EXECUTION COPY
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FIRST CONSUMERS NATIONAL BANK
Seller and Servicer
and
HARRIS TRUST AND SAVINGS BANK
Trustee
on behalf of the Certificateholders
of the First Consumers Master Trust
________________________
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of September 30, 1992,
and amended and restated as of February 1, 1999
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
Section 1.1 Definitions............................................................................. 1
Section 1.2 Other Definitional Provisions........................................................... 21
Section 1.3 Monthly Allocation of Finance Charge Receivables........................................ 21
ARTICLE II TRANSFER OF RECEIVABLES; ISSUANCE OF CERTIFICATES
Section 2.1 Transfer of Receivables................................................................. 22
Section 2.2 Acceptance by Trustee................................................................... 23
Section 2.3 Representations and Warranties of Seller Relating to Seller............................. 24
Section 2.4 Representations and Warranties of Seller Relating to the Agreement and the Receivables.. 26
Section 2.5 Covenants of Seller..................................................................... 30
Section 2.6 Addition of Accounts.................................................................... 32
Section 2.7 Removal of Accounts..................................................................... 35
Section 2.8 Discount Option......................................................................... 37
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to the Servicer.................... 37
Section 3.2 Servicing Compensation.................................................................. 39
Section 3.3 Representations, Warranties and Covenants of the Servicer............................... 40
Section 3.4 Reports and Records for the Trustee; Bank Account Statements............................ 41
Section 3.5 Annual Servicer's Certificate........................................................... 42
Section 3.6 Annual Independent Public Accountants' Servicing Report................................. 42
Section 3.7 Tax Treatment........................................................................... 43
Section 3.8 Notices to Seller....................................................................... 43
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ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders........................................................... 43
Section 4.2 Establishment of Investor Accounts..................................................... 44
Section 4.3 Collections and Allocations............................................................ 46
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]........................................................................... 49
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES]........................................................................ 49
ARTICLE VI THE CERTIFICATES
Section 6.1 The Certificates....................................................................... 50
Section 6.2 Authentication of Certificates......................................................... 50
Section 6.3 Registration of Transfer and Exchange of Certificates.................................. 50
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates...................................... 52
Section 6.5 Persons Deemed Owners.................................................................. 52
Section 6.6 Appointment of Paying Agent............................................................ 53
Section 6.7 Access to List of Certificateholders' Names and Addresses.............................. 53
Section 6.8 Authenticating Agent................................................................... 54
Section 6.9 Book-Entry Certificates................................................................ 55
Section 6.10 Notices to Clearing Agency............................................................. 56
Section 6.11 Definitive Certificates Initially Issued as Book-Entry Certificates.................... 56
Section 6.12 New Issuances.......................................................................... 57
ARTICLE VII OTHER MATTERS RELATING TO SELLER
Section 7.1 Liability of Seller.................................................................... 59
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of, Seller................ 59
Section 7.3 Limitation on Liability of Seller...................................................... 60
ARTICLE VIII OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 Liability of the Servicer.............................................................. 61
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations of, the Servicer.......... 61
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Section 8.3 Limitation on Liability of the Servicer and Others................. 61
Section 8.4 Indemnification of the Trust and the Trustee....................... 62
Section 8.5 The Servicer Not to Resign......................................... 62
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables.......................................... 63
Section 8.7 Delegation of Duties............................................... 63
Section 8.8 Examination of Records............................................. 63
ARTICLE IX PAY OUT EVENTS
Section 9.1 Pay Out Events..................................................... 64
Section 9.2 Additional Rights Upon the Occurrence of
Certain Events..................................................... 64
ARTICLE X SERVICER DEFAULTS
Section 10.1 Servicer Defaults.................................................. 65
Section 10.2 Trustee to Act; Appointment of Successor........................... 67
Section 10.3 Notification to Certificateholders................................. 68
Section 10.4 Waiver of Past Defaults............................................ 68
ARTICLE XI THE TRUSTEE
Section 11.1 Duties of Trustee.................................................. 69
Section 11.2 Certain Matters Affecting the Trustee.............................. 71
Section 11.3 Trustee Not Liable for Recitals in Certificates.................... 72
Section 11.4 Trustee May Own Certificates....................................... 72
Section 11.5 Seller to Pay Trustee's Fees and Expenses.......................... 72
Section 11.6 Eligibility Requirements for Trustee............................... 73
Section 11.7 Resignation or Removal of Trustee.................................. 73
Section 11.8 Successor Trustee.................................................. 74
Section 11.9 Merger or Consolidation of Trustee................................. 74
Section 11.10 Appointment of Co-Trustee or Separate Trustee...................... 75
Section 11.11 Tax Returns........................................................ 76
Section 11.12 Trustee May Enforce Claims Without Possession of Certificates...... 76
Section 11.13 Suits for Enforcement.............................................. 77
Section 11.14 Rights of Certificateholders to Direct Trustee..................... 77
Section 11.15 Representations and Warranties of Trustee.......................... 77
Section 11.16 Maintenance of Office or Agency.................................... 77
Section 11.17 Requests for Agreement............................................. 78
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ARTICLE XII TERMINATION
Section 12.1 Termination of Trust............................................... 78
Section 12.2 Optional Purchase and Final Maturity Date of
Investor Certificates.............................................. 78
Section 12.3 Final Distributions................................................ 80
Section 12.4 Termination Rights of the Holder of the Seller
Interest........................................................... 81
ARTICLE XIII MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.......................................................... 81
Section 13.2 Protection of Right, Title and Interest to Trust................... 83
Section 13.3 Limitation on Rights of Certificateholders......................... 84
Section 13.4 Governing Law...................................................... 85
Section 13.5 Notices............................................................ 85
Section 13.6 Severability of Provisions......................................... 85
Section 13.7 Assignment......................................................... 85
Section 13.8 Certificates Nonassessable and Fully Paid.......................... 86
Section 13.9 Further Assurances................................................. 86
Section 13.10 No Waiver; Cumulative Remedies..................................... 86
Section 13.11 Counterparts....................................................... 86
Section 13.12 Third-Party Beneficiaries.......................................... 86
Section 13.13 Actions by Certificateholders...................................... 86
Section 13.14 Merger and Integration............................................. 87
Section 13.15 Headings........................................................... 87
Section 13.16 Effect on Existing Pooling Agreement............................... 87
Section 13.17 No Petition........................................................ 87
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EXHIBITS
Exhibit A: Form of Transfer Agreement of Receivables in Additional
Accounts
Exhibit B: Provisions to be Included in Opinion of Counsel with Respect to
Additional Accounts
Exhibit C: Form of Retransfer Agreement
Exhibit D: Form of Monthly Servicer's Certificate
Exhibit E: Form of Annual Servicer's Certificate
Exhibit F: Provisions to be Included in Opinion with Respect to Amendments
Exhibit G: Provisions to be Included in Annual Opinion of Counsel
SCHEDULE
Schedule 1 List of Accounts
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AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of
February 1, 1999, by and between FIRST CONSUMERS NATIONAL BANK, a national
banking association, as Seller and Servicer, and HARRIS TRUST AND SAVINGS
BANK, a banking corporation organized and existing under the laws of
Illinois, as Trustee. This Agreement amends and restates the Pooling and
Servicing Agreement dated as of September 30, 1992, by and between the
parties hereto (the "Existing Pooling Agreement").
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In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit
of the Certificateholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the
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following words and phrases shall have the following meanings:
"Account" shall mean each MasterCard(R)* or VISA(R)* credit card
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account established pursuant to a Cardholder Agreement, and which is
identified in Schedule 1 by account number and by Receivable balance as of
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the Cut Off Date, or identified as of each Addition Date in each computer
file or microfiche list delivered to the Trustee by Seller pursuant to
Section 2.6. The term "Account" shall also be deemed to refer to an
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Additional Account, but only from and after the Addition Date with respect
thereto, and the term "Account" shall be deemed to refer to any Removed
Account prior to but not after the Removal Date with respect thereto.
"Addition Date" shall mean, with respect to any Additional Accounts,
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either the date five Business Days after the period or date when such
Additional Accounts are required or permitted to be added as Accounts
pursuant to subsections 2.6(a) or (b), or the date on which such Additional
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Accounts are automatically added as Accounts pursuant to subsection 2.6(e).
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"Additional Accounts" shall mean the Accounts the receivables arising
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under which are transferred to the Trust in accordance with the procedures
set forth in Section 2.6.
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_______________________
* MasterCard is a registered trademark of MasterCard International
Incorporated and VISA is a registered trademark of VISA USA, Inc.
"Adjusted Investor Amount" shall have, with respect to any Series, the
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meaning specified in the related Supplement, or if no meaning for such term
is specified in such Supplement, shall mean the Investor Amount for such
Series.
"Affiliate" of any specified Person, shall mean any other Person
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directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Investor Amount" shall mean, as of any date of
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determination, the sum of the Adjusted Investor Amounts of all Series
issued and outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to Principal Receivables,
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Finance Charge Receivables and Receivables in Defaulted Accounts, as the
case may be, shall mean, as of any date of determination, the sum of such
Investor Percentages of all Series issued and outstanding on such date of
determination; provided, however, that the Aggregate Investor Percentage
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shall not exceed 100%.
"Aggregate Principal Balance" shall mean, as of any time of
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determination, the sum of (a) the Aggregate Principal Receivables, (b) the
amount on deposit in the Excess Funding Account (exclusive of any
investment earnings on such amount) and (c) the amounts on deposit in the
Principal Accounts (exclusive of any investment earnings on such amounts),
in each case as of such time.
"Aggregate Principal Receivables" shall mean, as of any time of
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determination, the aggregate amount of Principal Receivables (excluding any
Discount Option Receivables) as of the end of the prior day.
"Aging Date" shall mean that date on which an Account is classified by
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the processor as past due according to a predetermined aging schedule.
"Agreement" shall mean this Pooling and Servicing Agreement and all
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amendments hereof and supplements hereto, including any Supplement.
"Amortization Period" shall mean, with respect to any Series, the
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period following the related Revolving Period, which shall be either the
Controlled Amortization Period or the Rapid Amortization Period or any
other amortization period, in each case as defined with respect to such
Series in the related Supplement.
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"Annual Account Additions" shall mean on any date of determination,
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the number of Accounts the Receivables of which have been added to the
Trust pursuant to subsections 2.6(a), (b) and (e) from and including the
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first day of the eleventh Monthly Period preceding such date of
determination.
"Annual Quotient" shall have the meaning specified in subsection
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2.6(c)(ii).
"Applicants" shall have the meaning specified in Section 6.7.
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"Authorized Newspapers" shall mean each newspaper of general
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circulation in New York, New York, or in any other place specified by
Seller, printed in the English language and customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays.
"Base Amount" shall mean, at any date of determination, with reference
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to Annual Account Additions or Quarterly Account Additions, the number of
Accounts included in the Trust on the first day of the relevant measurement
period before giving effect to any Accounts added to the Trust on such
first day.
"Base Rate" shall have, with respect to any Series, the meaning
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specified in the related Supplement.
"Book-Entry Certificates" shall mean certificates evidencing a
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beneficial interest in any Investor Certificates, ownership and transfers
of which shall be made through book entries by a Clearing Agency as
described in Section 6.9; provided, that after the occurrence of a
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condition whereupon book-entry registration and transfer are no longer
permitted and Definitive Certificates are to be issued to the Certificate
Owners, such Certificates shall no longer be "Book-Entry Certificates".
"Business Day" shall mean each day which is neither a Saturday, a
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Sunday nor any other day on which banking institutions in New York, New
York, Portland, Oregon or Chicago, Illinois (or, with respect to any
Series, any additional city specified in the related Supplement) are
authorized or obligated by law or required by executive order to be closed.
"Cardholder Agreement" shall mean the agreement (and the related
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application) for a MasterCard or VISA credit card account between any
Obligor and Seller, as the same may be amended, modified or otherwise
changed from time to time.
"Cardholder Fees" shall mean, with respect to any Account, any fees
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specified in the Cardholder Agreement applicable to such Account, including
without limitation, annual fees, over limit charges, late charges, returned
check fees, and reinstatement charges.
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"Cardholder Guidelines" shall mean Seller's policies and procedures
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relating to the operation of its credit card business, including, without
limitation, the FCNB Credit Policy and Operations Manual or such other of
its policies and procedures for determining the creditworthiness of credit
card customers, the extension of credit to credit card customers, the terms
on which repayments are required to be made, and relating to the
maintenance of credit card accounts and collection of credit card account
receivables, as said manual and such policies and procedures, as
applicable, may be amended from time to time.
"Carry-over Finance Charge Amount" shall have the meaning specified in
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Section 1.3.
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"Cash Advance Fees" shall mean, with respect to any Account, any fees
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specified in the Cardholder Agreement applicable to such Account as cash
advance fees or any similar term.
"Certificate" shall mean any one of the Investor Certificates of any
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Series.
"Certificateholder" or "Holder" shall mean the Person in whose name a
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Certificate is registered in the Certificate Register.
"Certificate Interest" shall mean interest payable in respect of the
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Investor Certificates of any Series pursuant to Article IV as set forth in
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the Supplement related to such Series.
"Certificate Owner" shall mean, with respect to a Book-Entry
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Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an
indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Principal" shall mean principal payable in respect of the
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Investor Certificates of any Series pursuant to Article IV as set forth in
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the Supplement related to such Series.
"Certificate Rate" shall mean, with respect to any Series of
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Certificates, the rate (or formula on the basis of which such rate shall be
determined) per annum stated for such Series in the related Supplement,
which rate shall, unless otherwise provided in such Supplement, be
calculated in each case on the basis of a 360-day year consisting of twelve
30-day months, provided that, in the case of the Monthly Period in which
the Certificates of a Series are first issued, such rate shall be
calculated for the number of actual days from the date of issuance.
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"Certificate Register" shall mean the register maintained pursuant to
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Section 6.3, providing for the registration of the Certificates and
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transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one or more of the
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classes of Certificates of such Series as specified in the related
Supplement.
"Clearing Agency" shall mean an organization registered as a "clearing
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agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
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financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the date
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specified as such in the related Supplement.
"Collection Account" shall have the meaning specified in subsection
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4.2(a).
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"Collection Subaccount" shall have the meaning specified in subsection
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4.2(a).
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"Collections" shall mean all payments (including Insurance Proceeds
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and Recoveries) received by the Servicer in respect of the Receivables, in
the form of cash, checks, wire transfers, Automated Teller Machine
transfers, net proceeds of redemption of certificates of deposit or
liquidation of bank accounts or other form of payment in accordance with
the Cardholder Agreement in effect from time to time on any Receivable. A
Collection processed in respect of an Account (other than a Defaulted
Account) in excess of the aggregate amount of Receivables in such Account
as of the Date of Processing of such Collection shall be deemed to be a
payment in respect of Principal Receivables to the extent of such excess.
Collections with respect to any Monthly Period shall also include the
amount of Interchange (if any) allocable to any Series of Certificates
pursuant to any Supplement with respect to such Monthly Period (to the
extent received by the Trust and deposited into each Series Finance Charge
Account or any other Series Account, as the case may be, on the Transfer
Date following such Monthly Period), to be applied as if such Collections
were Finance Charge Receivables for all purposes.
"Collections Deposit Day" shall mean the Business Day next preceding a
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Transfer Date.
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"Controlled Amortization Amount" for any Series shall have the meaning
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specified in the related Supplement.
"Controlled Amortization Period" for any Series shall have the meaning
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specified in the related Supplement.
"Controlled Distribution Amount" for any Series shall have the meaning
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specified in the related Supplement.
"Corporate Trust Office" shall mean the principal office of the
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Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this
Agreement is located at 111 West Monroe Street, Chicago, Illinois 60603.
"Credit Adjustment" shall have the meaning specified in subsection
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4.3(e).
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"Credit Insurance" shall mean life, accident, health, disability,
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involuntary unemployment or other insurance of an Obligor to Seller to
insure payment of any amount owing by such Obligor under an Account and
which proceeds of such insurance are payable to Seller upon such Obligor's
death, disability or involuntary unemployment.
"Cut Off Date" shall mean September 22, 1992.
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"Cycle" shall mean, with respect to any Account, the monthly billing
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cycle for such Account as determined in accordance with the Cardholder
Guidelines as in effect on the date of this Agreement.
"Cycle Billing Date" shall mean, with respect to any Account, each
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date on which bills are processed for the Cycle which includes such
Account.
"Date of Collection" shall mean any date during any Monthly Period
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that Collections are processed by the Servicer.
"Date of Processing" shall mean, with respect to any transaction, the
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date on which such transaction is first recorded on the Servicer's computer
master file of accounts (without regard to the effective date of such
recordation).
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United
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States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, suspension of payments, or similar debtor relief laws from
time to time in effect affecting the enforcement rights of creditors
(including creditors of national banking associations) generally.
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"Default Amount" shall mean, with respect to any Monthly Period, the
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result of multiplying (i) the excess, if any, of the aggregate amount of
Receivables in Defaulted Accounts charged off during such Monthly Period
over Recoveries collected during such Monthly Period, times (ii) 1.00,
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minus the percentage (expressed as a decimal) of Receivables (other than
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Receivables in Defaulted Accounts) constituting Finance Charge Receivables
determined in accordance with Section 1.3.
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"Defaulted Account" shall mean each Account with respect to which, in
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accordance with the Cardholder Guidelines or the Servicer's customary and
usual servicing procedures for servicing credit card receivables comparable
to the Receivables (which shall in any event provide for charge-off in the
event of delinquency of 180 days or more), the Servicer has charged off the
Receivables in such Account as uncollectible; an Account shall become a
Defaulted Account on the day on which such Receivables are recorded as
charged off on the Servicer's computer master file of accounts (regardless
of whether such Receivables are charged off before or after the Cut Off
Date or Addition Date of such Account, as the case may be).
"Deficit Controlled Amortization Amount" for any Series shall have the
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meaning specified in the related Supplement.
"Definitive Certificates" shall have the meaning specified in Section
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6.9.
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"Deposit Obligation" shall mean the obligation of the Seller to make
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any deposit to the Excess Funding Account pursuant to subsections 2.4(d) or
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4.3(e), and the obligation of the Servicer to make any payment or transfer
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of Collections to the Collection Account or Distribution Account pursuant
to this Agreement.
"Depository Agreement" shall mean, with respect to any Series, the
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agreement (if any) among the Seller, the Trustee and the initial Clearing
Agency (if any) with respect to such Series.
"Determination Date" shall mean the seventh calendar day prior to each
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Transfer Date.
"Discount Option Date" shall mean each date on which a Discount
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Percentage designated by the Seller pursuant to Section 2.8 takes effect.
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"Discount Option Receivable Collections" shall mean on any Date of
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Processing occurring in any Monthly Period succeeding the Monthly Period in
which the Discount Option Date occurs, the product of (a) a fraction (i)
the numerator of which is the Discount Option Receivables and (ii) the
denominator of which is the Principal Receivables (including the Discount
Option Receivables) in each case (for
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both the numerator and the denominator) at the end of the prior Date of
Processing and (b) Collections of Original Principal Receivables on such
Date of Processing.
"Discount Option Receivables" shall have the meaning specified in
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Section 2.8. The aggregate amount of Discount Option Receivables
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outstanding on any Date of Processing occurring on or after the Discount
Option Date shall equal the result of (a) the aggregate Discount Option
Receivables at the end of the prior Date of Processing (which amount, prior
to the Discount Option Date, shall be zero), plus (b) any new Discount
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Option Receivables created on such Date of Processing, minus (c) any
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Discount Option Receivables Collections received on such Date of
Processing. Discount Option Receivables created on any Date of Processing
shall mean the product of the amount of any Original Principal Receivables
created on such Date of Processing and the Discount Percentage.
"Discount Percentage" shall have the meaning specified in Section 2.8.
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"Distribution Account" shall have the meaning specified in subsection
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4.2(c).
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"Distribution Date" shall mean the fifteenth day of the month after
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the month the Certificates are first issued and the fifteenth day of each
calendar month thereafter, or, if any such fifteenth-day is not a Business
Day, the next succeeding Business Day.
"Eligible Account" shall mean, as of the Cut Off Date (or, with
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respect to Additional Accounts, as of the relevant Notice Date in respect
of Additional Accounts added pursuant to subsection 2.6 (a) or (b) or the
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fifth Business Day prior to the relevant Addition Date in respect of
Additional Accounts added pursuant to subsection 2.6(e)) each Account owned
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by Seller:
(a) which is payable in United States dollars;
(b) which is serviced in any credit service center of Seller which is
located in the United States;
(c) the Obligor on which has provided, as its initial billing address,
an address which is located in the United States or its territories or
possessions;
(d) which the Seller has not finally determined to be counterfeit or
fraudulent;
(e) which the Seller has not charged off in its customary and usual
manner for charging off such Accounts as of the Cut Off Date (or, with
respect to Additional Accounts as of the relevant Notice Date or Addition
Date);
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(f) which has not been sold or pledged to any other party;
(g) which does not have receivables which have been sold or pledged to
any other party; and
(h) is a "VISA" or "MasterCard" revolving credit card account.
"Eligible Deposit Account" shall mean either (a) a segregated account
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with a Qualified Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States or any one of the states thereof, including the
District of Columbia (or any domestic branch of a foreign bank), and acting
as a trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from
each Rating Agency in one of its short-term credit rating categories which
signifies investment grade.
"Eligible Receivable" shall mean each Receivable:
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(a) which has arisen under an Eligible Account;
(b) which was created in compliance, in all material respects, with
all Requirements of Law applicable to Seller and pursuant to a Cardholder
Agreement which complies, in all material respects, with all Requirements
of Law applicable to Seller;
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given by Seller in
connection with the creation of such Receivable or the execution, delivery
and performance by Seller of the Cardholder Agreement pursuant to which
such Receivable was created, have been duly obtained, effected or given and
are in full force and effect as of such date of creation;
(d) as to which, immediately prior to the transfer of same to the
Trust by Seller, Seller had good and marketable title thereto free and
clear of all Liens arising under or through Seller or its Affiliates (other
than Liens permitted pursuant to subsection 2.5(b));
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(e) which is the legal, valid and binding payment obligation of the
Obligor thereon, enforceable against such Obligor in accordance with its
terms, except as such enforceability may be limited by applicable Debtor
Relief Laws, and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity);
9
(f) which constitutes an "account" or a "general intangible" under and
as defined in Article 9 of the UCC as then in effect in the State of
Illinois;
(g) which, at the time of transfer to the Trust, has not been waived
or modified except for a Receivable which has been waived or modified as
permitted in accordance with the Cardholder Guidelines and which waiver or
modification is reflected in the Seller's computer file of revolving credit
card accounts;
(h) which, at the time of transfer to the Trust, is not (to the
knowledge of Seller) subject to any right of rescission, setoff,
counterclaim or any other defense (including defenses arising out of
violations or usury laws) of the Obligor, which requires that such
Receivable be charged off in accordance with the Cardholder Guidelines,
other than defenses arising out of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights in general; and
(i) as to which, at the time of transfer to the Trust, the Seller has
satisfied all its obligations required to be satisfied by such time.
"Enhancement" shall mean, with respect to any Series, the cash
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collateral account, letter of credit, guaranteed rate agreement, maturity
guaranty facility, tax protection agreement, interest rate swap or any
other contract, arrangement or agreement for the benefit of the
Certificateholders of such Series (or Certificateholders of a Class within
such Series), as designated in the applicable Supplement.
"Enhancement Provider" shall mean, with respect to any Series, the
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Person, if any, designated as such in the related Supplement.
"Excess Funding Account" shall have the meaning specified in
----------------------
subsection 4.2(d).
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"Exchange" shall have the meaning specified in subsection 6.12(b).
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"Exchangeable Seller Certificate" shall mean the certificate in favor
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of the Seller and authenticated by the Trustee, issued pursuant to the
Existing Pooling Agreement.
"Exchange Date" shall have the meaning specified in Section 6.12.
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"Exchange Notice" shall have the meaning specified in subsection
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6.12(b).
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"Existing Pooling Agreement" shall have the meaning specified in the
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introductory paragraph hereto.
10
"FASIT"shall have the meaning specified in subsection 13.1(d).
----- ------------------
"FDIC" shall mean the Federal Deposit Insurance Corporation.
----
"Final Trust Termination Date" shall mean December 31, 2032.
----------------------------
"Finance Charge Accounts" shall have the meaning specified in
-----------------------
subsection 4.2(b).
-----------------
"Finance Charge Collections" shall mean, for any period, the amount of
--------------------------
Collections allocated to Finance Charge Receivables during such period in
accordance with subsection 1.3, plus Discount Option Receivables
-------------- ----
Collections for such period.
"Finance Charge Receivables" shall mean, with respect to any Monthly
--------------------------
Period, (a) all amounts billed to Obligors on any Account during such
Monthly Period in respect of Finance Charges, Cash Advance Fees and
Cardholder Fees, and (b) the amount of Interchange (if any) allocable to
any Series of Certificates pursuant to any Supplement with respect to such
Monthly Period.
"Finance Charges" shall mean, as of any day, the amount of interest as
---------------
determined by the periodic finance charge rate assessed on the Cycle
Billing Date on or next preceding such day pursuant to the Cardholder
Agreements.
"Governmental Authority" shall mean the United States of America, any
----------------------
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Ineligible Receivable" shall have the meaning specified in subsection
--------------------- ----------
2.4(d).
------
"Initial Closing Date" shall mean September 30, 1992.
--------------------
"Initial Investor Amount" with respect to any Series, shall have the
-----------------------
meaning specified in the related Supplement.
"Insolvency Event" shall have the meaning specified in Section 9.2.
---------------- -----------
"Insurance Proceeds" shall mean any amounts paid to the Servicer or to
------------------
Seller pursuant to any Credit Insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"Interchange" shall mean interchange fees paid or payable to the
-----------
Seller, in its capacity as credit card issuer, through MasterCard
International Incorporated
11
and/or VISA USA, Inc. in connection with cardholder charges for goods and
services.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
---------------------
as amended from time to time.
"Investor Account" shall mean each of the Finance Charge Accounts, the
----------------
Principal Accounts, the Excess Funding Account and the Distribution
Account.
"Investor Amount" shall have, with respect to any Series, the meaning
---------------
specified in the related Supplement.
"Investor Certificate" shall mean any one of the certificates executed
--------------------
and authenticated by the Trustee substantially in the form (or forms, in
the case of a Series with multiple Classes) of the investor certificate
attached to the related Supplement.
"Investor Certificateholder" shall mean the Holder of record of an
--------------------------
Investor Certificate.
"Investor Charge Off" shall have, with respect to any Series, the
-------------------
meaning specified in the related Supplement.
"Investor Default Amount" shall have, with respect to any Series, the
-----------------------
meaning specified in the related Supplement.
"Investor Exchange" shall have the meaning specified in subsection
----------------- -----------
6.12(b).
-------
"Investor Monthly Servicing Fee" shall have the meaning specified in
------------------------------
Section 3.2.
-----------
"Investor Net Recoveries" shall mean, for any Monthly Period, an
-----------------------
amount equal to the product of (i) the Net Recoveries for such Monthly Period
and (ii) the applicable Investor Percentage at the end of the last day of such
Monthly Period.
"Investor Percentage" shall have, for any Series, with respect to
-------------------
Principal Collections, Finance Charge Collections and Receivables in
Defaulted Accounts, the meaning specified in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other),
equity interest, participation interest, preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other
title retention agreement, any financing lease
12
having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the Uniform Commercial Code
(other than any such financing statement filed for informational purposes
only) or comparable law of any jurisdiction to evidence any of the
foregoing; provided, however, that any assignment pursuant to Section 7.2
-------- ------- -----------
shall not be deemed to constitute a Lien.
"Minimum Aggregate Principal Balance" shall mean, on any date of
-----------------------------------
determination, the greater of (a) the sum of the Aggregate Investor Amount,
plus the Minimum Seller Amount, in each case as of such date and (b) the
sum of the Initial Investor Amounts of all Series outstanding on such date.
"Minimum Average Seller Percentage" shall mean the weighted average
---------------------------------
(by Adjusted Investor Amount) Minimum Seller Percentages for all Series
then outstanding.
"Minimum Seller Amount" shall mean, on any date of determination, the
---------------------
Aggregate Investor Amount at the end of the day prior to such date of
determination, times the Minimum Average Seller Percentage; provided that
if such percentage is zero, the Minimum Seller Amount shall be zero. FCNB
may reduce the Minimum Seller Amount by written notice to the Trustee,
provided that (a) the Rating Agency Condition is satisfied with respect to
--------
such reduction and (b) FCNB delivers to the Trustee an Opinion of Counsel
to the effect that such reduction will not have a material adverse effect
on the Federal income tax characterization of any outstanding Series.
"Minimum Seller Percentage" shall have, for any Series, the meaning
-------------------------
specified in the related Supplement.
"Monthly Period" shall mean the period from and including the first
--------------
day of the calendar month preceding a related Determination Date to and
including the last day of such calendar month.
"Monthly Servicing Fee" shall have the meaning specified in Section
--------------------- -------
3.2.
---
"Monthly Total Percentage Allocation" shall have, with respect to any
-----------------------------------
Series, the meaning specified in the related Supplement.
"Moody's" shall mean Moody's Investors Service, Inc.
-------
"Net Recoveries" shall mean, with respect to any Monthly Period, the
--------------
excess, if any, of Recoveries collected during such Monthly Period over the
----
aggregate amount of Receivables in Defaulted Accounts charged off during
such Monthly Period.
13
"Notice Date" shall have the meaning specified in subsection 2.6(c).
----------- -----------------
"Obligor" shall mean, with respect to any Account, the Person or
-------
Persons obligated to make payments with respect to such Account, including
any guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any officer
---------------------
of Seller or the Servicer and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
------------------
be counsel for Seller or the Servicer and who shall be reasonably
acceptable to the Trustee.
"Optional Repurchase Percentage" shall have, with respect to any
------------------------------
Series, the meaning specified in the related Supplement.
"Original Principal Receivables" shall mean Principal Receivables
------------------------------
determined without giving effect to any reduction thereof attributable to
Discount Option Receivables.
"Paying Agent" shall mean any paying agent appointed pursuant to
------------
Section 6.6 and shall initially be the Corporate Trust Office of the
-----------
Trustee.
"Pay Out Commencement Date" shall mean, with respect to each Series,
-------------------------
(a) the date on which a Trust Pay Out Event is deemed to occur pursuant to
Section 9.1, or (b) the date on which a Series Pay Out Event is deemed to
-----------
occur pursuant to the Supplement for such Series.
"Permitted Investments" shall mean (a) negotiable instruments or
---------------------
securities represented by instruments in bearer or registered form which
evidence (i) obligations of or guaranteed by the United States of America,
(ii) time deposits in, certificates of deposit of, or bankers' acceptances
issued by, any depositary institution or trust company (other than Seller
or an Affiliate of Seller) incorporated under the laws of the United States
of America or any state thereof and subject to supervision and examination
by federal or state banking or depositary institution authorities,
provided, however, that at the time of the Trust's investment or
-------- -------
contractual commitment to invest therein, the certificates of deposit or
short-term deposits, if any, or long-term unsecured debt obligations (other
than such obligation whose rating is based on collateral or on the credit
of a Person other than such institution or trust company) of such
depositary institution or trust company shall have a credit rating from
Moody's and Standard & Poor's of P-1 and A-1+, respectively, in the case of
the certificates of deposit or short-term deposits, or a rating from
Moody's of Aaa and from Standard & Poor's of AAA in the case of the long-
term unsecured debt obligations, or such time deposits are fully insured by
the
14
FDIC, (iii) certificates of deposit (other than those of Seller or an
Affiliate of Seller) having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating from Moody's and
Standard & Poor's of P-1 and A-1+, respectively, and (iv) investments in
money market funds rated in the highest investment category or otherwise
approved in writing by Moody's and Standard & Poor's; (b) demand deposits
in the name of the Trust or the Trustee in any depositary institution or
trust company referred to in (a) (ii) above; and (c) securities not
represented by an instrument, which are registered in the name of the
Trustee upon books maintained for that purpose by or on behalf of the
issuer thereof and identified on books maintained for that purpose by the
Trustee as held for the benefit of the Trust or the Certificateholders, and
consisting of shares of an open end diversified investment company which is
registered under the Investment Company Act of 1940, as amended, and which
(i) invests its assets exclusively in obligations of or guaranteed by the
United States of America or any instrumentality or agency thereof having in
each instance a final maturity date of less than one year from their date
of purchase or other Permitted Investments, (ii) seeks to maintain a
constant net asset value per share and (iii) has aggregate net assets of
not less than $100,000,000 on the date of purchase of such shares, and
which satisfies the Rating Agency Condition; provided, however, that only
-------- -------
those investments described above which are permitted to be made by a
national banking association shall be deemed to be "Permitted Investments"
hereunder.
"Person" shall mean any legal person, including any individual,
------
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Pool Factor" with respect to any Series issued in only one Class, as
-----------
of any Record Date, shall mean a number rounded to seven decimals
representing the ratio of the Investor Amount of such Series as of such
Record Date (determined after taking into account any reduction in such
Investor Amount which will occur on the following Distribution Date) to the
Initial Investor Amount of such Series, and with respect to any Series
issued in more than one Class, shall have the meaning stated in the related
Series Supplement.
"Portfolio Yield" shall have, with respect to any Series, the meaning
---------------
specified in the related Supplement.
"Principal Accounts" shall have the meaning specified in subsection
------------------ ----------
4.2(b).
------
"Principal Collections" shall mean, for any period, all Collections
---------------------
during such period other than Finance Charge Collections.
"Principal Receivable" shall mean each Receivable other than Finance
--------------------
Charge Receivables and Receivables in Defaulted Accounts. A Principal
Receivable
15
shall be deemed to have been created at the end of the day on the Date of
Processing of such Receivable. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall
be reduced by the aggregate amount of credit balances in the Accounts on
such day. Any Principal Receivables which Seller is unable to transfer as
provided in subsection 2.5(c) shall not be included in calculating the
-----------------
aggregate amount of Principal Receivables.
"Principal Sharing Series" shall mean a Series that provides for
------------------------
sharing of Principal Collections in the related Supplement.
"Principal Shortfalls" shall mean, with respect to a Distribution
--------------------
Date, the aggregate amount for all outstanding Principal Sharing Series
which the related Supplements specify are "Principal Shortfalls" for such
Distribution Date.
"Principal Terms" shall have the meaning, with respect to any Series
---------------
issued pursuant to an Exchange, specified in subsection 6.12(c).
------------------
"Qualified Institution" shall have the meaning specified in subsection
--------------------- ----------
4.2(a).
------
"Quarterly Account Additions" shall mean on any date of determination,
---------------------------
the number of Accounts the Receivables of which have been added to the
Trust pursuant to subsection 2.6(a), (b) or (e) during the current calendar
------------------ --- ---
quarter.
"Quarterly Quotient" shall have the meaning specified in subsection
------------------ ----------
2.6(c)(ii).
----------
"Rapid Amortization Period" for any Series shall have the meaning
-------------------------
specified in the Supplement for such Series.
"Rating Agency" shall mean, with respect to each Series, the rating
-------------
agency or agencies, if any, that initially rated the Investor Certificates
of such Series, as specified in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any Series and
-----------------------
any action or series of related actions or proposed transactions affecting
such Series, that each of the Rating Agencies shall have notified the
Servicer in writing that such action or series of related actions or the
consummation of such proposed transaction or series of related transactions
will not result in a reduction or withdrawal of such Rating Agency's rating
of any Class of Certificates included in such Series.
"Receivable" shall mean any amount owing by an Obligor under an
----------
Account (including amounts in Defaulted Accounts) from time to time,
including, without limitation, amounts owing for the purchase of goods and
services, Finance Charges,
16
Cash Advance Fees, Cardholder Fees, Special Fees, and premiums for Credit
Insurance, if any.
"Record Date" shall mean with respect to any Distribution Date the
-----------
last Business Day of the preceding Monthly Period.
"Recoveries" shall mean all amounts received, including Insurance
----------
Proceeds and net proceeds from the liquidation of certificates of deposit
or bank accounts, by the Servicer with respect to Receivables which have
previously been charged off as uncollectible, after deducting, in the case
of each such amount received, a percentage of such amount which in the good
faith judgment of the Servicer represents the amount of out-of-pocket costs
incurred by the Servicer during the preceding fiscal year (or other, more
recent period deemed appropriate by the Servicer) as a percentage of
collections during such period in respect of charged off receivables in all
credit card accounts (including the Accounts) serviced by the Servicer.
"Removal Date" shall have the meaning specified in Section 2.7.
------------ -----------
"Removal Notice Date" shall mean the fifth Business Day prior to a
-------------------
Removal Date.
"Removed Accounts" shall have the meaning specified in Section 2.7.
---------------- -----------
"Requirements of Law" for any Person shall mean the certificate of
-------------------
incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty,
rule or regulation, or order or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject, whether Federal, state or local
(including, without limitation, usury laws, the Federal Truth in Lending
Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
"Responsible Officer" shall mean the Chairman or any Vice Chairman of
-------------------
the Board of Directors or Trustees of the Trustee, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees of the Trustee, the President, any Executive Vice President,
Senior Vice President, Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary , the Treasurer, any Assistant
Treasurer, the Cashier, any Assistant or Deputy Cashier, any Trust Officer
or Assistant Trust Officer, the Controller and any Assistant Controller or
any other officer of the Trustee customarily performing functions similar
to those performed by any of the above-designated officers and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. The term "Responsible Officer," when used herein with
respect to any Person other than the
17
Trustee, means an officer or employee of such Person corresponding to any
officer or employee described in the preceding sentence.
"Retransfer Agreement" shall have the meaning specified in subsection
-------------------- ----------
2.7(b)(ii).
----------
"Revolving Period" shall have, with respect to any Series, the meaning
----------------
specified in the related Supplement.
"Seller" shall mean First Consumers National Bank, a national banking
------
association.
"Seller Amount" shall mean, on any date of determination, the
-------------
Aggregate Principal Balance at the end of the day immediately prior to such
date of determination, minus the Aggregate Investor Amount at the end of
such day.
"Seller Exchange" shall have the meaning specified in subsection
--------------- ----------
6.12(b).
-------
"Seller Interest" means the interest of the Seller in the Trust, which
---------------
shall be in an amount from time to time equal to the Seller Amount.
"Seller Percentage" shall mean, on any date of determination, when
-----------------
used with respect to Principal Collections, Finance Charge Collections and
Receivables in Defaulted Accounts, the percentage equivalent of a fraction
equal to 1.0, minus the fraction calculated on such date with respect to
-----
such categories of Receivables in accordance with the definition of
Aggregate Investor Percentage; provided, however, that the Seller
-------- -------
Percentage shall never be less than zero.
"Series" shall mean any series of Investor Certificates, which may
------
include within any such Series a Class or Classes of Investor Certificates
subordinate to another such Class or Classes of Investor Certificates.
"Series Account" shall mean, with respect to any Series, each of the
--------------
accounts established and designated as such pursuant to the related
Supplement.
"Series Finance Charge Account" shall mean, with respect to any
-----------------------------
Series, the account established and maintained by the Trustee pursuant to
subsection 4.2(b) with respect to such Series.
-----------------
"Series Pay Out Event" shall have, with respect to any Series, the
--------------------
meaning specified in the related Supplement.
18
"Series Principal Account" shall mean, with respect to any Series, the
------------------------
account established and maintained by the Trustee pursuant to subsection
----------
4.2(b) with respect to such Series.
------
"Series Servicing Fee Percentage" shall mean, with respect to any
-------------------------------
Series, the amount specified as such in the related Supplement.
"Series Share" shall have the meaning specified in subsection 4.3(i).
------------ -----------------
"Series Termination Date" shall mean, with respect to any Series, the
-----------------------
date, if any, specified as such in the related Supplement.
"Servicer" shall mean initially First Consumers National Bank and its
--------
permitted successors and assigns, and thereafter any Person appointed as
successor as herein provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.1.
---------------- ------------
"Servicing Officer" shall mean any employee of the Servicer involved
-----------------
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee
by the Servicer, as such list may from time to time be amended.
"Shared Finance Charge Collections" shall mean, with respect to any
---------------------------------
period, the aggregate amount of Finance Charge Collections allocable to
each Series which the related Supplements specify are to be treated as
"Shared Finance Charge Collections" for such period.
"Shared Principal Collections" shall mean, with respect to a
----------------------------
Distribution Date, the aggregate amount of Principal Collections for all
outstanding Series which the related Supplements specify are to be treated
as "Shared Principal Collections" for such Distribution Date.
"Shortfall Amount" shall mean, on any date of determination, the
----------------
amount, if any, by which the Minimum Aggregate Principal Balance exceeds
the Aggregate Principal Balance.
"Special Fees" shall mean Receivables consisting of fees which are not
------------
now but may from time to time be assessed on the Accounts.
"Standard & Poor's" shall mean Standard & Poor's Corporation.
-----------------
"Successor Servicer" shall have the meaning specified in Section 10.2.
------------------ ------------
19
"Supplement" shall mean, with respect to any Series, a supplement to
----------
this Agreement complying with the terms of Section 6.12, executed in
------------
conjunction with the issuance of any Series (or, in the case of the
issuance of Certificates on the Initial Closing Date, the supplement
executed in connection with the issuance of such Certificates).
"Termination Notice" shall have the meaning specified in Section 10.1.
------------------ ------------
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 6.3 and shall initially be the Trustee's Corporate Trust Office.
-----------
"Transfer Agreement" shall have the meaning specified in subsection
------------------ ----------
2.6(d)(iii).
-----------
"Transfer Date" shall mean the Business Day immediately preceding each
-------------
Distribution Date.
"Trust" shall mean the trust created by this Agreement and known as
-----
the "First Consumers Master Trust", the corpus of which shall consist of
the Receivables now existing or hereafter transferred thereto in accordance
herewith and all monies due or to become due with respect thereto, all
proceeds (as defined in Section 9-306 of the UCC as in effect in the State
of Illinois) of the Receivables and Recoveries and Insurance Proceeds
relating thereto and such funds and investments as from time to time are
deposited or held in the Collection Account, the Collection , the Finance
Charge Accounts, the Principal Accounts, the Distribution Account, the
Excess Funding Account and any other Series Account, and the rights to any
Enhancement with respect to any Series.
"Trust Pay Out Event" shall have, with respect to each Series, the
-------------------
meaning specified in Section 9.1.
-----------
"Trust Termination Date" shall have the meaning specified in
----------------------
subsection 12.1(a).
------------------
"Trustee" shall mean the institution executing this Agreement as
-------
Trustee, or its successor in interest, or any successor trustee appointed
as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
---
time, as in effect in any specified jurisdiction.
"Undivided Interest" shall mean the undivided interest in the Trust
------------------
evidenced by a Certificate.
20
Section 1.2 Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Agreement or in any Supplement shall
have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto or thereto unless otherwise defined
therein.
(b) As used in this Agreement or in any Supplement and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in Section 1.1, and accounting terms partially
-----------
defined in Section 1.1 to the extent not defined, shall have the respective
-----------
meanings given to them under generally accepted accounting principles or
regulatory accounting principles, as applicable. To the extent that the
definitions of accounting terms herein are inconsistent with the meaning of
such terms under generally accepted accounting principles or regulatory
accounting principles, the definitions contained herein shall control.
(c) The agreements, representations and warranties of First Consumers
National Bank in this Agreement and in any Supplement in each of its
capacities as Seller and Servicer shall be deemed to be the agreements,
representations and warranties of First Consumers National Bank solely in
each such capacity for so long as it acts in each such capacity under this
Agreement.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement or any Supplement shall refer to this
Agreement or any Supplement as a whole and not to any particular provision
of this Agreement or any Supplement; and Section, subsection, Schedule and
Exhibit references contained in this Agreement or any Supplement are
references to Sections, subsections, Schedules and Exhibits in or to this
Agreement or any Supplement unless otherwise specified.
(e) Any reference herein to any particular Rating Agency shall only
be effective for so long as a Series of Certificates rated by such Rating
Agency at FCNB's request is outstanding.
Section 1.3 Monthly Allocation of Finance Charge Receivables. The
------------------------------------------------
amount of Finance Charge Receivables in all Accounts shall be determined as
follows:
(i) At the close of business on each Cycle Billing Date for
any Cycle of which any Accounts are included in the Trust, the amount
of Finance Charge Receivables of all Accounts in such Cycle shall be
equal to (A) the amount of Finance Charges charged to all Accounts in
such Cycle on such date, plus (B) the Carry-Over Finance Charge Amount
----
for such Cycle.
21
(ii) For each Monthly Period, the amount of Collections
allocated to Finance Charge Receivables for all Accounts in such Cycle
shall be an amount equal to the amount of Finance Charges actually
assessed on all Accounts, in accordance with the Charge Account
Guidelines, on the Cycle Billing Date for such Cycle in the
immediately preceding Monthly Period.
(iii) If, at the close of business on the last Business Day of
any Monthly Period, the amount of Collections allocated to Finance
Charge Receivables for all Accounts in such Cycle during such Monthly
Period is less than the amount of Finance Charge Receivables for all
Accounts in such Cycle on the Cycle Billing Date for such Cycle next
preceding such Monthly Period, then such deficit shall be the "Carry-
Over Finance Charge Amount" for such Cycle and shall be added to the
amount of Finance Charges assessed on such Billing Cycle Date pursuant
to clause (i)(B) above. The Carry-Over Finance Charge Amount with
-------------
respect to any Accounts shall be zero as of the Cycle Billing Date
next preceding (A) the Closing Date, in the case of Accounts which are
not Additional Accounts and (B) the applicable Addition Date, in the
case of Additional Accounts.
Notwithstanding the foregoing, the Servicer may adopt a different
method of determining the amount of Finance Charge Receivables which in the
good faith judgment of the Servicer is designed to more accurately reflect
the portions of Receivables and Collections constituting Finance Charge
Receivables.
ARTICLE II
TRANSFER OF RECEIVABLES; ISSUANCE OF CERTIFICATES
Section 2.1 Transfer of Receivables. Seller does hereby
-----------------------
transfer, assign and set-over to the Trust for the benefit of the
Certificateholders, without recourse, all right, title and interest of
Seller in, to and under the Receivables now existing and hereafter created
and arising in connection with the Accounts, all monies due or to become
due with respect thereto (including all Finance Charge Receivables), all
Recoveries, Collections and other proceeds thereof and Insurance Proceeds
relating thereto, the rights to receive certain amounts paid or payable as
Interchange (if and to the extent provided for in any Supplement), all
rights to security for any Receivables (including without limitation rights
to bank accounts or certificates of deposit pledged as collateral), the
right to any Enhancement with respect to any Series, and all proceeds and
products of all of the foregoing.
In connection with such transfer, Seller agrees to record and
file, at its own expense, financing statements with respect to the
Receivables now existing and
22
hereafter created for the transfer of accounts (as defined in Section 9-106
of the UCC as in effect in the State of Illinois) meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
necessary to perfect the transfer of the Receivables from Seller to the
Trust, and to deliver file-stamped copies of such financing statements or
other evidence of such filings (which may, for purposes of this Section
-------
2.1, consist of telephone confirmations of such filings) to the Trustee on
---
or prior to the date of initial issuance of the Certificates.
In connection with such transfer, Seller further agrees, at its own
expense, on or prior to the Initial Closing Date (i) to indicate in its
books and records, including the computer files of the Receivables, that
Receivables created in connection with the Accounts have been transferred
to the Trust pursuant to this Agreement for the benefit of the
Certificateholders and (ii) to deliver to the Trustee a computer file or
microfiche list containing a true and complete list of all such Accounts,
identified by account number and by the Receivables balance and Principal
Receivables balance as of the Cut Off Date. Such file or list shall be
marked as Schedule 1 to this Agreement, delivered to the Trustee as
----------
confidential and proprietary, and is hereby incorporated into and made a
part of this Agreement.
The parties intend that, in the event this Agreement shall not be
effective to transfer, assign and set over to the Trustee the Trust
property, Seller shall be deemed hereunder to have granted to the Trustee a
first perfected security interest in all of the property described in the
first paragraph of this Section 2.1, and that this Agreement shall
-----------
constitute a security agreement under applicable law.
Seller acknowledges that all instruments (including certificates of
deposit) and bank accounts the security interest in which has been
transferred to the Trust hereby and which are maintained with Seller or of
which Seller has possession, shall be so maintained and held by Seller on
behalf and for the benefit of the Trust, in accordance with the terms of
this Agreement.
Additionally, for purposes of perfecting the Trustee's security
interest in bank accounts pledged to Seller, which security interest Seller
has transferred to the Trustee hereunder, this Agreement constitutes and
shall be deemed (i) notice to Seller by the Trustee of the Trustee's
security interest in such bank accounts, and (ii) Seller's acknowledgment
of and consent to the Trustee's notice and the Trustee's security interest
in such bank accounts.
Section 2.2 Acceptance by Trustee.
---------------------
(a) The Trustee hereby acknowledges its acceptance, on behalf of the
Trust, of all the property described in the first paragraph of Section 2.1,
-----------
and declares that it shall maintain such right, title and interest, upon
the trust herein set forth, for the benefit of all Certificateholders. The
Trustee further acknowledges that, prior to
23
or contemporaneously with the execution and delivery of this Agreement,
Seller delivered to the Trustee the computer file or microfiche list
described in the third paragraph of Section 2.1.
-----------
(b) The Trustee hereby agrees not to disclose to any Person any of
the account numbers or other information contained in the computer files or
microfiche lists delivered to the Trustee by Seller pursuant to Sections
--------
2.1 and 2.6, except as is required in connection with the performance of
--- ---
its duties hereunder or in enforcing the rights of the Certificateholders,
or to a Successor Servicer appointed pursuant to Section 10.2. The Trustee
------------
agrees to take such measures as shall be reasonably requested by Seller to
protect and maintain the security and confidentiality of such information,
and, in connection therewith, shall allow Seller to inspect the Trustee's
security and confidentiality arrangements from time to time during normal
business hours. The Trustee shall provide Seller with written notice five
days prior to any disclosure pursuant to this subsection 2.2(b).
-----------------
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 Representations and Warranties of Seller Relating to
----------------------------------------------------
Seller. Seller hereby represents and warrants as of the Initial Closing
------
Date that:
(a) Organization and Good Standing. Seller is a national banking
------------------------------
association duly organized and validly existing in good standing under the
laws of the United States of America, and has full corporate power,
authority and legal right to own its property and conduct its business as
such property is presently owned and such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement
and to execute and deliver to the Trustee each Series of Certificates
issued hereunder.
(b) Due Qualification. Seller is qualified as a foreign banking
-----------------
association or other entity in any state where it is required to be so
qualified in order to conduct its business as required by this Agreement,
and has obtained all necessary licenses and approvals as required under
federal and state law, in each case, where the failure to be so qualified,
licensed or approved, could reasonably be expected materially and adversely
to affect the ability of the Seller to comply with the terms of this
Agreement.
(c) Due Authorization. The execution and delivery of this Agreement
-----------------
and the consummation of the transactions provided for herein have been duly
authorized by Seller by all necessary corporate action on the part of
Seller. This Agreement from the time of its execution shall remain an
official record of the Seller.
24
(d) No Conflict. The execution and delivery of this Agreement, the
-----------
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof will not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which
Seller is a party or by which it or any of its property is bound.
(e) No Violation. The execution and delivery of this Agreement, the
-------------
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof will not conflict with or violate any
Requirements of Law applicable to Seller.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of Seller, threatened against Seller,
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
this Agreement or the Certificates, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Seller, would materially and
adversely affect the performance by the Seller of its obligations under
this Agreement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement or the Certificates or (v) seeking to impose income taxes on the
Trust (other than as a wholly-owned subsidiary of the Seller).
(g) Eligibility of Accounts. As of the Cut Off Date, each Account was
-----------------------
an Eligible Account.
(b) All Consents Required. All approvals, authorizations, consents,
---------------------
orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Agreement, and the Certificates, the performance of the transactions
contemplated by this Agreement, and the fulfillment of or terms hereof,
have been obtained.
(i) Bulk Sales. The execution, delivery and performance of this
----------
Agreement do not require compliance with any "bulk sales" law by Seller.
(j) Solvency. The transactions under this Agreement do not and will
--------
not render Seller insolvent, nor have such transactions been entered into
in contemplation of the Seller's insolvency.
25
(k) Selection Procedures. No selection procedures believed by Seller
--------------------
to be materially adverse to the interests of the Trust or the
Certificateholders were utilized by Seller in selecting the Accounts.
The representations and warranties set forth in this Section 2.3 shall
-----------
survive the transfer of the respective Receivables to the Trust and
termination of the rights and obligations of the Servicer pursuant to
Section 10.1. Upon discovery by Seller, the Servicer or the Trustee of a
------------
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the others and
any Enhancement Provider. For the purposes of the representations and
warranties contained in this Section 2.3 and made by Seller on the Initial
-----------
Closing Date, "Certificates" shall mean the Certificates issued on the
Initial Closing Date. The Seller hereby represents and warrants, with
respect to any Series, as of its Closing Date, unless otherwise stated in
the related Supplement, that the representations and warranties of the
Seller set forth in this Section 2.3 will be true and correct as of such
-----------
date (for the purposes of such representations and warranties,
"Certificates" shall mean the Certificates issued on the related Closing
Date).
Section 2.4 Representations and Warranties of Seller Relating to the
--------------------------------------------------------
Agreement and the Receivables.
-----------------------------
(a) Binding Obligation; Valid Transfer and Security Interest. Seller
------------------- ------------------------------------
hereby represents and warrants to the Trust that, as of the Initial Closing
Date and, with respect to any Series issued after the Initial Closing Date,
unless otherwise stated in the related Supplement, as of the Closing Date
for such Series:
(i) This Agreement constitutes a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms, except as such enforceability may be limited by Debtor
Relief Laws and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or
in equity).
(ii) This Agreement constitutes either (A) a valid transfer to
the Trust of all right, title and interest of Seller in, to and under
the property described in the first paragraph of Section 2.1, and such
-----------
property will be held by the Trust free and clear of any Lien of any
Person claiming through or under Seller or its Affiliates, except for
(x) Liens permitted under subsection 2.5(b), (y) the Seller Interest
-----------------
and (z) Seller's right to receive interest accruing on, and investment
earnings in respect of, the Finance Charge Accounts, the Principal
Accounts and any other Investor Accounts as provided in this Agreement
and any Supplement or (B) a grant of a security interest (as defined
in the UCC as in effect in the State of Illinois) in such property to
the Trust, which is enforceable with respect to existing Receivables
in the Accounts, all monies due or to become due with respect thereto,
the
26
Collections, Recoveries and other proceeds thereof, and Insurance
Proceeds relating thereto upon execution and delivery of this
Agreement, and which will be enforceable with respect to such
Receivables hereafter arising in the Accounts, all monies due or to
become due with respect thereto, the Collections, Recoveries and other
proceeds thereof and Insurance Proceeds relating thereto, at the time
such Receivables arise. If this Agreement constitutes the grant of a
security interest to the Trust in such property, upon the filing of
the financing statement described in Section 2.1 and in the case of
-----------
the Receivables hereafter arising in the Accounts and proceeds thereof
and Insurance Proceeds relating to such Receivables, as the same
arise, the Trust shall have a first priority perfected security
interest in such property, except for Liens permitted under subsection
----------
2.5(b). Neither Seller nor any Person claiming through or under Seller
------
shall have any claim to or interest in the Principal Accounts, the
Finance Charge Accounts or the Distribution Accounts or any other
Investor Accounts, except for Seller's right to receive interest
accruing on, and investment earnings in respect of, the Finance Charge
Accounts, Principal Accounts and any other Investor Accounts as
provided in this Agreement and any Supplement, Seller's right to
receive payments from the Finance Charge Accounts and Principal
Accounts in accordance with the provisions of Article IV, and, if this
----------
Agreement constitutes the grant of a security interest in such
property, except for the interest of Seller in such property as a
debtor for purposes of the UCC as in effect in the State of Illinois.
(b) Eligibility of Receivables. Seller hereby represents and warrants
--------------------------
to the Trust as of the Initial Closing Date that (i) each Receivable then
existing is an Eligible Receivable, (ii) each Receivable then existing has
been transferred to the Trust free and clear of any Lien of any Person
(other than Liens permitted under subsection 2.5(b), the Seller Interest
-----------------
and Seller's right to receive interest accruing on, and investment earnings
in respect of, the Finance Charge Accounts, the Principal Accounts, the
Excess Funding Account and any other Investor Accounts as provided in this
Agreement and any Supplement) and in compliance, in all material respects,
with all Requirements of Law applicable to Seller and (iii) with respect to
each Receivable then existing, all consents, licenses, approvals or
authorizations of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by Seller in
connection with the transfer of such Receivable to the Trust have been duly
obtained, effected or given and are in full force and effect. On each day
on which any new Receivable is transferred by Seller to the Trust, Seller
shall be deemed to represent and warrant to the Trust that (i) each
Receivable transferred on such day is an Eligible Receivable, (ii) each
Receivable transferred on such day has been transferred to the Trust free
and clear of any Lien of any Person (other than Liens permitted under
subsection 2.5(b), the Seller Interest and Seller's right to receive
-----------------
interest accruing on, and investment earnings in respect of, the Finance
Charge Accounts, the Principal Accounts and the other Investor
27
Accounts, as provided in this Agreement and any Supplement) and in
compliance, in all material respects, with all Requirements of Law
applicable to Seller, (iii) with respect to each such Receivable, all
consents, licenses, approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be obtained,
effected or given by Seller in connection with the transfer of such
Receivable to the Trust have been duly obtained, effected or given and are
in full force and effect and (iv) the representations and warranties set
forth in subsection 2.4(a) are true and correct with respect to each
-----------------
Receivable transferred on such day as if made on such day.
(c) Notice of Breach. The representations and warranties set forth in
----------------
this Section 2.4 shall survive the transfer of the respective Receivables
-----------
to the Trust and termination of the rights and obligations of the Servicer
pursuant to Section 10.1. Upon discovery by Seller, the Servicer or the
------------
Trustee of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the
others and any Enhancement Provider.
(d) Transfer of Ineligible Receivables. In the event of a breach of
----------------------------------
any representation and warranty set forth in subsection 2.4(b) within 30
-----------------
days (or with the prior written consent of a Responsible Officer of the
Trustee, such longer period, not to exceed 60 days, specified in such
consent) of the earlier to occur of the discovery of such breach by Seller,
or receipt by Seller of written notice of such breach given by the Trustee
or Servicer, Seller shall accept a retransfer of each Principal Receivable
to which such breach relates (an "Ineligible Receivable") on the terms and
---------------------
conditions set forth below; provided, however, that no such retransfer
-------- -------
shall be required to be made with respect to such Ineligible Receivable if,
on any day within such 30-day period (or such longer period as may be
specified in the consent) the representations and warranties in the second
sentence of subsection 2.4(b), with respect to such Ineligible Receivable
-----------------
shall then be true and correct in all material respects with respect to
such Ineligible Receivable as if such Ineligible Receivable had been
transferred to the Trust on such day. Notwithstanding anything contained in
this subsection 2.4(d) to the contrary, in the event of breach of any
-----------------
representation and warranty set forth in subsection 2.4(b), with respect to
-----------------
(x) each Receivable existing as of the Closing Date or an Addition Date, as
applicable, and (y) each new Receivable thereafter arising, having been
conveyed to the Trust free and clear of any Lien of any Person claiming
through or under Seller and its Affiliates and in compliance in all
material respects, with all Requirements of Law applicable to Seller,
immediately upon the earlier to occur of the discovery of such breach by
Seller or receipt by Seller of written notice of such breach given by the
Trustee or the Servicer, Seller shall repurchase and the Trustee shall
convey, without recourse, representation or warranty, all of the Trustee's
right, title and interest in each Ineligible Receivable, and the Servicer
shall promptly notify Moody's of such event. Seller shall accept a
retransfer of each such Ineligible Receivable and there shall be deducted
from the aggregate amount of Principal Receivables used to calculate the
28
Seller Amount the face amount of each such Ineligible Receivable. On and
after the date of such retransfer, each Ineligible Receivable so
retransferred shall not be included in the calculation of the Investor
Percentage, the Seller Percentage or the Seller Amount. In the event that
the exclusion of an Ineligible Receivable from the calculation of the
Seller Amount would cause the Seller Amount to be less than the Minimum
Seller Amount, Seller shall make a deposit in the Collection Account in
immediately available funds in an amount equal to the Shortfall Amount. The
amounts so deposited are to be treated for all purposes hereof as
Collections on such Ineligible Receivables. Such deposit shall be
considered a prepayment in full of the Ineligible Receivable and shall be
applied in accordance with Article IV. Upon each retransfer to Seller of
----------
such Ineligible Receivable, the Trust shall automatically and without
further action be deemed to transfer, assign and set-over to Seller,
without recourse, representation or warranty, all the right, title and
interest of the Trust in, to and under such Ineligible Receivable, all
monies due or to become due with respect thereto, all proceeds thereof and
Insurance Proceeds relating thereto. The Trustee shall execute such
documents and instruments of transfer and take such other actions as shall
reasonably be requested by Seller to effect the transfer of such Ineligible
Receivable pursuant to this subsection. The obligation of Seller to accept
retransfer of any Ineligible Receivable shall constitute the sole remedy
respecting any breach of the representations and warranties set forth in
subsection 2.4(b) with respect to such Receivable available to
-----------------
Certificateholders or the Trustee on behalf of Certificateholders.
(e) Retransfer of Trust Portfolio. In the event of a breach of any of
-----------------------------
the representations and warranties set forth in subsection 2.4(a), either
-----------------
the Trustee, or the Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 25% of the Investor Amount of any
Series, by notice then given in writing to Seller (and to the Trustee and
the Servicer, if given by the Investor Certificateholders), may direct
Seller to accept retransfer of all of the Principal Receivables following
the period of 45 days after such notice, or within such longer period as
may be specified in such notice, and Seller shall be obligated to accept
retransfer of such Receivables on a Distribution Date first occurring after
such applicable period on the terms and conditions set forth below;
provided, however, that no such retransfer shall be required to be made if,
-------- -------
at any time during such applicable period the representations and
warranties contained in subsection 2.4(a) shall then be true and correct in
-----------------
all material respects. Seller shall deposit on the Transfer Date (in next
day funds) for the related Distribution Date an amount equal to the deposit
amount provided in the next sentence for such Receivables in the
Distribution Account for distribution to the Investor Certificateholders
pursuant to Section 12.3. The deposit amount for such retransfer will be
------------
equal to (i) the Aggregate Investor Amount at the end of the day on the
last day of the Monthly Period preceding the Distribution Date on which the
retransfer is scheduled to be made, less the amount, if any, transferred to
the Distribution Account on such Transfer Date for application to principal
payments in respect of Investor
29
Certificates, plus (ii) an amount equal to all interest accrued but unpaid
on the Investor Certificates at the Certificate Rate through such last day,
less the amount transferred to the Distribution Account from the Finance
Charge Account on such Transfer Date in respect of Certificate Interest.
Payment of the deposit amount and all other amounts in the Distribution
Account in respect of the preceding Monthly Period shall be considered a
prepayment in full of the Receivables represented by the Investor
Certificates. On the Distribution Date following the Transfer Date on which
such amount has been deposited in full into the Distribution Account, the
Receivables and all monies due or to become due with respect thereto and
all proceeds of the Receivables and Insurance Proceeds relating thereto
shall be transferred to Seller, and the Trustee shall execute and deliver
such instruments of transfer, in each case without recourse, representation
or warranty, as shall be reasonably requested by Seller to vest in Seller,
or its designee or assignee, all right, title and interest of the Trust in,
to and under the Receivables, all monies due or to become due with respect
thereto (including all Finance Charge Receivables) and all proceeds thereof
and Insurance Proceeds relating thereto. If the Trustee or the Investor
Certificateholders give a notice directing Seller to accept a retransfer as
provided above, the obligation of Seller to accept a retransfer of the
Receivables pursuant to subsection 2.4(e) shall constitute the sole remedy
-----------------
respecting a breach of the representations and warranties contained in
subsection 2.4(a) available to the Investor Certificateholders or the
----------------
Trustee on behalf of the Investor Certificateholders.
Section 2.5 Covenants of Seller. Seller hereby covenants that:
-------------------
(a) Receivables to be General Intangibles or Accounts. Seller will
-------------------------------------------------
take no action to cause any Receivable to be characterized as anything
other than a "general intangible" or an "account" (as defined in the UCC as
in effect in the State of Illinois). Each Receivable shall be payable
pursuant to a contract which does not create a Lien on any goods purchased
thereunder.
(b) Security Interests. Except for the transfers hereunder, Seller
------------------
will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter transferred to the Trust, or any interest
therein; Seller will immediately notify the Trustee of the existence of any
Lien on any Receivable; and Seller shall defend the right, title and
interest of the Trust in, to and under the Receivables, whether now
existing or hereafter transferred to the Trust, against all claims of third
parties; provided, however, that nothing in this subsection 2.5(b) shall
-------- ------- -----------------
prevent or be deemed to prohibit Seller from suffering to exist upon any of
the Receivables any Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable or if Seller shall currently
be contesting the validity thereof in good faith by appropriate proceedings
and shall have set aside on its books adequate reserves with respect
thereto; provided further, however, that nothing in this subsection 2.5(b)
---------------- ------- -----------------
shall
30
prevent or be deemed to prohibit Seller from granting a participation
interest in the Seller Interest or the Undivided Interest in the Trust
evidenced thereby.
(c) Account Allocations.
-------------------
(i) In the event that Seller is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of
this Agreement (including, without limitation, by reason of the
occurrence of an Insolvency Event) then, in any such event, (A) Seller
agrees to instruct the Servicer to allocate and pay to the Trust,
after the date of such inability, payments received in respect of the
Accounts giving rise to such Receivables first to the total amount of
Principal Receivables from such Accounts transferred to the Trust; and
(B) Seller agrees to have such amounts applied as Collections in
accordance with Article IV. If such event shall occur, it shall be
----------
deemed a Pay Out Event immediately upon the occurrence thereof. The
parties hereto agree that Finance Charge Receivables, whenever
created, with respect to Principal Receivables which have been
transferred to the Trust shall continue to be a part of the Trust
notwithstanding any cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect thereto shall
continue to be allocated and paid in accordance with Article IV.
----------
(ii) In the event that pursuant to subsection 2.4(d), Seller
-----------------
accepts a retransfer of an Ineligible Receivable as a result of a
breach of the representations and warranties in subsection 2.4(b)
-----------------
relating to such Receivable, then, in any such event, Seller agrees to
instruct the Servicer to allocate payments received in respect of the
Account giving rise to such Receivable first to the total amount of
Principal Receivables of the appropriate Obligor retained in the Trust
and thereafter to the total amount owing by such Obligor on any
Ineligible Receivable retransferred to Seller.
(d) Delivery of Collections. Seller agrees to pay to the Servicer (if
-----------------------
the Servicer is not then First Consumers National Bank) promptly (but in no
event later than two Business Days after receipt) all Collections received
by Seller in respect of the Receivables.
(e) Regulatory Filings. Seller shall make any filings, reports,
------------------
notices, applications and registrations with, and seek any consents or
authorizations from, the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements laws.
(f) Finance Charges and Other Fees. Seller agrees that, except as
------------------------------
otherwise required by any Requirement of Law or as is deemed by Seller to
be advisable for its MasterCard and VISA program based on a good faith
assessment
31
by Seller of the various factors impacting the use of its MasterCard and
VISA cards, Seller shall not reduce at any time (x) the Finance Charges
assessed in respect of any Accounts, or (y) any other fees charged on any
of the Accounts, if as a result of such reduction, Seller's reasonable
expectation of the Portfolio Yield in respect of any Series as of such date
would be less than the current Base Rate applicable to such Series.
(g) Cardholder Agreements and Cardholder Guidelines. Seller agrees to
-----------------------------------------------
comply with and perform its obligations under the Cardholder Agreements
relating to the Accounts and the Cardholder Guidelines and all applicable
regulations of MasterCard and VISA, except insofar as any failure so to
comply or conform would not materially and adversely affect the rights of
the Trust or the Certificateholders hereunder or under the Certificates or
any Supplement. In that regard, except as aforesaid, and so long as such
changes are made applicable to the entire portfolio of MasterCard and VISA
accounts owned and serviced by the Servicer which have characteristics the
same as, or substantially similar to, the Accounts which are subject hereto
(if any), Seller shall be free to change the terms and provisions of such
Cardholder Agreements or the Cardholder Guidelines in any respect
(including, without limitation, the calculation of the amount, or the
timing, of charge offs).
Section 2.6 Addition of Accounts.
--------------------
(a) If, on any Record Date, the Aggregate Principal Balance is less
than the Minimum Aggregate Principal Balance, either Seller or the Servicer
(whichever shall first become aware of same) promptly shall give the
Trustee written notice thereof, and as soon as practicable (but in no event
later than 10 days thereafter) Seller shall designate additional Eligible
Accounts ("Additional Accounts") to be included as Accounts and shall
-------------------
transfer the Receivables in such Additional Accounts to the Trust, in a
sufficient amount so that the Aggregate Principal Balance on such Record
Date would have, if the Receivables from such Additional Accounts had been
transferred to the Trust on or prior to such Record Date, at least equaled
the Minimum Aggregate Principal Balance. If Seller fails to transfer
Receivables as required by the preceding sentence, then the Trustee shall
give Seller immediate notice thereof.
(b) In addition to its obligation under subsection 2.6(a), Seller
-----------------
may, but shall not be obligated to, from time to time, designate Additional
Accounts to be included as Accounts.
(c) Seller agrees that any Receivables from Additional Accounts shall
be transferred by Seller to the Trust under subsection 2.6(a), (b) or (e)
------------------ --- ---
upon and subject to the following conditions:
32
(i) On or before the fifth Business Day (the "Notice Date")
-----------
prior to the Addition Date in respect of Additional Accounts added
pursuant to subsection 2.6(a) or (b), Seller shall give the Trustee
----------------- ---
and the Servicer (if a Person other than Seller) written notice that
such Additional Accounts will be included and specifying the
approximate aggregate amount of the Receivables to be transferred;
(ii) Seller (A) shall transfer to the Trust Receivables only in
Eligible Accounts, and (B) shall, if such designation of Additional
Accounts is made pursuant to subsection 2.6(b) or (e) and the addition
----------------- ---
of such Additional Accounts
(1) would cause the quotient (the "Annual Quotient") of (x)
---------------
the sum of the Annual Account Additions after giving effect to
such addition, plus the related Base Amount, divided by (y) the
---- ----------
related Base Amount to exceed 1.20, or
(2) would cause the quotient (the "Quarterly Quotient") of
------------------
(x) the sum of the Quarterly Account Additions after giving
effect to such addition, plus the related Base Amount, divided by
---- ----------
(y) the related Base Amount to exceed 1.15;
in either case, deliver a letter from each Rating Agency to the
Trustee by the Addition Date confirming that the Rating Agency
Condition has been satisfied with respect to the addition of such
Additional Accounts;
(iii) On or prior to the Addition Date, in respect of Additional
Accounts added pursuant to subsection 2.6(a) or (b), Seller shall have
----------------- ---
delivered to the Trustee a written transfer agreement (including an
acceptance by the Trustee on behalf of the Trust for the benefit of
the Investor Certificateholders) in substantially the form of Exhibit
-------
A (the "Transfer Agreement") and shall have indicated in its books and
- ------------------
records, including the computer files of the Receivables, that the
Receivables created in connection with the Additional Accounts have
been transferred by Seller to the Trust; and shall have delivered to
the Trustee a computer file or microfiche list containing a true and
complete list of all Additional Accounts identified by account number,
and the aggregate amount of the Receivables and the aggregate amount
of Principal Receivables in such Additional Accounts, as of the
Addition Date in respect of Additional Accounts added pursuant to
subsection 2.6(a) or (b), which computer file or microfiche list shall
----------------- ---
be marked as Schedule 1 to the Transfer Agreement, delivered to the
----------
Trustee as confidential and proprietary, shall be as of the date of
such Transfer Agreement and incorporated into and made a part of such
Transfer Agreement and this Agreement;
33
(iv) Seller shall be deemed to represent and warrant that (x)
each Additional Account is, as of the Addition Date, an Eligible
Account, (y) no selection procedures reasonably believed by Seller to
be materially adverse to the interests of the Investor
Certificateholders were utilized in selecting the Additional Accounts
from the available Eligible Accounts, and (z) as of the Addition Date,
Seller is not insolvent and will not be rendered insolvent by adding
any such Additional Account to any Cycle;
(v) Seller shall be deemed to represent and warrant that, as of
the Addition Date, the Transfer Agreement constitutes either (x) a
valid transfer to the Trust of all right, title and interest of Seller
in, to and under the Receivables then existing and thereafter arising
in respect of the Additional Accounts, all monies due or to become due
with respect thereto (including all Finance Charge Receivables), and
all proceeds (including, without limitation, as defined in the UCC as
in effect in the State of Illinois) of such Receivables and Insurance
Proceeds relating thereto, and such property will be owned by the
Trust free and clear of any Lien of any Person, except for (i) Liens
permitted under subsection 2.5(b), (ii) the Seller Interest and (iii)
-----------------
Seller's right to receive interest accruing on, and investment
earnings in respect of, the Finance Charge Accounts, the Principal
Accounts and any other Investor Accounts, as provided in this
Agreement and any Supplement, or (y) a grant of a security interest
(as defined in the UCC as in effect in the State of Illinois) in such
property to the Trust, which is enforceable with respect to then
existing Receivables of the Additional Accounts, all monies due or to
become due with respect thereto, the proceeds thereof and Recoveries
and Insurance Proceeds relating thereto upon the transfer of such
Receivables to the Trust, and which will be enforceable with respect
to the Receivables thereafter transferred in respect of Additional
Accounts, the proceeds thereof and Insurance Proceeds relating thereto
upon such transfer; and (z) if the Transfer Agreement constitutes the
grant of a security interest to the Trust in such property, upon the
filing of a financing statement as described in Section 2.1 with
-----------
respect to such Additional Accounts and in the case of the Receivables
of Additional Accounts thereafter transferred and the proceeds
thereof, and Insurance Proceeds relating to such Receivables, upon
such transfer, the Trust shall have a first priority perfected
security interest in such property, except for Liens permitted under
subsection 2.5(b), the Seller Interest and Seller's right to receive
-----------------
interest accruing on, and investment earnings in respect of, the
Finance Charge Accounts, the Principal Accounts and any other Investor
Accounts, as provided in this Agreement and any Supplement;
(vi) Seller shall, on the Addition Date for Additional Accounts
added pursuant to subsection 2.6(a) or (b), deliver a certificate of a
----------------- ---
Vice
34
President or more senior officer confirming the items set forth in
clauses (ii), (iii), (iv) and (v) above; and
------------ ----- ---- ---
(vii) Seller shall, on the Addition Date for Additional Accounts
added pursuant to subsection 2.6(a) or (b), deliver an Opinion of
----------------- ---
Counsel with respect to the Receivables in the Additional Accounts
substantially in the form of Exhibit B, and which shall be reasonably
---------
acceptable to the Rating Agencies.
(d) Seller shall provide to each Rating Agency and to each
Enhancement Provider prior written notice each time Additional Accounts are
added pursuant to subsection 2.6(a) or (b).
----------------- ---
(e) In addition to the occasional designation of Additional Accounts
as required or permitted pursuant to subsections 2.6(a) and (b) above,
------------------ ---
Seller agrees that each new MasterCard or VISA account originated in the
normal course of Seller's business after the Cut Off Date shall
automatically be included as an Account (and the Receivables arising
thereunder automatically transferred to the Trust) effective on the tenth
Business Day following the end of the Monthly Period in which such account
is assigned to one of Seller's billing cycles; provided, however, that such
-------- -------
automatic inclusion and transfer shall not occur with respect to any such
account if: (i) such account does not qualify as an Eligible Account, (ii)
the inclusion in the Trust of the Receivables in such Account, if such
Accounts had been designated by Seller pursuant to subsection 2.6(b), would
-----------------
have caused the limitations set forth in subsection 2.6(c)(ii) to be
---------------------
exceeded (unless there shall have been delivered to the Trustee a letter
from each Rating Agency confirming the Rating Agency Condition has been
satisfied with respect to the addition of such Additional Account), or
(iii) Seller otherwise designates such account as an account which is not
to be included as an Account pursuant to this subsection 2.6(e). On or
-----------------
before the fifth Business Day of each month next succeeding a calendar
month in which Accounts were included pursuant to the preceding sentence,
Seller shall (i) indicate in its books and records, including the computer
files of the receivables, that the Receivables created in connection with
such included Accounts have been transferred to the Trust, and (ii) shall
deliver to the Trustee a computer file or microfiche list containing a true
and complete list of all such included Accounts identified by account
number and by the Receivables balance and Principal Receivables balance as
of the end of such calendar month, which computer file or microfiche list
shall be delivered to the Trustee as confidential and proprietary and
incorporated into and made a part of this Agreement.
Section 2.7 Removal of Accounts.
-------------------
(a) Subject to the conditions set forth below, during the Revolving
Period Seller may designate from time to time Accounts no longer to be
designated for
35
inclusion in the Trust (the "Removed Accounts"); provided, however, that
---------------- -------- -------
Seller shall not make more than one such designation in any Monthly Period.
On or before the fifth Business Day (the "Removal Notice Date") prior to
-------------------
the date on which Removed Accounts shall be designated (the "Removal
-------
Date"), Seller shall give the Trustee, the Servicer (if a Person other than
----
Seller), each Rating Agency and each Enhancement Provider written notice
that the Receivables from such Removed Accounts are to be retransferred to
Seller.
Notwithstanding anything in this Section 2.7(a) to the contrary, Seller's
designation of Removed Accounts hereunder shall be on a basis that complies
with generally accepted accounting principles as determined by Seller after
consultation with its accountants.
(b) Seller shall be permitted to designate and require
retransfer to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
(i) The Rating Agency Condition has been satisfied with
respect to the removal of such Removed Accounts;
(ii) On each Removal Date, the Trustee shall deliver to
Seller a written retransfer agreement in substantially the form of
Exhibit C (the "Retransfer Agreement") and Seller shall deliver to the
--------- --------------------
Trustee a computer file, microfiche or written list containing a true
and complete schedule identifying all Removed Accounts specifying for
each such Removed Account, as of the Removal Notice Date, its account
number and the aggregate amount of Receivables therein. Such computer
file, microfiche or written list shall be as of the date of such
Retransfer Agreement incorporated into and made a part of this
Agreement;
(iii) Seller shall represent and warrant as of each Removal
Date that (a) the list of Removed Accounts, as of the Removal Notice
Date, complies in all material respects with the requirements of (ii)
----
above; (b) no selection procedure used by Seller which is adverse to
the interests of the Investor Certificateholders was utilized in
selecting the Removed Accounts; and (c) as of the Removal Notice Date
and as of the Removal Date, Seller is not insolvent, and such removal
was not made in contemplation of the Seller's insolvency;
(iv) The removal of any Receivables of any Removed Accounts
on any Removal Date shall not, in the reasonable belief of Seller,
cause a Pay Out Event to occur, or an event which with notice or lapse
of time or both would constitute a Pay Out Event;
36
(v) The Aggregate Principal Balance shall not be less than
the Minimum Aggregate Principal Balance after giving effect to such
removal; and
(vi) Seller shall have delivered to the Trustee and to each
Enhancement Provider a certificate of an officer of Seller confirming
the items set forth in clauses (i) through (v) above. The Trustee may
----------- ---
conclusively rely on such certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur
no liability in so relying.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver the Retransfer Agreement to Seller, and the Receivables from
the Removed Accounts shall no longer constitute a part of the Trust.
Section 2.8 Discount Option.
---------------
(a) The Seller shall have the option to designate at any time and
from time to time a percentage or percentages, which may be a fixed
percentage or a variable percentage based on a formula (the "Discount
--------
Percentage"), of all or any specified portion of Principal Receivables
----------
created after the Discount Option Date to be treated as Finance Charge
Receivables ("Discount Option Receivables"). The Seller shall also have the
----------------------------
option of reducing or withdrawing the Discount Percentage, at any time and
from time to time, on and after such Discount Option Date. The Seller shall
provide to the Servicer, the Trustee and any Rating Agency 30 days prior
written notice of the Discount Option Date, and such designation shall
become effective on the Discount Option Date (i) unless such designation in
the reasonable belief of the Seller would cause a Pay Out Event with
respect to any Series to occur, or an event which, with notice or lapse of
time or both, would constitute a Pay Out Event with respect to any Series
or (ii) unless the Rating Agency Condition shall not have been satisfied
with respect to such designation; provided that for this purpose Moody's
shall not be deemed to be a "Rating Agency."
(b) After the Discount Option Date, the Seller shall treat Discount
Option Receivable Collections as Collections of Finance Charge Receivables
as provided herein.
37
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to
-------------------------------------------------------
the Servicer.
------------
(a) Seller agrees to act as the Servicer under this Agreement. The
Investor Certificateholders by their acceptance of the Investor
Certificates consent to Seller acting as Servicer.
(b) Subject to the provisions of this Agreement, the Servicer shall
service and administer the Receivables and shall collect payments due under
the Receivables in accordance with its customary and usual servicing
procedures for servicing credit card receivables comparable to the
Receivables and in accordance with the Cardholder Guidelines and shall have
full power and authority, acting alone or through any party properly
designated by it hereunder, to do any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing and subject to Section
-------
10.1, the Servicer is hereby authorized and empowered (i) unless such power
----
and authority is revoked by the Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.1, to make withdrawals from the
------------
Collection Account as set forth in this Agreement, (ii) unless such power
and authority is revoked by the Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.1, to instruct the Trustee to make
------------
withdrawals and payments from the Principal Accounts, the Finance Charge
Accounts and any other Investor Accounts in accordance with such
instructions as set forth in this Agreement, (iii) unless such power and
authority is revoked by the Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.1, to instruct the Trustee in
------------
writing as provided herein, and (iv) unless such power and authority is
revoked by the Trustee on account of the occurrence of a Servicer Default
pursuant to Section 10.1, to execute and deliver, on behalf of the Trust
------------
for the benefit of the Certificateholders, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge,
and all other comparable instruments, with respect to the Receivables and,
after the delinquency of any Receivable and to the extent permitted under
and in compliance with applicable law and regulations, to commence
enforcement proceedings with respect to such Receivables. The Trustee
agrees that it shall promptly follow the instructions of the Servicer,
including those to withdraw funds from the Principal Accounts, the Finance
Charge Accounts, the Excess Funding Account and any other Series Account.
The Trustee shall furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
38
(c) (i) In the event that Seller is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of
this Agreement (including, without limitation, by reason of the
occurrence of an Insolvency Event) the Servicer agrees to allocate and
pay to the Trust, after such date, all Collections in respect of the
Accounts giving rise to such Receivables first to the total amount of
Principal Receivables from such Accounts transferred to the Trust.
(ii) In the event that pursuant to subsection 2.4(d), Seller
-----------------
accepts a retransfer of an Ineligible Receivable as a result of a
breach of the representations and warranties in subsection 2.4(b)
-----------------
relating to such Receivable, the Servicer agrees to allocate payments
received in respect of the Account giving rise to such Receivable
first to the total amount of Principal Receivables of the appropriate
Obligor retained in the Trust and thereafter to the total amount owing
by such Obligor on any Ineligible Receivables retransferred to Seller.
(d) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables
from the procedures, offices, employees and accounts used by the Servicer
in connection with servicing other credit card receivables.
(e) The Servicer shall maintain fidelity bond coverage insuring
against losses through wrongdoing of its officers and employees who are
involved in the servicing of credit card receivables.
Section 3.2 Servicing Compensation. As compensation for its
----------------------
servicing activities hereunder and reimbursement for its expenses as set
forth in the immediately following paragraph, the Servicer shall be
entitled to receive a monthly servicing fee in respect of any Monthly
Period (or portion thereof) prior to the termination of the Trust pursuant
to Section 12.1 (the "Monthly Servicing Fee"). The share of the Monthly
------------ ---------------------
Servicing Fee allocable to each Series of Investor Certificates with
respect to any Monthly Period (or portion thereof) shall be payable on the
related Distribution Date and, with respect to each Series (unless provided
in the related Supplement), shall be equal to one-twelfth of the product of
(A) the applicable Series Servicing Fee Percentage and (B) the Investor
Amount of such Series as of the first day of the related Monthly Period, or
portion thereof (the "Investor Monthly Servicing Fee"). The share of the
------------------------------
Monthly Servicing Fee allocable to the Seller Interest with respect to any
Monthly Period (or portion thereof) shall be equal to one-twelfth of the
product of (A) the Seller Amount and (B) the weighted average of the Series
Servicing Fee Percentages with respect to each Series of Investor
Certificates then outstanding (the "Monthly Seller Servicing Fee"). The
----------------------------
Monthly Servicing Fee shall equal the sum of (x) the aggregate amount of
Investor Monthly Servicing Fees with
39
respect to each Series then outstanding and (y) the Monthly Seller
Servicing Fee. The Investor Monthly Servicing Fee with respect to any
Series is payable in arrears on the related Distribution Date (unless
otherwise provided in the related Supplement) and the Monthly Seller
Servicing Fee is payable in arrears no later than the last Distribution
Date with respect to any Series occurring in a Monthly Period. The Monthly
Seller Servicing Fee and, unless otherwise provided in a Supplement, each
Investor Monthly Servicing Fee, shall be calculated on the basis of a 360-
day year consisting of twelve 30-day months.
The Servicer's expenses include the reasonable fees and disbursements
of independent accountants and all other expenses incurred by the Servicer
in connection with its activities hereunder; provided that the Servicer
--------
shall not be liable for any liabilities, costs or expenses of the Trust,
the Investor Certificateholders or the Certificate Owners arising under any
tax law, including without limitation any federal, state or local income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to
comply therewith). The Servicer shall be required to pay such expenses for
its own account and shall not be entitled to any payment therefor other
than the Monthly Servicing Fee.
Section 3.3 Representations, Warranties and Covenants of the
------------------------------------------------
Servicer. Seller, as initial Servicer, hereby makes, and any successor
--------
Servicer by its appointment hereunder shall make, the following
representations and warranties and covenants on which the Trustee has
relied in accepting the Receivables in trust and in authenticating
Certificates:
(a) Organization and Good Standing. The Servicer is duly organized,
------------------------------
validly existing and in good standing under the laws of its jurisdiction of
organization, and has full corporate power, authority and right to own its
properties and conduct its business as such properties are presently owned
and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement.
(b) Due Qualification. The Servicer is qualified as a foreign banking
-----------------
association or other entity in any state where it is required to be so
qualified to service the Receivables as required by this Agreement and has
obtained all necessary licenses and approvals as required under federal and
state law, in each case, where the failure to be so qualified, licensed or
approved, could reasonably be expected materially and adversely to affect
the ability of the Servicer to comply with the terms of this Agreement.
(c) Due Authorization. The execution, delivery, and performance of
-----------------
this Agreement have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer.
40
(d) Binding Obligation. This Agreement constitutes legal, valid and
------------------
binding obligations of the Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by Debtor Relief Laws and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of this Agreement by the
------------
Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the
Servicer, will not conflict with, violate, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, any Requirements of Law applicable to the
Servicer or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement, seeking any determination or ruling that,
in the reasonable judgment of the Servicer, would materially and adversely
affect the performance by the Servicer of its obligations under this
Agreement, or seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement.
(g) Rescission and Cancellation. Other than pursuant to and in
---------------------------
accordance with the Cardholder Guidelines, the Servicer shall not rescind
or cancel any Receivable unless such rescission or cancellation shall have
been ordered or directed by a Governmental Authority.
(h) Other Actions. Other than pursuant to and in accordance with the
-------------
Cardholder Guidelines and as otherwise specifically permitted by this
Agreement, the Servicer shall not (i) take or fail to take any action if
such action or failure to act would impair the rights of the Trust in any
Receivable, or (ii) revise or defer any payment due in respect of any
Receivable.
Section 3.4 Reports and Records for the Trustee; Bank Account
-------------------------------------------------
Statements.
----------
(a) Daily Reports. On each Business Day, the Servicer shall prepare
-------------
and make available at the office of the Servicer for inspection by the
Trustee a record setting forth (i) the aggregate amount of Collections
processed by the Servicer on the preceding Business Day and (ii) the
aggregate amount of Receivables as of the close of business on the
preceding Business Day.
41
(b) Monthly Servicer's Certificate. Unless otherwise stated in
------------------------------
the related Supplement with respect to any Series, on each Determination
Date, the Servicer shall forward to the Trustee, the Paying Agent, any
Rating Agency and any Enhancement Provider a certificate of a Servicing
Officer substantially in the form of Exhibit D setting forth (i) the
---------
aggregate amount of Collections processed during the preceding Monthly
Period, (ii) the aggregate amount of the Investor Percentage of Collections
of Principal Receivables processed by the Servicer pursuant to Article IV
----------
during the preceding Monthly Period, (iii) the aggregate amount of the
Investor Percentage of Collections of Finance Charge Receivables processed
by the Servicer pursuant to Article IV during the preceding Monthly Period,
----------
(iv) the aggregate amount of Receivables and the balance on deposit in each
Finance Charge Account, each Principal Account, the Excess Funding Account
and each other Series Account with respect to Collections processed as of
the end of the last day of the preceding Monthly Period, (v) the aggregate
amount, if any, of withdrawals, drawings or payments under any Enhancement
with respect to each Series required to be made with respect to the
previous Monthly Period, and (vi) the sum of all amounts payable to the
Investor Certificateholders on the succeeding Distribution Date in respect
of Certificate Interest and Certificate Principal.
Section 3.5 Annual Servicer's Certificate. The Servicer will
-----------------------------
deliver to the Trustee, any Enhancement Provider and any Rating Agency on
or before April 30 of each calendar year, beginning with April 30, 1993, an
Officer's Certificate substantially in the form of Exhibit E stating that
---------
(a) a review of the activities of the Servicer during the preceding
calendar year and of its performance under this Agreement was made under
the supervision of the officer signing such certificate and (b) to the best
of such officer's knowledge, based on such review, the Servicer has fully
performed all its obligations under this Agreement throughout such year,
or, if there has been a default in the performance of any such obligation,
specifying each such default known to such officer and the nature and
status thereof. A copy of such certificate may be obtained by any Investor
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
Section 3.6 Annual Independent Public Accountants' Servicing
------------------------------------------------
Report.
------
(a) On or before April 30 of each calendar year, beginning with
April 30, 1993, the Servicer shall cause KPMG Peat Marwick or another firm
of nationally recognized independent public accountants (who may also
render other services to the Servicer or Seller) to furnish a report
covering the preceding annual period to the effect that such accountants
have applied certain agreed-upon procedures to certain documents and
records relating to the servicing of Accounts under this Agreement,
compared the information contained in the Servicer's certificates delivered
during the period covered by such report with such documents and records
and that no matters came to the attention of such accountants that caused
them to believe that
42
such servicing was not conducted in compliance with Section 3.2, Article IV
----------- ----------
and Section 8.8, except for such exceptions as such accountants shall
-----------
believe to be immaterial and such other exceptions as shall be set forth in
such statement. In addition, each report shall set forth the agreed-upon
procedures performed. A copy of such report may be obtained by any Investor
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office. In addition, the Servicer shall cause such
accountants to furnish a copy of such report to each Rating Agency and to
each Enhancement Provider.
(b) On or before April 30 of each calendar year, beginning with April
30, 1993, the Servicer shall cause KPMG Peat Marwick or another firm of
nationally recognized independent public accountants (who may also render
other services to the Servicer or Seller) to furnish a report to the
Trustee to the effect that they have compared the mathematical calculations
of each amount set forth in the monthly certificates forwarded by the
Servicer pursuant to subsection 3.4(c) during the period covered by such
-----------------
report (which shall be the period from January 1, to and including December
31 of such calendar year) with the Servicer's computer reports which were
the source of such amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in agreement, except
for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement. A copy of such report
may be obtained by any Investor Certificateholder by a request in writing
to the Trustee addressed to the Corporate Trust Office. In addition, the
Servicer shall cause such accountants to furnish a copy of such report to
each Rating Agency and to each Enhancement Provider.
Section 3.7 Tax Treatment. Seller has structured this Agreement and
-------------
the Investor Certificates to facilitate a secured, credit-enhanced
financing on favorable terms with the intention that the Investor
Certificates will constitute indebtedness of Seller for federal income and
state and local tax purposes; and Seller and each Investor
Certificateholder by acceptance of its Certificate agrees to recognize and
report the Investor Certificates as indebtedness of Seller for purposes of
federal, state and local income or franchise taxes and any other tax
imposed on or measured by income, and to report all receipts and payments
relating thereto in a manner that is consistent with such characterization.
Section 3.8 Notices to Seller. In the event that Seller is no
-----------------
longer acting as Servicer, any Successor Servicer appointed pursuant to
Section 10.2 shall deliver or make available to Seller each certificate and
------------
report required to be prepared, forwarded or delivered thereafter pursuant
to Sections 3.4, 3.5 and 3.6.
------------ --- ---
43
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders. Each Series of Investor
----------------------------
Certificates shall represent Undivided Interests in the Trust, including the
benefits of any Enhancement and the right to receive the Collections and other
amounts at the times and in the amounts specified in this Article IV to be
----------
deposited in Investor Accounts for the account of such Investor Certificates or
paid to the Investor Certificateholders of such Series; provided, however, that
-------- -------
the aggregate interest represented by such Series of Certificates at any time in
the Principal Receivables shall not exceed an amount equal to the Investor
Amount at such time. The Seller Interest shall represent the remaining Undivided
Interest in the Trust, including the right to receive the Collections and other
amounts at the times and in the amounts specified in this Article IV to be paid
----------
with respect to the Seller Interest, provided, however, that the aggregate
-------- -------
interest represented by the Seller Interest at any time in the Principal
Receivables shall not exceed the Seller Amount at such time, and the Seller
Interest shall not represent any interest in the Investor Accounts, except as
provided in this Agreement, or the benefits of any Enhancement issued with
respect to any Series.
Section 4.2 Establishment of Investor Accounts.
----------------------------------
(a) The Collection Account. The Servicer, for the benefit of the
----------------------
Certificateholders, shall establish and maintain in the name of the Trust, or
cause to be established and maintained, with an office or branch located in the
state designated by the Servicer of a depository institution or trust company
(which may include the Trustee) organized under the laws of the United States of
America or any one of the states thereof a non-interest bearing segregated
corporate trust account (the "Collection Account") bearing a designation clearly
------------------
indicating that the funds deposited therein are held in trust for the benefit of
the Certificateholders; provided, however, that at all times the certificates
-------- -------
of deposit, short-term deposits or commercial paper or the long-term unsecured
debt obligations (other than such obligation whose rating is based on collateral
or on the credit of a Person other than such institution or trust company) of
such depository institution or trust company shall have a credit rating from the
applicable Rating Agency of P-1, A-1+, as applicable, respectively, in the case
of the certificates of deposit, short-term deposits or commercial paper, or a
rating from the applicable Rating Agency of Aaa, AAA, as applicable, in the case
of the long-term unsecured debt obligations, and which is a member of the FDIC
(a "Qualified Institution"). Pursuant to Section 3.1(b), the Servicer shall have
--------------------- --------------
the revocable power to withdraw funds from the Collection Account for the
purposes of carrying out its duties hereunder. The Supplement for any Series may
require the Trustee to establish and maintain a subaccount of the
44
Collection Account for a Series (such subaccount, a "Collection Subaccount")
---------------------
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Certificateholders of such Series with a
depository institution or trust company meeting the criteria provided in such
Supplement. Funds on deposit in the Collection Subaccount with respect to any
Series shall not be for the benefit of the Investor Certificateholders of any
other Series. The funds on deposit in each Collection Subaccount shall be
invested in the manner provided in the related Supplement, and any earnings on
such investments shall be applied as provided in such Supplement. The Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Collection Account and in each Collection Subaccount and all
proceeds thereof, and the Trustee shall have sole dominion and control of such
account, funds and proceeds.
(b) The Finance Charge Accounts and Principal Accounts. The Trustee, for
--------------------------------------------------
the benefit of the Investor Certificateholders, shall establish and maintain
with itself (or with another Qualified Institution) in the name of the Trust two
segregated corporate trust accounts for each Series (in each case, the "Series
------
Finance Charge Account" and the "Series Principal Account", respectively, all of
- ---------------------- ------------------------
which are referred to herein as the "Finance Charge Accounts" and the "Principal
----------------------- ---------
Accounts", respectively), bearing a designation clearly indicating that the
- --------
funds therein are held for the benefit of the Investor Certificateholders of
such Series. The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the accounts created pursuant to this
subsection (b) and all proceeds thereof, and the Trustee shall have sole
- --------------
dominion and control of such accounts, funds and proceeds. Pursuant to authority
granted to it hereunder, the Servicer shall have the revocable power to instruct
the Trustee to withdraw funds from the Finance Charge Accounts and Principal
Accounts for the purpose of carrying out the Servicer's duties hereunder. The
Trustee at all times shall maintain accurate records reflecting each transaction
in the Principal Accounts and the Finance Charge Accounts and that funds held
therein shall at all times be held in trust for the benefit of the respective
Investor Certificateholders.
(c) The Distribution Account. The Trustee, for the benefit of the Investor
------------------------
Certificateholders, shall cause to be established and maintained in the name of
the Trust, with an office or branch of a Qualified Institution, a non-interest
bearing segregated demand deposit account (the "Distribution Account") bearing a
--------------------
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Investor Certificateholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Distribution Account and all proceeds thereof, and the Trustee shall have
sole dominion and control of such account, funds and proceeds. The Paying Agent
shall have the revocable authority to make withdrawals from the Distribution
Account.
45
(d) Establishment of the Excess Funding Account. The Servicer, for the
-------------------------------------------
benefit of the Investor Certificateholders and the holder of the Seller
Interest, shall establish and maintain or cause to be established and maintained
in the name of the Trustee, on behalf of the Trust, with a Qualified Institution
designated by the Servicer, a segregated trust account within the corporate
trust department of such Qualified Institution (the "Excess Funding Account"),
----------------------
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Investor Certificateholders and the holder
of the Seller Interest. The Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Excess Funding Account and in
all proceeds thereof, and the Trustee shall have sole dominion and control of
such account, funds and proceeds. Pursuant to the authority granted to it
pursuant to subsection 3.1(b), the Servicer shall have the power, revocable by
-----------------
the Trustee, to withdraw funds and to instruct the Trustee to withdraw funds
from the Excess Funding Account for the purposes of carrying out its duties
hereunder.
(e) Administration of the Investor Accounts. Funds on deposit in the
---------------------------------------
Principal Accounts and the Finance Charge Accounts shall at all times be
invested in Permitted Investments for the benefit of Seller; provided, that any
--------
such investment shall mature and such funds shall be available for withdrawal on
or prior to the Transfer Date following the Record Date occurring in the Monthly
Period in which such funds were processed for collection. The Trustee shall
maintain for the benefit of the Investor Certificateholders and the Servicer
possession of the negotiable instruments or securities evidencing the Permitted
Investments described in clause (a) of the definition thereof from the time of
----------
purchase thereof until the time of sale or maturity. On a monthly basis, all
interest and earnings (net of losses and investment expenses) on funds on
deposit in the Principal Accounts and the Finance Charge Accounts shall be
deposited by the Trustee in a separate deposit account with a Qualified
Institution in the name of Seller, which shall not constitute a part of the
Trust, or shall otherwise be turned over by the Trustee to Seller in accordance
with Seller's instructions. Subject to the restrictions set forth above, Seller
shall have the authority to instruct the Trustee with respect to the investment
of funds on deposit in the Principal Accounts and the Finance Charge Accounts.
For purposes of determining the availability of funds or the balances in the
Finance Charge Accounts and the Principal Accounts for any reason under this
Agreement, all investment earnings on such funds shall be deemed not to be
available or on deposit.
(f) Failure of Institution to Qualify. If an institution at which the
---------------------------------
Collection Account, any Collection Subaccount, the Excess Funding Account or any
Investor Account is established ceases to be a Qualified Institution, the
Servicer or the Trustee (as the case may be) shall notify the Rating Agencies
and within 15 days establish a replacement account at a Qualified Institution
and transfer any monies, documents, instruments, securities, securities
entitlements, certificates of deposit and other property to such replacement
account. From the date such new account is
46
established, it shall be the Collection Account, Excess Funding Account or
applicable Investor Account, as appropriate.
Section 4.3 Collections and Allocations.
---------------------------
(a) Collections. The Servicer shall deposit all Collections in the
-----------
Collection Account as promptly as possible after the Date of Processing of such
Collections, but in no event later than the second Business Day following such
Date of Processing; provided, however, that during the Revolving Period for all
-------- -------
outstanding Series, the Servicer may at its option deposit on a daily basis as
aforesaid only those Collections attributable to Finance Charge Receivables and
allocable to the Investor Certificates, and retain all other Collections until
the next Collections Deposit Day, at which time such other Collections, netted
as provided in subsection 4.3(c), shall be deposited in the Collection Account.
-----------------
The Servicer shall allocate such amounts to each Series of Investor
Certificates and to the Seller Interest in accordance with this Article IV and
----------
shall withdraw the required amounts from the Collection Account or pay such
amounts to the Seller Interest or to the other persons entitled thereto pursuant
to this Agreement, in each case as modified by any Supplement. The Servicer
shall make such deposits or payments on the date indicated therein, if
applicable, by wire transfer in next day funds.
(b) Commingling Conditions. Notwithstanding anything in this Agreement to
----------------------
the contrary, for so long as, and only so long as, First Consumers National Bank
shall remain the Servicer hereunder and no Servicer Default has occurred and is
continuing and either (i) the Servicer provides to the Trustee a letter of
credit or other arrangement covering risk of collection of the Servicer and the
Servicer shall have satisfied the Rating Agency Condition with respect to such
arrangement or (ii) the Servicer (unless the Rating Agency Condition has been
satisfied with respect to making monthly deposits) shall have and maintain a
certificate of deposit or short-term deposit rating of P-1 by Moody's and of at
least A-1 by Standard & Poor's and deposit insurance as required by law and by
the FDIC, the Servicer need not deposit Collections to the Collection Account in
the manner provided in this Article IV or make payments to the holder of the
----------
Seller Interest prior to the close of business on the day any Collections are
deposited in the Collection Account as provided in this Article IV, but may make
----------
such deposits, payments and withdrawals on the Transfer Date in the Monthly
Period following the Monthly Period in which such amounts were collected in an
amount equal to the net amount of such deposits, payments and withdrawals which
would have been made but for the provisions of this paragraph.
(c) Net Payments. So long as First Consumers National Bank is the Servicer
------------
and First Consumers National Bank, as Servicer, is making deposits to the
47
Collection Account in accordance with subsection 4.3(a), First Consumers
-----------------
National Bank, acting as Servicer and as agent for the holder of the Seller
Interest, may make a net payment to the Collection Account on the Collections
Deposit Day in the amount of all Collections received by the Servicer since the
previous Collections Deposit Date, minus all amounts payable to First Consumers
National Bank or with respect to the Seller Interest on or before the next
succeeding Transfer Date in accordance with this Article IV and, in such event,
----------
the Servicer will, on the Collections Deposit Date, retain, or pay to the holder
of the Seller Interest, as the case may be, all amounts payable to First
Consumers National Bank or the holder of the Seller Interest as aforesaid in
lieu of the payments required to be made under this Article IV.
----------
(d) Investor Net Recoveries. On each Determination Date, the Servicer shall
-----------------------
calculate the Investor Net Recoveries, if any, for the Monthly Period next
preceding such Determination Date. On or before the Transfer Date next following
such Determination Date, the Servicer shall deposit the amount of Investor Net
Recoveries, if any, in the Collection Account.
(e) Adjustments for Miscellaneous Credits. The Servicer shall be obligated
-------------------------------------
to reduce on a monthly basis the aggregate amount of Principal Receivables used
to calculate the Seller Amount as provided in this subsection 4.3(c) (a "Credit
----------------- ------
Adjustment") with respect to any Principal Receivable (i) which was created in
- ----------
respect of merchandise refused or returned by the Obligor thereunder, (ii) which
is reduced by the Servicer by any rebate, refund, chargeback or adjustment,
(iii) as to which the Obligor thereunder has asserted a counterclaim or defense
and either (A) the Servicer has agreed such counterclaim or defense is valid or
(B) a final nonappealable judgment or decree has been entered in favor of such
Obligor in respect of such counterclaim or defense by a court or arbitral body
having jurisdiction thereof, or (iv) which the Servicer has determined was
created through a fraudulent or counterfeit charge, but only if and to the
extent such fraudulent or counterfeit charges are not included as charge-offs
under the Cardholder Guidelines.
In the event that the exclusion of the amount of a Credit Adjustment from
the calculation of the Seller Amount would cause the Seller Amount to be less
than zero, Seller shall make a deposit, no later than the Business Day following
the Date of Processing of such Credit Adjustment, in the Excess Funding Account
in immediately available funds, in an amount equal to the amount by which such
Credit Adjustment exceeded the Seller Amount on such Date of Processing.
(f) Allocations for the Seller Interest. Throughout the existence of the
-----------------------------------
Trust, unless otherwise stated in any Supplement, the Servicer shall allocate to
the Seller Interest an amount equal to the product of (i) the Seller Percentage
and (ii) the aggregate amount of such Principal Collections and Finance Charge
Collections, respectively, in respect of each Monthly Period. Notwithstanding
anything in this
48
Agreement to the contrary, unless otherwise stated in any Supplement, the
Servicer need not deposit this amount or any other amounts so allocated to the
Seller Interest pursuant to any Supplement into the Collection Account and shall
pay, or be deemed to pay, such amounts as collected to the holder of the Seller
Interest, except, if the Seller Amount is less than zero, then Principal
Collections which are allocated to the Seller Interest shall be deposited in the
Excess Funding Account until the Seller Amount is equal to zero.
(g) Shared Principal Collections; Excess Funding Account. On each Business
----------------------------------------------------
Day, Principal Collections allocable to the Seller Interest and Shared Principal
Collections payable to the holder of the Seller Interest in an aggregate amount
equal to the Shortfall Amount shall be deposited in the Excess Funding Account.
Thereafter, amounts in the Excess Funding Account shall be treated as Shared
Principal Collections to the extent that, after giving effect to the application
and distribution of such amount as Shared Principal Collections, the Aggregate
Principal Balance would equal or exceed the Minimum Aggregate Principal Balance.
Shared Principal Collections shall be allocated to outstanding Principal Sharing
Series pro rata based on the Principal Shortfall, if any, for each such
--- ----
Principal Sharing Series, and the Servicer shall (except as provided above) pay
any remaining Shared Principal Collections on each Business Day to the holder of
the Seller Interest.
(h) Investment of Amounts in Excess Funding Account. Amounts on deposit in
-----------------------------------------------
the Excess Funding Account on any Business Day will be invested, at the
direction of the Seller, by the Servicer or the Trustee on behalf of the Seller
in Permitted Investments maturing on the next Business Day. Earnings from such
investments received shall be paid to the Seller or, if the Seller Amount as
determined on such Business Day does not exceed the Minimum Seller Amount, such
earnings shall be deposited in the Excess Funding Account.
(i) Allocation of Deposit Obligations. If the Seller or the Servicer shall
---------------------------------
fail to make any Deposit Obligation, the amount thereof shall first be allocated
to reduce the Seller Amount until the Seller Amount equals the Minimum Seller
Amount. Any remaining shortfall shall be allocated to each Series ratably based
upon a fraction the numerator of which is the Investor Percentage used by such
Series to allocate Default Amounts and the denominator of which is the sum of
all such numerators of all Series outstanding (such allocated amount, the
"Series Share" of such shortfall). The Series Share of each series that
------------
specifies a Minimum Seller Percentage greater than zero shall be allocated to
reduce the Minimum Seller Amount, and any Collections otherwise allocable to the
Seller Amount or balance on deposit in the Excess Funding Account shall be
available on a ratable basis to such Series to cover any shortfalls arising from
such failure; provided to the extent the Seller Amount falls below zero, any
--------
portion of the Series Share of any such Series that is not covered as described
above shall be allocated to such Series. The
49
Series Share of each Series that specifies a Minimum Seller Percentage of zero
shall be allocated to such Series.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND
SHALL BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Investor Certificates of each Series and
----------------
any Class thereof shall be issued in fully registered form and shall be
substantially in the form of the exhibits with respect thereto attached to the
related Supplement. The Investor Certificates shall, upon issue, be executed and
delivered by the Trustee. The Investor Certificates shall be issuable in a
minimum denomination of $1,000 Undivided Interest and integral multiples
thereof, unless otherwise provided in any Supplement, and the Investor
Certificates of each Series shall be issued upon initial issuance in an
aggregate original principal amount equal to the Initial Investor Amount of such
Series. Each Certificate shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer of the Trustee. Certificates
bearing the manual or facsimile signature of the individual who was, at the time
when such signature was affixed, authorized to sign on behalf of the Trustee
shall not be rendered invalid, notwithstanding that such individual has ceased
to be so authorized prior to the authentication and delivery of such
Certificates or does not hold such office at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by or on
behalf of the Trustee by the manual or facsimile signature of a duly authorized
signatory, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
Section 6.2 Authentication of Certificates. Contemporaneously with the
------------------------------
initial transfer of the Receivables, whether now existing or hereafter acquired
(other
50
than Receivables in Additional Accounts) and the other components to the Trust,
the Trustee shall authenticate and deliver the initial Series of Investor
Certificates. The Certificates shall be duly authenticated by or on behalf of
the Trustee, and together shall evidence the entire ownership of the Trust.
Section 6.3 Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at the office or agency to be
maintained by a transfer agent and registrar (the "Transfer Agent and
------------------
Registrar") in accordance with the provisions of Section 11.16 a register (the
- --------- -------------
"Certificate Register") in which, subject to such reasonable regulations as it
- --------------------
may prescribe, the Transfer Agent and Registrar shall provide for the
registration of the Investor Certificates and of transfers and exchanges of the
Investor Certificates as herein provided. The Trustee is hereby initially
appointed Transfer Agent and Registrar for the purpose of registering the
Investor Certificates and transfers and exchanges of the Investor Certificates
as herein provided. The Trustee shall be permitted to resign as Transfer Agent
and Registrar upon 30 days written notice to the Servicer. In the event that the
Trustee shall no longer be the Transfer Agent and Registrar, the Trustee shall
appoint a successor Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Investor Certificate of
any Series at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Investor Certificates of such Series in authorized denominations of like
aggregate Undivided Interests.
At the option of an Investor Certificateholder, Investor Certificates of
any Series may be exchanged for other Investor Certificates of the same Series
and authorized denominations of like Undivided Interests, upon surrender of the
Investor Certificates to be exchanged at any such office or agency. Whenever
any Investor Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate and deliver the Investor Certificates which the
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form satisfactory
to the Trustee and the Transfer Agent and Registrar duly executed by the
Certificateholder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Investor
Certificates.
51
All Investor Certificates surrendered for registration of transfer and
exchange shall be canceled and disposed of in a manner satisfactory to Seller
and the Trustee.
(b) Except as provided in Section 6.12 or 7.2 or this subsection 6.3(b),
------------ --- -----------------
Seller shall not transfer the Seller Interest or any interest therein. Seller
may from time to time transfer a portion of the Seller Interest upon
satisfaction of the following conditions:
(i) the Seller Amount shall not be less than the Minimum Seller
Amount, in each case as of the date of, and deducting the transferred
portion of, such transfer;
(ii) the Rating Agency Condition shall have been satisfied with
respect to such transfer; and
(iii) Seller shall have delivered to Trustee and each Rating Agency an
Opinion of Counsel to the effect that such transfer does not adversely
affect any of the conclusions stated in opinions as to federal income tax
delivered on any Closing Date, dated the date of such transfer, with
respect thereto.
Any portion of the Seller Interest transferred as described above may be further
transferred only upon satisfaction of the conditions set forth in clauses (ii)
------------
and (iii) above.
-----
(c) The Transfer Agent and Registrar will maintain at its expense in the
Borough of Manhattan, The City of New York, an office or offices or agency or
agencies where Investor Certificates may be surrendered for registration of
transfer or exchange.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
-------------------------------------------------
mutilated Certificate is surrendered to the Transfer Agent and Registrar, and
the Transfer Agent and Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Transfer Agent and Registrar and the Trustee such security or indemnity as may
be required by them (which unsecured agreement of indemnity by an institutional
Certificateholder shall be sufficient for such purposes) to save each of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and aggregate Undivided
Interest. In connection with the issuance of any new Certificate under this
Section 6.4, the Trustee or the Transfer Agent and Registrar may require the
- -----------
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the
52
fees and expenses of the Trustee and the Transfer Agent and Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section 6.4 shall
-----------
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee and the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Article V (as described in
---------
any Supplement) and for all other purposes whatsoever, and neither the Trustee
and the Paying Agent, the Transfer Agent and Registrar nor any agent of any of
them shall be affected by any notice to the contrary; provided, however, that in
-------- -------
determining whether the holders of Investor Certificates evidencing the
requisite Undivided Interests have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Investor Certificates owned by
Seller, the Servicer or any Affiliate thereof shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Investor Certificates which a Responsible
Officer in the Corporate Trust Office of the Trustee knows to be so owned shall
be so disregarded. Investor Certificates so owned which have been pledged in
good faith shall not be disregarded and may be regarded as outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Investor Certificates and that the pledgee is not
Seller, the Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent.
---------------------------
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the Distribution Account pursuant to Articles IV and V
----------- -
hereof. Any Paying Agent shall have the revocable power to withdraw funds from
the Distribution Account for the purpose of making distributions referred to
above. The Trustee may revoke such power and remove the Paying Agent for a
particular Series, if the Trustee determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect. The Paying Agent, unless the Supplement relating to any
Series states otherwise, shall initially be the Trustee. The Trustee shall be
permitted to resign as Paying Agent upon 30 days' written notice to Seller. In
the event that the Trustee shall no longer be the Paying Agent, the Trustee
shall appoint a successor. Each Paying Agent must be acceptable to Seller and
the Servicer. The provisions of Sections 11.1, 11.2 and 11.3 shall apply to the
------------- ---- ----
Trustee also in its role as Paying Agent, for so long as the Trustee shall act
as Paying Agent.
53
(b) The Trustee shall cause the Paying Agent (other than itself) to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee that such Paying Agent will hold all sums, if any, held by it
for payment to the Investor Certificateholders in trust for the benefit of the
Investor Certificateholders entitled thereto until such sums shall be paid to
such Certificateholders and shall agree, and if the Trustee is the Paying Agent
it hereby agrees, that it shall comply with all requirements of the Internal
Revenue Code regarding the withholding of payments in respect of federal income
taxes due from Certificate Owners by the Trustee.
Section 6.7 Access to List of Certificateholders' Names and Addresses. The
---------------------------------------------------------
Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to the Servicer or the Paying Agent, within five Business Days after
receipt by the Trustee of a request therefor from the Servicer or the Paying
Agent, respectively, in writing, a list in such form as the Servicer or the
Paying Agent may reasonably require, of the names and addresses of the Investor
Certificateholders as of the most recent Record Date for payment of
distributions to Investor Certificateholders. If Holders of Investor
Certificates (the "Applicants") evidencing Undivided Interests aggregating not
----------
less than 10% of the Investor Amount of the Investor Certificates of any Series
apply in writing to the Trustee, and such application states that the Applicants
desire to communicate with other Investor Certificateholders of any Series with
respect to their rights under this Agreement or under the Investor Certificates
and is accompanied by a copy of the communication which such Applicants propose
to transmit, then the Trustee, after having been adequately indemnified by the
Seller for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Certificateholders held by the Trustee and
shall give the Servicer notice that such request has been made, within five
Business Days after the receipt of such application. Such list shall be as of a
date no more than 45 days prior to the date of receipt of such Applicants'
request. Every Certificateholder, by receiving and holding a Certificate, agrees
with the Trustee that neither the Trustee, the Transfer Agent and Registrar, nor
any of their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was obtained.
Section 6.8 Authenticating Agent.
--------------------
(a) The Trustee may appoint one or more authenticating agents with respect
to the Certificates which shall be authorized to act on behalf of the Trustee in
authenticating the Certificates in connection with the issuance, delivery,
registration of transfer, exchange or repayment of Certificates. Whenever
reference is made in this Agreement to the authentication of Certificates by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include
54
authentication on behalf of the Trustee by an authenticating agent and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to
Seller and the Servicer.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to Seller. The Trustee may at any
time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to Seller. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
an authenticating agent shall cease to be acceptable to the Trustee or
Seller or the Servicer, the Trustee promptly may appoint a successor
authenticating agent. Any successor authenticating agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally
named as an authenticating agent. No successor authenticating agent shall
be appointed unless acceptable to the Trustee, Seller and the Servicer.
(d) The Trustee agrees to pay each authenticating agent from time to
time reasonable compensation for its services under this Section 6.8, and
-----------
the Trustee shall be entitled to be reimbursed and Seller shall reimburse
the Trustee for such reasonable payments actually made, subject to the
provisions of Section 11.5.
------------
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
------------- ---- ----
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
-----------
Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication
in substantially the following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
________________________________
as Authenticating Agent for the
Trustee,
By: ___________________________
Authorized Officer
55
Section 6.9 Book-Entry Certificates. Unless otherwise provided in any
-----------------------
related Supplement, the Investor Certificates of any Series upon original
issuance, shall be issued in the form of a one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to
the Clearing Agency specified in the Supplement for such Series, by, or on
behalf of, Seller. The Investor Certificates of each Series shall, unless
otherwise provided in the related Supplement, initially be registered on
the Certificate Register in the name of the nominee of the Clearing Agency,
and no Certificate Owner will receive a definitive certificate representing
such Certificate Owner's interest in the Investor Certificates, except as
provided in Section 6.11. Unless and until definitive, fully registered
------------
Investor Certificates of any Series (the "Definitive Certificates") have
-----------------------
been issued to Certificate Owners:
(i) the provisions of this Section 6.9 shall be in full force
-----------
and effect with respect to each such Series;
(ii) Seller, the Servicer, the Paying Agent, the Transfer
Agent and Registrar and the Trustee may deal with the related Clearing
Agency and the related Clearing Agency Participants for all purposes
(including the making of distributions on the Investor Certificates of
each such Series) as the authorized representatives of such
Certificate Owners;
(iii) to the extent that the provisions of this Section 6.9
-----------
conflict with any other provisions of this Agreement, the provisions
of this Section 6.9 shall control with respect to each such Series;
-----------
and
(iv) the rights of Certificate Owners of each such Series
shall be exercised only through the Clearing Agency and the applicable
Clearing Agency Participants and shall be limited to those established
by law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement applicable to a Series, unless and until
Definitive Certificates are issued pursuant to Section 6.11, the
------------
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Certificates to such Clearing
Agency Participants.
Section 6.10 Notices to Clearing Agency. Whenever notice or other
--------------------------
communication to the Certificateholders of a Series is required under this
Agreement, unless and until Definitive Certificates shall have been issued
to the Certificate Owners of such Series, the Trustee shall give all such
notices and communications specified herein to be given to Holders of the
Investor Certificates of such Series to the Clearing Agency.
56
Section 6.11 Definitive Certificates Initially Issued as Book-Entry
------------------------------------------------------
Certificates. If (i)(A) Seller advises the Trustee in writing that the
------------
Clearing Agency is no longer willing or able properly to discharge its
responsibilities under the related Depository Agreement, and (B) the
Trustee or Seller is unable to locate a qualified successor, (ii) Seller,
at its option, advises the Trustee in writing that it elects to terminate
the book-entry system through such Clearing Agency or (iii) after the
occurrence of a Servicer Default, Certificate Owners of a Series
representing beneficial interests aggregating not less than 50% of the
Investor Amount of a Series advise the Trustee and the related Clearing
Agency through the related Clearing Agency Participants in writing that the
continuation of a book-entry system through such Clearing Agency is no
longer in the best interests of the Certificate Owners, the Trustee shall
notify all Certificate Owners of such Series through such Clearing Agency,
of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to
the Trustee of the Investor Certificates of such Series by the related
Clearing Agency, accompanied by registration instructions from the related
Clearing Agency for registration, the Trustee shall issue the Definitive
Certificates of such Series. Neither Seller nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Certificates of such Series all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates and the Trustee
shall recognize the Holders of the Definitive Certificates of such Series
as Certificateholders of such Series hereunder.
Section 6.12 New Issuances.
-------------
(a) Upon any Exchange, Seller shall under Section 6.1 deliver to the
-----------
Trustee for execution and authentication under Section 6.2, one or more new
-----------
Series of Investor Certificates. Any such Series of Investor Certificates
shall be substantially in the form specified in the related Supplement and
shall bear, upon its face, the designation for the Series to which it
belongs, as selected by Seller. Except as specified in any Supplement for a
related Series, all Investor Certificates of any Series shall rank pari
----
passu and be equally and ratably entitled as provided herein to the
-----
benefits hereof (except that the Enhancement provided for any Series shall
not be available for any other Series) without preference, priority or
distinction on delivery, all in accordance with terms and provisions of
this Agreement and the related Supplement.
(b) Seller may require Trustee to issue to Seller under Section 6.1,
-----------
for execution and redelivery to Trustee for authentication under Section
-------
6.2, one or more newly issued Series of Investor Certificates in exchange
---
for a reduction in the Seller Interest (any such transfer, a "Seller
------
Exchange"). In addition, to the extent permitted
--------
57
for any Series of Investor Certificates as specified in the related
Supplement, the Investor Certificateholders of such Series may tender their
Investor Certificates to the Trustee pursuant to the terms and conditions
set forth in such Supplement in exchange for one or more newly issued
Series of Investor Certificates (an "Investor Exchange"). The Seller
-------- --------
Exchange and Investor Exchange are referred to collectively herein as an
"Exchange." The holder of the Seller Interest or Investor
Certificateholders, as applicable, may perform an Exchange by notifying the
Trustee in writing at least five days (but in no event less than three
Business Days) in advance (an "Exchange Notice") of the date upon which the
---------------
Exchange is to occur (an "Exchange Date"). Any Exchange Notice shall state
-------------
the designation of any Series to be issued on the Exchange Date and, with
respect to each such Series: (i) its Initial Investor Amount (or the method
of calculating such Initial Investor Amount), (ii) its Certificate Rate (or
the method of allocating interest payments or other cash flows to such
Series), if any, and (iii) the Enhancement Provider, if any, with respect
to such Series. On the Exchange Date, the Trustee shall authenticate and
deliver any such Series of Investor Certificates only upon delivery to it
of the following: (A) a Supplement in form satisfactory to the Trustee
satisfying the criteria set forth in subsection 6.12(c) executed by the
-----------------
Seller and specifying the Principal Terms of such Series, (B) the
applicable Enhancement, if any, (C) the agreement, if any, pursuant to
which the Enhancement Provider agrees to provide the Enhancement, if any,
(D) an Opinion of Counsel dated the Exchange Date with respect to such
Exchange, to the effect that, for federal income tax purposes, (1) such
Exchange will not adversely affect the tax characterization as debt of the
Investor Certificates of any outstanding Series or Class that was
characterized as debt at the time of its issuance, (2) such action will not
cause the Trust to be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (3) such Exchange will not cause or
constitute an event in which gain or loss would be recognized by any
Investor Certificateholder and (4) except as is otherwise provided in a
Supplement, the Investor Certificates of the Series established pursuant to
such Supplement will be properly characterized as debt, (E) evidence that
the Rating Agency Condition has been satisfied with respect to such
Exchange, (F) an Officer's Certificate of the Seller that on the Exchange
Date (1) the Seller, after giving effect to the Exchange, would not be
required to add Additional Accounts pursuant to subsection 2.6(a) and (2)
-----------------
after giving effect to such Exchange, the Aggregate Principal Balance would
be at least equal to the Minimum Aggregate Principal Balance, and (G) the
existing Investor Certificates, in the case of an Investor Exchange. Upon
satisfaction of such conditions, Trustee shall issue as provided above,
such Series of Investor Certificates, dated the Exchange Date and, in the
case of an Investor Exchange, cancel the Investor Certificates tendered in
exchange for the new Series. There is no limit to the number of Issuances
that may be performed under this Agreement.
(c) In conjunction with an Exchange, the parties hereto shall execute
a Supplement, which shall specify the relevant terms with respect to any
newly issued Series of Investor Certificates, which may including without
limitation: (i) its name
58
or designation, (ii) an Initial Investor Amount or the method of
calculating the Initial Investor Amount, (iii) the Certificate Rate (or
formula for the determination thereof), (iv) the Closing Date, (v) the
Rating Agency or Agencies rating such Series, (vi) the name of the Clearing
Agency, if any, (vii) the rights of the holder of the Seller Interest that
have been transferred to the Holders of such Series pursuant to such
Exchange (including any rights to allocations of Collections of Finance
Charge Receivables and Principal Receivables), (viii) the interest payment
date or dates and the date or dates from which interest shall accrue, (ix)
the method of allocating Collections with respect to Principal Receivables
for such Series and, if applicable, with respect to other Series and the
method by which the principal amount of Investor Certificates of such
Series shall amortize or accrete and the method for allocating Collections
with respect to Finance Charge Receivables and Receivables in Defaulted
Accounts, (x) the names of any accounts to be used by such Series and the
terms governing the operation of any such account, (xi) the Series
Servicing Fee Percentage, (xii) the Minimum Seller Amount, (xiii) the
Series Termination Date, (xiv) the terms of any Enhancement with respect to
such Series, (xv) the Enhancement Provider, if applicable, (xvi) the Base
Rate applicable to such Series, (xvii) the terms on which the Certificates
of such Series may be repurchased or remarketed to other investors, (xviii)
any deposit into any account provided for such Series, (xix) the number of
Classes of such Series, and if more than one Class, the rights and
priorities of each such Class, (xx) whether Interchange, Recoveries or
other fees will be included in the funds available to be paid for such
Series, (xxi) the priority of any Series with respect to any other Series,
(xxii) the rights, if any, of the holders of the Seller Interest that have
been transferred to the holders of such Series, and (xxiii) any other
relevant terms of such Series (including whether or not such Series will be
pledged as collateral for an issuance of any other securities, including
commercial paper) (all such terms, the "Principal Terms" of such Series).
---------------
The terms of such Supplement may modify or amend the terms of this
Agreement solely as applied to such new Series. If on the date of the
issuance of such Series there is issued and outstanding one or more Series
of Investor Certificates and no Series of Investor Certificates is
currently rated by a Rating Agency, then as a condition to such Exchange a
nationally recognized investment banking firm or commercial bank shall also
deliver to the Trustee an officer's certificate stating, in substance, that
the Exchange will not have an adverse effect on the timing or distribution
of payments to such other Series of Investor Certificates then issued and
outstanding.
ARTICLE VII
OTHER MATTERS RELATING TO SELLER
Section 7.1 Liability of Seller. Seller shall be liable in
-------------------
accordance herewith to the extent, and only to the extent, of the
obligations specifically undertaken by Seller hereunder.
59
Section 7.2 Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Seller.
----------------------
(a) Seller shall not consolidate with or merge into any other Person
or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Seller is merged or the Person which acquires by conveyance or
transfer the properties and assets of Seller substantially as an
entirety shall be, if Seller is not the surviving entity, organized
and existing under the laws of the United States of America or any
State or the District of Columbia, and shall be a national banking
association, federal savings association, state banking corporation or
state savings association which is not subject to the bankruptcy laws
of the United States of America and shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the performance of every covenant
and obligation of Seller, as applicable hereunder, and shall benefit
from all the rights granted to Seller, as applicable hereunder. To the
extent that any right, covenant or obligation of Seller, as applicable
hereunder, is inapplicable to the successor entity, such successor
entity shall be subject to such covenant or obligation, or benefit
from such right, as would apply, to the extent practicable, to such
successor entity. In furtherance hereof, in applying this Section 7.2
-----------
to a successor entity, Section 9.2 shall be applied by reference to
-----------
events of involuntary liquidation, receivership or conservatorship
applicable to such successor entity as such be set forth in the
Officer's Certificate described in subsection 7.2(a)(ii);
---------------------
(ii) Seller shall have delivered to the Trustee an Officer's
Certificate of Seller and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Section 7.2 and that all
-----------
conditions precedent herein provided for relating to such transaction
have been complied with and, in the case of the Opinion of Counsel,
that such supplemental agreement is legal, valid and binding with
respect to Seller; and
(iii) Seller shall have delivered notice to each Rating Agency
of such consolidation, merger, conveyance or transfer.
(b) The obligations of Seller hereunder shall not be assignable nor
shall any Person succeed to the obligations of Seller hereunder except for
mergers, consolidations, assumptions or transfers in accordance with the
provisions of the foregoing paragraph.
60
Section 7.3 Limitation on Liability of Seller. Neither Seller nor
---------------------------------
any of the directors or officers or employees or agents of Seller shall be
under any liability to the Trust, the Trustee, the Certificateholders or
any other Person for any action taken or for refraining from the taking of
any action pursuant to this Agreement whether arising from express or
implied duties under this Agreement; provided, however, that this provision
-------- -------
shall not protect Seller or any such person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of its willful
misconduct hereunder; and provided, further, that Seller shall be liable
-------- -------
for any actual damages resulting directly from Seller's material failure to
perform any of its obligations under this Agreement, but only if and to the
extent that another remedy is not provided for and available hereunder.
Seller and any director or officer or employee or agent of Seller may rely
in good faith on any document of any kind prima facie properly executed and
----- -----
submitted by any Person respecting any matters arising hereunder.
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be liable
-------------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Servicer. The Servicer shall not consolidate with or
----------------------------
merge into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be a corporation or a banking association organized and
existing under the laws of the United States of America or any State
or the District of Columbia, and, if the Servicer is not the surviving
entity, shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Trustee in form satisfactory to the
Trustee, the performance of every covenant and obligation of the
Servicer hereunder;
(ii) The Servicer has delivered notice of such consolidation,
merger, conveyance or transfer to each of the Rating Agencies; and
61
(iii) the Servicer has delivered to the Trustee and each
Enhancement Provider an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.2
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 8.3 Limitation on Liability of the Servicer and Others.
-------------------------------------------------
Except as provided in Section 8.4 with respect to the Trust and the
-----------
Trustee, neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the
Trust, the Trustee, the Certificateholders or any other Person for any
action taken or for refraining from the taking of any action in its
capacity as Servicer pursuant to this Agreement; provided, however, that
-------- -------
this provision shall not protect the Servicer or any such person against
any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by
reason of its willful misconduct hereunder. The Servicer and any director
or officer or employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
which does not arise out of its activities in servicing the Receivables in
accordance with this Agreement which in its reasonable opinion may involve
it in any expense or liability.
Section 8.4 Indemnification of the Trust and the Trustee. The
--------------------------------------------
Servicer shall indemnify and hold harmless the Trust and the Trustee from
and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions
arising out of activities of the Trust or the Trustee pursuant to this
Agreement, including those arising from acts or omissions of the Servicer
pursuant to this Agreement, including, but not limited to any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, however, that the Servicer shall not
-------- -------
indemnify the Trust or the Trustee if such acts, omissions or alleged acts
or omissions constitute fraud, negligence, breach of fiduciary duty or
misconduct by the Trustee; provided further, that the Servicer shall not
-------- -------
indemnify the Trust, the Trustee, any Investor Certificateholders or any
Certificate Owners for any liabilities, costs or expenses of the Trust with
respect to any action taken by the Trustee at the request of such Investor
Certificateholders; provided further, that the Servicer shall not indemnify
-------- -------
the Trust, any Investor Certificateholders or any Certificate Owners as to
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 Receivables which are written off as
uncollectible; and provided further, that the Servicer shall not indemnify
-------- -------
the Trust, any Investor Certificateholders or the Certificate Owners
62
for any liabilities, costs or expenses of the Trust, such Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation any federal, state or local income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to
comply therewith) required to be paid by the Trust, such Investor
Certificateholders or such Certificate Owners in connection herewith to any
taxing authority. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof.
Any indemnification pursuant to this Section shall not be payable from
the assets of the Trust.
The obligations of the Servicer under this Section 8.4 shall survive
-----------
the termination of the Trust and the resignation or removal of the Trustee.
Section 8.5 The Servicer Not to Resign. The Servicer shall not
--------------------------
resign from the obligations and duties hereby imposed on it except upon
determination that (i) the performance of its duties hereunder is or
becomes impermissible under applicable law and (ii) there is no reasonable
action which the Servicer could take to make the performance of its duties
hereunder permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause
------
(i) above by an Opinion of Counsel to such effect delivered to the Trustee.
---
No such resignation shall become effective until the Trustee or a Successor
Servicer shall have assumed the responsibilities and obligations of the
Servicer in accordance with Section 10.2. If the Trustee is unable within
------------
120 days of the date of such determination to appoint a Successor Servicer,
the Trustee shall serve as Successor Servicer hereunder. Notice of any
resignation by the Servicer shall be given to each Rating Agency by the
resigning Servicer.
Section 8.6 Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Receivables. The Servicer shall provide to the Trustee access
-------------------------
to the documentation regarding the Accounts and the Receivables in such
cases where the Trustee is required in connection with the enforcement of
the rights of the Investor Certificateholders, or by applicable statutes or
regulations to review such documentation, such access being afforded
without charge but only (i) upon reasonable request, (ii) during normal
business hours, (iii) subject to the Servicer's normal security and
confidentiality procedures and (iv) at offices designated by the Servicer.
Nothing in this Section 8.6 shall derogate from the obligation of Seller,
-----------
the Trustee or the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of the
Servicer to provide access as provided in this Section 8.6 as a result of
-----------
such obligation shall not constitute a breach of this Section 8.6.
-----------
63
Section 8.7 Delegation of Duties. It is understood and agreed by
--------------------
the parties hereto that the Servicer may delegate certain of its duties
hereunder to Total Systems Services, Inc., a Georgia corporation and to
First Data Resources Inc., a Delaware corporation. In addition, in the
ordinary course of business, the Servicer may at any time delegate any
duties hereunder to any other Person who agrees to conduct such duties in
accordance with the Cardholder Guidelines. Any such delegations shall not
relieve the Servicer of its liability and responsibility with respect to
such duties, and shall not constitute a resignation within the meaning of
Section 8.5.
-----------
Section 8.8 Examination of Records. The Servicer shall clearly and
----------------------
unambiguously identify each Account (including any Additional Account
designated pursuant to Section 2.6) in its computer or other records to
-----------
reflect that the Receivables arising in such Account have been transferred
by Seller to the Trust pursuant to this Agreement. The Servicer shall,
prior to the sale or transfer to a third party of any receivable held in
its custody, examine its computer and other records to determine that such
receivable is not a Receivable.
ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events shall
--------------
occur during either the Revolving Period or the Controlled Amortization
Period with respect to any Series of the Investor Certificates:
(a) Seller shall (i) become insolvent, (ii) fail to pay its debts
generally as they become due, (iii) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, (iv) become
a party to (or be made the subject of) any proceeding provided for by any
Debtor Relief Law, other than as a creditor or claimant, and, in the event
such proceeding is involuntary, (A) within 10 business days after Seller
has knowledge of such proceeding or the filing thereof either (1) the
petition instituting same has not been dismissed or (2) an order has not
been entered by the court having jurisdiction which allows continued
transfer to the Trust of Principal Receivables with no adverse effect to
the Trust or the Investor Certificateholders or (B) an order as
contemplated in clause (A)(2) above having previously been entered, is no
------------
longer in effect other than by reason of the termination of such
proceeding, or (v) become unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of this Agreement; or
(b) the Trust or Seller shall become an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
64
a pay out event (a "Trust Pay Out Event") shall occur without any notice or
-------------------
other action on the part of the Trustee or the Investor Certificateholders,
immediately upon the occurrence of such event.
Section 9.2 Additional Rights Upon the Occurrence of Certain
------------------------------------------------
Events. If Seller shall consent to the appointment of a conservator or
------
receiver or liquidator for the winding-up or liquidation of its affairs, or
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 for the winding-up or liquidation of its affairs
shall have been entered against Seller (an "Insolvency Event"), Seller
----------------
shall on the day of such Insolvency Event immediately cease to transfer
Principal Receivables and Discount Option Receivables to the Trust and
shall promptly give notice to Trustee of such Insolvency Event.
Notwithstanding any cessation of the transfer to the Trust of additional
Principal Receivables and Discount Option Receivables, Finance Charge
Receivables, whenever created, accrued in respect of Principal Receivables
or Discount Option Receivables which have been transferred to the Trust
shall continue to be a part of the Trust, and Collections with respect
thereto shall continue to be allocated and paid in accordance with Article
-------
IV.
--
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events
-----------------
(a "Servicer Default") shall occur and be continuing:
----------------
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Trustee pursuant to
Article IV or to make any required drawing, withdrawal, or payment under
----------
any Enhancement on or before the date occurring three Business Days after
the date such payment, transfer, deposit, withdrawal or drawing, or such
instruction or notice is required to be made or given, as the case may be,
under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in this Agreement which has a material adverse effect on the
Certificateholders, which continues unremedied for a period of 30 days
after the earlier to occur of (i) knowledge by a Responsible Officer of the
Servicer of such failure, or (ii) the date on which written notice of such
failure requiring the same to be remedied shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the Holders
of Investor Certificates evidencing Undivided Interests aggregating not
less than 25% of the Investor Amount of any Series affected thereby; or the
Servicer's delegation of its duties under this Agreement except as
permitted by Section 8.7; or
-----------
65
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the rights of the Certificateholders and which continues to be
incorrect in any material respect for a period of 30 days after the earlier to
occur of (i) knowledge of same by a Responsible Officer of the Servicer, or (ii)
the date on which written notice of such failure requiring the same to be
remedied shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 25% of the Investor Amount of any
Series affected thereby, or if such failure cannot be cured within such 30-day
period owing to causes beyond the control of Servicer, if Servicer shall fail to
proceed promptly to cure the same and prosecute the curing of such failure with
diligence and continuity; or
(d) the Servicer shall (i) become insolvent, (ii) fail to pay its
debts generally as they become due, (iii) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, or (iv) become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, and, in the event such
proceeding is involuntary, the petition instituting same is not dismissed within
60 days after its filing;
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Interests
aggregating greater than 50% of the Investor Amount of any Series affected
thereby, by notice then given in writing to the Servicer (and to the Trustee if
given by the Investor Certificateholders) (a "Termination Notice"), may
------------------
terminate all of the rights and obligations of the Servicer as Servicer under
this Agreement and in and to the Receivables and the proceeds thereof (other
than its rights and interest, if any, as holder of the Seller Interest under
this Agreement). After receipt by the Servicer of such Termination Notice, and
on the date that a Successor Servicer shall have been appointed by the Trustee
pursuant to Section 10.2, all authority and power of the Servicer under this
------------
Agreement shall pass to and be vested in a Successor Servicer; and, without
limitation, the Trustee is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights. The Servicer agrees to
cooperate with the Trustee and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including, without limitation, all authority
over all Collections which shall on the date of transfer be held by the
66
Servicer for deposit, or which have been deposited by the Servicer, in any
Collection Account, Finance Charge Account or other Investor Account, or the
Principal Account, or which shall thereafter be received with respect to the
Receivables, and in assisting the Successor Servicer and in enforcing all rights
to Insurance Proceeds. The Servicer shall promptly transfer its electronic
records relating to the Receivables to the Successor Servicer in such electronic
form as the Successor Servicer may reasonably request and shall promptly
transfer to the Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the Receivables in the manner
and at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section 10.1 shall require the Servicer to
------------
disclose to the Successor Servicer information of any kind which the Servicer
reasonably deems to be confidential, the Successor Servicer shall be required to
enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interest. The Servicer shall, on
the date of any servicing transfer, transfer all of its rights and obligations,
if any, in respect of any Enhancement to the Successor Servicer.
Section 10.2 Trustee to Act; Appointment of Successor.
----------------------------------------
(a) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 10.1, the Servicer shall continue to perform all servicing
------------
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Trustee in writing or, if no such date is
specified in such Termination Notice or otherwise specified by the Trustee,
until a date mutually agreed upon by the Servicer and Trustee. The Trustee shall
as promptly as possible after the giving of a Termination Notice appoint (with
the consent of the Holders of Investor Certificates evidencing Undivided
Interests aggregating greater than 50% of the Investor Amount of each Series) a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
------------------
accept its appointment by a written assumption in a form acceptable to the
Trustee. The Trustee may obtain bids from any potential successor servicer. If
the Trustee is unable to obtain any bids from any potential successor servicer
and the Servicer delivers an Officer's Certificate to the effect that it cannot
in good faith cure the Servicer Default which gave rise to a transfer of
servicing, then the Trustee shall offer Seller the right to accept retransfer of
all the Receivables and Seller may accept retransfer of all the Receivables,
provided, however, that if the long-term unsecured debt obligations of Seller
- -------- -------
are not rated at the time of such purchase at least Baa-3 by Moody's and BBB- by
Standard & Poor's, no such retransfer shall occur unless Seller shall deliver an
Opinion of Counsel reasonably acceptable to the Trustee that such retransfer
would not constitute a fraudulent conveyance of Seller. The retransfer deposit
amount for such a retransfer shall be equal to the higher of the sum of (i) the
outstanding principal balance of the Investor Certificates, plus accrued
interest thereon, at the Certificate Rate, through the date of retransfer and
(ii) the average bid price quoted by two recognized dealers for a similar
security rated in the highest rating category by
67
Moody's and Standard & Poor's and having a remaining maturity substantially
similar to the remaining maturity of the Certificates. In the event that a
Successor Servicer has not been appointed and has not accepted its appointment
at the time when the Servicer ceases to act as Servicer, the Trustee without
further action shall automatically be appointed the Successor Servicer.
Notwithstanding the above, the Trustee shall, if it is legally unable so to act,
petition a court of competent jurisdiction to appoint any established financial
institution having a net worth of not less than $100,000,000 and whose regular
business includes the servicing of installment sales charge, credit and/or
credit card account receivables as the Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the successor in
all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer. Any Successor Servicer, by its acceptance of
its appointment, will automatically agree to be bound by the terms and
provisions of any Enhancement to the extent that such terms apply to the
Servicer.
(c) In connection with such appointment and assumption, the Trustee shall
be entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
-------- -------
Seller shall be in excess of the Monthly Servicing Fees permitted to the
Servicer pursuant to Section 3.2. The holder of the Seller Interest agrees that
-----------
if the Servicer is terminated hereunder, it will agree, at the request of the
Trustee or any Successor Servicer, to deposit a portion of the Collections in
respect of Finance Charge Receivables that it is entitled to receive pursuant to
Article IV, to pay its share of the compensation of the Successor Servicer.
- ----------
(d) All authority and power granted to the Successor Servicer under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 12.1 and shall pass to and be vested in Seller and, without
------------
limitation, Seller is hereby authorized and empowered to execute and deliver, on
behalf of the Successor Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Successor Servicer agrees to cooperate with Seller in
effecting the termination of the responsibilities and rights of the Successor
Servicer to conduct servicing on the Receivables. The Successor Servicer shall
transfer its electronic records relating to the Receivables to Seller in such
electronic form as Seller may reasonably request and shall transfer all other
records, correspondence and documents to Seller in the manner and at such times
as Seller shall reasonably request. To the extent that
68
compliance with this Section 10.2 shall require the Successor Servicer to
------------
disclose to Seller information of any kind which the Successor Servicer deems to
be confidential, Seller shall be required to enter into such customary licensing
and confidentiality agreements as the Successor Servicer shall deem necessary to
protect its interests.
Section 10.3 Notification to Certificateholders. Upon the occurrence
----------------------------------
of any Servicer Default, the Servicer shall give prompt written notice thereof
to the Trustee and the Trustee shall give notice to the Investor
Certificateholders at their respective addresses appearing in the Certificate
Register. Upon any termination or appointment of a Successor Servicer pursuant
to this Article X, the Trustee shall give prompt written notice thereof to
---------
Investor Certificateholders at their respective addresses appearing in the
Certificate Register. A copy of any notice given pursuant to this Section 10.3
------------
shall be delivered to each Rating Agency.
Section 10.4 Waiver of Past Defaults. The Holders of Investor Certificates
-----------------------
evidencing Undivided Interests aggregating greater than 50% of the Investor
Amount of any Series affected thereby may, on behalf of all Holders of
Certificates, waive any default by the Servicer or Seller in the performance of
its obligations hereunder and its consequences, except a default in the failure
to make any required deposits or payments in accordance with Article IV,
----------
provided, however, that no such waiver shall affect any rights of, or
- -------- -------
obligations to, any Enhancement Provider hereunder. Upon any such waiver of a
past default, such default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
Notice of any such waiver shall be given to each Rating Agency by the Servicer.
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
-----------------
(a) The Trustee, prior to the occurrence of a Servicer Default and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Servicer Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in the exercise of
such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
69
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. The Trustee shall give prompt
written notice to the Certificateholders of any material lack of conformity of
any such instrument to the applicable requirements of this Agreement discovered
by the Trustee which would entitle a specified percentage of the
Certificateholders to take any action pursuant to this Agreement.
(c) Subject to subsection 11.1(a), no provision of this Agreement shall be
------------------
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
-------- -------
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing Undivided Interests aggregating more than 50% of the Investor
Amount of any Series relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to
in clauses (b), (c) and (d) of Section 10.1 unless a Responsible Officer of
------- --- --- --- ------------
the Trustee obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or any Holders of
Investor Certificates evidencing Undivided Interests aggregating not less
than 10% of the Investor Amount of any Series.
(d) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in exercise of any of its rights or powers, if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to,
70
and be vested with the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of
the Trust in any Receivable now existing or hereafter arising or to impair
the value of any Receivable now existing or hereafter arising.
(f) Except as provided in Section 2.6, the Trustee shall have no
-----------
power to vary the corpus of the Trust including, without limitation, the
power to (i) accept any substitute obligation for a Receivable initially
assigned to the Trust under Section 2.1 or 2.6, (ii) add any other
----------- ---
investment, obligation or security to the Trust or (iii) withdraw from the
Trust any Receivables, except for a withdrawal permitted under subsection
----------
2.4(d) or 2.4(e), Article IV, or Section 9.2 or 12.1.
------ ------ ---------- ----------- ----
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement, the
Trustee shall be obligated promptly to perform such obligation, duty or
agreement in the manner so required.
(h) If Seller has agreed to transfer any of its credit card
receivables (other than the Receivables) to another Person, upon the
written request of Seller, the Trustee will enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary separately to identify the rights of the Trust and such other
Person in Seller's, as the case may be, credit card receivables; provided,
--------
that the Trust shall not enter into any intercreditor agreement which could
adversely affect the interests of the Certificateholders and, upon the
request of the Trustee, Seller will deliver an Opinion of Counsel on any
matters relating to such intercreditor agreement, reasonably requested by
the Trustee.
Section 11.2 Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 11.1:
------------
(a) the Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accord with, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken
71
or suffered or omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligations,
upon the occurrence of any Servicer Default (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement, and
to use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs;
(d) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by
Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Investor Amount of any Series;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder; and
(g) except as may be required by subsection 11.1(a), the Trustee
------------------
shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the
purpose of establishing the presence or absence of defects, the compliance
by Seller with its representations and warranties or for any other purpose.
Section 11.3 Trustee Not Liable for Recitals in Certificates. The
-----------------------------------------------
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15,
-------------
the Trustee makes no representations as to the validity or sufficiency of
this Agreement or the Supplement or of the Certificates (other than the
certificate of authentication on the Certificates) or of any Receivable
72
or related document. The Trustee shall not be accountable for the use or
application by Seller of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to Seller in
respect of the Receivables or deposited in the Collection Account, any
Principal Account, any Finance Charge Account, the Excess Funding Account
or any other Series Account, or withdrawn from the Collection Account, by
the Servicer.
Section 11.4 Trustee May Own Certificates. The Trustee in its individual
----------------------------
or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the
Trustee.
Section 11.5 Seller to Pay Trustee's Fees and Expenses. Seller covenants
-----------------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall
be entitled to receive, reasonable compensation (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the
Trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and, subject to Section 8.4,
-----------
Seller will pay or reimburse the Trustee (without reimbursement from any
Investor Account or otherwise) upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable fees and expenses of its agents and counsel) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.2, the provisions of
------------
this Section 11.5 shall not apply to expenses, disbursements and advances
------------
made or incurred by the Trustee in its capacity as Successor Servicer.
The obligations of Seller under this Section 11.5 shall survive the
------------
termination of the Trust and the resignation or removal of the Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee hereunder
------------------------------------
shall at all times be a corporation organized and doing business under the
laws of the United States of America or any state thereof authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $100,000,000 and subject to supervision or examination
by Federal or state authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.6, the combined capital and surplus of such corporation shall be
------------
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In addition, no institution shall
qualify as a Successor Trustee hereunder unless its long-term debt
obligations are rated at least BBB- and Baa3 by Standard & Poor's and
Moody's, respectively. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of
73
this Section 11.6, the Trustee shall resign immediately in the manner and
------------
with the effect specified in Section 11.7.
-------------
Section 11.7 Resignation or Removal of Trustee.
---------------------------------
(a) The Trustee may at any time resign and be discharged from the
Trust hereby created by giving written notice thereof to Seller and the
Servicer. Upon receiving such notice of resignation, Seller shall promptly
appoint a successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 and shall fail to resign
------------
after written request therefor by Seller, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then Seller may, but shall not be required to,
remove the Trustee and promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7
------------
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.8 and any liability of the Trustee
------------
arising hereunder shall survive such appointment of a successor trustee.
Section 11.8 Successor Trustee.
-----------------
(a) Any successor trustee appointed as provided in Section 11.7
------------
shall execute, acknowledge and deliver to Seller and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties
and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee herein. The predecessor Trustee shall deliver
to the successor trustee all documents and statements held by it hereunder;
and Seller and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
74
(b) No successor trustee shall accept appointment as provided in this
Section 11.8 unless at the time of such acceptance such successor trustee
------------
shall be eligible under the provisions of Section 11.6.
-------------
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.8, such successor trustee shall mail notice of such
------------
succession hereunder to all Certificateholders at their addresses as shown
in the Certificate Register, and also to each Rating Agency.
Section 11.9 Merger or Consolidation of Trustee. Any Person into which
----------------------------------
the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 11.6, without the execution or
------------
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust may at the time be located, the Trustee
shall have the power and may execute and deliver all instruments to appoint
one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 11.10, such powers, duties,
-------------
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.6 and
------------
no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8.
------------
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions :
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any laws of any jurisdiction in which any
particular act or acts are
75
to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be liable by reason of any act or
omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
----------
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be required to
-----------
file tax returns, the Trustee, as soon as practicable after it is made aware of
such requirement, shall prepare or cause to be prepared and is authorized
hereunder to sign any tax returns required to be filed by the Trust and, to the
extent possible, shall file such returns at least five days before such returns
are due to be filed. The Servicer shall prepare or shall cause to be prepared
all tax information required by law to be distributed to Certificateholders and
shall deliver such information to the Trustee at least five days prior to the
date it is required by law to be distributed to Certificateholders. The
Servicer, upon request, will furnish the Trustee with all such information known
to the Servicer as may be reasonably required in connection with the preparation
of all tax returns of the Trust. In no event shall the Trustee or the
76
Servicer be liable for any liabilities, costs or expenses of the Trust, the
Investor Certificateholders or the Certificate Owners arising under any tax law,
including without limitation Federal, state or local income or excise taxes or
any other tax imposed on or measured by income (or any interest or penalty with
respect thereto or arising from a failure to comply therewith). Nothing in this
Section 11.11 shall be construed as inconsistent with the characterization of
- -------------
the Investor Certificates as indebtedness of Seller for purposes of federal,
state and local income or franchise taxes and any other tax imposed upon or
measured by income, as expressed in Section 3.7.
-----------
Section 11.12 Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default shall occur
---------------------
and be continuing, the Trustee, in its discretion may, subject to the provisions
of Section 10.1, proceed to protect and enforce its rights and the rights of the
------------
Certificateholders under this Agreement or any Supplement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
Supplement or in aid of the execution of any power granted in this Agreement or
any Supplement or for the enforcement of any other legal, equitable or other
remedy as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificateholders.
Section 11.14 Rights of Certificateholders to Direct Trustee. Holders of
-----------------------------------------------
Investor Certificates evidencing Undivided Interests aggregating more than 50%
of the Investor Amount of any Series affected shall have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee;
provided, however, that, subject to Section 11.1, the Trustee shall have the
- -------- ------- ------------
right to decline to follow any such direction if the Trustee being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided further
-------- -------
that nothing in this Agreement shall impair the right of the Trustee
77
to take any action deemed proper by the Trustee and which is not inconsistent
with such direction.
Section 11.15 Representations and Warranties of Trustee. The Trustee
-----------------------------------------
represents and warrants that:
(i) The Trustee is a banking corporation organized, existing and in
good standing under the laws of the State of Illinois;
(ii) The Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
and
(iii) This Agreement has been duly executed and delivered by the
Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will maintain
-------------------------------
at its expense in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where notices and demands to or upon the Trustee
in respect of the Certificates and this Agreement may be served. The Trustee
initially appoints the Corporate Trust Office as its office for such purposes in
New York. The Trustee will give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
Section 11.17 Requests for Agreement. A copy of this Agreement may be
----------------------
obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust Office and will be provided at the expense of
Seller.
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust. The respective obligations and
--------------------
responsibilities of Seller, the Servicer and the Trustee created hereby (other
than the obligation of the Trustee to make payments to Certificateholders as
hereafter set forth) shall terminate, except with respect to the duties
described in subsections 2.4(c) and 12.3(b), upon the earlier of (i) the day, if
------------------ -------
any, designated by Seller after the Distribution Date following the date on
which funds shall have been deposited in the Distribution Account sufficient to
pay the Aggregate Investor Amount, plus Certificate Interest accrued through the
----
last day of the month preceding such Distribution Date in full and (ii) the day
on which final payment is made under the Certificates (any such day under either
the preceding clause (i) or this clause (ii) is
---------- -----------
78
referred to as a "Trust Termination Date"); but in no event later than the Final
----------------------
Trust Termination Date.
Section 12.2 Optional Purchase and Final Maturity Date of Investor
-----------------------------------------------------
Certificates.
- ------------
(a) If so provided in any Supplement, Seller may, but shall not be
obligated to, repurchase Investor Certificates of the related Series by
depositing into the Distribution Account, on the Transfer Date preceding the
Distribution Date specified in such Supplement, the amount so specified therein;
provided, however, that if the long-term unsecured debt obligations of Seller
- -------- -------
are not rated at least Baa-3 by Moody's and BBB- by Standard & Poor's at the
time of such purchase, such purchase shall not occur unless Seller shall deliver
an Opinion of Counsel reasonably acceptable to the Trustee that such purchase of
Investor Certificates would not constitute a fraudulent conveyance by Seller. On
the Distribution Date following the Transfer Date on which such deposit is made,
Seller shall be deemed, automatically and without requirement for any act on the
part of Seller or of such Series any other Person, to have acquired all
outstanding Certificates and to have retired the Certificates, thereby resulting
in an increase in the Seller Amount.
(b) The entire Investor Amount with respect to each Series shall be due
and payable no later than the related Series Termination Date. If on the
Determination Date in the month immediately preceding the month in which the
Series Termination Date for any Series occurs (after giving effect to all
transfers, withdrawals, deposits and drawings to occur on the next Transfer Date
and the payment of principal on the Investor Certificates to be made on the
related Distribution Date), the Investor Amount would be greater than zero, the
Servicer shall sell, dispose of, or otherwise liquidate, in a commercially
reasonable manner and on commercially reasonable terms (which shall include the
solicitation of competitive bids from Persons who are not Affiliates of Seller),
within 30 days of such Determination Date, an amount of Receivables equal to (i)
100%, plus the lesser of (A) the Seller Percentage or (B) the Minimum Seller
Percentage for that Series, multiplied by (ii) the Investor Amount determined as
of the date of such sale, disposition or liquidation; provided, however, that
-------- -------
the Servicer shall give Seller at least 10 days advance written notice of such
sale, disposition or other liquidation. Seller shall have the option,
exercisable at any time after the Servicer has obtained an offer from any Person
that is not an Affiliate of Seller and prior to the consummation of such sale,
disposition or liquidation by giving notice of the exercise thereof to the
Servicer, to purchase such Receivables for cash (payable in immediately payable
funds on the Series Termination Date) for the lesser of (i) 100% of the amount
of such Receivables, or (ii) the highest price offered therefor pursuant to such
proposed sale, disposition or other liquidation. The proceeds received upon the
sale, disposition or other liquidation of such Receivables in an amount up to
(i) the Investor Amount on the Series Termination Date, plus (ii) unpaid
----
interest
79
thereon as of the Series Termination Date, less (iii) amounts on deposit on such
date in the related Series Accounts shall be deposited into the Distribution
Account on the Series Termination Date with respect to such Series, and shall be
distributed to the Holders of the Certificates in final payment thereof pursuant
to the terms of Section 12.3. Proceeds received in excess of the amount to be
------------
deposited as aforesaid shall be treated as Collections on the Receivables and
shall be allocated and deposited in accordance with the provisions of Article
--------
IV; provided that the Servicer shall determine conclusively the amount of such
- -- --------
proceeds which are allocable to Finance Charge Receivables and the amount of
such proceeds which are allocable to Principal Receivables. In the event that
the proceeds received upon the sale, disposition or other liquidation of such
Receivables is less than the result of (i) the Investor Amount for such Series
on the Series Termination Date, plus (ii) unpaid interest thereon, minus (iii)
---- -----
amounts on deposit on such date in the related Series Accounts, the Servicer
will make a withdrawal or drawing or take other action permitted by any
applicable Enhancement, and shall deposit all amounts thereby obtained in the
Distribution Account on the Final Trust Termination Date, and the amount so
withdrawn shall be distributed to the Holders of Certificates in final payment
thereof pursuant to the terms of Section 12.3; provided, that if the Servicer
------------ --------
fails to make such withdrawal or drawing or take such other action, then the
Trustee may make such withdrawal and deposit such amounts into the Distribution
Account.
(c) The amount deposited pursuant to subsections 12.2(a) and 12.2(b) shall
-------------------------------
be paid to the Investor Certificateholders in the manner provided in Section
-------
12.3.
- ----
Section 12.3 Final Distributions.
-------------------
(a) Written notice of any termination, specifying the Distribution Date
upon which the Investor Certificateholders may surrender their Certificates for
payment of the final distribution and cancellation, shall be given (subject to
at least two days' prior notice from the Servicer to the Trustee) by the Trustee
to Investor Certificateholders mailed (unless otherwise specified in a
Supplement) not later than the fifth day of the month of such final distribution
specifying (a) the Distribution Date (which shall be the Distribution Date in
the month in which the deposit is made pursuant to subsection 2.4(e), 12.1 or
----------------- ----
12.2(a)) upon which final payment of the Investor Certificates will be made upon
- -------
presentation and surrender of Investor Certificates at the office or offices
therein designated, (b) the amount of any such final payment and (c) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Investor
Certificates at the office or offices therein specified. The Servicer's notice
to the Trustee in accordance with the preceding sentence shall be accompanied by
an Officer's Certificate setting forth the information specified in Section 3.5
-----------
covering the period during the then current calendar year through the date of
such
80
notice. The Trustee shall give such notice to the Transfer Agent and Registrar
and the Paying Agent at the time such notice is given to Investor
Certificateholders.
(b) All funds on deposit in the Distribution Account, in the case of a
final payment pursuant to Section 12.2, in the case of a termination of the
------------
Trust pursuant to Section 12.1 (and notwithstanding such termination), shall
------------
continue to be held in trust for the benefit of the Certificateholders and the
Paying Agent or the Trustee shall pay such funds to the appropriate
Certificateholders upon surrender of their Certificates. In the event that all
of the Investor Certificateholders shall not surrender their Certificates for
cancellation within six months after the date specified in the above-mentioned
written notice, the Trustee shall give a second written notice to the remaining
Investor Certificateholders to surrender their Certificates for cancellation and
receive the final distribution with respect thereto. If within one year after
the second notice all the Investor Certificates shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Investor
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds in the Distribution Account held for the
benefit of such Investor Certificateholders.
Section 12.4 Termination Rights of the Holder of the Seller Interest.
-------------------------------------------------------
Upon the termination of the Trust pursuant to Section 12.1, the Trustee shall
------------
return to the holder of the Seller Interest (without recourse, representation or
warranty) all right, title and interest of the Trust in, to and under the
Receivables, whether then existing or thereafter created, and all monies due or
to become due with respect thereto (including all accrued interest theretofore
posted as Finance Charge Receivables), all proceeds thereof and Insurance
Proceeds relating thereto except for amounts held by the Trustee pursuant to
subsection 12.3(b). The Trustee shall execute and deliver such instruments of
- ------------------
transfer, in each case without recourse, as shall be reasonably requested by the
Holder of the Exchangeable Trust Certificate to vest in the Holder of the
Exchangeable Trust Certificate all right, title and interest which the Trust had
in the Receivables.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
---------
(a) This Agreement or any Supplement may be amended from time to time by
the Servicer, Seller and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, to
qualify the
81
transfers of Receivables pursuant to this Agreement as sales under generally
accepted accounting principles or to add any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
-------- -------
action shall not, as evidenced by an Opinion of Counsel in a form satisfactory
to the Rating Agencies, adversely affect in any material respect the interests
of the Certificateholders; provided, further, that prior to entering into any
-------- -------
amendment to qualify the transfers of Receivables pursuant to this Agreement as
sales under generally accepted accounting principles, the Seller shall deliver
to each Rating Agency an Officer's Certificate to the effect that (i) such
amendment is being entered into to qualify the transfers of Receivables pursuant
to this Agreement as sales under generally accepted accounting principles and
(ii) based upon discussions with the Seller's accountants, such amendment will
in fact qualify the transfers of Receivables pursuant to this Agreement as sales
under generally accepted accounting principles. The Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under this Agreement or otherwise. For purposes of
this Section 13.1 only, no Transfer Agreement or Retransfer Agreement regarding
------------
the addition or removal of Receivables from the Trust as provided in Sections
--------
2.6 and 2.7, respectively, executed in accordance with the provisions hereof and
- --- ---
substantially in the form of Exhibit A or C, respectively, with no material
--------- -
additional terms, shall be considered amendments to this Agreement.
(b) This Agreement or any Supplement may also be amended from time to time
by the Servicer, Seller and the Trustee with the consent of the Holders of
Investor Certificates evidencing Undivided Interests aggregating not less than
66-2/3% of the Investor Amount of each Series adversely affected, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or any Supplement or modifying in any manner
the rights of the Investor Certificateholders of any Series then issued and
outstanding; provided, however, that no such amendment shall (i) reduce in any
-------- -------
manner the amount of, or delay the timing of, distributions which are required
to be made on any Investor Certificate of such Series without the consent of the
Holder of such Certificate, (ii) change the definition of or the manner of
calculating the Investor Amount, the Investor Percentage or the Investor Default
Amount of such Series without the consent of each Investor Certificateholder
affected thereby, or (iii) reduce the aforesaid percentage required to consent
to any such amendment, without the consent of each Investor Certificateholder of
all Series affected. The Rating Agency Condition shall be satisfied with respect
to any such amendment, except that Moody's shall not be deemed to be a "Rating
Agency" for this purpose.
(c) Notwithstanding anything in this Section 13.1 to the contrary, the
------------
Supplement with respect to any Series may be amended on the terms and in
accordance with the procedures provided in such Supplement. The Rating Agency
82
Condition shall be satisfied with respect to any such amendment, except that
Moody's shall not be deemed to be a "Rating Agency" for this purpose.
(d) Notwithstanding anything in this Section 13.1 to the contrary, from
------------
and after the Series Termination Date for the Trust's Series 1996-A Certificates
(or with the consent of the Holders of such Certificates), the Seller, the
Servicer, the holder of the Seller Interest, and the Trustee may amend this
Agreement or any Supplement in order to enable all or a portion of the Trust to
qualify as a financial asset securitization investment trust (a "FASIT") for
-----
Federal income tax purposes and to permit a FASIT election to be made with
respect thereto and to make any such other modifications or amendments to this
Agreement and any Supplement as may be permitted in making such election;
provided, however that such amendment shall not be effective until the Seller
- -------- -------
provides the Trustee with (i) an Opinion of Counsel to the effect that such
amendment (A) would permit the Trust or a relevant portion thereof to be treated
as a FASIT, (B) would not cause the Trust to be classified as an association (or
publicly traded partnership) taxable as a corporation for Federal income tax
purposes, and (C) would not cause or constitute an event in which gain or loss
would be recognized by any Investor Certificateholder, and (ii) an Officer's
Certificate of the Seller that such amendment would not materially and adversely
affect any Certificateholder or any Enhancement Provider.
(e) Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of such amendment to
each Investor Certificateholder of each Series affected thereby and to each
Rating Agency providing a rating for such Series.
(f) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.1 to approve the particular form of any
------------
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Section 13.2 Protection of Right, Title and Interest to Trust.
------------------------------------------------
(a) The Servicer shall cause this Agreement, all amendments hereto and/or
all financing statements and continuation statements and any other necessary
documents covering the Certificateholders and the Trustee's right, title and
interest to the Trust to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve and protect the right, title
and interest of the Trustee hereunder to all property comprising the Trust. The
Servicer shall deliver to the Trustee file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recording,
83
registration or filing. Seller shall cooperate fully with the Servicer in
connection with the obligations set forth above and will execute any and all
documents reasonably required to fulfill the intent of this Section 13.2(a).
---------------
(b) Within 30 days after Seller makes any change in its name, identity or
corporate structure which would make any financing statement or continuation
statement filed in accordance with subsection (a) above seriously misleading
--------------
within the meaning of Section 9-402(8) of the UCC as in effect in the state
where such financing statement or continuation statement was filed, Seller shall
give the Trustee notice of any such change and shall file such financing
statements or amendments as may be necessary to continue the perfection of the
Trust's security interest in the Receivables and the proceeds thereof.
(c) Each of Seller and the Servicer will give the Trustee prompt written
notice of any relocation of any office from which it services Receivables or
keeps records concerning the Receivables or of its principal executive office
and whether, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest in the Receivables and the proceeds
thereof. Each of Seller and the Servicer will at all times maintain each office
from which it services Receivables and its principal executive office within the
United States of America.
(d) The Servicer will deliver to the Trustee: (i) upon the execution and
delivery of each amendment of Articles I, II, III or IV other than amendments
---------- -- --- --
pursuant to subsection 13.1(a) an Opinion of Counsel substantially in the form
------------------
of Exhibit F; and (ii) on or before April 15 of each year, beginning with April
---------
15, 1994 an Opinion of Counsel, dated as of a date during the preceding 90-day
period, substantially in the form of Exhibit G.
---------
Section 13.3 Limitation on Rights of Certificateholders.
------------------------------------------
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust, nor shall such death or incapacity
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except with respect
to the Investor Certificateholders as provided in Section 13.1) or in any manner
------------
otherwise control the operation and management of the Trust, or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the
84
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provisions
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given to the Trustee, and unless the
Holders of Certificates evidencing Undivided Interests aggregating more than 50%
of the Investor Amount of any Series affected shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Certificateholders shall
have the right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Certificateholders of any other of the Certificates, or to
obtain or seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 13.3, each and every Certificateholder and the Trustee shall be entitled
- ------------
to such relief as can be given either at law or in equity.
Section 13.4 Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 13.5 Notices. All demands, notices and communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of Seller or the initial Servicer, to First Consumers National Bank,
P.O. Box 5280, Portland, Oregon 97208, Attn: President, with a copy to Spiegel,
Inc., 3500 Lacey Road, Downers Grove, Illinois, 60515-5452, Attn: Treasurer, (b)
in the case of the Trustee, to the Corporate Trust Office, (c) in the case of
the Enhancement Provider for a particular Series the address, if any, specified
in the Supplement relating to such Series, (d) in the case of Moody's, to
Moody's Investor Services, Inc., 99 Church Street, New York, New York 10007,
Attn: ABS Monitoring Department, 4th Floor, and (e) in the case of Standard &
Poor's, to Standard & Poor's Corporation,
85
25 Broadway, New York, New York 10004, Attention: Structured Finance
Surveillance; or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Certificateholder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
Section 13.6 Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof or any Enhancement Provider.
Section 13.7 Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Section 8.2, this Agreement may not be
-----------
assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50% of the
Aggregate Investor Amount.
Section 13.8 Certificates Nonassessable and Fully Paid. It is the
-----------------------------------------
intention of the parties to this Agreement that the Certificateholders shall not
be liable for obligations of the Trust, that the Undivided Interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and that Certificates upon authentication
thereof by the Trustee pursuant to Sections 2.1 and 6.2 are and shall be deemed
------------ ---
fully paid.
Section 13.9 Further Assurances. Seller and the Servicer agree to do and
------------------
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Trustee more fully to effect
the purposes of this Agreement, including, without limitation, the execution of
any financing statements or continuation statements relating to the Receivables
for filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to exercise and
------------------------------
no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges
86
herein provided are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement may be executed in two or
------------
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement shall inure to
-------------------------
the benefit of and be binding upon the parties hereto, the Certificateholders
and, to the extent provided in any Supplement, to the Enhancement Provider named
therein, and their respective successors and permitted assigns. Except as
otherwise provided in this Article XIII, no other person will have any right or
------------
obligation hereunder.
Section 13.13 Actions by Certificateholders.
-----------------------------
(a) Wherever in this Agreement a provision is made that an action may be
taken or a notice, demand or instruction given by Investor Certificateholders,
such action, notice or instruction may be taken or given by any Investor
Certificateholder, unless such provision requires a specific percentage of
Investor Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind such Certificateholder and every
subsequent holder of such Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee, Seller or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
Section 13.14 Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.15 Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.16 Effect on Existing Pooling Agreement. This Agreement
------------------------------------
amends and restates the Existing Pooling Agreement effective as of the date of
this Agreement. This Agreement shall not effect a novation of the obligations of
the parties to the Existing Pooling Agreement, but instead shall be merely a
restatement and, where applicable, an amendment of the terms governing such
obligations. The parties hereto hereby affirm, ratify and confirm all transfers
of Receivables and other
87
related assets pursuant to the Existing Pooling Agreement. The parties hereto
agree that the existing Exchangeable Seller Certificate shall be deemed to have
been replaced with the Seller Interest as further described herein.
Section 13.17 No Petition. The Trustee and the Seller each hereby agree
-----------
that it shall not file a petition or otherwise institute against, or join any
other person in instituting against, the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, for one year and one day after the
final payment is made on the last rated Series of Certificates issued by the
Trust.
[Signatures Follow]
88
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
FIRST CONSUMERS NATIONAL BANK
By:________________________________
Title:_____________________________
HARRIS TRUST AND SAVINGS BANK
By:________________________________
Title:_____________________________
S-1
EXHIBIT A
to Amended and Restated
Pooling and Servicing Agreement
FORM OF TRANSFER AGREEMENT OF
RECEIVABLES IN ADDITIONAL ACCOUNTS
----------------------------------
ASSIGNMENT No. _____ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated as of
__________________, ________ (this "Assignment"), by and between First
Consumers National Bank, a national banking association ( the "Transferor") to
Harris Trust and Savings Bank, a banking corporation organized and existing
under the laws of Illinois, as trustee (the "Trustee") pursuant to the Amended
and Servicing Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Transferor and the Trustee are parties to the Amended and
Restated Pooling and Servicing Agreement, dated as of September 30, 1992 and
amended and restated as of January ______, 1999 (hereinafter as such agreement
may have been, or may from time to time be, amended, supplemented or otherwise
modified, the "Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Transferor
wishes to designate Additional Accounts of the Transferor to be included as
Accounts and to convey the Receivables of such Additional Accounts, whether now
existing or hereafter created, to the Trust as part of the corpus of the Trust
(as each such term is defined in the Pooling and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and conveyance
subject to the terms and conditions hereof;
NOW THEREFORE, the Transferor and the Trustee hereby agree as follows:
SECTION 1. Defined Terms. All terms defined in the Pooling and Servicing
-------------
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional Accounts
designated hereby, ________________, __________.
"Notice Date" shall mean, with respect to the Additional Accounts
designated hereby, ________________, __________ (which shall be a date on or
prior to the fifth Business Day prior to the Addition Date).
A-1
SECTION 2. Designation of Additional Accounts. The Transferor shall
-----------------------------------
deliver or cause to be delivered to the Trustee not later than five Business
Days after the Addition Date, a computer file or microfiche list containing a
true and complete list of each charge account which as of the Addition Date
shall be deemed to be an Additional Account, such accounts being identified by
account number and by the amount of Receivables and the amount of Principal
Receivables in such accounts as of the close of business on the Addition Date.
Such list shall be marked as Schedule 1 to this Assignment and, as of the
Addition Date, shall be incorporated into and made a part of this Assignment.
SECTION 3. Conveyance of Receivables. (a) The Transferor does hereby
--------------------------
transfer, assign, set-over and otherwise convey to the Trust for the benefit of
the Certificateholders, without recourse on and after the Addition Date, all
right, title and interest of the Transferor in and to the Receivables now
existing and hereafter created in the Additional Accounts designated hereby, all
monies due or to become due with respect thereto (including all Finance Charge
Receivables), all Collections, Recoveries and other proceeds of such Receivables
and Insurance Proceeds relating thereto.
(b) In connection with such transfer, unless a financing statement
covering such Receivables has heretofore been filed, the Transferor agrees to
record and file, at its own expense, a financing statement with respect to the
Receivables now existing and hereafter created in the Additional Accounts
designated hereby (which may be a single financing statement with respect to all
such Receivables) for the transfer of accounts as defined in Section 9-106 of
the UCC as in effect in the State of Illinois meeting the requirements of
applicable state law in such manner and such jurisdictions as are necessary to
perfect the assignment of such Receivables to the Trust, and to deliver a file-
stamped copy of such financing statement or other evidence of such filing (which
may, for purposes of this Section 3, consist of telephone confirmation of such
filing) to the Trustee on or prior to the date of this Assignment.
(c) In connection with such transfer, the Transferor further agrees, at
its own expense, on or prior to the date of this Assignment to indicate or cause
to be indicated in its books and records and in the computer files of the
Receivables that Receivables created in connection with the Additional Accounts
designated hereby have been transferred to the Trust pursuant to this Assignment
for the benefit of the Certificateholders.
SECTION 4. Acceptance by Trustee. The Trustee hereby acknowledges its
----------------------
acceptance on behalf of the Trust of all right, title and interest previously
held by the Transferor in and to the Receivables now existing and hereafter
created, and declares that it shall maintain such right, title and interest,
upon the trust set forth
A-2
herein and in the Pooling and Servicing Agreement, for the benefit of all
Certificateholders. The Trustee further acknowledges that, prior to or
contemporaneously with the execution and delivery of this Assignment, the
Transferor delivered to the Trustee the computer file or microfiche list
described in Section 2 of this Assignment.
SECTION 5. Representations and Warranties of the Transferor. The
-------------------------------------------------
Transferor hereby represents and warrants to the Trust as of the Addition Date:
(a) Legal, Valid and Binding Obligation. This Assignment constitutes a
------------------------------------
legal, valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, except as such enforceability may be
limited by applicable receivership or conservatorship, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and the rights of
creditors of national banking associations and except as such enforceability may
be limited by general principles of equity (whether considered in a suit at law
or in equity);
(b) Eligibility of Accounts. Each Additional Account designated hereby is
------------------------
an Eligible Account;
(c) Selection Procedures. No selection procedures believed by the
---------------------
Transferor to be materially adverse to the interests of the Investor
Certificateholders were utilized in selecting the Additional Accounts designated
hereby;
(d) Insolvency. The Transferor is not insolvent and, after giving effect
-----------
to the conveyance set forth in Section 3 of this Assignment, will not be
insolvent;
(e) Security Interest. This Assignment constitutes (i) a valid transfer
------------------
and assignment to the Trust of all right, title and interest of the Transferor
in and to Receivables now existing and hereafter created in the Additional
Accounts designated hereby, and all proceeds (as defined in the UCC as in effect
in the State of Illinois) of such Receivables and Insurance Proceeds relating
thereto, and such Receivables and any Collections, Recoveries and other proceeds
thereof and Insurance Proceeds relating thereto will be held by the Trust free
and clear of any Lien of any Person except for (x) Liens permitted under Section
2.5 (b) of the Pooling and Servicing Agreement, (y) the interest of the
Transferor as holder of the Seller Interest, and (z) the Transferor's right to
receive interest accruing on, and investment earnings in respect of, the Finance
Charge Account and the Principal Account as provided in the Pooling and
Servicing Agreement; and/or (ii) it constitutes a grant of a security interest
(as defined in the UCC as in effect in the State of Illinois) in such property
to the Trust, which is enforceable with respect to the existing Receivables in
the Additional Accounts designated hereby, the Collections, Recoveries and other
proceeds (as defined in the UCC as in effect in the
A-3
State of Illinois) thereof and Insurance Proceeds relating thereto upon the
conveyance of such Receivables to the Trust, and which will be enforceable with
respect to the Receivables thereafter created in respect of the Additional
Accounts designated hereby, the Collections, Recoveries and other proceeds (as
defined in the UCC as in effect in the State of Illinois) thereof and Insurance
Proceeds relating thereto upon the conveyance of such Receivables to the Trust,
and which will be enforceable with respect to the Receivables thereafter created
in respect of Additional Accounts designated hereby, the Collections, Recoveries
and other proceeds (as defined in the UCC as in effect in the State of Illinois)
thereof and Insurance Proceeds relating thereto, upon such creation; and (iii)
if this Assignment constitutes the grant of a security interest to the Trust in
such property, upon the filing of a financing statement described in Section 3
of this Assignment with respect to the Additional Accounts designated hereby and
in the case of the Receivables of such Additional Accounts thereafter created
and the Collections, Recoveries and other proceeds (as defined in the UCC as in
effect in the State of Illinois) thereof, and Insurance Proceeds relating to
such Receivables, upon such creation, the Trust shall have a first priority
perfected security interest in such property, except for Liens permitted under
subsection 2.5 (b) of the Pooling and Servicing Agreement, the interest of the
Transferor as holder of the Seller Interest, and the Transferor's right to
receive interest accruing on, and investment earnings in respect of, the Finance
Charge Account and the Principal Account as provided in the Pooling and
Servicing Agreement.
(f) Notice has been given to each Rating Agency and to each Enhancement
Provider as required under Section 2.6 (d) of the Pooling and Servicing
Agreement.
SECTION 6. Conditions Precedent. The acceptance of the Trustee set forth
---------------------
in Section 4 above and the amendment of the Pooling and Servicing Agreement set
forth in Section 7 below are subject to the satisfaction, on or prior to the
Addition Date, of the following conditions precedent:
(a) Officer's Certificate. The Transferor shall have delivered to the
----------------------
Trustee a certificate of a Vice President or more senior officer, certifying
that (i) all requirements set forth in Section 2.6 of the Pooling and Servicing
Agreement for designating Additional Accounts and conveying the Principal
Receivables of such Accounts, whether now existing or hereafter created, have
been satisfied, and (ii) each of the representations and warranties made by the
Transferor in Section 5 is true and correct as of the Addition Date. The
Trustee may conclusively rely on such Officer's Certificate, shall have no duty
to make inquiries with regard to the matters set forth therein, and shall incur
no liability in so relying.
(b) Opinion of Counsel. The Transferor shall have delivered to the Trustee
-------------------
an Opinion of Counsel with respect to the Additional Accounts designated
A-4
hereby substantially in the form of Exhibit B to the Pooling and Servicing
Agreement.
(c) Additional Information. The Transferor shall have delivered to the
-----------------------
Trustee such information as was reasonably requested by the Trustee to satisfy
itself as to the accuracy of the representation and warranty set forth in
Section 5 (d) to this Assignment.
SECTION 7. Amendment of the Pooling and Servicing Agreement. The Pooling
-------------------------------------------------
and Servicing Agreement is hereby amended to provide that all references therein
to the "Pooling and Servicing Agreement," to "this Agreement" and "herein" shall
be deemed from and after the Addition Date to be a dual reference to the Pooling
and Servicing Agreement as supplemented by this Assignment. Except as expressly
amended hereby, all of the representations, warranties, terms, covenants and
conditions of the Pooling and Servicing Agreement shall remain unamended and
shall continue to be, and shall remain, in full force and effect in accordance
with its terms and except as expressly provided herein shall not constitute or
be deemed to constitute a waiver of compliance with or a consent to
noncompliance with any term or provision of the Pooling and Servicing Agreement.
SECTION 8. Counterparts. This Assignment may be executed in two or more
-------------
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Assignment of
Receivables in Additional Accounts to be duly executed and delivered by their
respective duly authorized officers on the day and year first above written.
FIRST CONSUMERS NATIONAL BANK
By:___________________________________
Title:________________________________
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:___________________________________
Title:________________________________
A-5
SCHEDULE 1
to Assignment of Receivables
in Additional Accounts
ADDITIONAL ACCOUNTS
-------------------
Delivered to Trustee only
As contained on an appropriately labeled computer record delivered
contemporaneously with the Execution and delivery of the Existing Pooling
Agreement.
A-6
EXHIBIT B
to Amended and Restated
Pooling and Servicing Agreement
PROVISIONS TO BE INCLUDED IN OPINION OF COUNSEL TO BE
DELIVERED PURSUANT TO SUBSECTION 2.6(c)(vii) OF THE
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
----------------------------------------------------
The opinions set forth below may be subject to certain qualifications,
assumptions, limitations and exceptions taken or made in the opinion of
FCNB's counsel with respect to similar matters delivered on the Initial
Closing Date.
1. The Assignment has been duly authorized, executed and delivered
by FCNB and constitutes the legal, valid and binding agreement of FCNB,
enforceable against FCNB in accordance with its terms.
2. If the Pooling and Servicing Agreement constitutes a valid
assignment of all FCNB's right, title and interest in, to and under the
Transferred Items/1/ and assuming the accuracy of the lien search report
for liens filed against FCNB in the office of the Oregon Secretary of State
("Search") and the certificates of officers of FCNB and Spiegel as to
certain matters of fact ("Officer's Certificate"), then the Trustee has or
will acquire all FCNB's right, title and interest in, to and under the
Transferred Items free and clear of any Lien or interest of any person at
the time of transfer (and anytime thereafter with respect to any Lien or
interest arising through or under FCNB, except as provided in the Pooling
and Servicing Agreement), except for Liens for municipal or other local
taxes and subject to paragraph 4.
3. If the Pooling and Servicing Agreement does not constitute a
valid assignment of all FCNB's right, title and interest in, to and under
the Transferred Items, then the Pooling and Servicing Agreement constitutes
a valid security interest in all FCNB's right, title and interest in, to
and under the Transferred Items in favor of the Trustee, for the benefit of
the holders of the Offered Certificates. The security interest is perfected
and, assuming the accuracy of the Search and the Officer's Certificates,
first priority, subject to paragraph 4.
4. No opinion is rendered as to FCNB's or the Trustee's title to the
Receivables or with respect to the following possible interests or rights
in the Receivables or limitations on the security interest: (a) security
interest perfected
_________________
/1/ As used in paragraphs 2 and 3, "Transferred Items" shall mean the
Receivables existing on September 30, 1992 and thereafter created (the
"Transferred Receivables"), monies due or to become due from them, security for
Transferred Receivables (including without limitation rights to bank accounts
and certificates of deposit pledged as collateral), and proceeds and Insurance
Proceeds.
B-1
without filing under the Uniform Commercial Code; (b) purchase money security
interests in the Receivables; (c) security interests in proceeds that become
unperfected as provided in Section 9-306 of the Uniform Commercial Code; (d)
security interest, liens, transactions or rights not governed by the Uniform
Commercial Code; (e) rights and interests of any lien creditor who instituted
proceedings for attachment, execution or other relief against the Receivables
prior to the filing of the Uniform Commercial Code financing statement with
respect to the Trust's interest in the Receivables and the proceeds thereof in
the office of the Oregon Secretary of State ("Financing Statement"); (f)
security interests in the Receivables for which a financing statement has been
improperly filed or which does not use FCNB's current name as "debtor"; and (g)
the requirements under the Uniform Commercial Code for new filings due to
changes in the debtor's location, name, identity, or corporate structure, and
for continuation statements for financing statements.
5. No filings or other action, other than the filing of the Financing
Statement with respect to the Trust's security interest in such Receivables and
the proceeds thereof; in the office of the Secretary of State of the State of
Oregon, are necessary to perfect or continue the perfected status of the
security or other interest of the Trust in the Receivables of the Additional
Accounts designated by the Assignment, and the proceeds thereof, against third
parties, except that appropriate continuation statements with respect to the
Financing Statement(s) be filed at five year intervals to continue the
perfection of such security interest.
6. In the course of such counsel's representation of FCNB in connection
with this matter, and without independent investigation, such counsel has not
become aware of (a) any type of right, lien or interest of any government or
agency or instrumentality thereof or any lien arising by operation of law which
might be asserted against the Receivables in the Additional Accounts designated
by the Assignment or the proceeds thereof in particular circumstances other than
a tax lien or a lien arising under the Employee Retirement Income Security Act
(ERISA), (b) any such right, lien or interest which has been so asserted, or (c)
any lien arising by operation of law or any attachment or execution lien which
has been asserted against the Receivables of the Additional Accounts designated
by the Assignment or the proceeds thereof.
7. The transfer of the Receivables in the Additional Accounts to the
Trust would not constitute a fraudulent conveyance of FCNB; provided that this
opinion numbered 6 need not be delivered if the short-term unsecured debt
obligations of FCNB are rated at the time of such transfer at least P-3 by
Moody's Investor Service, Inc.
8. Based on certificates of FCNB to the effect of the following, to the
best of the knowledge of counsel, (a) FCNB originated the Receivables, (b) FCNB
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has not transferred any interest in the Receivables other than to the Trustee or
caused any lien to be imposed upon the Receivables except for Liens permitted
under subsection 5.1(d) of the Receivables Purchase Agreement, , and (c) FCNB
will originate all Receivables created in the Additional Accounts.
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EXHIBIT C
to Amended and Restated
Pooling and Servicing Agreement
FORM OF RETRANSFER AGREEMENT
----------------------------
TRANSFER No. ___ OF RECEIVABLES (this "Retransfer Agreement"), dated
as of ________________, _____, by and between FIRST CONSUMERS NATIONAL
BANK, a national banking association (the "Transferor"), and HARRIS TRUST
AND SAVINGS BANK, a banking corporation organized and existing under the
laws of Illinois (the "Trustee"), pursuant to the Amended and Restated
Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Transferor and the Trustee are parties to the Amended and
Restated Pooling and Servicing Agreement, dated as of September 30, 1992,
amended and restated as of January ___, 1999 (hereinafter as such agreement
may have been, or may from time to time be, amended, supplemented or
otherwise modified, the "Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to remove all Receivables from certain designated
Accounts of the Transferor (the "Removed Accounts") and to cause the
Trustee to reconvey the Receivables of such Removed Accounts, whether now
existing or hereafter created, from the Trust to the Transferor (as each
such term is defined in the Pooling and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;
NOW THEREFORE, the Transferor and the Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing
-------------
Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
------------
designated hereby, _________________, _____.
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"Removal Notice Date" shall mean, with respect to the Removed Accounts
-------------------
designated hereby, _____________________ (which shall be a date on or prior
to the fifth Business Day prior to the Removal Date).
2. Designation of Removed Accounts. The Transferor shall deliver to
-------------------------------
the Trustee, not later than three Business Days after the Removal Date, a
computer file or microfiche list containing a true and complete list of
each credit card account which as of the Removal Date shall be deemed to be
a Removed Account, such accounts being identified by account number and by
the amount of Principal Receivables in such accounts as of the close of
business on the Removal Date. Such list shall be marked as Schedule 1 to
this Retransfer Agreement and shall be incorporated into and made a part of
this Retransfer Agreement as of the Removal Date.
3. Conveyance of Receivables. (a) The Trustee does hereby transfer,
-------------------------
assign, set-over and otherwise convey to the Transferor, without recourse
on and after the Removal Date, all right, title and interest of the Trust
in and to the Receivables now existing and hereafter created in the Removed
Accounts designated hereby, all monies due or to become due with respect
thereto (including all Finance Charge Receivables), all Collections,
Recoveries and other proceeds (as defined in Section 9-306 of the UCC as in
effect in the State of Illinois) of such Receivables and Insurance Proceeds
relating thereto.
(b) In connection with such transfer, the Trustee agrees to execute
and deliver to the Transferor on or prior to the date of this Retransfer
Agreement, a termination statement with respect to the Receivables now
existing and hereafter created in the Removed Accounts designated hereby
(which may be a single termination statement with respect to all such
Receivables) evidencing the release by the Trust of its lien on the
Receivables in the Removed Accounts, and meeting the requirements of
applicable state law, in such manner and such jurisdictions as are
necessary to remove such lien.
4. Acceptance by Trustee. The Trustee hereby acknowledges that,
---------------------
prior to or contemporaneously with the execution and delivery of this
Retransfer Agreement, the Transferor delivered to the Trustee the computer
file or microfiche list described in Section 2 of this Retransfer
Agreement.
5. Representations and Warranties of the Transferor. The Transferor
hereby represents and warrants to the Trust as of the Removal Date:
(a) Legal Valid and Binding Obligation. This Retransfer Agreement
----------------------------------
constitutes a legal, valid and binding obligation of the Transferor
enforceable against the Transferor in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other
C-2
similar laws now or hereafter in effect affecting the enforcement or
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity); and
(b) Selection Procedures. No selection procedures believed by the
--------------------
Transferor to be materially adverse to the interests of the Investor
Certificateholders were utilized in selecting the Removed Accounts
designated hereby.
6. Condition Precedent. The amendment of the Pooling and Servicing
-------------------
Agreement set forth in Section 7 hereof is subject to the satisfaction, on
or prior to the Removal Date, of the following condition precedent:
Officers' Certificate. The Transferor shall have delivered to the
---------------------
Trustee an Officers' Certificate certifying that (i) as of the Removal
Date, all requirements set forth in Section 2.7 of the Pooling and
Servicing Agreement for designating Removed Accounts and reconveying the
Receivables of such Removed Accounts, whether now existing of hereafter
created, have been satisfied, and (ii) each of the representations and
warranties made by the Transferor in Section 5 hereof is true and correct
as of the Removal Date. The Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.
7. Amendment of the Pooling and Servicing Agreement. The Pooling
------------------------------------------------
and Servicing Agreement is hereby amended to provide that all references
therein to the "Pooling and Servicing Agreement", to "this Agreement" and
"herein" shall be deemed from and after the Removal Date to be a dual
reference to the Pooling and Servicing Agreement as supplemented by this
Retransfer Agreement. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Pooling
and Servicing Agreement shall remain unamended and shall continue to be,
and shall remain, in full force and effect in accordance with its terms and
except as expressly provided herein shall not constitute or be deemed to
constitute a waiver of compliance with or a consent to non-compliance with
any term or provision of the Pooling and Servicing Agreement.
8. Counterparts. This Retransfer Agreement may be executed in two or
------------
more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute
one and the same instrument.
C-3
IN WITNESS WHEREOF, the undersigned have caused this Retransfer
Agreement to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
FIRST CONSUMERS
NATIONAL BANK
By: ________________
Title:__________
HARRIS TRUST AND
SAVINGS BANK,
As Trustee
By: ________________
Title:__________
C-4
SCHEDULE 1
to Retransfer Agreement
REMOVED ACCOUNTS
----------------
Delivered to Trustee only
As contained on an appropriately labeled computer record delivered
contemporaneously with the Execution and delivery of the Existing Pooling
Agreement.
C-5
EXHIBIT D
to Amended and Restated
Pooling and Servicing Agreement
FORM OF MONTHLY SERVICER'S CERTIFICATE
--------------------------------------
FIRST CONSUMERS MASTER TRUST
The undersigned, a duly authorized representative of First Consumers
National Bank ("FCNB"), as Servicer pursuant to the Pooling and Servicing
Agreement dated as of September 30, 1992 and amended and restated as of
January ___, 1999, (the "Pooling and Servicing Agreement") between FCNB and
Harris Trust and Savings Bank, as Trustee, does hereby certify as follows:
1. Capitalized terms used in this Certificate have their respective
meanings set forth in the Pooling and Servicing Agreement; provided that
the "preceding Monthly Period" shall mean the Monthly Period immediately
preceding the calendar month in which this Certificate is delivered. This
Certificate is delivered pursuant to Section 3.4(c) of the Pooling and
Servicing Agreement. References herein to certain sections and subsections
are references to the respective sections and subsections of the Pooling
and Servicing Agreement.
2. FCNB is Servicer under the Pooling and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. The date of this Certificate is a Determination Date under the
Pooling and Servicing Agreement.
5. The aggregate amount of Collections processed during the
preceding Monthly Period was equal to........................ $___________
6. The aggregate amount of the Investor Percentage of Collections of
Principal Receivables processed by the Servicer pursuant to Article IV
during the preceding Monthly Period was equal to............. $___________
7. The aggregate amount of the Investor Percentage of Collections of
Finance Charge Receivables processed by the Servicer pursuant to Article IV
during the preceding Monthly Period was equal to............. $___________
8. The aggregate amount of Receivables as of the end of the last day
of the preceding Monthly Period was equal to................. $___________
D-1
9. The aggregate amount of funds on deposit in the Finance Charge
Account with respect to Collections processed as of the end of the last day
of the preceding Monthly Period was equal to.................. $___________
10. The aggregate amount of funds on deposit in the Principal Account
with respect to Collections processed as of the end of the last day of the
preceding Monthly Period was equal to......................... $___________
11. The Available Cash Collateral Amount in connection with the
Series _______ Certificates as of the next succeeding Transfer Date is
equal to...................................................... $___________
12. The aggregate amount of withdrawals required to be made from the
Cash Collateral Account pursuant to Article IV in connection with the
Series _______ Certificates in the current calendar month is
equal to...................................................... $___________
13. The aggregate amount to be paid to the Cash Collateral Depositor
in connection with the Series _______ Certificates from the Series _______
Finance Charge Account pursuant to Article IV in the current calendar month
is equal to................................................... $___________
14. The sum of all amounts payable to the Investor Certificateholders
on the Distribution Date in the current calendar month is
equal to...................................................... $___________
15. Attached hereto is a true and correct copy of the statement
required to be delivered by the Servicer on the date of this Certificate to
the Paying Agent pursuant to the Series _______ Supplement.
16. To the knowledge of the undersigned, there are no liens on any
Receivables in the Trust except as described below:
[If applicable, insert "None".]
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this certificate this ____ day of _______________, _____.
FIRST CONSUMERS
NATIONAL BANK,
as Servicer
By: ________________
Title:____________
D-2
EXHIBIT E
to Amended and Restated
Pooling and Servicing Agreement
FORM OF ANNUAL SERVICER'S CERTIFICATE
-------------------------------------
FIRST CONSUMERS MASTER TRUST
The undersigned, a duly authorized representative of First Consumers
National Bank ("FCNB") as Servicer pursuant to the Pooling and Servicing
Agreement dated as of September 30, 1992 as amended and restated as of
January ___, 1999 (the Pooling and Servicing Agreement) between FCNB and
Harris Trust and Savings Bank, as trustee (the "Trustee"), does hereby
certify that:
1. FCNB is Servicer under the Pooling and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee
3. This Certificate is delivered pursuant to Section 3.5 of the
Pooling and Servicing Agreement.
4. A review of the activities of the Servicer during the calendar
year ended December 31, _____ was conducted under my supervision.
5. Based on such review, the Servicer has, to the best of my
knowledge, fully performed all its obligations under the Pooling and
Servicing Agreement throughout such calendar year and no default in the
performance of such obligations has occurred or is continuing except as set
forth in paragraph 6 below.
6. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Pooling and
Servicing Agreement known to me to have been made during the calendar year
ended December 31, _____, which sets forth in detail the (i) nature of each
such default, (ii) the action taken by the Servicer, if any, to remedy each
such default and (iii) the current status of each such default: [If
applicable, insert "None"]
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this day of ______, _____.
By: _____________________________
Name: ____________________
Title: ___________________
E-1
EXHIBIT F
to Amended and Restated
Pooling and Servicing Agreement
PROVISIONS TO BE INCLUDED IN OPINION OF
COUNSEL PURSUANT TO SUBSECTION 13.2(d)(i)
-----------------------------------------
(i) The amendment to the Pooling and Servicing Agreement, attached
hereto as Exhibit A (the "Amendment"), has been duly authorized, executed
and delivered by FCNB and constitutes the legal, valid and binding
agreement of FCNB, enforceable in accordance with its terms.
(ii) The Amendment has been entered into in accordance with the terms
and provisions of Section 13.1 of the Pooling and Servicing Agreement.
F-1
EXHIBIT G
to Amended and Restated
Pooling and Servicing Agreement
PROVISIONS TO BE INCLUDED
IN ANNUAL OPINION OF COUNSEL
----------------------------
The opinions set forth below, which are to be delivered pursuant to
subsection 13.2(d) of the Amended and Restated Pooling and Servicing
Agreement ("Pooling and Servicing Agreement"), may be subject to certain
qualifications, assumptions, limitations, and exceptions taken or made in
the opinion of counsel to FCNB with respect to similar matters delivered on
the Initial Closing Date.
1. If the Pooling and Servicing Agreement constitutes a valid
assignment of all FCNB's right, title and interest in, to and under the
Transferred Items/1/ and assuming the accuracy of the lien search report
for liens filed against FCNB in the office of the Oregon Secretary of State
("Search") and the certificates of officers of FCNB and Spiegel as to
certain matters of fact ("Officer's Certificate"), then the Trustee has or
will acquire all FCNB's right, title and interest in, to and under the
Transferred Items free and clear of any Lien or interest of any person at
the time of transfer (and anytime thereafter with respect to any Lien or
interest arising through or under FCNB, except as provided in the Pooling
and Servicing Agreement), except for Liens for municipal or other local
taxes and subject to paragraph 4.
2. If the Pooling and Servicing Agreement does not constitute a
valid assignment of all FCNB's right, title and interest in, to and under
the Transferred Items, then the Pooling and Servicing Agreement constitutes
a valid security interest in all FCNB's right, title and interest in, to
and under the Transferred Items in favor of the Trustee, for the benefit of
the holders of the Offered Certificates. The security interest is perfected
and, assuming the accuracy of the Search and the Officer's Certificates,
first priority, subject to paragraph 4.
3. No opinion is rendered as to FCNB's or the Trustee's title to the
Receivables or with respect to the following possible interests or rights
in the Receivables or limitations on the security interest: (a) security
interest perfected without filing under the Uniform Commercial Code; (b)
purchase money security interests in the Receivables; (c) security
interests in proceeds that become unperfected as provided in Section 9-306
of the Uniform Commercial Code;
______________________
/1/ As used in paragraphs 1 and 2, "Transferred Items" shall mean the
Receivables existing on September 30, 1992 and thereafter created (the
"Transferred Receivables"), monies due or to become due from them, security for
Transferred Receivables (including without limitation rights to bank accounts
and certificates of deposit pledged as collateral), and proceeds and Insurance
Proceeds.
G-1
(d) security interest, liens, transactions or rights not governed by the
Uniform Commercial Code; (e) rights and interests of any lien creditor who
instituted proceedings for attachment, execution or other relief against
the Receivables prior to the filing of the Uniform Commercial Code
financing statement with respect to the Trust's interest in the Receivables
and the proceeds thereof in the office of the Oregon Secretary of State
("Financing Statement"); (f) security interests in the Receivables for
which a financing statement has been improperly filed or which does not use
FCNB's current name as "debtor"; and (g) the requirements under the Uniform
Commercial Code for new filings due to changes in the debtor's location,
name, identity, or corporate structure, and for continuation statements for
financing statements.
4. No filings or other action, other than the filing of the
Financing Statement with respect to the Trust's interest in the Receivables
and the proceeds thereof in the office of the Secretary of State of the
State of Oregon, are necessary to perfect or continue that perfected status
of the interest of the Trust in the Receivables and the proceeds thereof
against third parties, except that appropriate continuation statements with
respect to the Financing Statement must be filed at five-year intervals.
5. In the course of such counsel's representation of FCNB in
connection with this matter, and without independent investigation, such
counsel has not become aware of (a) any type of right, lien or interest of
any government or agency or instrumentality thereof or any lien arising by
operation of law which might be asserted against the Receivables or the
proceeds thereof in particular circumstances other than a tax lien or a
lien arising under the Employee Retirement Income Security Act (ERISA), (b)
any such right, lien or interest which has been so asserted, or (c) any
lien arising by operation of law or any attachment or execution lien which
had been asserted against the Receivables or the proceeds thereof.
G-2
SCHEDULE 1
to Amended and Restated
Pooling and Servicing Agreement
LIST OF ACCOUNTS
----------------
Delivered to Trustee only
As contained on an appropriately labeled computer record delivered
contemporaneously with the Execution and delivery of the Existing Pooling
Agreement.
Aggregate Receivables as of the Cut Off Date: $ 152,900,177
Aggregate Principal Receivables as of the Cut Off Date: $ 150,759,365
G-3