment
category by each rating agency then rating a series of certificates
or otherwise approved in writing by each rating agency then rating a
series of certificates;
(f) time deposits, other than as referred to in the preceding clause (e)
with a person the commercial paper of which has a credit rating in
the highest investment category from each rating agency then rating
a series of certificates; or
(g) any other investments approved in writing by each rating agency then
rating a series of certificates.
The trustee together with any successor or any entity specified in a series
supplement, acting as the "PAYING AGENT," shall have the revocable power to
withdraw funds from the collection account for the purpose of making
distributions to the certificateholders of any series pursuant to the related
series supplement.
SERIES PERCENTAGE AND SELLER PERCENTAGE
Pursuant to the Pooling and Servicing Agreement, the servicer will allocate
among the series, including each class of each series, and the sellers' interest
the collections of finance charge receivables, the collections of principal
receivables and the defaulted receivables. The servicer will make each
allocation by reference to the applicable Series Percentage for each series and
the Seller Percentage in each case. The "SERIES PERCENTAGE" for each series
means that percentage specified in the series supplement as the percentage to be
used in making allocations to that series. Generally, the Series Percentage
specified in the series supplement is a floating percentage for purposes of
allocating collections of finance charge receivables at all times, for purposes
of allocating defaulted receivables at all times and for purposes of allocating
principal receivables during the revolving period. Generally, the Series
Percentage specified in the series supplement is a fixed percentage for purposes
of allocating collections of principal receivables during the amortization
period for that series.
The "SELLER PERCENTAGE" in all cases means the excess of 100% over the sum
of the Series Percentages of all series then outstanding.
APPLICATION OF COLLECTIONS
Except as provided below or in a series supplement, the servicer will
deposit into the collection account, no later than the second business day
following the date of processing, any payment collected by the servicer on the
receivables; provided, however, that the servicer need not deposit into the
collection account amounts allocated to the sellers' interest and various
amounts allocated to certificateholders of a series, as specified in the related
series supplement. In addition, for so long as the bank remains the servicer and
(1) maintains a certificate of deposit rating of A-1 or better by Standard &
Poor's and P-1 by Moody's, or such other rating below A-1 or P-1, as the case
may be, that is satisfactory to each rating agency then rating a series of
certificates, or (2) the bank has provided to the trustee a letter of credit
covering the collection risk of the servicer acceptable to each rating agency
then rating a series of certificates, the servicer need not make daily deposits
of collections into the collection account, but may make a single monthly
deposit into the collection account in immediately available funds.
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OPERATION OF EXCESS FUNDING ACCOUNT
On any distribution date on which the Seller Amount is less than the
Required Seller Amount, the servicer will deposit any shared principal
collections that would otherwise be distributed to the holders of the sellers'
interest into the excess funding account. The seller may also cause deposits to
be made to the excess funding account on any business day. The servicer will
determine, for each distribution date on which no series is in an amortization
period, the amount by which the Seller Amount exceeds the Required Seller Amount
and will instruct the trustee to withdraw that amount from the excess funding
account, to the extent of the principal amount of funds on deposit, and pay the
amount to the holders of the sellers' interest. The servicer will determine, for
each distribution date on which one or more series is in an amortization period,
the aggregate amount of principal shortfalls, if any, for each series and will
instruct the trustee to withdraw that amount from the excess funding account, to
the extent of the principal amount of funds on deposit in the account, and
allocate the amount among those series with a principal shortfall as shared
principal collections.
As long as the bank remains the servicer and maintains a certificate of
deposit rating of P-1 or better by Moody's and the seller makes deposits into
the excess funding account on each business day if the Seller Amount on that
date is less than the Required Seller Amount, then the servicer will, as
described in the next sentence, direct the distribution of the excess amount
from the excess funding account on any business day when an excess exists. If
the conditions in the previous sentence are met, then the servicer will, on each
business day, whether or not a distribution date, determine the amount, if any,
by which the Seller Amount exceeds the Required Seller Amount and instruct the
trustee to withdraw the excess amount from the excess funding account, to the
extent of the principal amount of funds on deposit in the account, and pay the
amount to the holders of the sellers' interest on the next business day. Before
directing a distribution on a date other than a distribution date, if any series
is in an amortization period, the servicer is required to determine, on the
basis of collections received prior to that business day, that no principal
shortfall will exist for any principal sharing series on the next distribution
date.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
The term "DEFAULTED RECEIVABLES" means, for any monthly period, all
principal receivables which are charged-off as uncollectible in the monthly
period in accordance with the servicer's credit card guidelines and customary
and usual servicing procedures for servicing consumer revolving credit card and
other revolving credit account receivables comparable to the receivables.
A principal receivable shall become a defaulted receivable on the day on
which the principal receivable is recorded as charged-off on the servicer's
computer master file of consumer revolving credit card accounts but, in any
event, shall be deemed a defaulted receivable no later than the day the related
account becomes 186 days contractually delinquent unless the obligor cures the
default by making a partial payment which satisfies the criteria for curing
delinquencies under the servicer's applicable credit card guidelines.
The term "DEFAULTED AMOUNT" means, for any monthly period, an amount, not
less than zero, equal to (a) the amount of principal receivables which became
defaulted receivables in the monthly period, minus (b), unless an insolvency
event involving the seller or the servicer has occurred, the amount of any
defaulted receivables included in any account the receivables of which the
seller or the servicer became obligated to accept reassignment or assignment in
accordance with the terms of the Pooling and Servicing Agreement during such
monthly period. If an insolvency event occurs with respect to the seller, the
amount of the defaulted receivables which are subject to reassignment to the
seller shall not be added to the sum so subtracted. If events involving
insolvency occur with respect to the servicer, the amount of the defaulted
receivables which are subject to reassignment or assignment to the servicer
shall not be added to the sum so subtracted.
The servicer may adjust downward the amount of any receivable for a number
of reasons including adjustments related to rebates, refunds, unauthorized
charges or billing errors to an account holder or because the receivable was
created in respect of merchandise which was refused or returned by an account
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holder. On each day when the servicer adjusts downward any receivable without
receiving collections or charging-off the amount as uncollectible, then, the
amount of principal receivables used to calculate the Seller Amount, the Series
Percentages and any other percentages used to allocate within or among series
will be reduced by the amount of the adjustment. Similarly, the amount of
principal receivables used to calculate the Seller Amount, the Series
Percentages and any other percentage used to allocate within or among series
will be reduced by the amount of any receivable discovered to have been created
through a fraudulent or counterfeit charge. Furthermore, in the event that the
exclusion of the principal receivables from the calculation of the Seller Amount
at that time would cause the Seller Amount to be less than the Required Seller
Amount, the seller shall be required to pay an amount equal to the deficiency
into the excess funding account, up to the amount of the reduction in principal
receivables.
FINAL PAYMENT OF PRINCIPAL AND INTEREST; TERMINATION
Subject to any prior termination, the interest of the certificateholders of
a series in the trust will terminate following the earliest of:
- the day after the distribution date on which the final payment of
principal and interest is made to the certificateholders of that series;
- the date specified for termination in the applicable series supplement,
called the "STATED SERIES TERMINATION DATE" for the series; and
- the trust termination date.
In the event the investor amount of any series would be greater than zero
on the stated series termination date for that series or an earlier date
specified in the related series supplement, the trustee will sell or cause to be
sold principal receivables and the related finance charge receivables or
interests, in an amount equal to 100% of the investor amount of the certificates
of the series and accrued and unpaid interest thereon, but not more than the
applicable Series Percentages of receivables on the stated series termination
date or earlier date specified in the series supplement. The proceeds of the
sale will be allocated and distributed in accordance with the applicable series
supplement.
The "TRUST TERMINATION DATE" will be the earliest to occur of:
- the day following the payment date on which the aggregate investor amount
and series enhancement investor amounts, if any, of each series is zero,
provided that the seller has delivered a written notice to the trustee
electing to terminate the trust;
- December 31, 2044; or
- if the receivables are liquidated following the occurrence of an
insolvency event as described under "--Liquidation of Receivables,"
immediately following that liquidation.
Upon termination of the trust, all right, title and interest in the
receivables and other funds of the trust other than amounts in accounts
maintained by the trust for the final payment of principal and interest to
certificateholders, will be conveyed and transferred to the seller.
TRUST PAY OUT EVENTS
If a Pay Out Event occurs under the terms of a series supplement, it will
be a series Pay Out Event although the same event may result in a series Pay Out
Event occurring under multiple series supplements. The occurrence of a series
Pay Out Event will terminate the revolving period or any amortization period
then in effect for affected series and the rapid amortization period or, if
applicable, a rapid accumulation period, will begin.
If a Pay Out Event occurs under the base Pooling and Servicing Agreement,
it will be a trust Pay Out Event and affect all series.
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A trust Pay Out Event will occur with respect to all series upon the
occurrence of any of the following:
- an insolvency event relating to the seller or any additional seller;
- the trust shall become subject to regulation by the SEC as an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended; or
- the seller or any additional seller is unable for any reason to transfer
receivables to the trust in accordance with the provisions of the Pooling
and Servicing Agreement.
When a rapid amortization period or a rapid accumulation period begins,
distributions or deposits of principal will be made to the certificateholders or
into an account for the certificateholders of the affected series in the
priority provided in the related series supplement.
If, because of the occurrence of a Pay Out Event, a rapid amortization
period begins earlier than the scheduled amortization date or the expected final
payment date of the series, certificateholders of the series will begin
receiving distributions of principal earlier than they otherwise would have,
which may shorten the final maturity of the certificates of the series.
When a rapid accumulation period begins, the principal receivables will be
deposited into a principal funding account, as described in the related
prospectus supplement. Unlike in a rapid amortization period, if, because of the
occurrence of a Pay Out Event, a rapid accumulation period begins earlier than
the scheduled amortization date or the expected final payment date of the
series, then certificateholders of the series or class affected by the rapid
accumulation period will not, unless a rapid amortization period begins, receive
distributions of principal until the expected final distribution date of the
series or class.
An "INSOLVENCY EVENT" shall occur if:
- the seller and/or any additional seller shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings relating to the seller or relating to all or substantially
all of its property;
- a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings or for the
winding-up or liquidation of the affairs of the seller, shall have been
entered against the seller; or
- the seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make any assignment for
the benefit of its creditors or voluntarily suspend payment of its
obligations.
See "Description of the Certificates--Liquidation of Receivables" in this
prospectus for a description of the consequences of the occurrence of an
insolvency event.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's compensation for its servicing activities and reimbursement
for its expenses for any monthly period will be a servicing fee payable monthly
on the related distribution date in an amount equal to one-twelfth of the
product of:
- the weighted average of the applicable servicing fee rates for each
series outstanding, based upon the applicable servicing fee rate for each
series and the investor amount of the series or other amount specified in
the applicable series supplement; and
- the amount of principal receivables outstanding on the last day of the
prior monthly period.
The servicing fee will be allocated among the sellers' interest and the
certificateholders' interests of all series. The share of the servicing fee
allocable to the certificateholders' interest of a particular series, the
"MONTHLY SERVICING FEE," will be determined in accordance with the applicable
series supplement. The
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remainder of the servicing fee shall be paid by the certificateholders of other
series and by the holders of the sellers' interest. In no event shall the trust,
the trustee or the certificateholders of any series be liable for the share of
the servicing fee to be paid by the holders of the sellers' interest. Unless
otherwise provided in any series supplement, in the case of the first monthly
period for a series, the monthly servicing fee shall accrue from the date of
issuance of that series.
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, any paying
agent and 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 certificateholders of a series other than federal,
state, local and foreign income, franchise or other taxes, if any, or any
interest or penalties imposed upon the trust.
MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that:
- the performance of its duties under the Pooling and Servicing Agreement
is no longer permissible under applicable law; and
- there is no reasonable action which the servicer could take to make the
performance of its duties thereunder permissible under applicable law.
Any determination permitting the resignation of the servicer will be
evidenced by an opinion of counsel delivered to the trustee. No resignation will
become effective until the trustee or a successor servicer that is an eligible
servicer shall have assumed the responsibilities and obligations of the servicer
in accordance with the Pooling and Servicing Agreement.
An "ELIGIBLE SERVICER" means the trustee, or an entity which is acting as
servicer and:
- is servicing a portfolio of revolving credit card accounts;
- is legally qualified and has the capacity to service the accounts;
- has demonstrated the ability to professionally and completely service a
portfolio of similar accounts in accordance with high standards of skill
and care;
- 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 the Pooling and Servicing Agreement;
and
- has a net worth of at least $50,000,000 as of the end of its most recent
fiscal quarter.
Pursuant to the Pooling and Servicing Agreement, the bank, as servicer, has
the right to delegate any of its responsibilities and obligations as servicer to
any entity that agrees to conduct the duties in accordance with the Pooling and
Servicing Agreement and the seller's credit card guidelines; provided, that in
the case of a significant delegation to an entity other than Fleet, the seller,
any affiliate of the seller, or First Data Resources, Inc.:
- at least 30 days' prior written notice must be given to the trustee and
each rating agency then rating a series of certificates of the
delegation; and
- at or prior to the end of the 30 day period the servicer must determine
that the rating agencies then rating a series of certificates have
notified the seller that such action will not result in a reduction or
withdrawal of the rating of any outstanding series or class of
certificates.
For information concerning entities currently involved in the bank's
servicing operations see "The Bank's Credit Card Activities--General,"
"--Billing and Payments" and "--Description of First Data Resource, Inc." in
this prospectus.
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INDEMNIFICATION
The Pooling and Servicing Agreement provides that the seller will indemnify
and hold harmless the trust and the trustee, its officers, directors, employees
and agents from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions or otherwise arising out of or based upon the arrangement created by
the Pooling and Servicing Agreement or any series supplement, as though the
Pooling and Servicing Agreement or the series supplement created a general
partnership under the Delaware Uniform Partnership Law in which the seller is
the general partner; provided, however, that:
- the seller will not indemnify the trustee if the acts, omissions or
alleged acts or omissions constitute or are caused by fraud, negligence,
or willful misconduct by the trustee;
- without limiting the claims of third parties, that the seller will not
indemnify the trust, the certificateholders or the Certificate Owners for
any liabilities, costs or expenses of the trust with respect to any
action taken by the trustee at the request of the certificateholders;
- the seller will not indemnify the trust, the certificateholders or the
Certificate Owners for any losses, claims or damages incurred by any of
them in their capacities as investors, including, without limitation,
losses incurred as a result of defaulted receivables; and
- the seller will not indemnify certificateholders or the Certificate
Owners for any liabilities, costs or expenses of the certificateholders
or the Certificate Owners arising under any tax law relating to any
federal, state, local or foreign income or franchise taxes or any other
tax imposed on or measured by income, or any interest or penalties
arising from a failure to comply with the tax law, required to be paid by
or for the account of the certificateholders or the Certificate Owners in
connection to any taxing authority.
The Pooling and Servicing Agreement states that the indemnification
provided by the seller will not be payable from the trust assets.
The Pooling and Servicing Agreement also provides that the servicer will
indemnify and hold harmless the trust and the trustee from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of any acts
or omissions of the servicer with respect to the trust, 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;
provided, however, that the servicer will not indemnify:
- the trustee if the acts or omissions constitute or are caused by fraud,
negligence, or willful misconduct by the trustee;
- the trust, the certificateholders or the Certificate Owners for any
liabilities, costs or expenses of the trust resulting from any action
taken by the trustee at the request of the certificateholders;
- the trust, the certificateholders or the Certificate Owners for any
losses, claims or damages incurred by any of them in their capacities as
investors, including without limitation losses incurred as a result of
defaulted receivables; or
- the trust, certificateholders or Certificate Owners for any liabilities,
costs or expenses of the trust, the certificateholders or the Certificate
Owners arising under any tax law, including without limitation, any
federal, state, local or foreign income or franchise taxes or any other
tax imposed on or measured by income or any related interest or penalty
required to be paid by the trust, the certificateholders or the
Certificate Owners to any taxing authority.
The Pooling and Servicing Agreement states that the indemnification
provided by the servicer will not be payable from the trust assets.
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SERVICER DEFAULT
If a Servicer Default occurs and has not been remedied, the trustee, or
certificateholders evidencing more than 50% of the aggregate investor amount of
the certificates of all series, may terminate all but not less than all of the
rights and obligations of the servicer, as servicer under the Pooling and
Servicing Agreement, and in and to the related receivables and proceeds of the
receivables.
The rights and interest of the seller under the Pooling and Servicing
Agreement and in the sellers' interest will not be affected by the termination
of the servicer; provided, however, if within 60 days of receipt of a notice of
termination, the trustee does not receive any bids from eligible servicers to
act as a successor servicer and receives an officer's certificate of the
servicer to the effect that the servicer cannot in good faith cure the Servicer
Default which gave rise to the termination notice, then the trustee will offer
the seller the right, at its option, to purchase the certificateholders'
interest on the next succeeding distribution date. The purchase price for the
certificateholders' interest will be equal to the sum of the amounts specified
in the related series supplements. The seller will notify the trustee in writing
prior to the record date for the distribution date of the purchase if it is
exercising this option. If the seller exercises this option, the seller will:
(1) if the seller's short-term deposits or long-term unsecured debt
obligations are not rated at the time at least P-3 or Baa3,
respectively, by Moody's, deliver to the trustee an opinion of
independent outside counsel to the effect that the purchase would
not be considered a fraudulent conveyance; and
(2) deposit the purchase price into the collection account on the
distribution date in immediately available funds.
A "SERVICER DEFAULT" refers to any of the following events:
(1) Any failure by the servicer to make any payment, transfer or deposit
or to give instructions or notice to the trustee pursuant to the
Pooling and Servicing Agreement or any series supplement on or
before the date occurring five business days after the date the
payment, transfer, deposit or such instruction or notice is required
to be made or given.
(2) Failure of the servicer duly to observe or perform in any material
respect any other covenants or agreements of the servicer described
in the Pooling and Servicing Agreement or any series supplement,
which has a material adverse effect on the certificateholders of any
series or class and the failure continues unremedied for 60 days
after notice is given to the servicer by the trustee, or to the
servicer and the trustee by certificateholders evidencing more than
50% of the aggregate investor amount of all series then outstanding
or, if the failure does not related to all series, more than 50% of
the investor amount of those series to which the failure relates.
(3) The servicer delegates its duties under the Pooling and Servicing
Agreement except as permitted by the Pooling and Servicing
Agreement, a responsible officer of the trustee has actual knowledge
of the delegation and the delegation continues unremedied for 15
days after notice is given to the servicer by the trustee, or to the
servicer and the trustee by certificateholders evidencing more than
50% of the aggregate investor amount of all series.
(4) Any representation, warranty or certification made by the servicer
shall prove to have been incorrect when made, has a material adverse
effect on the certificateholders of any series or class and
continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of the 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
certificateholders evidencing more than 50% of the aggregate
investor amount of all series then outstanding or if the
representation, warranty or certification does not relate to all
series, 50% of the investor amount of the affected series.
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(5) Certain events of bankruptcy, conservatorship, or receivership occur
with respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance under
clauses (1), (2), (3) or (4), will not, for certain limited periods, constitute
a Servicer Default if the delay or failure (a) could not be prevented by the
exercise of reasonable diligence by the servicer and (b) was caused by an act of
God or the public enemy, acts of declared or undeclared war, terrorism, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence will
not relieve the servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of the Pooling and
Servicing Agreement and any series supplement and the servicer will provide the
trustee, each rating agency, the holders of the Seller Certificates and the
certificateholders of all series with an officer's certificate giving prompt
notice of the failure or delay by it, together with a description of its efforts
to so perform its obligations.
REPORT TO CERTIFICATEHOLDERS
The seller expects that on each distribution date of a series, the paying
agent will forward to each certificateholder of record a statement prepared by
the servicer describing, among other things:
- the total amount distributed to certificateholders of each class of the
series;
- the amount of any distribution allocable to principal on the
certificates;
- the amount of the distribution allocable to interest on the certificates;
- the aggregate amount of collections processed during the prior monthly
period and allocated in respect of the certificates;
- the amount of collections of principal receivables processed during the
prior monthly period and allocated in respect of the certificates;
- the amount of collections of finance charge receivables processed during
the prior monthly period and allocated in respect of the certificates;
- the Series Percentage for each class of certificates with respect to
principal receivables and finance charge receivables, each as of the end
of the last day of the prior monthly period;
- the aggregate outstanding balance of accounts designated to the trust
which are 30 or more days contractually delinquent, by class of
delinquency, as of the end of the last day of the prior monthly period;
- the defaulted amount for the prior monthly period;
- the amount of the monthly servicing fee for each class for the prior
monthly period; and
- the amount of any series enhancement, available for each class as of the
close of business on the distribution date.
Each year the paying agent will furnish to each person who at any time
during the preceding calendar year was a certificateholder of record of a
series, a statement prepared by the servicer containing the information required
to be contained in the regular monthly servicing report aggregated for the
calendar year or the applicable portion of the year during which the person was
a certificateholder, together with the other customary information consistent
with the treatment of the certificates as debt, as the trustee or the servicer
deems necessary or desirable to enable the certificateholders to prepare their
tax returns.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before November 30
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 seller, to furnish a report to the trustee. The report will
state
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that the firm has applied agreed-upon procedures to documents and records
relating to the servicing of the receivables and, based upon the agreed-upon
procedures, no matters came to their attention that caused them to believe that
the servicing, including the allocations of collections, was not conducted in
compliance with the applicable terms and conditions described in the Pooling and
Servicing Agreement and any series supplements except for those exceptions the
firm believes to be immaterial and except for exceptions described in the
statement. In addition, on or before November 30 of each calendar year, the
accountants will compare the mathematical calculations of certain amounts
contained in the monthly servicer's certificates delivered during the period
covered by the report with the computer reports of the servicer which were the
source of the amounts and deliver a report to the trustee confirming that these
amounts are in agreement except for those exceptions as they believe to be
immaterial and except for other exceptions described in the report.
The Pooling and Servicing Agreement provides for delivery to the trustee on
or before November 30 of each calendar year of a statement signed by an
authorized 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 and any series supplements throughout the
preceding year or, if there has been a default in the performance of any of
these obligations, 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 or any series supplement may be amended
from time to time without certificateholder consent if:
- the seller delivers to the trustee an officer's certificate to the effect
that the seller reasonably believes the amendment will not result in the
occurrence of a Pay Out Event for any series and will not materially
adversely affect the amount or timing of distributions to be made to any
class or series; and
- each rating agency then rating any series of certificates has notified
the seller that the amendment will not result in a reduction or
withdrawal of any rating on any series or class of certificates.
Amendments which may be made without the consent of the certificateholders
include, but are not limited to, amendments which provide additional series
enhancement for the benefit of the certificateholders of any series or which
reduce the series enhancement and amendments in connection with the addition of
a participation interest to the trust or the designation of an additional
seller.
The Pooling and Servicing Agreement or any series supplement may also be
amended if the holders of certificates evidencing not less than 66 2/3% of the
aggregate investor amount of all adversely affected series consent. An amendment
made with 66 2/3% consent may change or eliminate any of the provisions of the
Pooling and Servicing Agreement or any series supplement or modify in any manner
the rights of certificateholders. No amendment, however, may:
- reduce in any manner the amount of or delay the timing of distributions
to be made to certificateholders or deposits of amounts to be so
distributed or the amount available under any series enhancement without
the consent of each affected certificateholder;
- change the definition of or the manner of calculating the interest of any
certificateholder without the consent of each affected certificateholder;
- reduce the percentage required to consent to any amendment without the
consent of each certificateholder; or
- adversely affect the rating of any series or class without the consent of
certificateholders of the related series or class evidencing not less
than 66 2/3% of the aggregate investor amount of the related series or
class.
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Any amendment shall be deemed not to adversely affect any outstanding
series for which the seller delivers an opinion of counsel that the amendment
will not have an adverse effect on that series.
Promptly following the execution of any amendment, except amendments that
do not require the consent of any certificateholders, the servicer will provide
written notice of the substance of the amendment to the trustee and, the trustee
will furnish that written notice to each certificateholder.
Prior to December 31, 2001, the bank expects to amend the Pooling and
Servicing Agreement, including relevant supplements to preserve under Financial
Accounting Standards Board Statement No. 140 the sale treatment for accounting
purposes of assets transferred by the seller directly or indirectly to the
trust. These amendments will be made without certificateholder consent and may
include providing for the transfer of receivables from the bank as seller to a
special purpose entity and from that entity to the trust, provided the bank
delivers a tax opinion in connection with that amendment. Prior to the
effectiveness of any amendment related to the transfer to a special purpose
entity, the seller agrees to deliver a copy of the form of the amendment to each
rating agency for its review.
DEFEASANCE
Pursuant to the Pooling and Servicing Agreement, the seller may terminate
its substantive obligations in respect of any series or all outstanding series
by depositing with the trustee under the terms of an irrevocable trust
agreement, monies and/or eligible investments which monies or investments do not
come from funds of the seller or an affiliate of the seller and are sufficient
to make all remaining scheduled interest and principal payments on the
designated series on the dates scheduled for the payments and to pay all amounts
owing to any provider of series enhancement with respect to that series.
Each series for which a deposit is made will be a "DEFEASED SERIES." To
provide for a defeasance of a series, the seller has the right to use
collections of receivables allocated to the defeased series and otherwise
available to purchase additional receivables to be applied to purchase eligible
investments rather than additional receivables. Prior to its first exercise of
its right to substitute monies or eligible investments for receivables, the
seller shall deliver to the trustee a tax opinion with respect to the deposit
and termination of obligations and shall deliver to the servicer and the trustee
written notice from each rating agency then rating a series of certificates that
the defeasance will not result in a reduction on withdrawal of the rating of any
outstanding series or class of certificates. In addition, the seller must comply
with other requirements described in the Pooling and Servicing Agreement
including requirements that the seller:
- deliver to the trustee an opinion of counsel 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
- deliver to the trustee and providers of series enhancement a certificate
of an authorized officer stating that, based on the facts known to the
officer at the time, in the reasonable opinion of the seller, the deposit
and termination of obligations will not at the time of its occurrence
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
any series.
If the seller discharges its substantive obligations in respect of the
defeased series, any series enhancement for the affected series may no longer be
available to make payments on that series.
LIST OF CERTIFICATEHOLDERS
Upon application of certificateholders of record representing undivided
interests in the trust aggregating not less than 10% of the aggregate unpaid
principal amount of any or all series, the trustee will, if it has been
adequately indemnified by the certificateholders, within five business days of
the
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request, afford the certificateholders access to the current list of registered
certificateholders of the series or all series, as applicable. Access to the
list will be made only during business hours and only for the purposes of
communicating with other certificateholders concerning their rights under the
Pooling and Servicing Agreement or any series supplement or the certificates.
THE TRUSTEE
Bankers Trust Company is the trustee under the Pooling and Servicing
Agreement. The seller, 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, the seller, the servicer and any of
their respective affiliates may hold certificates in their own names. 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 the
appointment, all rights, powers, duties and obligations conferred or imposed
upon the trustee by the Pooling and Servicing Agreement shall be conferred or
imposed upon the trustee and the 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 the separate trustee or co-trustee who shall
exercise and perform these rights, powers, duties and obligations solely at the
direction of the trustee.
The trustee may resign at any time, in which event the servicer will be
obligated to appoint a successor trustee. The servicer may also remove the
trustee if the trustee ceases to be eligible to continue as trustee under the
Pooling and Servicing Agreement, is legally unable to act or if the trustee
becomes bankrupt or insolvent. In these circumstances, the servicer will be
obligated to appoint a successor trustee. Any resignation or removal of the
trustee and appointment of a successor trustee does not become effective until
acceptance of the appointment by the successor trustee.
ENHANCEMENT
GENERAL
For any series, enhancement may be provided for one or more classes.
Enhancement provided for a series of certificates or a class or classes within a
series is "SERIES ENHANCEMENT." Series enhancement may be in the form of the
subordination of one or more classes of the certificates of the series, a letter
of credit, the establishment of a cash collateral guaranty or account, a
collateral interest, a surety bond, insurance, the use of cross support
features, the use of a swap agreement or any combination of these. To the extent
specified in the related prospectus supplement, any form of series enhancement
may be structured so as to be drawn upon by more than one class.
For any series, the series enhancement may not provide protection against
all risks of loss and may not guarantee repayment of the entire principal
balance and interest of the certificates. If losses occur which exceed the
amount covered by the series enhancement or which are not covered by the series
enhancement, certificateholders will bear their allocable share of deficiencies.
If series enhancement is provided for a series, the related prospectus
supplement will include a description of:
- the amount payable under the series enhancement;
- any conditions to payment under the series enhancement not otherwise
described in this prospectus;
- the conditions, if any, under which the amount payable under the series
enhancement may be reduced and under which the series enhancement may be
terminated or replaced; and
- any provisions of any agreement relating to the series enhancement
material to the certificateholders of the series.
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Additionally, the related prospectus supplement may set forth information
with respect to the issuer of any third-party series enhancement, including:
- a brief description of its principal business activities;
- its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
- if applicable, the identity of regulatory agencies which exercise primary
jurisdiction over the conduct of its business; and
- its total assets, and its stockholders' or policyholders' surplus, if
applicable, as of the date specified in the prospectus supplement.
SUBORDINATION
If specified in the related prospectus supplement, one or more classes of a
series may be subordinated to one or more other classes of a series. If
specified in the related prospectus supplement, the rights of the holders of the
subordinated certificates or uncertificated interests to receive distributions
of principal and/or interest on any distribution date will be subordinated to
the rights of the holders of the certificates which are senior to the
subordinated certificates or uncertificated interests to the extent described in
the related prospectus supplement. The amount of subordination will decrease
whenever amounts otherwise payable to the holders of subordinated certificates
or uncertificated interests are paid to the holders of the senior certificates
or interests.
LETTER OF CREDIT
If specified in the related prospectus supplement, a letter of credit for a
series or class of certificates may be issued by the bank or financial
institution specified in the related prospectus supplement. Under the letter of
credit, the issuing bank will be obligated to honor drawings in an aggregate
fixed dollar amount, net of unreimbursed payments thereunder, equal to the
amount described in the related prospectus supplement. The amount available
under the letter of credit will be reduced to the extent of the unreimbursed
payments under it.
CASH COLLATERAL GUARANTY OR ACCOUNT
If specified in the related prospectus supplement, the certificates of any
class or series may have the benefit of a guaranty, called a "CASH COLLATERAL
GUARANTY," issued pursuant to a trust agreement between a cash collateral
depositor, a cash collateral trustee and the seller and the servicer or be
secured by the deposit of cash or permitted investments in a "CASH COLLATERAL
ACCOUNT" directly. The cash collateral guaranty will generally be an obligation
of the cash collateral trust and not of the cash collateral depositor, the cash
collateral trustee, except to the extent of amounts on deposit in the cash
collateral account, the trustee or the bank, as seller and servicer.
The servicer will determine prior to each distribution date with respect to
the series enhanced by the cash collateral guaranty or the cash collateral
account whether a deficiency exists for the payment of interest and/or principal
on the certificates so enhanced. If the servicer determines that a deficiency
exists, it shall instruct the trustee to draw an amount equal to the deficiency
from the cash collateral guaranty or the cash collateral account, up to the
maximum amount available.
COLLATERAL INTEREST
If so specified in the related prospectus supplement, support for a series
of certificates or one or more classes of certificates may be provided initially
by an uncertificated, subordinated interest in the trust called a "COLLATERAL
INTEREST" in an amount initially equal to a percentage of the certificates of
the series specified in the related prospectus supplement.
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SWAP AGREEMENTS
If 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 cap agreements, currency swap
agreements or other forms of swap agreements for the benefit of a series or of a
class of a series. The terms of the swap agreement will be specified in the
related prospectus supplement.
SURETY BOND OR INSURANCE POLICY
If specified in the related prospectus supplement, insurance with respect
to a series or class of certificates may be provided by one or more insurance
companies. This 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 specified in the related prospectus supplement, a surety bond may be
purchased for the benefit of the holders of any series or class of the series to
assure distributions of interest or principal for the series or class of
certificates in the manner and amount specified in the related prospectus
supplement.
SPREAD ACCOUNT
If specified in the related prospectus supplement, support for a series or
one or more classes of a series may be provided upon the terms and conditions
described in the related prospectus supplement by the periodic deposit of
limited amounts of excess cash flow from the trust assets into an account called
the "SPREAD ACCOUNT," intended to assure the subsequent distribution of interest
and principal on the certificates of the class or series in the manner specified
in the related prospectus supplement.
CERTIFICATE RATING
Any rating of the certificates by a rating agency will indicate:
- that rating agency's view on the likelihood that certificateholders will
receive required interest and principal payments; and
- that rating agency's evaluation of the receivables and the availability
of any credit enhancement for the certificates.
Among the things a rating will not indicate are:
- the likelihood that interest or principal payments will be paid on a
scheduled date;
- the likelihood that a Pay Out Event will occur;
- the likelihood that a United States withholding tax will be imposed on
non-U.S. certificateholders;
- the marketability of the certificates;
- the market price of the certificates; or
- whether the certificates are an appropriate investment for any purchaser.
A rating will not be a recommendation to buy, sell or hold the
certificates. A rating may be lowered or withdrawn at any time by a rating
agency.
The seller will request a rating of the certificates offered by this
prospectus and the accompanying prospectus supplement from at least one rating
agency. Rating agencies other than those requested could assign a rating to the
certificates and that rating could be lower than any rating assigned by a rating
agency chosen by the seller.
Whenever in this prospectus there are references to notices given to the
rating agencies or notices, consents or letters to be obtained from the rating
agencies, those references are, with respect to any series
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or class, the statistical rating agency or rating agencies selected by the
seller to rate the certificates of that series or class.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a discussion of the material federal income tax
consequences relating to the purchase, ownership and disposition of a
certificate offered by this prospectus and the related prospectus supplement.
This discussion has been prepared by Orrick, Herrington & Sutcliffe LLP as
special federal income tax counsel to the seller ("SPECIAL TAX COUNSEL").
Additional material federal income tax considerations, if any, relevant to a
particular series will be set forth in the related prospectus supplement.
Special tax counsel is of the opinion that this discussion is correct in all
material respects.
As more fully described below, special tax counsel is also of the opinion
that the offered certificates will be characterized as debt for federal income
tax purposes and the trust will not be treated as an association or publicly
traded partnership taxable as a corporation for these purposes. Except as
provided in the related prospectus supplement, special tax counsel will render
no other tax opinions to the seller with respect to the offered certificates or
the trust. This discussion is intended as an explanatory discussion of the
possible effects of the classification of the offered certificates as debt to
investors generally and related tax matters affecting investors generally, but
does not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an investor's tax advisor. This discussion is based on current law, which is
subject to changes that could prospectively or retroactively modify or adversely
affect the tax consequences summarized below. The discussion does not address
all of the tax consequences relevant to a particular Certificate Owner in light
of that Certificate Owner's circumstances, and some Certificate Owners may be
subject to special tax rules and limitations not discussed below. Each
prospective Certificate Owner is urged to consult its own tax adviser in
determining the federal, state, local and foreign income and any other tax
consequences of the purchase, ownership and disposition of a certificate.
For purposes of this discussion, "U.S. PERSON" means a citizen or resident
of the United States, a corporation or partnership organized in or under the
laws of the United States, any state thereof, or any political subdivision of
either (including the District of Columbia), or an estate or trust the income of
which is includible in gross income for U.S. federal income tax purposes
regardless of its source. The term "U.S. CERTIFICATE OWNER" means any
Certificate Owner that is a U.S. Person.
TREATMENT OF THE CERTIFICATE AS DEBT
The seller expresses in the Pooling and Servicing Agreement the intent that
for federal, state and local income and franchise tax purposes, the certificates
will be debt secured by the receivables. The seller, by entering into the
Pooling and Servicing Agreement, and each investor, by the acceptance of a
beneficial interest in a certificate, will agree to treat the certificates as
debt for federal, state and local income and franchise tax purposes. However,
the Pooling and Servicing Agreement generally refers to the transfer of
receivables as a "sale," and because different criteria are used in determining
the non-tax accounting treatment of the transaction, the seller will treat the
Pooling and Servicing Agreement for certain non-tax accounting purposes as
causing a transfer of an ownership interest in the receivables and not as
creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines its tax consequences. The form and non-tax
characterization of a transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as the Internal Revenue Service to treat a
transaction in accordance with
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its economic substance as determined under federal income tax law, even though
the participants in the transaction have characterized it differently for
non-tax purposes.
The determination of whether the economic substance of a purchase of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and the courts on the basis of numerous factors designed to
determine whether the seller has relinquished and the purchaser has obtained
substantial incidents of ownership in the property. Among those factors, the
primary ones examined are whether the purchaser has the opportunity to gain if
the property increases in value, and has the risk of loss if the property
decreases in value.
Except to the extent otherwise specified in the accompanying prospectus
supplement, Orrick, Herrington & Sutcliffe LLP, special tax counsel to the
seller, is of the opinion that, under current law as in effect on the date of
issuance of a series of certificates, although no transaction closely comparable
to that contemplated by this prospectus has been the subject of any Treasury
regulation, revenue ruling or judicial decision, for federal income tax purposes
the certificates will not constitute an ownership interest in the receivables,
but will properly be characterized as debt. Except where indicated to the
contrary, the following discussion assumes that the certificates are debt for
federal income tax purposes.
TREATMENT OF THE TRUST
General. The Pooling and Servicing Agreement permits the issuance of
certificates and certain other interests in the trust, including collateral
interests, each of which may be treated for federal income tax purposes either
as debt or as equity interests in the trust. If all of the certificates and
other interests, other than the sellers' interest, in the trust were
characterized as debt, the trust might be characterized as a security
arrangement for debt collateralized by the receivables and issued directly by
the seller or other holders of the sellers' interest. Under this view, the trust
would be disregarded for federal income tax purposes. Alternatively, if some of
the certificates and other interests in the trust were characterized as equity,
the trust might be characterized as a separate entity owning the receivables,
issuing its own debt, and jointly owned by the seller or other holders of the
sellers' interest and any other holders of equity interests in the trust.
However special tax counsel is of the opinion that, under the current law as in
effect on the date of issuance of a series of certificates, any entity
constituted by the trust will not be an association or publicly traded
partnership taxable as a corporation.
Possible Treatment of the Trust as a Partnership or a Publicly Traded
Partnership. Although, as described above, special tax counsel is of the
opinion that the certificates will properly be treated as debt for federal
income tax purposes and that the trust will not be treated as an association or
publicly traded partnership taxable as a corporation for federal income tax
purposes, this opinion will not bind the IRS and thus, no assurance can be given
that such treatment will prevail. If the IRS were to contend successfully that
some or all of the sellers' interest, the certificates or other interests in the
trust including any collateral interest were equity in the trust for federal
income tax purposes, all or a portion of the trust could be classified as a
partnership or a publicly trade partnership taxable as a corporation for such
purposes. Because special tax counsel is of the opinion that the certificates
will be characterized as debt for federal income tax purposes and because any
holder of an interest in a collateral interest will agree to treat that interest
as debt for tax purposes, no attempt will be made to comply with any tax
reporting requirements that would apply as a result of any alternative
characterizations.
If the trust were treated in whole or in part as a partnership in which
some or all holders of interests in the publicly offered certificates were
partners, that partnership could be classified as a publicly traded partnership
and so could be taxable as a corporation. Further, regulations published by the
Treasury Department 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 publicly traded partnership 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 publicly traded partnership
regulations provide for a 10-year grandfather period for a partnership actively
engaged in an activity before
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December 4, 1995, it is not clear whether the trust would 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 publicly traded partnership regulations, it would
avoid taxation as a corporation if its income was not derived in the conduct of
a "financial business;" however, whether the income of the trust would be so
classified is unclear.
Under the Internal Revenue Code and the publicly traded partnership
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 seller intends 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 seller
expects these measures will ultimately be successful, certain of the actions
that may be necessary for avoiding the treatment of the interests as "readily
tradable" on a "secondary market" or its "substantial equivalent" are not fully
within the control of the seller. As a result, there can be no assurance that
the measures the seller intends to take will in all circumstances be sufficient
to prevent the trust from being classified as a publicly traded partnership
under the publicly traded partnership regulations.
If the trust were treated as a partnership other than a publicly traded
partnership taxable as a corporation, that partnership would not be subject to
federal income tax. Rather, each item of income, gain, loss and deduction of the
partnership generated through the ownership of the related receivables would be
taken into account directly in computing taxable income of the seller, or the
holder of the sellers' interest, and any Certificate Owners treated as partners
in accordance with their respective partnership interests therein. The amounts
and timing of income reportable by any Certificate Owners treated as partners
would likely differ from that reportable by the Certificate Owners had they been
treated as owning debt. In addition, if the trust were treated in whole or in
part as a partnership other than a publicly traded partnership, income derived
from the partnership by any Certificate Owner that is a pension fund or other
tax-exempt entity may be treated as unrelated business taxable income.
Partnership characterization also may have adverse state and local income or
franchise tax consequences for a Certificate Owner. Further, if the trust were
treated in whole or in part as a partnership and the number of holders of
interests in the publicly offered certificates and other interests in the trust
treated as partners equaled or exceeded 100, the seller may cause the trust to
elect to be an "electing large partnership." The consequence of this election to
investors could include the determination of certain tax items at the
partnership level and the disallowance of otherwise allowable deductions. No
representation is made as to whether any this election will be made.
If the arrangement created by the Pooling and Servicing Agreement were
treated in whole or in part as a publicly traded partnership taxable as a
corporation, that entity would be subject to federal income tax at corporate tax
rates on its taxable income generated by ownership of the related receivables.
That tax could result in reduced distributions to Certificate Owners. No
distributions from the trust would be deductible in computing the taxable income
of the corporation, except to the extent that any certificates were treated as
debt of the corporation and distributions to the related Certificate Owners were
treated as payments of interest thereon. In addition, distributions to
Certificate Owners not treated as holding debt would be dividend income to the
extent of the current and accumulated earnings and profits of the corporation
and Certificate Owners may not be entitled to any dividends received deduction
in respect of this income.
TAXATION OF INTEREST INCOME OF U.S. CERTIFICATE OWNERS
General. Stated interest on a beneficial interest in a certificate will be
includible in gross income in accordance with a U.S. Certificate Owner's method
of accounting.
Original Issue Discount. If the certificates are issued with original
issue discount, the provisions of sections 1271 through 1273 and 1275 of the
Internal Revenue Code of 1986 will apply to the certificates. Under those
provisions, a U.S. Certificate Owner including a cash basis holder generally
would be required to accrue the original issue discount on its interest in a
certificate in income for federal income tax
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purposes on a constant yield basis, resulting in the inclusion of original issue
discount in income somewhat in advance of the receipt of cash attributable to
that income.
In general, a certificate will be treated as having original issue discount
to the extent that its "stated redemption price" exceeds its "issue price," if
such excess equals or exceeds 0.25 percent multiplied by the weighted average
life of the certificate. The weighted average life of the certificate will be
determined by taking into account only the number of complete years following
issuance until payment is made for any partial principal payments. Under Section
1272(a)(6) of the Internal Revenue Code, special provisions apply to debt
instruments on which payments may be accelerated due to prepayments of other
obligations securing those debt instruments. However, no regulations have been
issued interpreting those provisions, and the manner in which those provisions
would apply to the certificates is unclear. Additionally, the Internal Revenue
Service could take the position based on Treasury regulations that none of the
interest payable on a certificate is "unconditionally payable" and hence that
all of the interest should be included in the certificate's stated redemption
price at maturity. If sustained, this treatment should not significantly affect
the tax liability of most Certificate Owners, but prospective U.S. Certificate
Owners should consult their own tax advisers concerning the impact to them in
their particular circumstances.
Market Discount. A U.S. Certificate Owner who purchases an interest in a
certificate at a discount that exceeds any unamortized original issue discount
may be subject to the "market discount" rules of sections 1276 through 1278 of
the Internal Revenue Code. These rules provide, in part, that gain on the sale
or other disposition of a certificate and partial principal payments on a
certificate are treated as ordinary income to the extent of accrued market
discount. The market discount rules also provide for deferral of interest
deductions with respect to debt incurred to purchase or carry a certificate that
has market discount.
Market Premium. A U.S. Certificate Owner who purchases an interest in a
certificate at a premium may elect to offset the premium against interest income
over the remaining term of the Certificate in accordance with the provisions of
section 171 of the Internal Revenue Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a disposition of an interest in a certificate, a U.S. Certificate
Owner generally will recognize gain or loss equal to the difference between the
amount realized on the disposition and the U.S. Certificate Owner's adjusted
basis in its interest in the certificate. The adjusted basis in the interest in
the certificate will equal its cost, increased by any original issue discount or
market discount includible in income with respect to the interest in the
certificate prior to its sale and reduced by any payments of principal and
original issue discount 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.
FOREIGN CERTIFICATE OWNERS
In general, a Certificate Owner who, as to the United States, is a
nonresident alien individual or a foreign corporation (a "FOREIGN PERSON"),
generally will be considered "portfolio interest" and generally will not be
subject to U.S. federal income tax on interest, including original issue
discount, on a beneficial interest in a Certificate, provided the interest is
not effectively connected with the conduct of a trade or business within the
United States by the foreign person unless:
- the foreign person actually or constructively owns 10 percent or more of
the total combined voting power of all classes of stock of the seller
entitled to vote or of a profits or capital interest of the trust if
characterized as a partnership;
- the foreign person is a controlled foreign corporation that is related to
the seller (or the trust if treated as a partnership) through stock
ownership;
- the foreign person is a bank described in Internal Revenue Code section
881(c)(3)(A);
- this interest is contingent interest described in Internal Revenue Code
section 871(h)(4); or
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- the foreign person bears certain relationships to any holder of either
the Seller Certificates other than the Seller or any other interest in
the trust not properly characterized as debt.
To qualify for the exemption from taxation, the last U.S. Person in the
chain of payment prior to payment to a foreign person must have received, in the
year in which a payment of interest or principal occurs or in either of the two
preceding years, a statement that:
- is signed by the foreign person under penalties of perjury;
- certifies that the foreign person is not a U.S. Person; and
- provides the name and address of, and certain additional information
concerning, the foreign person.
The statement generally may be made on a Form W-8BEN or substantially
similar substitute form, and the foreign person must inform the withholding
agent of any change in the information on the statement within 30 days of the
change. If a certificate is held through a securities clearing organization or
certain other financial institutions, the organization or institution may
provide a signed statement to the withholding agent. However, in that case, the
signed statement must be accompanied by a Form W-8BEN or substitute form
provided by the foreign person to the organization or institution holding the
certificate on behalf of the foreign person. If interest is not portfolio
interest, then it will be subject to United States federal income and
withholding tax at a rate of 30 percent, unless reduced or eliminated under an
applicable tax treaty or interest is effectively connected with the conduct of a
trade of business within the United States and, in either case, the appropriate
statement has been provided. Special rules apply to partnerships, estates and
trusts, and in certain circumstances certifications as to foreign status and
other matters may be required to be provided by partners and beneficiaries
thereof.
Generally, any gain or income realized by a foreign person upon retirement
or disposition of an interest in a certificate will not be subject to U.S.
federal income tax, provided that:
- in the case of a Certificate Owner that is an individual, that
Certificate Owner is not present in the United States for 183 days or
more during the taxable year in which such retirement or disposition
occurs; and
- in the case of gain representing accrued interest, the conditions
described in the preceding paragraph for exemption from withholding are
satisfied.
- Some exceptions to the exemption may be applicable, and an individual
foreign person should consult a tax advisor.
The U.S. Treasury Department has recently issued final Treasury regulations
which revise various procedural matters relating to withholding taxes.
Certificate Owners should consult their tax advisors regarding the procedures
whereby they may establish an exemption from withholding.
If the certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificate Owner to be treated as
engaged in a trade or business in the United States. In that event, the non-U.S.
Certificate Owner would be required to file a federal income tax return and, in
general, would be subject to U.S. federal income tax including the branch
profits tax on its net income from the partnership. Further, certain withholding
obligations apply with respect to income allocable or distributions made to a
foreign partner. That withholding may be at a rate as high as 39.6 percent. If
some or all of the certificates were treated as stock in a corporation, any
related dividend distributions to a non-U.S. Certificate Owner generally would
be subject to withholding of tax at the rate of 30 percent, unless that rate
were reduced by an applicable tax treaty.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of principal and interest, as well as payments of proceeds from
the sale, retirement or other disposition of a certificate, may be subject to
"BACKUP WITHHOLDING" tax under the Internal Revenue Code at a rate of 31 percent
if a recipient of such payments fails to furnish to the payor certain
identifying information. Any amounts deducted and withheld would be allowed as a
credit against such recipient's United States federal income tax, provided
appropriate proof is provided under rules established by the Internal Revenue
Service. Furthermore, certain penalties may be imposed by the Internal Revenue
Service on a recipient of payments that is required to supply information but
that does not do so in the proper
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manner. Backup withholding will not apply with respect to payments made to
certain exempt recipients, such as corporations and financial institutions.
Information may also be required to be provided to the Internal Revenue Service
concerning payments, unless an exemption applies. Certificate Owners should
consult their tax advisors regarding their qualification for exemption from
backup withholding and information reporting and the procedure for obtaining
such an exemption.
STATE AND LOCAL TAXATION
The discussion above does not address the taxation of the trust or the tax
consequences of the purchase, ownership or disposition of an interest in the
certificates under any state or local tax law. Each investor should consult its
own tax adviser regarding state and local tax consequences.
ERISA CONSIDERATIONS
This section provides a brief summary of the material provisions of ERISA
and the Internal Revenue Code which should be considered by potential investors
if such investors contemplate acquisition of the certificates as an investment
or with "plan assets" of a plan, as defined below. Additional information with
respect to each series and the classes will be included in the related
prospectus supplement.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, and Section 4975 of the Internal Revenue Code prohibit certain pension,
profit sharing or other employee benefit plans, individual retirement accounts
or annuities and employee annuity plans and Keogh plans--collectively,
"PLANS"--from engaging in certain transactions involving "plan assets" with
persons that are "parties in interest" under ERISA or "disqualified persons"
under the Internal Revenue Code--collectively, "parties in interest"--with
respect to the plan. A violation of these "prohibited transaction" rules may
generate excise tax and other liabilities under ERISA and Section 4975 of the
Internal Revenue Code for these persons, unless a statutory, regulatory or
administrative exemption is available.
Subject to the considerations described below and except to the extent
otherwise specified in the accompanying prospectus supplement, the seller
anticipates that the most senior class of each series of certificates will be
eligible for purchase by plan investors.
A violation of the prohibited transaction rules could occur if any class of
certificates were to be purchased with "plan assets" of any plan and the seller,
the trustee, any underwriters of the related series or any of their affiliates
were a party in interest with respect to the plan, unless a statutory,
regulatory or administrative exemption is available or an exception applies
under a regulation issued by the Department of Labor. The seller, the trustee,
any underwriters of a series and their affiliates are likely to be parties in
interest with respect to many plans. Before purchasing certificates, a plan
fiduciary or other plan investor should consider whether a prohibited
transaction might arise by reason of the relationship between the plan and the
seller, the trustee, any underwriters of the series or any of their affiliates
and consult their counsel regarding the purchase in light of the considerations
described below.
The Department of Labor has issued five class exemptions that may apply to
otherwise prohibited transactions arising from the purchase or holding of the
certificates: Department of Labor Prohibited Transaction Class Exemptions 96-23
relating to transactions determined by "in-house asset managers", 95-60 relating
to transactions involving insurance company general accounts, 91-38 relating to
transactions involving bank collective investment funds, 90-1 relating to
transactions involving insurance company pooled separate accounts or 84-14
relating to transactions determined by independent "qualified professional asset
managers" or any other prohibited transaction exemption issued by the Department
of Labor. A purchaser of certificates of any class should be aware, however,
that even if the conditions specified in one or more of the above-referenced
exemptions are met, the scope of the exemptive relief provided by the exemption
might not cover all acts which might be construed as prohibited transactions.
Under certain circumstances, the Department of Labor plan asset regulation
treats the assets of an entity in which a plan holds an equity interest as "plan
assets" of that plan. Because the certificates will
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represent beneficial interests in the trust, and despite the agreement of the
seller and the certificate owners to treat each series of certificates as debt
instruments, the certificates are likely to be considered equity interests in
the trust for purposes of the plan asset regulation, with the result that the
assets of the trust are likely to be treated as "plan assets" of the investing
plans for purposes of ERISA and Section 4975 of the Internal Revenue Code,
unless either of the following exceptions applies.
The first exception applies to a "publicly-offered security." A
publicly-offered security is a security that is:
(1) freely transferable;
(2) part of a class of securities that is owned, immediately
subsequent to the initial offering, by 100 or more investors who
were independent of the issuer and of one another; and
(3) 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 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 the
security is a part is registered under the Exchange Act within
120 days, or a later time as may be allowed by the SEC, after
the end of the fiscal year of the issuer during which the
offering of the securities to the public occurred.
For purposes of the 100 independent investor criterion, except to the extent
otherwise disclosed in the accompanying prospectus supplement, each class of
certificates should be deemed to be a "class" of securities that would be tested
separately from any other securities that may be issued by the trust. The
accompanying prospectus supplement will indicate whether it is anticipated that
each class of certificates will meet the foregoing criteria for treatment as
"publicly-offered securities." No restrictions will be imposed on the transfer
of the certificates. Unless otherwise disclosed in the accompanying prospectus
supplement, the seller expects that the most senior class of each series of
certificates will be held by at least 100 independent investors at the
conclusion of the initial public offering although no assurance can be given,
and no monitoring or other measures will be taken to ensure, that the condition
is met. Unless otherwise disclosed in the accompanying prospectus supplement,
the most senior class of each series of certificates will be sold as part of an
offering pursuant to an effective registration statement under the Securities
Act of 1933 and then will be timely registered under the Securities Act of 1934.
The second exception applies if equity participation in the entity by
"benefit plan investors"--i.e., plans and other employee benefit plans not
subject to ERISA, such as governmental or foreign plans, as well as entities
holding assets deemed to be "plan assets"--is not "significant." Benefit plan
investors' equity participation in the trust is not significant on any date on
which any series of certificates is issued and outstanding if, immediately after
the most recent acquisition of any equity interest in the trust, less than 25%
of the value of each class of equity interests in the trust excluding interests
held by the seller, the trustee or their affiliates is held by benefit plan
investors. The seller can give no assurance as to whether the value of each
class of equity interests in the trust held by benefit plan investors will be
"significant" upon completion of the offering of any series of certificates or
thereafter, and no monitoring or other measures will be taken with respect to
the satisfaction of the conditions to this exception.
If neither of the foregoing exceptions under the plan asset regulation is
satisfied with respect to the trust and the trust were considered to hold "plan
assets," transactions involving the trust and parties in interest with respect
to a plan that is a Certificate Owner might be prohibited under Section 406 of
ERISA and/or Section 4975 of the Internal Revenue Code and result in excise tax
and other liabilities under ERISA and Section 4975 of the Internal Revenue Code
unless an exemption were available. The five Department of Labor class
exemptions mentioned above may not provide relief for all transactions involving
the assets of the trust even if they would otherwise apply to the purchase of a
certificate by a
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plan. However, exemptive relief may be available under an exemption issued to
the seller if and to the extent disclosed in the related prospectus supplement.
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the certificates on behalf or with "plan assets" of any plan should
consult their own counsel regarding whether the trust assets represented by the
certificates would be considered "plan assets," the consequences that would
apply if the trust's assets were considered "plan assets," and the availability
of exemptive relief from the prohibited transaction rules or the applicability
of an exception under the plan asset regulation. In addition, based on the
reasoning of the United States Supreme Court decision in John Hancock Mut. Life
Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86 (1993), under some
circumstances assets in the general account of an insurance company may be
deemed to be plan assets for certain purposes, with the result that a purchase
of certificates with assets of an insurance company's general account may
subject the insurance company to the prohibited transaction and other fiduciary
responsibility rules of ERISA with respect to these assets. Insurance company
general account investors should also consider the effect of the enactment of
Section 401(c) of ERISA and any regulations issued under Section 401(c).
Finally, plan fiduciaries and other plan investors should consider the fiduciary
standards under ERISA or other applicable law in the context of the plan's
particular circumstances before authorizing an investment of a portion of the
plan's assets in the certificates. Accordingly, among other factors, plan
fiduciaries and other plan investors should consider whether the investment:
- satisfies the diversification requirement of ERISA or other applicable
law;
- is in accordance with the plan's governing instruments; and
- is prudent in light of the "Risk Factors" and other factors discussed in
this prospectus and in the accompanying prospectus supplement.
PLAN OF DISTRIBUTION
The certificates of any series offered hereby and by the related prospectus
supplement may be offered by the underwriter or underwriters named in the
related prospectus supplement as agent or underwriter, or through underwriting
syndicates represented by the same underwriter or underwriters.
The underwriters involved in the offering of any series of certificates may
include Fleet Securities, Inc., an affiliate of Fleet and of the bank, and may
include other affiliates of Fleet and of the bank. Fleet Securities, Inc. or
other affiliates may be involved in any series as an underwriter or an agent.
This prospectus, together with the accompanying prospectus supplement, may
be used by Fleet Securities, Inc. or another affiliate of the bank, in
connection with offers and sales of an indeterminate amount of the certificates
in market-making transactions. In these transactions, Fleet Securities, Inc. or
another affiliate may act as a principal or an agent and the sales will be at
negotiated prices related to prevailing market prices at the time of the sale.
UNDERWRITING
The prospectus supplement relating to a series will set forth the terms of
the offering of that series and each class within the series, including the name
or names of the underwriters, the proceeds to and their intended use by the
seller, and either the initial public offering price, the discounts and
commissions to the underwriters and any discounts or concessions allowed or
reallowed to certain dealers, or the method by which the price at which the
underwriters will sell the certificates of the series will be determined.
The underwriters will be obligated, subject to certain conditions, to
purchase all of the certificates described in the prospectus supplement relating
to a series if any of the certificates are purchased. The certificates may 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 determined at the time of sale.
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The seller may also sell the certificates offered hereby and by means of
the related prospectus supplements from time to time in negotiated transactions
or otherwise, at prices determined at the time of sale. These transactions may
be effected by selling certificates to or through dealers and the dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the seller and any purchasers of certificates for whom they may
act as agents.
The place and time of delivery for the series in respect of which this
prospectus is delivered will be set forth in the accompanying prospectus
supplement.
LEGAL MATTERS
It is anticipated that certain legal matters relating to the issuance of
the certificates of any series will be passed upon for the bank by counsel named
in the related prospectus supplement and, with respect to the federal tax
consequences of such issuance, by the bank's special tax counsel. Certain legal
matters relating to the issuance of the certificates of a series will be passed
upon for the underwriters by the counsel named in the related prospectus
supplement. Prior to the sale of each series of certificates, the seller will
cause a legality opinion to be filed with the SEC with respect to that series.
REPORTS TO CERTIFICATEHOLDERS
The servicer will prepare monthly and annual reports that will contain
information about the trust. These reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
Unless and until definitive certificates are issued to Certificate Owners, the
reports will be sent to the trustee and in turn sent only to Cede & Co., which
is the nominee of The Depository Trust Company and the only registered holder of
the certificates. No financial reports will be sent to you. See "Description of
the Certificates--Book-Entry Registration," "--Reports to Certificateholders"
and "--Evidence as to Compliance" in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the certificates with the
SEC. This prospectus is part of the registration statement, but the registration
statement includes additional information.
The servicer will file with the SEC all required annual, monthly and
special reports and other information about the trust.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room of the SEC in Washington, D.C. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the SEC. Please call the SEC at (800) SEC-0330 for further information and
the operation of the public reference room. Our SEC filings are also available
to the public on the SEC Internet site (http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. This information incorporated by reference is considered
to be part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus or the accompanying prospectus supplement. We incorporate by
reference any future annual, monthly and special SEC reports and proxy materials
filed by or on behalf of the trust until we terminate our offering of the
certificates.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: Fleet Bank (RI), National Association, 200 Tournament Drive,
Suite 303, Horsham, PA 19044-2303, Attn: Credit Card Securitization Department;
(215) 444-6800.
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INDEX OF PRINCIPAL TERMS
PAGE
----
accumulation period................. 27
addition date....................... 43
additional sellers.................. 33
amortization period................. 27
automatic additions................. 45
backup withholding.................. 66
bank................................ 16
Bank Certificate.................... 32
cash collateral account............. 60
cash collateral guaranty............ 60
Certificate Owner................... 28
certificateholders.................. 17
certificateholders' interest........ 17
collateral interest................. 60
collection account.................. 48
cycle............................... 21
defaulted amount.................... 50
defaulted receivables............... 50
defeased series..................... 58
definitive certificates............. 31
depositaries........................ 28
depository.......................... 28
discount option receivable
collections....................... 47
discount percentage................. 47
distribution date................... 33
Eligible Account.................... 41
eligible deposit account............ 48
eligible institution................ 48
eligible investments................ 48
Eligible Receivable................. 41
eligible servicer................... 53
excess funding account.............. 48
FDIA................................ 24
finance charge receivables.......... 16
Fleet............................... 23
Fleet Credit Card Portfolio......... 18
foreign person...................... 65
ineligible receivables.............. 39
PAGE
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insolvency event.................... 52
interchange......................... 16, 22
interest period..................... 28
invested amount..................... 26
investor amount..................... 26
monthly period...................... 28
monthly servicing fee............... 52
Pay Out Event....................... 27
paying agent........................ 49
plans............................... 67
Pooling and Servicing Agreement..... 16
principal receivables............... 16
rapid accumulation period........... 27
rapid amortization period........... 27
receivables......................... 16
recoveries.......................... 16
Required Principal Balance.......... 43
Required Seller Amount.............. 43
Required Seller Percentage.......... 43
revolving period.................... 26
scheduled amortization date......... 27
Seller Amount....................... 26
Seller Certificates................. 32
Seller Percentage................... 49
sellers' interest................... 35
series accounts..................... 48
series enhancement.................. 59
Series Investor Amount.............. 43
Series Percentage................... 49
Servicer Default.................... 55
special tax counsel................. 62
spread account...................... 61
stated series termination date...... 51
Supplemental Certificate............ 32
trust termination date.............. 51
U.S. Certificate Owner.............. 62
U.S. Person......................... 62
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain circumstances, the globally offered Fleet Credit Card
Master Trust II Asset Backed Securities (the "GLOBAL SECURITIES") to be issued
in Series from time to time (each, a "SERIES") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Clearstream or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Clearstream and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Clearstream and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Clearstream and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC (other than
through accounts at Clearstream or Euroclear) will follow the settlement
practices applicable to U.S. corporate debt obligations. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their Global Securities through Clearstream or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds in registered form. Global Securities will be credited to
the securities custody accounts on the business day following the settlement
date against payment for value on the settlement date.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trading of any Global Securities where both the
purchaser's and seller's accounts are located to ensure that settlement can be
made on the desired value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants (other than the depositaries for Clearstream and Euroclear) will be
settled using the procedures applicable to U.S. corporate debt obligations in
same-day funds.
Trading between Clearstream Customers and/or Euroclear
Participants. Secondary market trading between Clearstream Customers and/or
Euroclear Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
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Trading between DTC seller and Clearstream or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
(other than the depositaries for Clearstream and Euroclear) to the account of a
Clearstream Customer or a Euroclear Participant, the purchaser must send
instructions to Clearstream prior to settlement date 12:30. Clearstream or
Euroclear, as the case may be, will instruct the respective depositary to
receive the Global Securities against payment. Payment will then be made by the
respective depositary, as the case may be, to the DTC Participant's account
against delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Clearstream
Customer's or Euroclear Participant's account. Credit for the Global Securities
will appear the next day (European time) and cash debit will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Clearstream or Euroclear cash debit will be valued instead as of the actual
settlement date.
Clearstream Customers and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until Global Securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream Customers or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Clearstream Customers or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Clearstream Customer's or Euroclear Participant's particular cost of
funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European depositary for the benefit of Clearstream Customers or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participant a cross-market transaction
will settle no differently from a trade between two DTC Participants.
Trading between Clearstream or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Clearstream Customers and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective depositary, to another DTC Participant. The seller must
send instructions to Clearstream before settlement date 12:30. In these cases,
Clearstream or Euroclear will instruct the respective depositary, as
appropriate, to credit the Global Securities to the DTC Participant's account
against payment. The payment will then be reflected in the account of the
Clearstream Customer or Euroclear Participant the following day, and receipt of
the cash proceeds in the Clearstream Customer's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). If the Clearstream Customer or
Euroclear Participant has a line of credit with its respective clearing system
and elects to draw on such line of credit in anticipation of receipt of the sale
proceeds in its account, the back-valuation may substantially reduce or offset
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Clearstream Customer's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
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U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of global securities holding securities through
Clearstream, Luxembourg or Euroclear (or through DTC if the holder has an
address outside the U.S.) will be subject to the 30% U.S. withholding tax that
generally applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless, (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes
appropriate steps to obtain an exemption or reduced tax rate. See "Federal
Income Tax Consequences" in the prospectus for additional information.
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FLEET CREDIT CARD MASTER TRUST II
ISSUER
[FLEET LOGO]
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
SERIES 2001-B
$684,000,000
CLASS A 5.60% ASSET-BACKED CERTIFICATES
$48,000,000
CLASS B 5.90% ASSET-BACKED CERTIFICATES
------------------------
PROSPECTUS SUPPLEMENT
------------------------
Underwriters of the Class A certificates
JPMORGAN
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
FLEET SECURITIES, INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
Underwriters of the Class B certificates
JPMORGAN FLEET SECURITIES, INC.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
We are not offering the Series 2001-B certificates in any state where the
offer is not permitted.
The delivery of this prospectus supplement and the accompanying prospectus
at any time does not imply that the information in this prospectus supplement
and the accompanying prospectus is correct as of any date after the dates on
their covers. We note that if any material change occurs while this prospectus
supplement and the accompanying prospectus are required by law to be delivered,
we will update the relevant information in this prospectus supplement and the
accompanying prospectus to incorporate the material change.
Until September 10, 2001 all dealers that effect transactions in the Class A
certificates or the Class B certificates, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
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