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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 18, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ASSOCIATES CREDIT CARD RECEIVABLES CORP.
(Originator of the Trust described herein)
(Exact Name of Registrant as Specified in Its Charter)
ASSOCIATES CREDIT CARD MASTER NOTE TRUST
(Issuer of the Notes)
DELAWARE 75-2709748
(State or Other Jurisdiction of Organization) (I.R.S. Employer Identification Number)
290 EAST CARPENTER FREEWAY
IRVING, TEXAS 75062
(972) 652-4000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Office)
CORPORATION SERVICE COMPANY
800 BRAZOS, SUITE 750
AUSTIN, TEXAS 78701
(512) 397-1564
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies to:
MICHAEL J. FORDE, ESQ. CAMERON L. COWAN, ESQ.
ASSOCIATES FIRST CAPITAL CORPORATION ORRICK, HERRINGTON & SUTCLIFFE LLP
250 CARPENTER FREEWAY WASHINGTON HARBOUR
P.O. BOX 660237 3050 K STREET, N.W., SUITE 200
DALLAS, TEXAS 75266 WASHINGTON, DC 20007
(972) 652-4000 (202) 339-8400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this registration statement becomes effective as determined by market
conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
REGISTERED AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED (A)(B) PER NOTE(C) PRICE(C) REGISTRATION FEE
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Asset Backed Notes............ $1,000,000 100% $1,000,000 $264
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(a) With respect to any Asset Backed Notes issued with original issue discount,
the amount to be registered is calculated based on the initial public
offering price thereof.
(b) With respect to any Asset Backed Notes denominated in any foreign currency,
the amount to be registered shall be the U.S. dollar equivalent thereof
based on the prevailing exchange rate at the time such Asset Backed Note is
first offered.
(c) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INTRODUCTORY NOTE
This registration statement includes:
- a representative form of prospectus supplement to the base prospectus
relating to the offering by Associates Credit Card Master Note Trust of a
series of asset backed notes; and
- a form of base prospectus relating to asset backed notes of Associates
Credit Card Master Note Trust.
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THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. WE MAY NOT SELL THESE
SECURITIES UNTIL WE DELIVER A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE
NOT AN OFFER TO SELL NOR ARE THEY SEEKING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Representative Form of Prospectus Supplement
SUBJECT TO COMPLETION, DATED JANUARY 18, 2000
Prospectus Supplement to Prospectus dated , 2000
ASSOCIATES CREDIT CARD MASTER NOTE TRUST
Issuer
ASSOCIATES CREDIT CARD RECEIVABLES CORP.
Transferor
ASSOCIATES CREDIT CARD SERVICES, INC.
Servicer
Series 2000- Asset Backed Notes
CLASS A NOTES CLASS B NOTES CLASS C NOTES
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Principal amount $ $ $
Interest rate [One-Month LIBOR] plus [One-Month LIBOR] plus [One-Month LIBOR] plus
[ ]% per year [ ]% per year [ ]% per year
Interest payment dates Monthly on the 17th, Monthly on the 17th, Monthly on the 17th,
beginning , beginning , beginning ,
2000 2000 2000
Expected principal payment
date 200 200 200
Legal maturity date 200 200 200
Price to public $ (or %) $ (or %) $ (or %)
Underwriting discount $ (or %) $ (or %) $ (or %)
Proceeds to issuer $ (or %) $ (or %) $ (or %)
The Class B notes are subordinated to the Class A notes. The Class C notes are
subordinated to the Class A and Class B notes.
We expect to issue your series of notes on or about , 2000. We will
deliver your series of notes in book-entry form.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 6 IN THE
PROSPECTUS.
A note is not a deposit and neither the notes nor the underlying accounts or
receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
The notes are obligations of Associates Credit Card Master Note Trust only and
are not obligations of Associates Credit Card Receivables Corp., Associates
Credit Card Services, Inc., Associates National Bank (Delaware) or any other
person.
This prospectus supplement may be used to offer and sell the notes only if
accompanied by the prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE NOTES OR DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Underwriters of the Series 2000- notes
, 2000
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the notes in two separate documents:
(a) the accompanying prospectus, which provides general information, some of
which may not apply to your series of notes, and (b) this prospectus supplement,
which describes the specific terms of your series of notes.
If the terms of your series of notes vary between this prospectus
supplement and the accompanying prospectus, you should rely on the information
in this prospectus supplement.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus, including the information
incorporated by reference. We have not authorized anyone to provide you with
different information. We are not offering the notes in any state where the
offer is not permitted.
We include cross references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table of
Contents in the accompanying prospectus provide the pages on which these
captions are located.
This prospectus supplement uses defined terms. You can find a listing of
the pages where definitions can be found under the caption "Index of Terms for
Prospectus Supplement" beginning on page S-39 in this prospectus supplement and
under the caption "Index of Terms for Prospectus" beginning on page 62 in the
accompanying prospectus.
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TABLE OF CONTENTS
PAGE
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Transaction Summary.................. S-1
Summary of Terms..................... S-2
The Issuer......................... S-2
The Series 2000- Notes............. S-2
Interest........................ S-2
Principal....................... S-2
Credit Enhancement................. S-2
Subordination................... S-2
Spread Account.................. S-3
Events of Default.................. S-3
Other Interests in the Trust....... S-3
Other Series of Notes........... S-3
The Transferor Interest......... S-4
The Receivables.................... S-4
Allocations of Collections......... S-4
Application of Collections......... S-4
Finance Charge Collections...... S-4
Principal Collections........... S-5
Pay Out Events..................... S-5
Optional Redemption................ S-6
Denominations...................... S-6
Registration, Clearance and
Settlement...................... S-6
Tax Status......................... S-6
ERISA Considerations............... S-6
[Exchange Listing]................. S-6
The Bank's Credit Card Portfolio..... S-7
Billing and Payments............... S-7
Delinquency and Loss Experience.... S-8
Revenue Experience................. S-9
Interchange........................ S-11
Recoveries......................... S-11
Payment Rates...................... S-11
The Trust Portfolio.................. S-12
Maturity Considerations.............. S-15
Controlled Accumulation Period..... S-15
Early Amortization Period.......... S-15
The Originator, the Servicer and the
Transferor......................... S-16
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Associates National Bank
(Delaware)...................... S-16
Associates Credit Card Services,
Inc. ........................... S-16
Associates Credit Card Receivables
Corp. .......................... S-17
Description of Series Provisions..... S-17
General............................ S-17
Interest Payments.................. S-17
Principal Payments................. S-19
Postponement of Controlled
Accumulation Period............. S-20
Subordination...................... S-21
Allocation Percentages............. S-21
Reallocated Principal
Collections..................... S-23
Application of Collections......... S-24
Shared Excess Finance Charge
Collections..................... S-26
Shared Principal Collections and
Transferor Principal
Collections..................... S-26
Defaulted Receivables; Investor
Charge-Offs..................... S-27
Principal Funding Account.......... S-27
Reserve Account.................... S-27
Spread Account..................... S-29
Spread Account Distributions....... S-31
Issuance of Additional Notes....... S-31
Paired Series...................... S-32
Pay Out Events..................... S-32
Events of Default.................. S-34
Servicing Compensation and Payment
of Expenses..................... S-34
Reports to Noteholders............. S-34
ERISA Considerations................. S-34
Underwriting......................... S-36
Legal Matters........................ S-38
Index of Terms for Prospectus
Supplement......................... S-39
Annex I: Other Series Issued and
Outstanding........................ I-1
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TRANSACTION SUMMARY
Trust: Associates Credit Card Master Note Trust
Transferor: Associates Credit Card Receivables Corp.
Originator: Associates National Bank (Delaware)
Servicer: Associates Credit Card Services, Inc.
Indenture Trustee: The Bank of New York
Owner Trustee: Wilmington Trust Company
Closing Date: , 2000
Clearance and
Settlement: DTC/Cedelbank/Euroclear
Primary Trust Assets: Receivables originated in MasterCard(R) and VISA(R)
accounts
NOTE STRUCTURE AMOUNT % OF TOTAL SERIES
Class A $ %
Class B $ %
Class C $ %
Annual Servicing Fee Rate: 2.0%
CLASS A CLASS B CLASS C
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Anticipated Ratings:* Aaa/AAA/AAA A2/A/A Baa2/BBB/BBB
(Moody's/Standard &
Poor's/Fitch IBCA)
Credit Enhancement: subordination of subordination of spread account
Class B and Class C Class C
Interest Rate: [One-Month LIBOR] [One-Month LIBOR] [One-Month LIBOR]
plus [ ]% per year plus [ ]% per year plus [ ]% per year
Interest Accrual Method: [actual/360] [actual/360] [actual/360]
Interest Payment Dates: monthly (17th) monthly (17th) monthly (17th)
Interest Rate Index Reset Date: [2 London business [2 London business [2 London business
days before each days before each days before each
interest payment interest payment interest payment
date] date] date]
First Interest Payment Date: , 2000 , 2000 , 2000
Expected Principal Payment Date: , 200 , 200 , 200
Commencement of Accumulation Period
(subject to adjustment): , 200 , 200 , 200
Legal Final Maturity Date: , 200 , 200 , 200
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* It is a condition to issuance that one of these ratings be obtained.
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SUMMARY OF TERMS
This summary highlights selected information and does not contain all of
the information that you need to consider in making your investment decision.
You should carefully read this entire document and the accompanying prospectus
before you purchase any notes.
THE ISSUER
The notes will be issued by Associates Credit Card Master Note Trust, a Delaware
statutory business trust, pursuant to an indenture supplement to an indenture,
each between the trust and the indenture trustee.
The indenture trustee is The Bank of New York.
THE SERIES 2000- NOTES
INTEREST
The Class A notes will bear interest at [one-month LIBOR as determined each
month] plus % per annum.
The Class B notes will bear interest at [one-month LIBOR as determined each
month] plus % per annum.
The Class C notes will bear interest at [one-month LIBOR as determined each
month] plus % per annum.
For each class of the Series 2000- notes, interest will be calculated as
follows:
Principal balance at Number of days in
end of prior monthly X interest period X Interest rate
period ----------------
360
Each interest period begins on and includes a distribution date and ends on but
excludes the next distribution date. However, the first interest period will
begin on and include the closing date.
Interest on the Series 2000- notes will be paid on each distribution date, which
will be [17], 2000 and the 17th day of each following month if the
17th is a business day and, if not, the following business day.
You may obtain the interest rates for the current interest period and the
immediately preceding interest period by telephoning the indenture trustee at
(212) 815-5738.
See "Description of Series Provisions -- Interest Payments" in this prospectus
supplement for a description of how and when LIBOR will be determined.
PRINCIPAL
Principal of the Class A notes, the Class B notes and the Class C notes is
expected to be paid in full on the 200 distribution date. However:
- - no principal will be paid on the Class B notes until the Class A notes are
paid in full; and
- - no principal will be paid on the Class C notes until the Class A and Class B
notes are paid in full.
We are scheduled to begin accumulating collections of principal receivables
starting on , 200 for payment to the Series 2000- noteholders on the
expected principal payment date, but we may begin accumulating at a later date.
Principal of the Series 2000- notes may be paid earlier or later than the
expected principal payment date. You will not be entitled to any premium for
early or late payment of principal. If specified adverse events known as pay out
events occur, principal may be paid earlier than expected. If collections of the
credit card receivables are less than expected or are collected more slowly than
expected, then principal payments may be delayed. If the Series 2000- notes are
not paid on the expected principal payment date, collections of principal
receivables will continue to be used to pay principal on the Series 2000- notes
until the notes are paid or until , 200 , whichever occurs first.
, 200 is the legal maturity date for Series 2000- .
For more information about principal payments, see "Maturity Considerations,"
"Description of Series Provisions -- Principal Payments" and "-- Allocation
Percentages" in this prospectus supplement.
CREDIT ENHANCEMENT
SUBORDINATION
Credit enhancement for the Class A notes is provided by the subordination of the
Class B notes and the Class C notes.
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Credit enhancement for the Class B notes is provided by the subordination of the
Class C notes.
SPREAD ACCOUNT
A spread account will provide credit enhancement for the Class C notes. The
spread account initially will not be funded. After the Series 2000- notes are
issued, deposits into the spread account will be made each month from available
finance charge collections and, if necessary and available, excess finance
charge collections from other series in group one up to the required spread
account amount as described in this prospectus supplement under "Description of
Series Provisions -- Spread Account." The spread account will be used to make
payments on the Class C notes if collections of receivables allocated to the
Class C notes are insufficient to make required payments.
Credit enhancement for your series is for your series' benefit only, and you are
not entitled to the benefits of credit enhancement available to other series.
For more information about credit enhancement, see "Description of Series
Provisions -- Reallocated Principal Collections," "-- Application of
Collections" and "-- Defaulted Receivables; Investor Charge-Offs" in this
prospectus supplement.
EVENTS OF DEFAULT
The Series 2000- notes are subject to specified events of default described
under "Description of Series Provisions -- Events of Default" in this prospectus
supplement and "The Indenture -- Events of Default; Rights upon Event of
Default" in the accompanying prospectus. These include, among other things, the
failure to pay interest for 35 days after it is due or to pay principal on the
legal maturity date.
In case any event of default occurs and continues with respect to the Series
2000- notes, the indenture trustee or holders of more than 50% of the
then-outstanding principal balance of the Series 2000- notes may declare the
principal amount of the notes to be immediately due and payable. That
declaration may, under certain circumstances be rescinded by holders of more
than 50% of the then-outstanding principal balance of the Series 2000- notes.
After an event of default and the acceleration of the Series 2000- notes,
funds on deposit in the collection account, the principal funding account, the
reserve account and, with respect to the Class C notes, the spread account will
be applied to pay principal of and interest on the Series 2000- notes to the
extent permitted by law. Principal collections and finance charge collections
allocated to Series 2000- will be applied to make monthly principal and
interest payments on the Series 2000- notes until the earlier of the date
those notes are paid in full or the legal final maturity of those notes.
If the Series 2000- notes are accelerated or the issuer fails to pay the
principal of the Series 2000- notes on the legal maturity, once certain
conditions described in the prospectus under "The Indenture -- Events of
Default; Rights upon Event of Default" are satisfied, the indenture trustee may,
if legally permitted, or will at the direction of holders of at least 66 2/3% of
the principal amount of each class of Series 2000- notes:
- - institute proceedings in its own name for the collection of all amounts then
payable on the Series 2000- notes;
- - take any other appropriate action to protect and enforce the rights and
remedies of the indenture trustee and the Series 2000- noteholders; or
- - foreclose on a portion of the trust's assets by causing the trust to sell an
interest in the assets of the trust by issuing a foreclosure certificate to
the holders of the notes or to a third party selected by the indenture trustee
or by holders of more than 50% of the then-outstanding principal balance of
the Series 2000- notes.
A foreclosure certificate is an investor certificate issued by the trust
representing ownership of the interest in the assets of the trust securing the
Series 2000- notes. A foreclosure certificate held by a noteholder or a third
party will be subject to certain restrictions on transfer described under "The
Indenture -- Events of Default; Rights upon Event of Default" in the
accompanying prospectus.
OTHER INTERESTS IN THE TRUST
OTHER SERIES OF NOTES
The trust will issue other series of notes secured by the assets of the trust
from time to time in the
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future. A summary of the outstanding series is in "Annex I: Other Series Issued
and Outstanding" included at the end of this prospectus supplement. The issuance
of future series will occur without prior review or consent by you or any other
noteholder.
THE TRANSFEROR INTEREST
The interest in the trust not securing your series or any other series is the
transferor interest. The transferor interest is owned by the transferor. The
transferor may, however, sell all or a portion of its interest in the transferor
interest. The transferor interest does not provide credit enhancement for your
series or any other series.
THE RECEIVABLES
The primary assets of the trust are receivables in MasterCard(R) and VISA(R)*
revolving credit card accounts. The receivables consist of principal receivables
and finance charge receivables.
The following information is as of , 2000:
- - Receivables in the trust: $
- - Accounts designated to the trust:
For more information, see "The Trust Portfolio" in this prospectus supplement.
ALLOCATIONS OF COLLECTIONS
Associates Credit Card Services, Inc., as servicer, will collect payments on the
receivables and will deposit those collections in an account. It will keep track
of those collections that are finance charge receivables and those that are
principal receivables.
Each month, the servicer will allocate collections received among:
- - your series;
- - other series outstanding; and
- - the transferor interest in the trust.
The amount allocated to your series will be determined based mainly upon the
size of the invested amount of your series compared to the total amount of
principal receivables in the trust. At the time of issuance of the Series
2000-
notes, the invested amount for Series 2000-
will be $ .
You are entitled to receive payments of interest and principal only from
collections of receivables and other trust assets allocated to your series. If
the invested amount of your series declines, amounts allocated and available for
payment to your series and to you may be reduced. For a description of the
allocation calculations and the events which may lead to these reductions, see
"Description of Series Provisions -- Allocation Percentages" and "-- Reallocated
Principal Collections" in this prospectus supplement.
APPLICATION OF COLLECTIONS
FINANCE CHARGE COLLECTIONS
The trust will apply your series' share of collections of finance charge
receivables each month in the following order of priority:
- - to pay interest on the Class A notes;
- - to pay interest on the Class B notes;
- - to pay the servicing fee;
- - to pay interest on the Class C notes;
- - to cover your series' allocation of defaulted receivables;
- - to cover reductions in your series' invested amount resulting from investor
charge-offs allocated to your series and from reallocated principal
collections, in each case that have not been reimbursed;
- - to fund, in limited circumstances, a reserve account to cover interest payment
shortfalls for Class A and Class B during the accumulation period;
- - to make a deposit, if needed, to the spread account for Class C up to the
required spread account amount; and
- - to other series in group one or to the holders of the transferor certificates.
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* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Inc. and VISA U.S.A., Inc., respectively.
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For a more detailed description of these applications, see "Description of
Series Provisions -- Application of Collections" in this prospectus supplement.
PRINCIPAL COLLECTIONS
The trust will apply your series' share of principal collections each month as
follows:
- - During the revolving period, no principal will be paid to you or accumulated
in a trust account. Instead, your series' share of principal collections will
be treated as shared principal collections and may be available to make
principal payments for other series in group one.
- - The accumulation period is scheduled to begin on , 200 , but may
begin at a later date. During the accumulation period, your series' share of
principal collections will be deposited in a trust account, up to a controlled
deposit amount. On the expected principal payment date, amounts on deposit in
that account will be paid first to the Class A noteholders, then to the Class
B noteholders and then to the Class C noteholders.
- - If a pay out event (described below) that applies to Series 2000- or
to all series occurs, the early amortization period will begin. During the
early amortization period, your series' share of principal collections will be
paid first to the Class A noteholders, then to the Class B noteholders and
then to the Class C noteholders.
- - During any of the above periods, principal collections allocated to your
series, may be reallocated, if necessary, to make required interest payments
on the Class A notes and the Class B notes not made from available finance
charge collections, excess finance charge collections available from other
series in group one or funds in the reserve account. However, for any monthly
period, the sum of these reallocated principal collections cannot exceed
[ ]% of the initial invested amount of your series, as reduced due to
the writing off of receivables or for previously reallocated principal
collections, in each case that have not been reimbursed.
- - Any remaining principal collections will first be made available to other
series in group one and then be paid to the holders of the transferor
certificates or deposited in the special funding account.
For a more detailed description of these applications, see "Description of
Series Provisions -- Application of Collections" in this prospectus supplement.
PAY OUT EVENTS
The documents under which the Series 2000- notes will be issued include a list
of adverse events known as pay out events. If a pay out event that applies to
Series 2000- or to all series occurs, the trust will use collections of
principal receivables allocated to Series 2000- each month to pay principal on
the Series 2000- notes.
Pay out events may occur if the transferor fails to make required payments or
deposits, violates other covenants and agreements or makes representations and
warranties that are materially incorrect.
The following also are pay out events:
- - The yield on the trust portfolio less the amount of receivables that are
written off as uncollectible allocated to Series 2000- , averaged over three
months is less than the weighted average interest rate for Series 2000- ,
calculated by taking into account the interest rate for the Class A notes, the
Class B notes and the Class C notes, plus the servicing fee rate for Series
2000- ;
- - The Class A notes, the Class B notes or the Class C notes are not paid in full
on their expected principal payment dates;
- - Certain bankruptcy, insolvency or similar events relating to the transferor
(including any additional transferor), Associates Credit Card Services, Inc.
or the bank;
- - The transferor (including any additional transferor) is unable to transfer
receivables to the trust as required under the transfer and servicing
agreement;
- - The transferor does not transfer receivables in additional accounts to the
trust within 5 business days of when required under the transfer and servicing
agreement;
- - Certain defaults of the servicer;
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- - The trust becomes subject to regulation as an "investment company" under the
Investment Company Act of 1940; or
- - An event of default occurs for the Series 2000- notes.
For a more detailed discussion of the pay out events, see "Description of Series
Provisions -- Pay Out Events" in this prospectus supplement and "Description of
the Notes -- Pay Out Events" in the accompanying prospectus.
OPTIONAL REDEMPTION
The trust has the option to repurchase your notes when the outstanding principal
amount for your series has been reduced to 10% or less of the initial principal
amount (as increased by the principal amount of any notes of your series issued
after the closing date). See "Description of the Notes -- Final Payment of
Principal; Termination" in the accompanying prospectus.
DENOMINATIONS
Beneficial interests in the Series 2000-_ notes may be purchased in minimum
denominations of $1,000 and multiples of $1,000 in excess of that amount.
REGISTRATION, CLEARANCE AND SETTLEMENT
The Series 2000- notes will be in book-entry form and will be registered in the
name of Cede & Co., as the nominee of The Depository Trust Company. Except in
certain limited circumstances, you will not receive a definitive instrument
representing your notes. See "Description of the Notes -- Definitive Notes" in
the accompanying prospectus.
You may elect to hold your Series 2000- notes through The Depository Trust
Company, in the United States, or Cedelbank, societe anonyme or the Euroclear
System, in Europe.
Transfers will be made in accordance with the rules and operating procedures of
those clearing systems. See "Description of the Notes -- Book-Entry
Registration" in the accompanying prospectus.
TAX STATUS
Subject to important considerations described under "Federal Income Tax
Consequences" in the accompanying prospectus, Orrick, Herrington & Sutcliffe
LLP, as special tax counsel to the trust, is of the opinion that under existing
law your Series 2000- notes will be characterized as debt for federal income tax
purposes. By your acceptance of a Series 2000- note, you will agree to treat
your Series 2000- notes as debt for federal, state and local income and
franchise tax purposes. See "Federal Income Tax Consequences" in the
accompanying prospectus for additional information concerning the application of
federal income tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the Series 2000-
notes are eligible for purchase by persons investing assets of employee benefit
plans or individual retirement accounts. A fiduciary or other person
contemplating purchasing the Series 2000- notes on behalf of or with plan assets
of any plan or account should consult with its counsel regarding whether the
purchase or holding of the Series 2000- notes could give rise to a transaction
prohibited or not otherwise permissible under ERISA or Section 4975 of the
Internal Revenue Code.
[EXCHANGE LISTING
We will apply to list the Series 2000- notes on the Luxembourg Stock Exchange.
We cannot guarantee that the application for the listing will be accepted.]
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THE BANK'S CREDIT CARD PORTFOLIO
The following discussion describes certain terms and characteristics that
generally apply to the accounts in the bank portfolio from which the accounts in
the trust portfolio were selected. The accounts selected for the trust portfolio
do not represent the entire bank portfolio. Additional accounts consist of
eligible accounts which may or may not currently be in existence and which may
be selected using different criteria from those used in selecting the accounts
already included in the trust portfolio. See "Description of the
Notes -- Addition of Trust Assets" in the accompanying prospectus. Consequently,
actual loss and delinquency, revenue and monthly payment rate experience with
respect to the initial accounts and the additional accounts may be different
from such experience for the trust portfolio described in this prospectus
supplement.
BILLING AND PAYMENTS
Each credit card account may have different billing and payment structures,
including different periodic finance charges and fees. The following information
reflects the typical billing and payment characteristics of the accounts.
Each cardholder is subject to an agreement with Associates National Bank
(Delaware) (the "BANK") governing the terms and conditions of the cardholder's
VISA(R) or MasterCard(R) account. Under each of these agreements, the bank
generally reserves the right, upon advance notice to the cardholder, to add or
to change any terms, conditions, services or features of its VISA(R) and
MasterCard(R) accounts at any time, including increasing or decreasing periodic
finance charges, other charges or minimum payment terms. The agreement with each
cardholder provides that, subject to the requirements of applicable law, after
notice to a cardholder of any new or changed terms, those new or changed terms
will become effective at the time stated in the notice and will apply to all
outstanding unpaid indebtedness as well as new transactions.
A cardholder may use the credit card to purchase or lease goods or services
wherever the card is honored or to obtain cash advances from any financial
institution that accepts the card. Purchases and cash advances may also be
obtained through the use of "convenience checks" issued by the bank which may be
completed and signed by the cardholder in the same manner as a regular personal
check.
Associates Credit Card Services, Inc. ("ACCS") sends monthly billing
statements to cardholders with balances at the end of each billing period from
its operational facility located in South Bend, Indiana. Each month a
MasterCard(R) or VISA(R) cardholder is required to make at least one minimum
payment. The credit terms of each account vary, but the generic product requires
a monthly minimum payment at least equal to the greater of: (a) 2.0% of the
outstanding balance plus any amounts past due, or (b) $15 plus past due amounts.
If an account is greater than 60 days past due, the minimum payment may be
increased to the greater of: (i) 3.0% of the outstanding balance plus any
amounts past due, or (ii) $25 plus past due amounts.
Finance charges, which are assessed monthly, are based on an account's
average daily balance. Finance charges on purchases are calculated by
multiplying the account's average daily purchase balance by the applicable daily
periodic rate, and multiplying the result by the number of days in the billing
cycle. The majority of accounts are given a 25-day grace period on all new
purchases. Finance charges are calculated from the date the account cycles after
the grace period ends. Cash advances are not given any grace period, and thus
are assessed finance charges from the date of the transaction.
Payments are processed at ACCS's operational facility in Des Moines, Iowa.
Payments are currently applied in the following order: (i) any outstanding
annual membership fees, (ii) any outstanding accrued finance charges and fees,
(iii) promotional offers in order of lowest to highest APR, (iv) revolving
regular balances in order of lowest to highest APR, and (v) to any new balances.
The bank primarily offers variable rate credit card accounts. The periodic
finance charge assessed on balances in most credit card accounts from purchases
and cash advances is indexed to the prime rate plus an add-on percentage ranging
from 0.0% to 23.0%. The bank does, from time to time, also offer temporary
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promotional rates. Sometimes a credit card account will have two separate
variable rates, one for purchases and one for cash advances. In some cases, the
bank uses a form of performance based pricing where the finance charge rate for
an account which is greater than 60 days delinquent will be increased up to 4.0%
for up to six or eight months after the delinquency status has been remedied by
the customer.
The bank assesses annual membership fees on certain accounts. For most
credit card accounts, the bank also assesses late, overlimit and returned check
charges. The bank generally assesses a fee on cash advances, which normally is
in the range of 2.0% to 4.0% of the advance.
DELINQUENCY AND LOSS EXPERIENCE
An account is contractually delinquent if the minimum payment is not
received by the appropriate due date indicated on the customer's statement.
Efforts to collect contractually delinquent credit card receivables currently
are made primarily at ACCS's main operational facility in Irving, Texas.
Collection activities include statement messages, telephone calls and formal
collection letters. ACCS divides collection efforts into two primary groups: (a)
"front end/early collections," which represents one or two cycle delinquent
accounts, and (b) "60 plus day collections." At 90 days delinquent, credit
privileges are permanently revoked. The account is closed and the credit
relationship is permanently terminated. To increase the likelihood that the
customer fulfills its payment obligations, customized payment programs may be
used.
The bank's aging and loss policy adheres to the standard set by the Office
of the Comptroller of the Currency. The standard requires the following:
- aging accounts are charged-off at month end when they become 180
days-contractually delinquent;
- bankrupt accounts are manually charged-off daily upon receipt of official
notification;
- deceased status accounts are manually charged-off within 90 days of
receipt of the death certificate, if no payment arrangements were made or
if the account reaches 180 days contractual delinquency;
- fraud loss charge-offs occur 90 days after the account is blocked for
fraud; and
- settlement loss charge-offs are recognized based on the residual unpaid
balance and are charged-off 30 days after the agreed upon settlement
funds are received.
In February 1999, the Federal Financial Institutions Examination Council
published a revised policy statement on the classification of consumer loans.
The revised policy establishes uniform guidelines for charge-off of loans to
delinquent, bankrupt and deceased borrowers, for charge-off of fraudulent
accounts, and for re-aging, extending, deferring or rewriting delinquent
accounts. The guidelines were required to be implemented by June 30, 1999,
unless programming resources are required, in which case they must be
implemented by December 31, 2000. The bank has been following the majority of
the guidelines for the past several years. However, the bank might accelerate
some charge-offs of some delinquent loans when it fully implements the
guidelines, but does not expect implementation to have an effect upon the
payment of principal and interest on the Series 2000- notes. This statement is
a forward-looking statement, subject to certain risks and uncertainties. The
implementation of the guidelines could, in combination with other adverse
changes, such as a material increase in charge-off rates or in the rate of
interest payable to noteholders, have a material adverse effect upon the
payments of principal and interest on the Series 2000- notes.
The following tables set forth the aggregate delinquency and loss
experience for cardholder payments on the credit card accounts in the bank
portfolio for each of the three calendar years in the period ended December 31,
1998, and in the trust portfolio for the [ calendar months in the
period ended ], 1999. Any particular segment of the bank portfolio may
have delinquency and gross charge-off characteristics different from those of
the overall bank portfolio.
As of the beginning of the day on , 2000, the receivables in
the trust portfolio represented approximately % of the bank portfolio. Because
the trust portfolio is only a portion of the bank portfolio,
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actual delinquency and loss experience with respect to the receivables may be
different from that set forth below for the bank portfolio. We cannot assure you
that the future delinquency and loss experience for the receivables in either
the bank portfolio or trust portfolio will be similar to the historical
experience set forth below.
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
DECEMBER 31,
[ ], ---------------------------------------------------------------------------------
1999 1998 1997 1996
------------------------- ------------------------- ------------------------- -------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Receivables
Outstanding(2) $ $ $ $
Receivables
Delinquent:
30-59 Days $ % $ % $ % $ %
60-89 Days
90 or more
---------- ----- ---------- ----- ---------- ----- ---------- -----
Total $ % $ % $ % $ %
========== ===== ========== ===== ========== ===== ========== =====
- ---------------
(1) For each of the three calendar years in the period ended December 31, 1998,
information is presented for credit card accounts in the bank portfolio. For
the [ calendar months in the period ended ], 1999, this
information is presented for credit card accounts in the trust portfolio.
(2) The receivables outstanding on the accounts consist of all amounts due from
cardholders as posted to the accounts as of the end of the period shown,
including principal and accrued finance charge receivables.
LOSS EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
[ MONTHS YEAR ENDED DECEMBER 31,
ENDED ], ------------------------------------------------------------
1999 1998 1997 1996
------------------ ------------------ ------------------ ------------------
Average Principal Receivables
Outstanding(2) $ $ $ $
Total Principal Charge-Offs(3)
Total Principal Charge-Offs as a
percentage of Average Receivables
Outstanding(4) % % % %
- ---------------
(1) For each of the three calendar years in the period ended December 31, 1998,
information is presented for credit card accounts in the bank portfolio. For
the [ calendar months in the period ended ], 1999, this
information is presented for credit card accounts in the trust portfolio.
(2) Average principal receivables outstanding is the average of the receivable
balance at the end of each month during the period indicated.
(3) Total principal charge-offs are shown on a cash basis for principal
receivables only, before recoveries, and do not include the amount of any
reductions in average principal receivables outstanding due to fraud,
returned goods, customer disputes or other miscellaneous credit adjustments.
If accrued finance charge receivables that have been written off were
included, total charge-offs would be higher as an absolute number and as a
percentage of the average of principal and finance charge receivables
outstanding during the periods indicated.
(4) The percentage reflected for the [ months ended ], 1999 is an
annualized figure.
REVENUE EXPERIENCE
The gross revenues from finance charges and fees billed to accounts in the
bank portfolio for each of the three calendar years in the period ended December
31, 1998 and to accounts in the trust portfolio for
S-9
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the [ calendar months in the period ended ], 1999 are set
forth in the following table.
The historical yield figures for accounts in the bank portfolio reflected
in the following table are calculated on an accrual basis. Collections of
receivables included in the trust portfolio will be on a cash basis and may not
reflect the historical yield experience for accounts in the bank portfolio
reflected in the table. During periods of increasing delinquencies or periodic
payment deferral programs, accrual yields may exceed cash amounts accrued and
billed to cardholders. Conversely, cash yields may exceed accrual yields as
amounts collected in a current period may include amounts accrued during prior
periods. However, the transferor believes that during the three calendar years
in the period ended December 31, 1998 the yield on an accrual basis closely
approximated the yield on a cash basis. The yield on both an accrual and a cash
basis will be affected by numerous factors, including the monthly periodic
finance charges on the receivables, the amount of the annual membership fees and
other fees, changes in the delinquency rate on the receivables and the
percentage of cardholders who pay their balances in full each month and do not
incur monthly periodic finance charges. See "Risk Factors" in the accompanying
prospectus.
REVENUE EXPERIENCE(1)
[ MONTHS YEAR ENDED DECEMBER 31,
ENDED ], ---------------------------------------------------------------------------------
1999 1998 1997 1996
------------------------- ------------------------- ------------------------- -------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Average Principal
Receivables(2) $ $ $ $
Finance Charges and
Fees(3) $ % $ % $ % $ %
Yield from
Interchange(4) $ % $ % $ % $ %
Yield from
Recoveries(4) $ % $ % $ % $ %
---------- ----- ---------- ----- ---------- ----- ---------- -----
Total Yield from
Finance Charges,
Fees, Interchange
and Recoveries(5) $ % $ % $ % $ %
========== ===== ========== ===== ========== ===== ========== =====
- ---------------
(1) For each of the three calendar years in the period ended December 31, 1998,
information is presented for credit card accounts in the bank portfolio. For
the [ calendar months in the period ended ], 1999, this
information is presented for credit card accounts in the trust portfolio.
(2) Average principal receivables outstanding is the average of the receivable
balance at the end of each month during the period indicated.
(3) Finance charges and fees are comprised of monthly periodic finance charges
and all other credit card fees.
(4) The amount of interchange and recoveries of charged-off accounts for each of
the periods indicated above has been estimated.
(5) The percentage reflected for the [ months ended ], 1999 is an
annualized figure.
The revenue for the credit card accounts shown in the above table is
comprised of monthly periodic finance charges, credit card fees and Interchange.
These revenues vary for each account based on the type and volume of activity
for each account. Because the trust portfolio is only a portion of the bank
portfolio, actual yield with respect to receivables may be different from that
set forth above for the bank portfolio. See "The Bank's Credit Card Portfolio"
in this prospectus supplement and "The Bank's Credit Card Activities" in the
accompanying prospectus.
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INTERCHANGE
Creditors participating in the VISA(R) and MasterCard(R) associations
receive certain fees ("INTERCHANGE") as partial compensation for taking credit
risk, absorbing fraud losses and funding receivables for a limited period prior
to initial billing. Under the VISA(R) and MasterCard(R) systems, a portion of
Interchange in connection with cardholder charges for goods and services is
collected by banks that issue credit cards by applying a discount to the amount
paid by such banks to the banks that clear the related transactions for
merchants. Interchange will be allocated to the trust on a monthly basis based
on an equivalent percentage that the transferor receives each month for the
aggregate bank portfolio.
RECOVERIES
Pursuant to the terms of the transfer and servicing agreement, the
transferor will be required to transfer to the trust all of the recoveries that
are reasonably estimated by the servicer on receivables in charged-off accounts
of the trust, including amounts received by the transferor or the servicer from
the purchaser or transferee with respect to the sale or other disposition of
receivables in defaulted accounts ("RECOVERIES"). Collections of recoveries will
be treated as collections of finance charge receivables and included as part of
the Portfolio Yield.
PAYMENT RATES
The following table sets forth the highest and lowest cardholder monthly
payment rates on the credit card accounts during any month in the periods shown
and the average cardholder monthly payment rates for all months in the periods
shown, in each case calculated as a percentage of total opening monthly account
balances during the periods shown. Payment rates shown in the table are based on
amounts which would be deemed payments of principal receivables and finance
charge receivables with respect to the accounts.
CARDHOLDER MONTHLY PAYMENT RATES(1)
[ MONTHS
ENDED YEAR ENDED DECEMBER 31,
], ---------------------------
1999 1998 1997 1996
----------- ------- ------- -------
Lowest Month.................................... % % % %
Highest Month................................... % % % %
Monthly Average................................. % % % %
- ---------------
(1) For each of the three calendar years in the period ended December 31, 1998,
information is presented for credit card accounts in the bank portfolio. For
the [ calendar months in the period ended ], 1999, this
information is presented for credit card accounts in the trust portfolio.
Generally, cardholders must make a monthly minimum payment equal to 2.0% of
the statement balance plus any past due amounts. However, the cardholder is
usually required to make at least a monthly minimum payment of $15 plus any past
due amounts. The minimum monthly payment typically will be increased to 3.0% of
the statement balance plus any past due amounts if the account becomes greater
than 60 days delinquent. In the case of delinquency, however, the cardholder is
usually required to make at least a monthly payment of $25 plus any past due
amounts. We cannot assure you that the cardholder monthly payment rates in the
future will be similar to the historical experience set forth above. In
addition, the amount of collections of receivables may vary from month to month
due to seasonal variations, general economic conditions and payment habits of
individual cardholders.
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THE TRUST PORTFOLIO
The receivables conveyed to the trust arise in accounts selected from the
bank portfolio at the time the trust was established, and in additional accounts
selected since that time, on the basis of criteria set forth in the transfer and
servicing agreement (the "TRUST PORTFOLIO"). The transferor has the right to
designate additional accounts for the trust portfolio and to transfer to the
trust all receivables of those additional accounts, whether the receivables
already exist or arise after the designation, if certain conditions are
satisfied. For a discussion of these conditions, see "Description of the
Notes -- Addition of Trust Assets" in the accompanying prospectus. In addition,
the transferor will be required to designate additional accounts, to the extent
available, (a) to maintain the Transferor Interest so that, during any period of
30 consecutive days, the Transferor Interest averaged over that period equals or
exceeds the Required Transferor Interest for the same period and (b) to
maintain, for so long as notes of any series remain outstanding, an aggregate
amount of principal receivables in the trust portfolio equal to or greater than
the Required Minimum Principal Balance (as adjusted for any series having a
paired series as described in the related indenture supplement).
The "TRANSFEROR INTEREST" on any date is equal to the difference between:
(a) the sum of
(i) Total amount of
principal
receivables in (1 minus
the trust X the Discount
portfolio Percentage)
on immediately
prior day
and
(ii) the special funding account
balance
minus
(b) the total adjusted invested amounts of all series of notes then
outstanding.
The "REQUIRED TRANSFEROR INTEREST" will be calculated as follows:
Required Total amount of (1 minus the
Transferor X principal receivables X Discount
Percentage in the trust portfolio Percentage)
The "REQUIRED TRANSFEROR PERCENTAGE" initially is 4%, but may be reduced if
certain conditions set forth in the transfer and servicing agreement are
satisfied, including receipt of written confirmation that reducing the Required
Transferor Percentage will not result in the reduction or withdrawal by any
rating agency of its rating of any outstanding series or class.
The "DISCOUNT PERCENTAGE" on the closing date is %.
The "REQUIRED MINIMUM PRINCIPAL BALANCE" on any date is, for all
outstanding series, unless otherwise provided in the related indenture
supplement for a series having a paired series, the sum of the initial invested
amounts for each series outstanding on that date plus the Required Transferor
Interest on that date minus the amounts on deposit in the special funding
account.
The transferor also has the right to designate certain removed accounts and
to require the indenture trustee to transfer all receivables in the removed
accounts back to the transferor, whether the receivables already exist or arise
after the designation, if certain conditions are satisfied. For a discussion of
these conditions, see "Description of the Notes -- Removal of Accounts" in the
accompanying prospectus.
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Throughout the term of the trust, the accounts from which the receivables
arise will be the accounts designated by the transferor at the time the trust is
established plus any additional accounts minus any removed accounts. As a
result, the composition of the trust assets is expected to change over time. For
a general description of the receivables in the trust, see "The Trust Portfolio"
in the accompanying prospectus.
The following is selected information about the receivables:
- The receivables in the trust portfolio, as of the beginning of the day on
, 1999, included $ of principal receivables and $ of
finance charge receivables.
- The accounts designated for the trust portfolio had an average principal
receivable balance of $
and an average credit limit of $ .
- The percentage of the aggregate total receivable balance to the aggregate
total credit limit was %. The average age of the accounts was
approximately months.
- As of the beginning of the day on , 1999, cardholders whose
accounts are designated for the trust portfolio had billing addresses in
all 50 states and the District of Columbia.
The following tables summarize the trust portfolio by various criteria as
of the beginning of the day on , 1999. Because the future
composition of the trust portfolio may change over time, these tables are not
necessarily indicative of the composition of the trust portfolio at any
subsequent time.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
ACCOUNT BALANCE RANGE OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- ----------- ------------- ----------- -----------
Credit Balance................................ % $ () ()%
No Balance.................................... 0 0.0
$ .01-$5,000.00..........................
$ 5,000.01-$10,000.00.........................
$10,000.01-$15,000.00.........................
$15,000.01-$20,000.00.........................
$20,000.01-$25,000.00.........................
$25,000.01 or More............................
-------- -------- --------- -------
Total............................... % $ %
======== ======== ========= =======
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
ACCOUNT BALANCE RANGE OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- ----------- ------------- ----------- -----------
Less than or equal to $5,000.00............... % $ %
$ 5,000.01-$10,000.00.........................
$10,000.01-$15,000.00.........................
$15,000.01-$20,000.00.........................
$20,000.01-$25,000.00.........................
$25,000.01 or More............................
-------- -------- --------- -------
Total............................... % $ %
======== ======== ========= =======
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COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
ACCOUNT BALANCE RANGE OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- ----------- ------------- ----------- -----------
Not Delinquent................................ % $ %
Up to 29 Days.................................
30 to 59 Days.................................
60 to 89 Days.................................
90 or More Days...............................
-------- -------- --------- -------
Total............................... % $ %
======== ======== ========= =======
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
----------- ------------- ----------- -----------
Not More Than 6 Months......................... % $ %
Over 6 Months to 12 Months.....................
Over 12 Months to 24 Months....................
Over 24 Months to 36 Months....................
Over 36 Months to 48 Months....................
Over 48 Months to 60 Months....................
Over 60 Months to 72 Months....................
Over 72 Months.................................
-------- ----- -------- -----
Total................................ % $ %
======== ===== ======== =====
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
----------- ------------- ----------- -----------
[California.................................... % $ %
New York.......................................
Texas..........................................
Florida........................................
Pennsylvania...................................
New Jersey.....................................
Illinois.......................................
Ohio...........................................
Maryland.......................................
Michigan]......................................
Other..........................................
-------- ----- -------- -----
Total................................ % $ %
======== ===== ======== =====
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MATURITY CONSIDERATIONS
You are expected to receive payment of principal in full on ,
200 , the "EXPECTED PRINCIPAL PAYMENT DATE." You may, however, receive payments
of principal earlier than the expected principal payment date if a pay out event
occurs and the early amortization period begins. The holders of the Class B
notes will not begin to receive payments of principal until the final principal
payment on the Class A notes has been made. The holders of the Class C notes
will not begin to receive payments of principal until the final principal
payments on the Class A notes and Class B notes have been made.
CONTROLLED ACCUMULATION PERIOD
Principal for payment to the Series 2000- noteholders will accumulate
during the controlled accumulation period in the principal funding account
established by the indenture trustee. The controlled accumulation period is
scheduled to begin at the close of business on , 200 , but may be
delayed based on recent payment rate experience, as discussed under "Description
of Series Provisions -- Postponement of the Controlled Accumulation Period" in
this prospectus supplement. On each distribution date during the controlled
accumulation period, an amount will be deposited into the principal funding
account equal to, for each monthly period, the least of:
- Available Principal Collections;
- the Controlled Deposit Amount; and
- the Adjusted Invested Amount prior to any deposits on that day.
We expect, but cannot assure you, that the amounts available in the
principal funding account on the expected principal payment date will be
sufficient to pay in full the outstanding principal balance of the Class A
notes, the Class B notes and the Class C notes. If these amounts are not
available on the expected principal payment date, a pay out event will occur and
the early amortization period will begin.
EARLY AMORTIZATION PERIOD
If a pay out event occurs during either the revolving period or the
controlled accumulation period, the early amortization period will begin. If a
pay out event occurs during the controlled accumulation period, on the next
distribution date any amount on deposit in the principal funding account will be
paid to the Class A noteholders and, after the outstanding principal balance of
the Class A notes has been paid in full, any remaining amount will be paid to
the Class B noteholders and, after the outstanding principal balance of the
Class B notes has been paid in full, any remaining amount will be paid to the
Class C noteholders, up to the outstanding principal balance of the Class C
notes.
In addition, if the outstanding principal balance of the Class A notes has
not been paid in full, Available Principal Collections will be paid to the Class
A noteholders on each distribution date until the earlier of:
- the date the Class A notes are paid in full; and
- , 200 , called the "SERIES 2000- TERMINATION DATE".
After the Class A notes have been paid in full, and if the Series 2000-
termination date or the trust termination date has not occurred, Available
Principal Collections will be paid to the Class B noteholders on each
distribution date until the earlier of:
- the date the Class B notes are paid in full; and
- the Series 2000- termination date.
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After the Class B notes have been paid in full, and if the Series 2000-
termination date or the trust termination date has not occurred, Available
Principal Collections will be paid to the Class C noteholders on each
distribution date until the earlier of:
- the date the Class C notes are paid in full; and
- the Series 2000- termination date.
THE ORIGINATOR, THE SERVICER AND THE TRANSFEROR
ASSOCIATES NATIONAL BANK (DELAWARE)
Associates National Bank (Delaware), a national banking association, is a
wholly-owned, direct subsidiary of Associates First Capital Corporation
("AFCC"). The bank was established on January 14, 1991. Its principal executive
office is located at 110 Lake Drive, Newark, Delaware 19702. On a managed basis,
the bank maintained loan accounts with aggregate outstanding balances of
$[ ] as of [ ], 1999. Of this amount, $[ ]
were MasterCard(R) and VISA(R) credit card loans originated in the United
States. As of [ ], 1999, the bank had assets of
$[ ], deposits of $[ ] and capital and surplus accounts of
$[ ]. The bank is a national bank insured through the FDIC and is
regulated by the Office of the Comptroller of the Currency. The bank currently
originates all the bank portfolio accounts as well as a portion of AFCC's
consumer private label credit card accounts.
The bank also performs several key sub-servicing functions for ACCS
primarily for the bank portfolio. These functions include credit application
processing, card embossing, card issuance and some customer service duties.
AFCC is a corporation organized under the laws of Delaware and was
established on December 22, 1971, as Associates First National Corporation. As
of [ ], 1999, AFCC had consolidated assets of $[ ],
consolidated liabilities of $[ ] and capital and surplus accounts of
$[ ].
ASSOCIATES CREDIT CARD SERVICES, INC.
ACCS, a Delaware corporation, is a wholly-owned, direct subsidiary of AFCC.
ACCS was established on January 17, 1996. Its principal executive office is
located at 250 East Carpenter Freeway, Irving, Texas 75062. As of
[ ], 1999, ACCS had approximately $[ ] in total
assets, approximately $[ ] in total liabilities and approximately
$[ ] in shareholders' equity. ACCS services both bank card and private
label credit card accounts for the entire AFCC credit card business. ACCS's main
operational facility is located in Irving, Texas where it conducts many of its
servicing functions. ACCS also has operational facilities in Houston, Texas, Des
Moines, Iowa, Wilmington, Delaware and South Bend, Indiana. As of [ ],
1999, ACCS had over [ ] employees.
The operational facility in Irving, Texas serves as the main credit card
administration facility. This location houses all of the major credit card
personnel for the VISA(R) and MasterCard(R) bank portfolio, including senior
management, credit policy, risk management, customer service, collections,
marketing and underwriting, financial planning and accounting, and information
technology. This facility also performs some of these same functions for AFCC's
private label credit card business.
Centralized payment processing for the bank portfolio is performed at
ACCS's Des Moines, Iowa facility and statement processing and mailing functions
are housed at the Associates Information Service Center, in South Bend, Indiana.
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ASSOCIATES CREDIT CARD RECEIVABLES CORP.
Associates Credit Card Receivables Corp. ("ACCR"), a Delaware corporation,
is a wholly-owned, direct subsidiary of ACCS. ACCR was established on April 8,
1997. Its principal executive office is located at 290 East Carpenter Freeway,
Irving, Texas 75062. ACCR was organized for the limited purpose of purchasing,
holding, owning and transferring receivables and related activities.
DESCRIPTION OF SERIES PROVISIONS
The following is a summary of the material provisions of the Series 2000-
notes. This summary is not a complete description of the terms of the Series
2000- notes. You should refer to "Description of the Notes" in the accompanying
prospectus as well as to the transfer and servicing agreement, the indenture and
the Series 2000- indenture supplement for a complete description. The form of
each of the transfer and servicing agreement, the indenture and an indenture
supplement has been filed with the SEC as an exhibit to the registration
statement relating to the notes.
GENERAL
The Class A notes, Class B notes and Class C notes comprise the "SERIES
2000- NOTES" and will be issued under the indenture, as supplemented by the
indenture supplement relating to the Series 2000- notes (the "SERIES 2000-
INDENTURE SUPPLEMENT"), in each case between the trust and the indenture
trustee. As described under "Description of the Notes--New Issuances" in the
accompanying prospectus, the transferor may cause the owner trustee, on behalf
of the trust, and the indenture trustee to execute further indenture supplements
in order to issue additional series.
The "CLOSING DATE" for Series 2000- is , 2000. The Series
2000- notes will be issued in denominations of $1,000 and integral multiples of
$1,000 and will be available only in book-entry form, registered in the name of
Cede, as nominee of DTC. As described under "Description of the Notes--General,"
"-- Book-Entry Registration" and "-- Definitive Notes" in the accompanying
prospectus, unless and until definitive notes are issued, you will be able to
transfer your notes only through the facilities of DTC. You will receive
payments and notices through DTC and its participants. Payments of interest and
principal will be made on each distribution date on which those amounts are due
to the noteholders in whose names Series 2000- notes were registered on the last
day of the calendar month preceding that distribution date (each, a "RECORD
DATE").
[Application will be made to list the notes on the Luxembourg Stock
Exchange; however, we cannot assure you that the listing will be obtained. You
should consult with [ ], the Luxembourg listing agent for the notes,
[Address] Luxembourg, phone number ( ) , for the status of
the listing].
INTEREST PAYMENTS
The Class A notes will accrue interest from and including the closing date
through but excluding , 2000, and for each following interest
period, at a rate of % per annum above LIBOR for the related LIBOR
determination date with respect to each interest period (the "CLASS A NOTE
INTEREST RATE").
The Class B notes will accrue interest from and including the closing date
through but excluding , 2000, and for each following interest
period, at a rate of % per annum above LIBOR for the related LIBOR
determination date with respect to each interest period (the "CLASS B NOTE
INTEREST RATE").
The Class C notes will accrue interest from and including the closing date
through but excluding , 2000, and for each following interest
period, at a rate of % per annum above LIBOR for the related LIBOR
determination date with respect to each interest period (the "CLASS C NOTE
INTEREST RATE").
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The indenture trustee will determine LIBOR for each interest period two
London business days before the related interest period commences. We refer to
each of these determination dates as a "LIBOR DETERMINATION DATE." For purposes
of calculating LIBOR, a "LONDON BUSINESS DAY" is any business day on which
dealings in deposits in United States dollars are transacted in the London
interbank market.
An "INTEREST PERIOD" begins on and includes a distribution date and ends on
but excludes the next distribution date. However, the first interest period will
begin on and include the closing date.
"LIBOR" means, for any LIBOR determination date, the rate for deposits in
United States dollars for a one-month period which appears on Telerate Page 3750
as of 11:00 a.m., London time, on that date. If that rate does not appear on
Telerate Page 3750, the rate for that LIBOR determination date will be
determined based on the rates at which deposits in United States dollars are
offered by four major banks selected by the servicer at approximately 11:00
a.m., London time, on that day to prime banks in the London interbank market for
a one-month period. The indenture trustee will request the principal London
office of each of those banks to provide a quotation of its rate. If at least
two quotations are provided, the rate for that LIBOR determination date will be
the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that LIBOR determination date will be the arithmetic mean
of the rates quoted by major banks in New York City, selected by the servicer,
at approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
"TELERATE PAGE 3750" means the display page currently so designated on the
Bridge Telerate Capital Markets Report (or any other page as may replace that
page on that service for the purpose of displaying comparable rates or prices).
The Class A note interest rate, the Class B note interest rate and the
Class C note interest rate applicable to the then current and immediately
preceding interest period may be obtained by telephoning the indenture trustee
at its corporate trust office at (212) 815-5738.
Interest on the notes will be calculated on the basis of the actual number
of days in the related interest period and a 360-day year.
Interest will be paid on each "DISTRIBUTION DATE," which will be
, 2000 and the 17th day of each following month (or, if the 17th day
is not a business day, the following business day). For purposes of this
prospectus supplement and the accompanying prospectus, a "BUSINESS DAY" is,
unless otherwise indicated, any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, Delaware or any other state in
which the principal executive offices of the bank, the owner trustee, the
indenture trustee or other account owner, as the case may be, are located, are
authorized or obligated by law, executive order or governmental decree to be
closed.
Interest payments on the Class A notes, the Class B notes and the Class C
notes on any distribution date will be calculated on the outstanding principal
balance of the Class A notes, the Class B notes and the Class C notes, as
applicable, as of the preceding record date, except that interest for the first
distribution date will accrue at the applicable note interest rate on the
initial outstanding principal balance of the Class A notes, the Class B notes
and the Class C notes, as applicable, from the closing date.
Interest due on the Class A notes, the Class B notes and the Class C notes
but not paid on any distribution date will be payable on the following
distribution date, together with additional interest on that amount at the
applicable note interest rate. We refer to this additional interest as "CLASS A
ADDITIONAL INTEREST," "CLASS B ADDITIONAL INTEREST" and "CLASS C ADDITIONAL
INTEREST," as applicable. Additional interest will accrue on the same basis as
interest on the Series 2000- notes, and will accrue from the distribution date
on which the overdue interest became due, to but excluding the distribution date
on which the additional interest is paid.
Interest payments on the Series 2000- notes on any distribution date will
be paid from Available Finance Charge Collections for the related monthly period
and, to the extent Available Finance Charge Collections are insufficient to pay
the interest, from Excess Finance Charge Collections and Reallocated
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Principal Collections (to the extent available) for the related monthly period.
Interest payments on the Class C notes on any distribution date will also be
paid from available amounts on deposit in the spread account to the extent
needed.
"AVAILABLE FINANCE CHARGE COLLECTIONS" means, with respect to any monthly
period, an amount equal to the sum of:
(a) the Investor Percentage of collections of finance charge
receivables deposited in the collection account for that monthly period;
(b) an amount equal to the Principal Funding Investment Proceeds, if
any, for the related distribution date; and
(c) amounts, if any, to be withdrawn from the reserve account which
are required to be included in Available Finance Charge Collections
pursuant to the Series 2000- indenture supplement for the related
distribution date.
Each "MONTHLY PERIOD" will be the period from and including the first day
of a calendar month to and including the last day of that calendar month (other
than the initial monthly period, which will commence on and include the closing
date and end on and include , 2000).
PRINCIPAL PAYMENTS
Principal payments on the Series 2000- notes will be paid from "AVAILABLE
PRINCIPAL COLLECTIONS" which, for any monthly period, equal:
(a) the Investor Percentage of collections of principal receivables
deposited in the collection account for that monthly period; minus
(b) the amount of Reallocated Principal Collections for that monthly
period; plus
(c) any Shared Principal Collections from other series in group one
and any Shared Transferor Principal Collections allocated to your series.
REVOLVING PERIOD
The "REVOLVING PERIOD" for the Series 2000- notes begins on the closing
date and ends on the earlier of the date the controlled accumulation period or
the early amortization period begins. During the revolving period, the Investor
Percentage of collections of principal receivables will, subject to certain
limitations, including the allocation of any Reallocated Principal Collections
for that monthly period, be treated as Shared Principal Collections and used to
pay principal to other series in group one or will be paid to the holders of the
transferor certificates.
CONTROLLED ACCUMULATION PERIOD
The "CONTROLLED ACCUMULATION PERIOD" for the Series 2000- notes is
scheduled to begin on , 200 , but may be postponed, as discussed
under "Description of Series Provisions -- Postponement of the Controlled
Accumulation Period" in this prospectus supplement, and ends on the earliest of:
- the beginning of the early amortization period;
- the payment in full of the Invested Amount; and
- the Series 2000- termination date.
If a pay out event occurs before the controlled accumulation period begins,
there will be no controlled accumulation period and the early amortization
period will begin.
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On each distribution date relating to the controlled accumulation period,
the indenture trustee will deposit in the principal funding account an amount
equal to the least of (a) Available Principal Collections with respect to that
distribution date, (b) the applicable Controlled Deposit Amount and (c) the
Adjusted Invested Amount prior to any deposits on that date. Amounts in the
principal funding account will be paid:
- first to Class A noteholders, up to the outstanding principal balance of
the Class A notes;
- then to Class B noteholders, up to the outstanding principal balance of
the Class B notes; and
- then to Class C noteholders, up to the outstanding principal balance of
the Class C notes;
in each case, on the expected principal payment date unless paid earlier due to
the commencement of the early amortization period.
During the controlled accumulation period, the portion of Available
Principal Collections not applied for the payment of principal on the Class A
notes, the Class B notes or the Class C notes on a distribution date generally
will be treated as Shared Principal Collections.
EARLY AMORTIZATION PERIOD
The "EARLY AMORTIZATION PERIOD" for the Series 2000- notes will begin on
the day on which a pay out event with respect to Series 2000- occurs and ends on
the earlier of:
- the payment in full of the Invested Amount; and
- the Series 2000- termination date.
On each distribution date relating to the early amortization period, the
Class A noteholders will be entitled to receive Available Principal Collections
for the related monthly period in an amount up to the outstanding principal
balance of the Class A notes.
After payment in full of the outstanding principal balance of the Class A
notes, the Class B noteholders will be entitled to receive, on each distribution
date relating to the early amortization period, Available Principal Collections
for the related monthly period in an amount up to the outstanding principal
balance of the Class B notes.
After payment in full of the outstanding principal balance of the Class B
notes, the Class C noteholders will be entitled to receive on each distribution
date relating to the early amortization period, Available Principal Collections
for the related monthly period in an amount up to the outstanding principal
balance of the Class C notes.
See "-- Pay Out Events" below for a discussion of events that might lead to
the commencement of the early amortization period.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The controlled accumulation period is scheduled to last [ ]
months. However, the servicer may elect to extend the revolving period and
postpone the controlled accumulation period by providing a notice to the
indenture trustee. The servicer can make this election only if the number of
months needed to fund the principal funding account based on expected principal
collections needed to pay principal on the Series 2000- notes is less than
[ ] months.
On each determination date beginning in 200 and ending when the
controlled accumulation period begins, the servicer will review the amount of
expected principal collections and determine the number of months expected to be
required to fully fund the principal funding account by the expected principal
payment date and may elect to postpone the controlled accumulation period. In
making its decision, the servicer is required to assume that the principal
payment rate will be no greater than the lowest monthly payment rate for the
prior 12 months and will consider the amount of principal
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expected to be allocable to noteholders of all other series which are expected
to be amortizing or accumulating principal during the controlled accumulation
period for Series 2000- . In no case will the controlled accumulation period be
reduced to less than one month.
The method for determining the number of months required to fully fund the
principal funding account may be changed upon receipt of written confirmation
that the change will not result in the reduction or withdrawal by any rating
agency of its rating of any outstanding series or class.
SUBORDINATION
The Class B notes and the Class C notes are subordinated to the Class A
notes. Interest payments will be made on the Class A notes prior to being made
on the Class B notes and the Class C notes. Interest payments will be made on
the Class B notes prior to being made on the Class C notes. Principal payments
on the Class B notes will not begin until the Class A notes have been paid in
full. Principal payments on the Class C notes will not begin until the Class A
notes and the Class B notes have been paid in full. If principal collections
allocated to your series are reallocated to pay the interest on the Class A
notes, the principal amount of the Class B notes and the Class C notes may not
be repaid. If principal collections allocated to your series are reallocated to
pay interest on the Class B notes, the principal amount of the Class C notes may
not be repaid. If a foreclosure certificate is sold after an event of default,
the net proceeds of that sale which are available to pay principal on the Series
2000- notes would be paid first to the Class A notes before any remaining net
proceeds would be available for payments due to the Class B notes or the Class C
notes.
ALLOCATION PERCENTAGES
Pursuant to the indenture, with respect to each monthly period, the
servicer will allocate among the Invested Amount, the invested amount for all
other series issued and outstanding and the Transferor Interest, all amounts
collected on finance charge receivables, all amounts collected on principal
receivables and all Defaulted Amounts with respect to that monthly period. These
amounts will be allocated based on the Investor Percentage.
"INVESTOR PERCENTAGE," for any monthly period, means (a) for Defaulted
Amounts at anytime and for collections of finance charge receivables and
principal receivables during the revolving period, the Floating Investor
Percentage and (b) for collections of finance charge receivables and principal
receivables during the controlled accumulation period and early amortization
period, the Fixed Investor Percentage.
FLOATING ALLOCATION DEFINITIONS
Defaulted Amounts at any time and collections of finance charge receivables
and principal receivables during the revolving period will be allocated to the
Invested Amount based on the Floating Investor Percentage. The "FLOATING
INVESTOR PERCENTAGE" means, with respect to any monthly period, the percentage
equivalent of a fraction:
(a) the numerator of which is the Adjusted Invested Amount as of the
close of business on the last day of the preceding monthly period (or with
respect to the first monthly period, the initial Invested Amount); and
(b) the denominator of which is the greater of:
(i) the sum of (A) the product of (1) the aggregate amount of
principal receivables in the trust as of the close of business on the
last day of the preceding monthly period (or with respect to the first
monthly period, the aggregate amount of principal receivables in the
trust as of the close of business on the closing date) and (2) one minus
the Discount Percentage and (B) the principal amount on deposit in the
special funding account as of the close of business on the last day of
the preceding monthly period (or with respect to the first monthly
period, as of the closing date) and
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(ii) the sum of the numerators used to calculate the investor
percentages for allocations with respect to finance charge receivables,
Defaulted Amounts or principal receivables, as applicable, for all
outstanding series on the date of determination.
The denominator used in the calculation of Floating Investor Percentage,
however, will be adjusted as follows, with respect to any monthly period in
which an addition date occurs or in which a removal date occurs on which, if any
series has been paid in full, principal receivables in an aggregate amount
approximately equal to the initial invested amount of that series are removed
from the trust:
the amount in clause (b)(i)(A) above shall be:
(1) the product of (x) the aggregate amount of principal
receivables in the trust as of the close of business on the last day of
the prior monthly period and (y) one minus the Discount Percentage, for
the period from and including the first day of the prior monthly period
to but excluding the related addition date or removal date; and
(2) the product of (x) the aggregate amount of principal
receivables in the trust as of the close of business on the related
addition date or removal date after adjusting for the aggregate amount
of principal receivables added to or removed from the trust on the
related addition date or removal date, as the case may be, and (y) one
minus the Discount Percentage, for the period from and including the
related addition date or removal date to and including the last day of
that monthly period.
FIXED ALLOCATION DEFINITIONS
Collections of finance charge receivables and principal receivables during
the controlled accumulation period and early amortization period will be
allocated to the Invested Amount based on the Fixed Investor Percentage. The
"FIXED INVESTOR PERCENTAGE" means, with respect to any monthly period, the
percentage equivalent of a fraction:
(a) the numerator of which is the Invested Amount as of the close of
business on the last day of the revolving period; and
(b) the denominator of which is the greater of:
(i) the sum of (A) the product of (1) the aggregate amount of
principal receivables in the trust as of the close of business on the
last day of the prior monthly period (or with respect to the first
monthly period, the aggregate amount of principal receivables in the
trust as of the closing date) and (2) one minus the Discount Percentage
and (B) the principal amount on deposit in the special funding account
as of the close of business on the last day of the preceding monthly
period (or with respect to the first monthly period, as of the closing
date) and
(ii) the sum of the numerators used to calculate the investor
percentages for allocations with respect to principal receivables or
finance charge receivables, as applicable, for all outstanding series on
the date of determination.
The denominator used in the calculation of Fixed Investor Percentage,
however, will be adjusted as follows, with respect to any monthly period in
which an addition date occurs or in which a removal date occurs on which, if any
series has been paid in full, principal receivables in an aggregate amount
approximately equal to the initial invested amount of that series are removed
from the trust:
the amount in clause (b)(i)(A) above shall be:
(1) the product of (x) the aggregate amount of principal
receivables in the trust as of the close of business on the last day of
the prior monthly period and (y) one minus the Discount Percentage, for
the period from and including the first day of the prior monthly period
to but excluding the related addition date or removal date; and
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(2) the product of (x) the aggregate amount of principal
receivables in the trust as of the close of business on the related
addition date or removal date after adjusting for the aggregate amount
of principal receivables added to or removed from the trust on the
related addition date or removal date, as the case may be, and (y) one
minus the Discount Percentage, for the period from and including the
related addition date or removal date to and including the last day of
that monthly period.
INVESTED AMOUNT DEFINITIONS
"INVESTED AMOUNT," for any date of determination, means an amount equal to
(a) the initial outstanding principal amount of the Series 2000- notes (as
increased by the principal balance of any Series 2000- notes issued after
the closing date), minus (b) the amount of principal previously paid to the
Series 2000- noteholders, minus (c) the amount of unreimbursed Investor
Charge-Offs and Reallocated Principal Collections.
"ADJUSTED INVESTED AMOUNT," for any date of determination, means the (a)
the Invested Amount as of that date, minus (b) the amount on deposit in the
principal funding account for that date.
REALLOCATED PRINCIPAL COLLECTIONS
On each distribution date, if the sum of Class A interest, Class B interest
and the monthly servicing fee cannot be paid from Available Finance Charge
Collections and Excess Finance Charge Collections as described below under
"--Application of Collections," then collections of principal receivables
allocated to the Invested Amount will be treated as collections of finance
charge receivables and will be available to pay these amounts, in an amount
equal to the Reallocated Principal Collections, and the Invested Amount will be
reduced accordingly. A reduction in the Invested Amount will reduce the
allocation of finance charge and principal collections to your series.
"REALLOCATED PRINCIPAL COLLECTIONS" means, for any monthly period,
Available Principal Collections used to pay interest on the Class A notes and
the Class B notes or used to pay the monthly servicing fee in an amount equal to
the lesser of:
- the Monthly Principal Reallocation Amount for that monthly period; and
- the Invested Amount after giving effect to any Investor Charge-Offs for
that distribution date.
"MONTHLY PRINCIPAL REALLOCATION AMOUNT" means, for any monthly period, the
sum of:
- the lower of:
- the excess of the amounts needed to pay current and past due Class A
Monthly Interest and Class A Additional Interest as described under
" --Application of Collections -- Payment of Interest, Fees and Other
Items" below over the Available Finance Charge Collections allocated
to cover these amounts; and
- [ ]% of the initial Invested Amount minus the amount of unreimbursed
Investor Charge-Offs and unreimbursed Reallocated Principal
Collections; plus
- the lower of:
- the sum of (A) the excess of the amounts needed to pay current and
past due Class B Monthly Interest and Class B Additional Interest as
described under " --Application of Collections -- Payments of
Interest, Fees and Other Items" below over the Available Finance
Charge Collections allocated to cover these amounts and (B) the excess
of the monthly servicing fee over the Available Finance Charge
Collections allocated to cover these amounts; and
- [ ]% of the initial Invested Amount minus the amount of unreimbursed
Investor Charge-Offs and unreimbursed Reallocated Principal
Collections.
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APPLICATION OF COLLECTIONS
PAYMENT OF INTEREST, FEES AND OTHER ITEMS
On each distribution date, the servicer will direct the indenture trustee
to apply Available Finance Charge Collections and Excess Finance Charge
Collections on deposit in the collection account in the following order:
- an amount equal to the Class A Monthly Interest plus Class A Additional
Interest due for the related distribution date, and past due for any
prior distribution dates, will be paid to the Class A noteholders on that
distribution date;
- an amount equal to the Class B Monthly Interest plus Class B Additional
Interest due for the related distribution date, and past due for any
prior distribution dates, will be paid to the Class B noteholders on that
distribution date;
- an amount equal to the monthly servicing fee due for the related
distribution date, and past due for any prior distribution date, will be
paid to the servicer;
- an amount equal to the Class C Monthly Interest plus Class C Additional
Interest due for the related distribution date, and past due for any
prior distribution dates, will be paid to the Class C noteholders on that
distribution date;
- an amount equal to the Investor Default Amount, if any, for the related
monthly period, will be treated as Available Principal Collections;
- an amount equal to the sum of the Investor Charge-Offs and the amount of
unreimbursed Reallocated Principal Collections will be treated as
Available Principal Collections;
- on and after the reserve account funding date, an amount equal to the
excess, if any, of the Required Reserve Account Amount over the amount
then on deposit in the reserve account will be deposited into the reserve
account;
- an amount equal to the excess, if any, of the Required Spread Account
Amount over the amount then on deposit in the spread account will be
deposited into the spread account;
- all remaining amounts will be treated as Excess Finance Charge
Collections and will be available to cover any shortfalls in finance
charge collections for other outstanding series in group one and, after
payment of these shortfalls, the remaining amount will be paid to the
holders of the transferor certificates.
In the event that Available Finance Charge Collections and Excess Finance
Charge Collections for any monthly period are insufficient to pay Class C
Monthly Interest when due, a draw will be made from amounts available in the
spread account and will be paid to the Class C noteholders on the related
distribution date.
"CLASS A MONTHLY INTEREST" with respect to any distribution date will equal
the product of (a) the Class A note interest rate for the related interest
period, (b) the actual number of days in that interest period divided by 360 and
(c) the outstanding principal balance of the Class A notes as of the close of
business on the last day of the prior monthly period or, with respect to the
first distribution date, the outstanding principal balance of the Class A notes
as of the closing date.
"CLASS B MONTHLY INTEREST" with respect to any distribution date will equal
the product of (a) the Class B note interest rate for the related interest
period, (b) the actual number of days in that interest period divided by 360 and
(c) the outstanding principal balance of the Class B notes as of the close of
business on the last day of the prior monthly period or, with respect to the
first distribution date, the outstanding principal balance of the Class B notes
as of the closing date.
"CLASS C MONTHLY INTEREST" with respect to any distribution date will equal
the product of (a) the Class C note interest rate for the related interest
period, (b) the actual number of days in that interest
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period divided by 360 and (c) the outstanding principal balance of the Class C
notes as of the close of business on the last day of the prior monthly period
or, with respect to the first distribution date, the outstanding principal
balance of the Class C notes as of the closing date.
"MONTHLY INTEREST" with respect to any distribution date will equal the sum
of the Class A Monthly Interest, the Class B Monthly Interest and the Class C
Monthly Interest for that distribution date.
PAYMENTS OF PRINCIPAL
On each distribution date, the servicer will direct the indenture trustee
to apply Available Principal Collections on deposit in the collection account in
the following priority:
(a) on each distribution date with respect to the revolving period, all
Available Principal Collections will be treated as Shared Principal Collections
and applied as described under "Description of Series Provisions -- Shared
Principal Collections and Transferor Principal Collections" in this prospectus
supplement and "Description of the Notes -- Shared Principal Collections and
Transferor Principal Collections" in the accompanying prospectus;
(b) on each distribution date with respect to the controlled accumulation
period and the early amortization period, all Available Principal Collections
will be distributed or deposited in the following priority:
(i) during the controlled accumulation period, an amount equal to
Monthly Principal will be deposited in the principal funding account;
(ii) during the early amortization period, an amount equal to the
Monthly Principal will be distributed to the paying agent for payment to
the Class A noteholders until the outstanding principal balance of the
Class A notes has been paid in full;
(iii) during the early amortization period, an amount equal to Monthly
Principal will, after the outstanding principal balance of the Class A
notes has been paid in full, be distributed to the paying agent for payment
to the Class B noteholders until the outstanding principal balance of the
Class B notes has been paid in full; and
(iv) during the early amortization period, an amount equal to Monthly
Principal will, after the outstanding principal balances of the Class A
notes and the Class B notes have been paid in full, be distributed to the
paying agent for payment to the Class C noteholders until the outstanding
principal balance of the Class C notes has been paid in full;
(c) on each distribution date with respect to the controlled accumulation
period and the early amortization period, the balance of Available Principal
Collections not applied pursuant to (b) above, if any, will be treated as Shared
Principal Collections and applied as described under "Description of Series
Provisions -- Shared Principal Collections and Transferor Principal Collections"
in this prospectus supplement and "Description of the Notes -- Shared Principal
Collections and Transferor Principal Collections" in the accompanying
prospectus.
"MONTHLY PRINCIPAL" with respect to any distribution date will equal the
least of (i) the Available Principal Collections on deposit in the collection
account with respect to that distribution date, (ii) for each distribution date
with respect to the controlled accumulation period, the Controlled Deposit
Amount for that distribution date and (iii) the Adjusted Invested Amount (as
adjusted for any Investor Charge-Offs and Reallocated Principal Collections on
that distribution date) prior to any deposits into the principal funding account
on that distribution date.
"CONTROLLED DEPOSIT AMOUNT" means, for any distribution date, the sum of
(i) the Controlled Accumulation Amount for that distribution date, plus (ii) the
Accumulation Shortfall, if any.
"CONTROLLED ACCUMULATION AMOUNT" means for any distribution date with
respect to the controlled accumulation period, $ . However, if the
commencement of the controlled accumulation period is postponed as described
above under "--Postponement of Controlled Accumulation Period," the Controlled
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Accumulation Amount may be higher than the amount stated above for each
distribution date with respect to the controlled accumulation period and will be
determined by the servicer in accordance with the Series 2000- indenture
supplement based on the principal payment rates for the accounts and on the
invested amounts of other series (other than certain excluded series) which are
scheduled to be in their revolving periods and then scheduled to create Shared
Principal Collections during the controlled accumulation period.
"ACCUMULATION SHORTFALL" means:
(a) on the first distribution date during the controlled accumulation
period, the excess, if any, of the Controlled Accumulation Amount for that
distribution date over the amount deposited in the principal funding account on
that distribution date; and
(b) on each subsequent distribution date during the controlled accumulation
period, the excess, if any, of the applicable Controlled Accumulation Amount for
that subsequent distribution date plus any Accumulation Shortfall for the prior
distribution date over the amount deposited in the principal funding account on
that subsequent distribution date.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Finance charge collections -- and other amounts treated like finance charge
collections -- in excess of the amount required to make payments or deposits for
your series will be made available to other series included in group one whose
allocation of finance charge collections is not sufficient to make its required
payments or deposits. We call these collections "EXCESS FINANCE CHARGE
COLLECTIONS." If your series requires more finance charge collections than
allocated through the Investor Percentage, it will have access to finance charge
collections -- and other amounts treated like finance charge collections -- from
other series in group one. Each series that is part of group one and has a
shortfall will receive a share of the total amount of Excess Finance Charge
Collections available for that month based on the amount of shortfall for that
series divided by the total shortfall for all series for that same month.
SHARED PRINCIPAL COLLECTIONS AND TRANSFEROR PRINCIPAL COLLECTIONS
Collections of principal receivables for any monthly period allocated to
the Invested Amount will first be used to cover, during the controlled
accumulation period, deposits of the applicable Controlled Deposit Amount to the
principal funding account, and during the early amortization period, payments to
the noteholders. The servicer will determine the amount of collections of
principal receivables for any monthly period allocated to the Invested Amount
remaining after covering required payments to the noteholders and any similar
amount remaining for any other series in group one ("SHARED PRINCIPAL
COLLECTIONS"). The servicer will allocate the Shared Principal Collections to
cover any scheduled or permitted principal distributions to noteholders and
deposits to principal funding accounts, if any, for any series in group one
which have not been covered out of the collections of principal receivables
allocable to the other series in group one and certain other amounts for those
series ("PRINCIPAL SHORTFALLS"). Shared Principal Collections will not be used
to cover investor charge-offs for any series. If Principal Shortfalls exceed
Shared Principal Collections for any monthly period, Shared Principal
Collections will be allocated pro rata among the applicable series in group one
based on the relative amounts of Principal Shortfalls. To the extent that Shared
Principal Collections exceed Principal Shortfalls, the balance will, subject to
certain limitations, be paid to the holders of the transferor certificates.
In addition, the servicer will, under the terms of the indenture, determine
the amount of collections of principal receivables for any monthly period
allocated to the Transferor Interest but not due to the holder of any
supplemental certificate and other amounts payable to the transferor with
respect to collections of principal receivables ("SHARED TRANSFEROR PRINCIPAL
COLLECTIONS"). Shared Transferor Principal Collections will be applied, if
necessary, to cover payments of principal due to noteholders during the
controlled accumulation period and the early amortization period that have not
been covered out of collections of principal receivables allocated to Series
2000- and certain other amounts and Shared Principal Collections. To the extent
Principal Shortfalls for series designated to receive Shared Transferor
Principal
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Collections exceed Shared Principal Collections allocable to each of these
series and Shared Transferor Principal Collections, for any monthly period,
Shared Transferor Principal Collections will be allocated pro rata among the
applicable series in group one based on the remaining Principal Shortfalls for
each of these series.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
The Investor Default Amount represents the series' share of losses from the
trust portfolio. On each distribution date, the servicer will calculate the
"INVESTOR DEFAULT AMOUNT" by multiplying:
- the Floating Investor Percentage for that month, by
- the "DEFAULTED AMOUNT," which is the total amount of principal
receivables (other than ineligible receivables) in the trust that were
charged-off for that month.
If the Investor Default Amount exceeds the amount of finance charge collections
allocated to fund this amount for the prior month, then the Invested Amount will
be reduced by the excess. The Invested Amount will also be reduced by the amount
of any Reallocated Principal Collections used to cover any Investor Default
Amounts. In no event, however, will the Invested Amount be reduced below zero.
Reductions in the Invested Amount from both of these items may be reimbursed
from subsequent finance charge collections allocated for reimbursement, if
available. If the Invested Amount is reduced to zero, your series will not
receive any further allocations of finance charge and principal collections.
PRINCIPAL FUNDING ACCOUNT
The indenture trustee will establish and maintain with an eligible
institution a segregated trust account held for the benefit of the noteholders
to serve as the "PRINCIPAL FUNDING ACCOUNT." During the controlled accumulation
period, the indenture trustee at the direction of the servicer will transfer
Available Principal Collections from the collection account to the principal
funding account as described under "-- Application of Collections" in this
prospectus supplement.
Funds on deposit in the principal funding account will be invested to the
following distribution date by the indenture trustee at the direction of the
servicer in eligible investments. Investment earnings (net of investment losses
and expenses) on funds on deposit in the principal funding account (the
"PRINCIPAL FUNDING INVESTMENT PROCEEDS") will be deposited in the collection
account and included in Available Finance Charge Collections for the related
interest period. If, for any distribution date, the Principal Funding Investment
Proceeds are less than the sum of:
(a) the product of (i) the balance of the principal funding account, up to
the outstanding principal balance of the Class A notes, on the record date
immediately preceding that distribution date, (ii) the Class A note interest
rate for the related interest period and (iii) the number of days in the related
interest period divided by 360, plus
(b) the product of (i) the balance of the principal funding account in
excess of the outstanding principal balance of the Class A notes on the record
date immediately preceding that distribution date, (ii) the Class B note
interest rate for the related interest period and (iii) the number of days in
the related interest period divided by 360,
then the indenture trustee will withdraw the shortfall, called the "RESERVE DRAW
AMOUNT," to the extent required and available, from the reserve account and
deposit it in the collection account for use as Available Finance Charge
Collections.
RESERVE ACCOUNT
The indenture trustee will establish and maintain with an eligible
institution a segregated trust account held for the benefit of the noteholders
to serve as the "RESERVE ACCOUNT." The reserve account is established to assist
with the subsequent distribution of interest on the notes during the controlled
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accumulation period and on the first distribution date with respect to the early
amortization period. On each distribution date from and after the reserve
account funding date, but prior to the termination of the reserve account, the
indenture trustee, acting pursuant to the servicer's instructions, will apply
Available Finance Charge Collections and Excess Finance Charge Collections
allocated to the Series 2000- notes (to the extent described above under
"-- Application of Collections -- Payment of Interest, Fees and Other Items") to
increase the amount on deposit in the reserve account (to the extent that amount
is less than the Required Reserve Account Amount).
The "RESERVE ACCOUNT FUNDING DATE" will be the distribution date with
respect to the monthly period which commences no later than three months prior
to the commencement of the controlled accumulation period, or an earlier date as
the servicer may determine.
The "REQUIRED RESERVE ACCOUNT AMOUNT" for any distribution date on or after
the reserve account funding date will be equal to (a) 0.5% of the outstanding
principal balance of the Class A notes or (b) any other amount designated by the
transferor; except that if the designation is of a lesser amount, the transferor
will provide the servicer and the indenture trustee with written confirmation
that the designation will not result in the reduction or withdrawal by any
rating agency of its rating of any outstanding series or class and the
transferor will deliver to the indenture trustee a certificate of an authorized
officer of the transferor to the effect that, based on the facts known to that
officer at the time, in the reasonable belief of the transferor, the designation
will not cause a pay out event or an event that, after the giving of notice or
the lapse of time, would cause a pay out event to occur with respect to Series
2000- .
On each distribution date, after giving effect to any deposit to be made
to, and any withdrawal to be made from, the reserve account on that distribution
date, the indenture trustee will withdraw from the reserve account an amount
equal to the excess, if any, of the amount on deposit in the reserve account
over the Required Reserve Account Amount, will deposit the excess in the spread
account to the extent that funds available in the spread account are less than
the Required Spread Account Amount and will distribute any remaining excess to
the holders of the transferor certificates. Any amounts withdrawn from the
reserve account and deposited in the spread account as described above will be
available for distribution only to the holders of the Class C notes. Any amounts
withdrawn from the reserve account and distributed to the holders of the
transferor certificates as described above will not be available for
distribution to the noteholders.
So long as the reserve account is not terminated as described below, all
amounts on deposit in the reserve account on any distribution date (after giving
effect to any deposits to, or withdrawals from, the reserve account to be made
on that distribution date) will be invested to the following distribution date
by the indenture trustee at the direction of the servicer in eligible
investments. The interest and other investment income (net of investment
expenses and losses) earned on these investments will be retained in the reserve
account (to the extent the amount on deposit is less than the Required Reserve
Account Amount) or deposited in the collection account and treated as Available
Finance Charge Collections.
On or before each distribution date with respect to the controlled
accumulation period and on the first distribution date with respect to the early
amortization period, a withdrawal will be made from the reserve account, and the
amount of this withdrawal will be deposited in the collection account and
included as Available Finance Charge Collections, as provided in the Series
2000- indenture supplement, for that distribution date in an aggregate
amount equal to the least of (a) the amount then on deposit in the reserve
account with respect to that distribution date, (b) the Required Reserve Account
Amount and (c) the reserve draw amount with respect to that distribution date.
However, the amount of the withdrawal will be reduced to the extent that funds
otherwise would be available to be deposited in the reserve account on that
distribution date.
The reserve account will be terminated upon the earliest to occur of:
- the first distribution date for the early amortization period;
- the expected principal payment date; and
- the termination of the trust.
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Upon the termination of the reserve account, all amounts on deposit in the
reserve account (after giving effect to any withdrawal from the reserve account
on that date as described above) will be deposited in the spread account to the
extent that funds available in the spread account are less than the Required
Spread Account Amount and any remaining amounts will be distributed to the
holders of the transferor certificates. Any amounts withdrawn from the reserve
account and deposited in the spread account as described above will be available
for distribution only to the holders of the Class C notes. Any amounts withdrawn
from the reserve account and distributed to the holders of the transferor
certificates as described above will not be available for distribution to the
noteholders.
SPREAD ACCOUNT
The servicer will establish and maintain with an eligible institution the
spread account as a segregated account held as security for the benefit of the
Class C noteholders (the "SPREAD ACCOUNT"). Amounts on deposit in the spread
account will be used (a) to fund shortfalls in interest payments on the Class C
notes and (b) on the Series 2000- termination date, to fund any shortfall in
payment of the outstanding principal balance of the Class C notes.
The spread account initially will not be funded, but will be funded by (a)
Available Finance Charge Collections and Excess Finance Charge Collections, as
described above under "-- Application of Collections -- Payment of Interest,
Fees and Other Items," and (b) amounts, if any, withdrawn from the reserve
account to be treated as Available Finance Charge Collections, as described
above under "-- Reserve Account," and deposited into the spread account on any
distribution date to the extent that the funds available in the spread account
are less than the Required Spread Account Amount on that distribution date.
The "REQUIRED SPREAD ACCOUNT AMOUNT" will be determined on each
distribution date, and, in general, for any date of determination, will be equal
to the product of (a) the Spread Account Percentage in effect on the date of
determination and (b) the initial Invested Amount. However, as long as no event
of default for your series has occurred and is continuing, the Required Spread
Account Amount will not exceed the outstanding principal balance of the Class C
Notes minus the excess, if any, of the principal funding account balance over
the sum of the outstanding principal balances of the Class A notes and the Class
B notes on the date of determination.
Once an event of default for your series occurs and is continuing, the
Required Spread Account Amount for any distribution date will automatically
increase to the sum of (a) the amount on deposit in the spread account on that
distribution date plus (b) Available Finance Charge Collections and Excess
Finance Charge Collections for that distribution date available immediately
after funding the reserve account plus (c) amounts withdrawn from the reserve
account to be treated as Available Finance Charge Collections, as described
above under "-- Reserve Account." However, following an event of default for
your series, if the maturity of your notes is not accelerated, the increase in
the Required Spread Account Amount will be limited to an amount equal to the
outstanding principal amount of your series of notes.
"SPREAD ACCOUNT PERCENTAGE" will be determined as follows:
IF THE QUARTERLY EXCESS SPREAD PERCENTAGE IS THEN, THE SPREAD ACCOUNT
GREATER THAN OR EQUAL TO: LESS THAN: PERCENTAGE WILL EQUAL:
- ------------------------- AND ---------- ------------------------
[--]% -- 0
[--]% [--]% [--]%
[--]% [--]% [--]%
[--]% [--]% [--]%
-- [--]% [--]%
However, if a pay out event (other than a pay out event resulting from the
occurrence of an event of default) for Series 2000- has occurred, the Spread
Account Percentage will be [--]%.
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After the Spread Account Percentage has been increased above zero as
specified in the table above, it will remain at the specified percentage until:
(a) further increased to a higher required percentage as specified above,
or
(b) the distribution date on which the Quarterly Excess Spread Percentage
has increased to a level above that for the then current Spread Account
Percentage, in which case the Spread Account Percentage will be decreased to the
appropriate percentage as specified above (or, if the Quarterly Excess Spread
Percentage is greater than or equal to [--]%, the Spread Account Percentage will
be zero and the Required Spread Account Amount will be zero).
However, if a pay out event (other than a pay out event resulting from the
occurrence of an event of default) with respect to Series 2000- has occurred,
the Spread Account Percentage will equal [--]% (as provided in the definition of
Spread Account Percentage above) and may not be subsequently reduced.
The "QUARTERLY EXCESS SPREAD PERCENTAGE" will be determined as follows:
For the [Month 1] 2000
distribution date: The Modified Excess Spread Percentage
For the [Month 2]
2000
distribution
date: The Modified Excess Spread Percentage for the first monthly period, plus
the Excess Spread Percentage for the [Month 1] 2000 monthly period
-------------------------------------------------------------------------
2
For the [Month 3]
2000
distribution
date: The Modified Excess Spread Percentage for the first monthly period, plus
the Excess Spread Percentage for the [Month 1] 2000 monthly period, plus
the Excess Spread Percentage for the [Month 2] 2000 monthly period
-------------------------------------------------------------------------
3
For each following
distribution
date: The sum of the Excess Spread Percentages for the 3 prior monthly periods
-------------------------------------------------------------------------
3
The "EXCESS SPREAD PERCENTAGE" for any monthly period will be determined as
follows:
- during the controlled accumulation period, but only if the amount on
deposit in the reserve account is greater than or equal to the
Required Reserve Account Amount:
Available Finance Charge Collections for that
monthly period available immediately
after covering Class A's portion of the times 12
Investor Default Amount
- ----------------------------------------------------------
The Adjusted Invested Amount on the first day of that
monthly period
- in all other cases:
Available Finance Charge Collections for that
monthly period available immediately
after covering Class A's portion of the times 12
Investor Default Amount
- ----------------------------------------------------------
The Invested Amount on the first day of that monthly
period
The "MODIFIED EXCESS SPREAD PERCENTAGE" will be calculated for the first
monthly period in accordance with the Series 2000- indenture supplement based
on collections of finance charge receivables for that monthly period in relation
to the amount of interest and servicing fee accrued for the first distribution
date.
Funds on deposit in the spread account will be invested at the direction of
the servicer in eligible investments. For purposes of the spread account, the
reference in the definition of eligible investments to a rating in the "highest
rating category" refers to a rating of at least A-2 by Standard & Poor's, P-2 by
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Moody's or F2 by Fitch. Investment earnings (net of losses and investment
expenses) will, except as otherwise indicated in this prospectus supplement, not
be deposited into the spread account and will be paid to the holders of the
transferor certificates. However, after an event of default relating to your
series of notes, these investment earnings will be available for payment to
holders of the Class C notes.
SPREAD ACCOUNT DISTRIBUTIONS
If on any distribution date, the interest to be paid on the Class C notes
exceeds the amount allocated to pay that interest, the indenture trustee, at the
instruction of the servicer, will withdraw from the spread account the lesser of
(i) the amount on deposit in the spread account (including investment earnings
to the extent necessary to fund that excess) and (ii) the amount of the excess,
and will deposit that amount into the collection account for payment of interest
on the Class C notes.
On the Series 2000- termination date, funds available in the spread account
(after giving effect to any withdrawals to be made as discussed in the preceding
paragraph) will be used to fund any shortfall in the payment of the outstanding
principal balance of the Class C notes.
Funds on deposit in the spread account on any distribution date in excess
of the Required Spread Account Amount on that date will be paid to the holders
of the transferor certificates. On the date on which all amounts due to the
Class C noteholders from the spread account have been paid in full, all amounts,
if any, then remaining in the spread account will be distributed to the holders
of the transferor certificates.
ISSUANCE OF ADDITIONAL NOTES
The Series 2000- indenture supplement provides that, from time to time
during the revolving period, the transferor may, subject to certain conditions
described below, cause the trust to issue additional notes of Series 2000-
(each issuance, an "ADDITIONAL ISSUANCE"). When issued, the additional notes of
each class will be identical in all respects to the other outstanding notes of
that class and will be equally and ratably entitled to the benefits of the
transfer and servicing agreement, the indenture and the Series 2000-
indenture supplement without preference, priority or distinction.
In connection with each additional issuance, the outstanding principal
amounts of each class of notes and the series enhancement will be increased
proportionately. The additional series enhancement provided in connection with
an additional issuance may take the form of a letter of credit, the
establishment of a cash collateral account, the purchase of interest rate caps
or swaps and/or another form of series enhancement, provided that the form and
amount of additional series enhancement will not cause a reduction or withdrawal
by any rating agency of its rating of any outstanding series or class.
Following an additional issuance, the respective portions of the series
enhancement that are for the benefit of the noteholders will remain the same, as
a percentage of the total series enhancement, as the respective proportions in
effect on the closing date. The Controlled Accumulation Amount also will be
increased proportionately to reflect the principal amount of additional notes.
In order to issue additional notes, several conditions must be satisfied,
including:
- notice to the indenture trustee, the owner trustee, the servicer and any
series enhancer of the issuance and the date upon which it is to occur;
- after giving effect to the additional issuance, the total amount of
principal receivables must at least equal the Required Minimum Principal
Balance, and the Transferor Interest must equal or exceed the Required
Transferor Interest;
- delivery to the indenture trustee of any additional series enhancement
agreement related to the additional issuance, executed by each of the
parties to the series enhancement agreement;
- delivery to the indenture trustee of written confirmation that the
additional issuance will not result in the reduction or withdrawal by any
rating agency of its rating of any outstanding series or class;
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- delivery to the indenture trustee of a certificate of an authorized
officer of the transferor to the effect that, in the transferor's
reasonable belief, the issuance will not have a material adverse effect
on the interests of the noteholders at the date of issuance or at any
future date;
- as of the date of the additional issuance, all amounts due to the Series
2000- noteholders must have been paid, and there must not be any
unreimbursed Investor Charge-Offs;
- the excess of the principal amount of the additional notes over their
issue price shall not exceed the maximum amount permitted under the Code
without the creation of original issue discount; and
- delivery by the transferor to the indenture trustee of an opinion of
counsel acceptable to the indenture trustee that, for federal income tax
purposes, (1) the issuance will not adversely affect the tax
characterization as debt of notes of any outstanding series or class that
were characterized as debt at the time of their issuance; (2) the new
issuance will not cause the trust to be deemed to be an association (or
publicly traded partnership) taxable as a corporation; and (3) the new
issuance will not cause or constitute an event in which gain or loss
would be recognized by any noteholder.
There are no restrictions on the timing or amount of any additional
issuance, provided that the conditions described above are met. As of the date
of any additional issuance, the Invested Amount will be increased to reflect the
initial principal balance of the additional notes of each class.
PAIRED SERIES
Your series of notes may be paired with one or more series of notes issued
at a later time once the controlled accumulation period or the early
amortization period for your series begins. We call each of these later issued
series a "PAIRED SERIES." All or a portion of a paired series may be pre-funded
with an initial deposit to a funding account that is for the sole benefit of the
paired series; in the alternative, a paired series may have a principal amount
that can be increased. Once your series is paid in full, if there have been no
unreimbursed investor charge-offs for any paired series, the invested amount of
the paired series will be increased by an amount up to the full Invested Amount
of your series. The issuance of the paired series will be subject to the
conditions described under "Description of the Notes -- New Issuances" in the
accompanying prospectus.
We cannot assure you that the terms of any paired series will not have an
impact on the calculation of the Investor Percentage or the timing or amount of
payments received by you as a Series 2000- noteholder. The extent to which the
timing or amount of payments received by you may be affected will depend on many
factors, only one of which is a change in the calculation of the Investor
Percentage.
PAY OUT EVENTS
As described above, the revolving period will continue through
, 200 (unless that date is postponed as described under
"-- Postponement of Controlled Accumulation Period" in this prospectus
supplement), unless a pay out event occurs prior to that date.
A "PAY OUT EVENT" refers to any of the following events:
(a) failure by the transferor (i) to make any payment or deposit on the
date required under the transfer and servicing agreement, the indenture or the
Series 2000- indenture supplement (or within the applicable grace period
which shall not exceed five days) or (ii) to observe or perform in any material
respect any other covenants or agreements of the transferor set forth in the
transfer and servicing agreement, the indenture or the Series 2000-
indenture supplement, which failure has a material adverse effect on the Series
2000- noteholders and which continues unremedied for a period of 60 days
after written notice of the failure, requiring the same to be remedied, and
continues to materially and adversely affect the interests of the noteholders
for the designated period;
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(b) any representation or warranty made by the transferor in the transfer
and servicing agreement, the indenture or the Series 2000- indenture
supplement, or any information required to be given by the transferor to the
indenture trustee to identify the accounts proves to have been incorrect in any
material respect when made or delivered and which continues to be incorrect in
any material respect for a period of 60 days after written notice of the
failure, requiring the same to be remedied, and as a result of which the
interests of the noteholders are materially and adversely affected and continue
to be materially and adversely affected for the designated period; except that a
pay out event pursuant to this subparagraph (b) will not occur if the transferor
has accepted reassignment of the related receivable or all related receivables,
if applicable, during the designated period in accordance with the provisions of
the transfer and servicing agreement;
(c) a failure by the transferor to convey receivables in additional
accounts or participations to the trust within 5 business days after the date
required by the transfer and servicing agreement;
(d) any servicer default occurs which would have a material adverse effect
on the Series 2000-
noteholders;
(e) the average of the Portfolio Yields for any three consecutive monthly
periods is less than the average of the Base Rates for the same monthly periods;
(f) insufficient moneys are available to pay in full the outstanding
principal balances of all the Series 2000- notes on the expected principal
payment date;
(g) certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor (including any
additional transferor), ACCS or the bank, unless written confirmation from each
rating agency that the removal of the bank from this pay out event will not
result in a reduction or withdrawal of its rating of any outstanding series or
class;
(h) the transferor is unable for any reason to transfer receivables to the
trust in accordance with the provisions of the transfer and servicing agreement;
(i) the trust becomes subject to regulation as an "investment company"
within the meaning of the Investment Company Act of 1940, as amended; or
(j) an event of default for Series 2000- occurs under the indenture.
In the case of any event described in clause (a), (b), (d) or (f) above, a
pay out event will be deemed to have occurred with respect to the notes only if,
after any applicable grace period, either the indenture trustee or the Series
2000- noteholders evidencing interests aggregating not less than 50% of the
aggregate unpaid principal amount of the Series 2000- notes, by written notice
to the transferor and the servicer (and to the indenture trustee if given by the
Series 2000- noteholders), declare that a pay out event has occurred with
respect to the Series 2000- notes as of the date of the notice.
In the case of any event described in clause (g), (h) or (i), a pay out
event with respect to all series then outstanding, and in the case of any event
described in clause (c), (e) or (j), a pay out event with respect to only the
Series 2000- notes, will occur without any notice or other action on the part
of the indenture trustee or the Series 2000- noteholders immediately upon the
occurrence of the event.
On the date on which a pay out event is deemed to have occurred, the early
amortization period will begin.
See "Description of the Notes -- Pay Out Events" in the accompanying
prospectus for an additional discussion of the consequences of an insolvency,
conservatorship or receivership of the transferor.
The term "BASE RATE" means, with respect to any monthly period, the
annualized percentage equivalent of a fraction:
- the numerator of which is the sum of the Monthly Interest and the Monthly
Servicing Fee, each for the related distribution date; and
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- the denominator of which is the Invested Amount as of the close of
business on the last day of that monthly period.
The term "PORTFOLIO YIELD" means, with respect to any monthly period, the
annualized percentage equivalent of a fraction:
- the numerator of which is the sum of collections of finance charge
receivables, Excess Finance Charge Collections, Principal Funding
Investment Proceeds and amounts withdrawn from the reserve account, if
any, deposited in the collection account and allocable to the Series
2000- notes for that monthly period, calculated on a cash basis after
subtracting the Investor Default Amount for that monthly period; and
- the denominator of which is the Invested Amount as of the close of
business on the last day of that monthly period.
EVENTS OF DEFAULT
The events of default for Series 2000- , as well as the rights and remedies
available to the indenture trustee and the Series 2000- noteholders when an
event of default occurs, are described under "The Indenture -- Events of
Default; Rights Upon Event of Default" in the accompanying prospectus.
If an event of default for Series 2000- occurs, the indenture trustee or
the holders of a majority of the then-outstanding principal balance of the
Series 2000- notes may declare the Series 2000- notes to be immediately due
and payable. If the Series 2000- notes are accelerated, you may receive
principal prior to the expected principal payment date for your notes.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the servicing fee allocable to the Invested Amount with
respect to any distribution date (the "MONTHLY SERVICING FEE") will be equal to
one-twelfth of the product of (a) 2.0% and (b) (i) the Adjusted Invested Amount
as of the last day of the monthly period preceding that distribution date, minus
(ii) the product of the amount, if any, on deposit in the special funding
account as of the last day of the monthly period preceding that distribution
date and the Investor Percentage of collections of finance charge receivables
with respect to that monthly period. However, with respect to the first
distribution date, the monthly servicing fee will equal $[ ].
The servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the receivables including, without
limitation, payment of the fees and disbursements of the indenture trustee and
independent certified public accountants and other fees which are not expressly
stated in the transfer and servicing agreement, the indenture or the Series
2000- indenture supplement to be payable by the trust or the noteholders other
than federal, state and local income and franchise taxes, if any, of the trust.
REPORTS TO NOTEHOLDERS
On each distribution date, the paying agent, on behalf of the indenture
trustee will forward to each noteholder of record, a statement prepared by the
servicer setting forth the items described in "Description of the
Notes -- Reports to Noteholders" in the accompanying prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which the plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or
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Section 4975 of the Code (collectively, "PLANS"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of "plan
assets" of any Plan ("PLAN ASSETS"). ERISA generally imposes on Plan fiduciaries
certain general fiduciary requirements, including those of investment prudence
and diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("parties in interest" under ERISA and
"disqualified persons" under the Code, collectively, "PARTIES IN INTEREST") who
have certain specified relationships to a Plan or its Plan Assets, unless a
statutory or administrative exemption is available. Parties in Interest that
participate in a prohibited transaction may be subject to a penalty imposed
under ERISA and/or an excise tax imposed pursuant to Section 4975 of the Code,
unless a statutory or administrative exemption is available. These prohibited
transactions generally are set forth in Section 406 of ERISA and Section 4975 of
the Code.
Subject to the considerations described below and in the accompanying
Prospectus, the notes are eligible for purchase with Plan Assets of any Plan.
Any fiduciary or other Plan investor considering whether to purchase the
notes with Plan Assets of any Plan should determine whether that purchase is
consistent with its fiduciary duties and whether that purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the transferor, the servicer, the indenture trustee,
the owner trustee or any other party may be Parties in Interest with respect to
the investing Plan and may be deemed to be benefiting from the issuance of the
notes. If the transferor or the servicer is a Party in Interest with respect to
the prospective Plan investor, any fiduciary or other Plan investor considering
whether to purchase or hold the notes should consult with its counsel regarding
the availability of exemptive relief under U.S. Department of Labor ("DOL")
Prohibited Transaction Class Exemption ("PTCE") 96-23 (relating to transactions
determined by "in-house asset managers"), 95-60 (relating to transactions
involving insurance company general accounts), 91-38 (relating to transactions
involving bank collective investment funds), 90-1 (relating to transactions
involving insurance company pooled separate accounts) or 84-14 (relating to
transactions determined by independent "qualified professional asset managers")
or any other prohibited transaction exemption issued by the DOL. A purchaser of
the notes should be aware, however, that even if the conditions specified in one
or more of the above-referenced exemptions are met, the scope of the exemptive
relief provided by the exemption might not cover all acts which might be
construed as prohibited transactions.
In addition, under DOL Regulation Section 2510.3-101 (the "PLAN ASSET
REGULATION"), the purchase with Plan Assets of equity interests in the issuer
could, in certain circumstances, cause the receivables and other assets of the
issuer to be deemed Plan Assets of the investing Plan which, in turn, would
subject the issuer and its assets to the fiduciary responsibility provisions of
ERISA and the prohibited transaction provisions of ERISA and Section 4975 of the
Code. Nevertheless, because the notes (a) are expected to be treated as
indebtedness under local law and will, in the opinion of Special Tax Counsel, be
treated as debt, rather than equity, for federal tax purposes (see "Federal
Income Tax Consequences -- Tax Characterization of the Trust and the
Notes -- Treatment of the Notes as Debt" in the accompanying prospectus), and
(b) should not be deemed to have any "substantial equity features," purchases of
the notes with Plan Assets should not be treated as equity investments and,
therefore, the receivables and other assets included as assets of the issuer
should not be deemed to be Plan Assets of the investing Plans. Those conclusions
are based, in part, upon the traditional debt features of the notes, including
the reasonable expectation of purchasers of the notes that the notes will be
repaid when due, as well as the absence of conversion rights, warrants and other
typical equity features.
The notes may not be purchased or held by any Plan, or any person investing
Plan Assets of any Plan, if any of the transferor, the servicer, the indenture
trustee, the owner trustee or any of their respective affiliates (a) has
investment or administrative discretion with respect to the Plan Assets used to
effect the purchase; (b) has authority or responsibility to give, or regularly
gives, investment advice with respect to the Plan Assets, for a fee and pursuant
to an agreement or understanding that the advice (1) will serve as
S-35
41
a primary basis for investment decisions with respect to the Plan Assets, and
(2) will be based on the particular investment needs of that Plan; or (c) unless
PTCE 95-60, 91-38 or 90-1 is applicable, is an employer maintaining or
contributing to that Plan. Each purchaser or holder of the notes or any interest
in the notes will be deemed to have represented by its purchase and holding
thereof that it is not subject to the foregoing limitation.
Any fiduciary or other Plan investor considering whether to purchase any notes
on behalf of or with Plan Assets of any Plan should consult with its counsel and
refer to this prospectus supplement for guidance regarding the ERISA
considerations applicable to the notes offered by this prospectus supplement and
the accompanying prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
as supplemented by a terms agreement relating to the Class A notes (together,
the "CLASS A UNDERWRITING AGREEMENT") between the transferor and the Class A
underwriters named below (the "CLASS A UNDERWRITERS"), the terms and conditions
set forth in an underwriting agreement as supplemented by a terms agreement
relating to the Class B notes (together, the "CLASS B UNDERWRITING AGREEMENT")
between the transferor and the Class B underwriters named below (the "CLASS B
UNDERWRITERS") and the terms and conditions set forth in an underwriting
agreement as supplemented by a terms agreement relating the Class C notes
(together, the "CLASS C UNDERWRITING AGREEMENT" and, together with the Class A
underwriting agreement and the Class B underwriting agreement, the "UNDERWRITING
AGREEMENT") between the transferor and the Class C underwriters named below (the
"CLASS C UNDERWRITERS" and, together with the Class A underwriters and the Class
B underwriters, the "UNDERWRITERS"), the transferor has agreed to sell to the
underwriters, and each of the underwriters has severally agreed to purchase, the
principal amount of the notes set forth opposite its name:
PRINCIPAL AMOUNT OF
CLASS A UNDERWRITERS CLASS A NOTES
- -------------------- -------------------
$
Total............................................. $
========
PRINCIPAL AMOUNT OF
CLASS B UNDERWRITERS CLASS B NOTES
- -------------------- -------------------
$
Total............................................. $
========
PRINCIPAL AMOUNT OF
CLASS C UNDERWRITERS CLASS C NOTES
- -------------------- -------------------
$
Total............................................. $
========
In the Class A underwriting agreement, the Class A underwriters have
agreed, subject to the terms and conditions set forth in that agreement, to
purchase all of the Class A notes offered hereby if any of the Class A notes are
purchased. In the Class B underwriting agreement, the Class B underwriters have
agreed, subject to the terms and conditions set forth in that agreement, to
purchase all of the Class B notes offered hereby if any of the Class B notes are
purchased. In the Class C underwriting agreement, the Class C underwriters have
agreed, subject to the terms and conditions set forth in that agreement, to
purchase all of the Class C notes offered hereby if any of the Class C notes are
purchased.
The Class A underwriters propose initially to offer the Class A notes to
the public at [ ]% of their principal amount and to certain dealers at that
price less concessions not in excess of [ ]% of the principal amount of the
Class A notes. The Class A underwriters may allow, and the dealers may reallow,
concessions not in excess of [ ]% of the principal amount of the Class A notes
to certain brokers and
S-36
42
dealers. After the initial public offering, the public offering price and other
selling terms may be changed by the Class A underwriters.
The Class B underwriters propose initially to offer the Class B notes to
the public at [ ]% of their principal amount and to certain dealers at that
price less concessions not in excess of [ ]% of the principal amount of the
Class B notes. The Class B underwriters may allow, and the dealers may reallow,
concessions not in excess of [ ]% of the principal amount of the Class B notes
to certain brokers and dealers. After the initial public offering, the public
offering price and other selling terms may be changed by the Class B
underwriters.
The Class C underwriters propose initially to offer the Class C notes to
the public at [ ]% of their principal amount and to certain dealers at that
price less concessions not in excess of [ ]% of the principal amount of the
Class C notes. The Class C underwriters may allow, and the dealers may reallow,
concessions not in excess of [ ]% of the principal amount of the Class C notes
to certain brokers and dealers. After the initial public offering, the public
offering price and other selling terms may be changed by the Class C
underwriters.
We will receive proceeds of approximately $[ ] from the sale of
the notes (representing [ ]% of the principal amount of each Class A note,
[ ]% of the principal amount of each Class B note and [ ]% of the principal
amount of each Class C note) after paying the underwriting discount of
$[ ] (representing [ ]% of the principal amount of each Class A note,
[ ]% of the principal amount of each Class B note and [ ]% of the principal
amount of each Class C note). Additional offering expenses are estimated to be
$[ ].
Each underwriter has represented and agreed that:
(a) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the notes in, from or otherwise involving the United Kingdom;
(b) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue or sale
of the notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom that document may otherwise lawfully be issued or passed
on;
(c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote (as that
term is defined in Regulation 1.02(2) of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991) to any person in the United Kingdom the
scheme described in this Prospectus Supplement and the accompanying Prospectus
if that person is of a kind described either in Section 76(2) of the Financial
Services Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991; and
(d) it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
The transferor will indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or contribute to payments the
underwriters may be required to make in respect thereof.
The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the notes in accordance with Regulation M under the Exchange Act. Over-allotment
transactions involve syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the notes so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the notes in the
open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the underwriters to reclaim a
selling concession from a syndicate member when the notes originally sold by
that syndicate member are purchased in a syndicate covering transaction.
Over-allotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids may
S-37
43
cause the prices of the notes to be higher than they would otherwise be in the
absence of those transactions. Neither the transferor nor the underwriters
represent that the underwriters will engage in any of these transactions or that
those transactions, once commenced, will not be discontinued without notice at
any time.
LEGAL MATTERS
Certain legal matters relating to the issuance of the notes will be passed
upon for the transferor by Michael J. Forde, Vice President and Assistant
General Counsel of Associates First Capital Corporation, and by Orrick,
Herrington & Sutcliffe LLP, Washington, D.C., special counsel to the transferor.
Mr. Forde currently owns shares of the Class A common stock of Associates First
Capital Corporation and options to acquire additional shares. Certain legal
matters relating to the issuance of the notes under the laws of the State of
Delaware will be passed upon for the transferor by Richards, Layton & Finger,
P.A., Wilmington, Delaware. Certain legal matters relating to the federal tax
consequences of the issuance of the notes will be passed upon for the transferor
by Orrick, Herrington & Sutcliffe LLP. Certain legal matters relating to the
issuance of the Notes will be passed upon for the underwriters by [ ].
S-38
44
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
TERMS PAGE
- ----- ----
ACCR................................. S-17
ACCS................................. S-7
Accumulation Shortfall............... S-26
additional issuance.................. S-31
Adjusted Invested Amount............. S-23
AFCC................................. S-16
Available Finance Charge
Collections........................ S-19
Available Principal Collections...... S-19
bank................................. S-7
Base Rate............................ S-33
business day......................... S-18
Class A Additional Interest.......... S-18
Class A Monthly Interest............. S-24
Class A note interest rate........... S-17
Class A underwriters................. S-36
Class A underwriting agreement....... S-36
Class B Additional Interest.......... S-18
Class B Monthly Interest............. S-24
Class B note interest rate........... S-17
Class B underwriters................. S-36
Class B underwriting agreement....... S-36
Class C Additional Interest.......... S-18
Class C Monthly Interest............. S-24
Class C note interest rate........... S-17
Class C underwriters................. S-36
Class C underwriting agreement....... S-36
closing date......................... S-17
Controlled Accumulation Amount....... S-25
controlled accumulation period....... S-19
Controlled Deposit Amount............ S-25
Defaulted Amount..................... S-27
Discount Percentage.................. S-12
distribution date.................... S-18
DOL.................................. S-35
early amortization period............ S-20
ERISA................................ S-34
Excess Finance Charge Collections.... S-26
Excess Spread Percentage............. S-30
expected principal payment date...... S-15
Fixed Investor Percentage............ S-22
Floating Investor Percentage......... S-21
indenture trustee.................... S-1
Interchange.......................... S-11
interest period...................... S-18
Invested Amount...................... S-23
Investor Default Amount.............. S-27
Investor Percentage.................. S-32
LIBOR................................ S-18
TERMS PAGE
- ----- ----
LIBOR determination date............. S-18
London business day.................. S-18
Modified Excess Spread Percentage.... S-30
Monthly Interest..................... S-25
monthly period....................... S-19
Monthly Principal.................... S-25
Monthly Principal Reallocation
Amount............................. S-23
monthly servicing fee................ S-34
owner trustee........................ S-1
paired series........................ S-32
Parties in Interest.................. S-35
pay out event........................ S-32
Plan Asset Regulation................ S-35
Plan Assets.......................... S-35
Plans................................ S-35
Portfolio Yield...................... S-34
principal funding account............ S-27
Principal Funding Investment
Proceeds........................... S-27
Principal Shortfalls................. S-26
PTCE................................. S-35
Quarterly Excess Spread Percentage... S-30
Reallocated Principal Collections.... S-23
record date.......................... S-17
recoveries........................... S-11
Required Minimum Principal Balance... S-12
Required Reserve Account Amount...... S-28
Required Spread Account Amount....... S-29
Required Transferor Interest......... S-12
Required Transferor Percentage....... S-12
reserve account...................... S-27
reserve account funding date......... S-28
reserve draw amount.................. S-27
revolving period..................... S-19
Series 2000- indenture supplement.... S-17
Series 2000- notes................... S-17
Series 2000- termination date........ S-15
servicer............................. S-1
Shared Principal Collections......... S-26
Shared Transferor Principal
Collections........................ S-26
spread account....................... S-29
Spread Account Percentage............ S-29
Telerate Page 3750................... S-18
transferor........................... S-1
Transferor Interest.................. S-12
trust................................ S-1
trust portfolio...................... S-12
underwriters......................... S-36
underwriting agreement............... S-36
S-39
45
ANNEX I
OTHER SERIES ISSUED AND OUTSTANDING
The table below sets forth the principal characteristics of the other
series previously issued by the trust that are currently outstanding, all of
which are in group one. For more specific information with respect to any
series, any prospective investor should contact Associates Credit Card Services,
Inc., Treasury Department at (972) 652-5564 or (972) 652-4186. Associates Credit
Card Services, Inc. will provide, without charge, to any prospective purchaser
of the notes, a copy of the disclosure documents for any previous
publicly-issued series.
[1. Series 2000-
Current Class A Invested Amount.................. $
Class A note interest rate....................... [one-month] LIBOR plus % per annum
Initial Class B Invested Amount.................. $
Current Class B Invested Amount.................. $
Class B note interest rate....................... [one-month] LIBOR plus % per annum
Initial Class C Invested Amount.................. $
Current Class C Invested Amount.................. $
Class C note interest rate....................... [one-month] LIBOR plus % per annum
[Controlled Accumulation Amount.................. $ *]
[Expected principal payment date................. [ ] distribution date]
Annual servicing fee percentage.................. 2.0% per annum
[Enhancement for the Class A notes............... Subordination of Class B and Class C notes]
[Enhancement for the Class B notes............... Subordination of Class C notes]
[Enhancement for the Class C notes............... spread account]
Series 2000- termination date.................... [ ] distribution date
Series Issuance Date............................. , 2000
Initial Class A Invested Amount.................. $
- ---------------
* Subject to change if the commencement of the accumulation period or
controlled accumulation period, as applicable, is delayed.]
I-1
46
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 18, 2000
Prospectus
ASSOCIATES CREDIT CARD MASTER NOTE TRUST
Issuer
ASSOCIATES CREDIT CARD RECEIVABLES CORP.
Transferor
ASSOCIATES CREDIT CARD SERVICES, INC.
Servicer
Asset Backed Notes
THE TRUST --
- - may periodically issue asset backed notes in one or more series with one or
more classes; and
- - will own --
- receivables in a portfolio of VISA(R) and MasterCard(R) revolving credit
card accounts;
- payments due on those receivables; and
- other property described in this prospectus and in the accompanying
prospectus supplement.
THE NOTES --
- - will be paid only from the trust assets;
- - offered with this prospectus will be rated in one of the four highest rating
categories by at least one nationally recognized rating organization;
- - may have one or more forms of credit enhancement; and
- - will be issued as part of a designated series which may include one or more
classes of notes and credit enhancement.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE IN THIS
PROSPECTUS.
A note is not a deposit and neither the notes nor the underlying accounts or
receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
The notes are obligations of Associates Credit Card Master Note Trust only and
are not obligations of Associates Credit Card Receivables Corp., Associates
Credit Card Services, Inc., Associates National Bank (Delaware) or any other
person.
This prospectus may be used to offer and sell notes of a series only if
accompanied by the prospectus supplement for that series.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE NOTES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 2000
47
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the notes in two separate documents:
(a) this prospectus, which provides general information, some of which may not
apply to your series of notes, and (b) the accompanying prospectus supplement,
which describes the specific terms of your series of notes, including:
- the terms, including interest rates, for each class;
- the timing of interest and principal payments;
- information about the receivables;
- information about credit enhancement, if any, for each class;
- the ratings for each class being offered; and
- the method for selling the notes.
If the terms of your series of notes vary between this prospectus and the
accompanying prospectus supplement, you should rely on the information in the
prospectus supplement.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the notes in any state where the offer is not
permitted.
We include cross references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
in the accompanying prospectus supplement provide the pages on which these
captions are located.
This prospectus uses defined terms. You can find a listing of the pages
where definitions can be found under the caption "Index of Terms for Prospectus"
beginning on page 62 in this prospectus.
48
TABLE OF CONTENTS
PAGE
----
Prospectus Summary.................... 1
The Issuer.......................... 1
Indenture Trustee................... 1
Transferor.......................... 1
Servicer and Administrator.......... 1
Trust Assets........................ 1
Collections and Allocations......... 2
Interest Payments on the Notes...... 2
Principal Payments on the Notes..... 2
Revolving Period.................... 2
Controlled Accumulation Period...... 2
Controlled Amortization Period...... 3
Early Amortization or Accumulation
Period........................... 3
Pay Out Events...................... 3
Events of Default................... 3
Event of Default Remedies........... 4
Shared Excess Finance Charge
Collections...................... 4
Shared Principal Collections and
Transferor Principal
Collections...................... 4
Credit Enhancement.................. 4
Tax Status.......................... 5
Note Ratings........................ 5
Risk Factors.......................... 6
It may not be possible to find an
investor to purchase your
notes............................ 6
Some liens would be given priority
over your notes which could cause
delayed or reduced payments...... 6
If a conservator or receiver were
appointed for Associates National
Bank (Delaware), or if Associates
Credit Card Services, Inc. or
Associates Credit Card
Receivables Corp. became a debtor
in a bankruptcy case, delays or
reductions in payment of your
notes could occur................ 6
The account owner may change the
terms and conditions of the
accounts in a way that reduces
collections...................... 8
Changes to consumer protection laws
may impede collection efforts or
reduce collections............... 8
Limited remedies for breaches of
representations could reduce or
delay payments................... 8
Payment patterns of receivables
could reduce collections......... 9
PAGE
----
Subordinated classes bear losses
before senior classes............ 9
Allocations of charged-off
receivables could reduce payments
to you........................... 9
Recharacterization of principal
receivables would reduce
principal receivables and may
require addition of new
receivables...................... 10
The note interest rate and the
receivables interest rate may
re-set at different times,
resulting in reduced or early
payments to you.................. 10
Issuance of additional series by the
trust may affect the timing of
payments to you.................. 10
The Issuer............................ 11
The Bank's Credit Card Activities..... 11
General............................. 11
Origination......................... 11
Underwriting Procedures............. 12
Description of FDR.................. 12
Interchange......................... 13
Competition in the Credit Card
Industry......................... 13
The Trust Portfolio................... 13
Maturity Considerations............... 15
Use of Proceeds....................... 15
Description of the Notes.............. 16
General............................. 16
Book-Entry Registration............. 17
Definitive Notes.................... 20
Interest Payments................... 21
Principal Payments.................. 21
Transfer and Assignment of
Receivables...................... 22
New Issuances....................... 22
Representations and Warranties...... 23
Addition of Trust Assets............ 27
Removal of Accounts................. 28
Collection and Other Servicing
Procedures....................... 29
Discount Option..................... 29
Trust Accounts...................... 30
Funding Period...................... 31
Investor Percentage and Transferor
Percentage....................... 32
Application of Collections.......... 32
i
49
PAGE
----
Shared Excess Finance Charge
Collections........................... 34
Shared Principal Collections and
Transferor Principal
Collections...................... 34
Defaulted Receivables; Rebates and
Fraudulent Charges; Investor
Charge-Offs...................... 34
Defeasance.......................... 35
Final Payment of Principal;
Termination...................... 35
Paired Series....................... 36
Pay Out Events...................... 36
Servicing Compensation and Payment
of Expenses...................... 37
Certain Matters Regarding the
Transferor and the Servicer...... 37
Servicer Default.................... 39
Reports to Noteholders.............. 40
Evidence as to Compliance........... 41
Amendments.......................... 41
The Indenture......................... 42
Events of Default; Rights upon Event
of Default....................... 42
Certain Covenants................... 45
Modification of the Indenture....... 46
Annual Compliance Statement......... 48
Indenture Trustee's Annual Report... 48
List of Noteholders................. 48
Satisfaction and Discharge of
Indenture........................ 48
The Indenture Trustee............... 48
Certain Matters Regarding the
Administrator.................... 49
Credit Enhancement.................... 49
General............................. 49
Subordination....................... 50
PAGE
----
Letter of Credit.................... 50
Cash Collateral Guaranty or
Account.......................... 50
Surety Bond or Insurance Policy..... 50
Spread Account...................... 51
Reserve Account..................... 51
Description of the Purchase
Agreements.......................... 51
Note Ratings.......................... 52
Certain Legal Aspects of the
Receivables......................... 53
Transfer of Receivables............. 53
Certain Matters Relating to
Conservatorship, Receivership and
Bankruptcy....................... 54
Consumer Protection Laws............ 56
Federal Income Tax Consequences....... 56
General............................. 56
Tax Characterization of the Trust
and the Notes.................... 57
Consequences to Holders of the
Offered Notes.................... 58
State and Local Tax Consequences.... 59
ERISA Considerations.................. 60
Plan of Distribution.................. 60
Reports to Noteholders................ 61
Where You Can Find More Information... 61
Index of Terms for Prospectus......... 62
Annex I: Global Clearance, Settlement
and Tax Documentation Procedures.... A-1
ii
50
PROSPECTUS SUMMARY
This summary highlights selected information and does not contain all of
the information that you need to consider in making your investment decision.
You should carefully read this entire document and the accompanying prospectus
supplement before you purchase any notes.
THE ISSUER
Associates Credit Card Master Note Trust, a Delaware statutory business trust,
is the issuer of the notes. The trust's principal place of business is located
at . Its phone number is .
The trust is a master trust and will issue notes in series. Each series of notes
will consist of one or more classes. The classes of a series may be issued at
the same time or at different times. The notes of each series will be issued
pursuant to an indenture supplement to an indenture, in each case between the
trust and the indenture trustee.
Some classes or series may not be offered by this prospectus. They may be
offered, for example, in a private placement.
INDENTURE TRUSTEE
The Bank of New York
101 Barclay Street
New York, New York 10286
(212) -
TRANSFEROR
Associates Credit Card Receivables Corp. is the transferor of the credit card
receivables to the trust. Its address is 290 East Carpenter Freeway, Irving,
Texas 75062. Its phone number is (972) 652-4000. Associates Credit Card
Receivables Corp. is a wholly-owned subsidiary of Associates Credit Card
Services, Inc.
SERVICER AND ADMINISTRATOR
Associates Credit Card Services, Inc. will service the receivables for the trust
and will act as the trust's administrator. Its address is 250 East Carpenter
Freeway, Irving, Texas 75062. Its phone number is (972) 652-4000. Associates
Credit Card Services, Inc. is a wholly-owned subsidiary of Associates First
Capital Corporation.
In limited cases, the servicer may resign or be removed, and either the
indenture trustee or a third party may be appointed as the new servicer.
Associates Credit Card Services, Inc., or any new servicer, is called the
"SERVICER." The servicer receives a servicing fee from the trust, and each
series is obligated to pay a portion of that fee.
TRUST ASSETS
Associates National Bank (Delaware) is the originator of the credit card
receivables. It has designated selected MasterCard(R) and VISA(R)*
revolving credit card accounts from its portfolio and has sold the receivables
in those accounts to Associates Credit Card Services, Inc. under a receivables
purchase agreement. Associates Credit Card Services, Inc. has, in turn,
transferred those receivables to Associates Credit Card Receivables Corp. under
a receivables purchase agreement. Associates Credit Card Receivables Corp. has,
in turn, sold those receivables to the trust under the transfer and servicing
agreement.
All new receivables generated in the accounts will be transferred automatically
to the trust. The total amount of receivables in the trust fluctuates daily as
new receivables are generated and payments are received on existing receivables.
The receivables transferred to the trust are the primary trust assets.
Additional similar assets may be transferred to the trust as described under
"Description of the Notes -- Addition of Trust Assets" in this prospectus. The
transferor may also remove receivables that it transferred to the trust as
described under "Description of the Notes -- Removal of Accounts" in this
prospectus.
For more information about the receivables, see "The Trust Portfolio" in this
prospectus.
-----------------------------------------------------------
*MasterCard(R) and VISA(R) are
federally registered
servicemarks of MasterCard
International Inc. and Visa
U.S.A., Inc., respectively.
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COLLECTIONS AND ALLOCATIONS
The servicer receives collections on the receivables, deposits those collections
in the collection account and keeps track of them as finance charge receivables
or principal receivables.
The servicer then allocates those collections among each series of notes
outstanding and the transferor interest. The servicer allocates (a) collections
of finance charge receivables and principal receivables and (b) receivables in
accounts written off as uncollectible to each series based on varying
percentages. The accompanying prospectus supplement describes the allocation
percentages applicable to your series.
The interest in the assets not allocated to any series of notes is the
transferor interest. The principal amount of the transferor interest fluctuates
with the amount of the principal receivables held in the trust and the amount of
notes outstanding. The transfer and servicing agreement requires the transferor
to transfer receivables in additional accounts to the trust (a) if the
transferor interest, averaged over any 30-day period, is less than a designated
size, referred to as the required transferor interest, or (b) if the total
amount of principal receivables in the trust portfolio plus the principal amount
of any participations transferred to the trust are less than a designated
amount, referred to as the required minimum principal balance. The transferor
may sell all or part of its interest in the transferor's interest by issuing a
supplemental certificate. The transferor interest does not provide credit
enhancement for your series or any other series.
INTEREST PAYMENTS ON THE NOTES
Each note entitles the holder to receive payments of interest as described in
the applicable prospectus supplement. If a series of notes consists of more than
one class, each class may differ in, among other things, priority of payments,
payment dates, interest rates, methods for computing interest, and rights to
series enhancement.
Each class of notes may have fixed, floating or any other type of interest rate.
Generally, interest will be paid monthly, quarterly, semi-annually or on other
scheduled dates over the life of the notes. See "Description of the
Notes -- Interest Payments" in this prospectus.
PRINCIPAL PAYMENTS ON THE NOTES
Each note entitles the holder to receive payments of principal as described in
the applicable prospectus supplement. If a series of notes consists of more than
one class, each class may differ in, among other things, the amounts allocated
for principal payments, priority of payments, payment dates, maturity, and
rights to series enhancement. See "Description of the Notes -- Principal
Payments" in this prospectus.
REVOLVING PERIOD
Each series of notes will begin with a period during which the trust will not
pay or accumulate principal for payment to the noteholders. The period when no
principal is paid or accumulated is known as the "REVOLVING PERIOD." The trust,
during the revolving period, will pay available principal to noteholders of
other series in a group as shared principal collections or to the transferor as
holder of the transferor interest, or in certain circumstances will deposit the
available principal in the special funding account. The revolving period for a
series begins on the closing date described in the applicable prospectus
supplement and ends at the start of an amortization period or an accumulation
period.
Following the revolving period, each class of notes will have one or more of the
following periods in which:
- - principal is accumulated in specified amounts per month and paid on an
expected principal payment date, known as a "CONTROLLED ACCUMULATION PERIOD";
- - principal is paid in fixed amounts at scheduled intervals, known as a
"CONTROLLED AMORTIZATION PERIOD"; or
- - principal is paid or accumulated in varying amounts each month based on the
amount of principal receivables collected following a payout event, known as
an "EARLY AMORTIZATION PERIOD" or "EARLY ACCUMULATION PERIOD," respectively.
CONTROLLED ACCUMULATION PERIOD
If a series or class of notes is in a controlled accumulation period, the trust
is expected to pay available principal to those noteholders on the
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date specified in the prospectus supplement for that series. We call this date
an "EXPECTED PRINCIPAL PAYMENT DATE." If the series has more than one class,
each class may have a different priority for payment. For a period of time prior
to the expected principal payment date, the trust will deposit specified amounts
of available principal in a trust account. The controlled accumulation period
for a series or class begins on a date specified in the applicable prospectus
supplement and ends when any one of the following occurs:
- - the notes of that series or class are paid in full;
- - the early amortization or accumulation period starts; or
- - the latest date by which principal and interest for the series of notes can be
paid, known as the "SERIES TERMINATION DATE."
CONTROLLED AMORTIZATION PERIOD
If a series or class of notes is in a controlled amortization period, the trust
will pay available principal up to a fixed amount to those noteholders on each
distribution date during that period. The trust will pay available principal in
a fixed amount, plus any amounts not previously paid. If the series has more
than one class, each class may have a different priority for payment. The
controlled amortization period for a series or class starts on the date
specified in the applicable prospectus supplement and ends when any one of the
following occurs:
- - the notes of that series or class are paid in full;
- - the early amortization or accumulation period starts; or
- - the series termination date.
EARLY AMORTIZATION OR ACCUMULATION PERIOD
If a series or class of notes is in an early amortization or early accumulation
period, the trust will pay available principal to those noteholders on each
distribution date or accumulate available principal by making a deposit into an
account on each distribution date. If the series has more than one class, each
class may have a different priority for payment. The early amortization period
or early accumulation period for a series or class starts on the day a pay out
event occurs and ends when any of the following occurs:
- - the notes of that series or class are paid in full;
- - the series termination date; or
- - the trust termination date.
PAY OUT EVENTS
A pay out event for any series of notes will include adverse events described in
the prospectus supplement for that series. In addition, the following will be
pay out events for all series:
- - certain bankruptcy, insolvency or similar events relating to the transferor
(including any additional transferor), Associates Credit Card Services, Inc.
or the bank;
- - the transferor (including any additional transferor) is unable to transfer
receivables to the trust as required under the transfer and servicing
agreement; or
- - the trust becomes subject to regulation as an "investment company" under the
Investment Company Act of 1940.
See "Description of the Notes -- Pay Out Events" in this prospectus.
EVENTS OF DEFAULT
The indenture and related indenture supplement governing the terms and
conditions of the notes include a list of adverse events called events of
default.
If an event of default occurs, then, after any applicable cure period, the
indenture trustee or the holders of a majority in principal amount of the
affected series of notes may accelerate those notes by declaring the principal
amount of those notes to be immediately due and payable. That declaration may,
under certain circumstances, be rescinded by the holders of a majority in
principal amount of the affected series of notes.
Events of default include the following:
- - the trust fails to pay interest on any note within 35 days of its due date;
- - the trust fails to pay in full principal on any note on its series termination
date;
- - the trust defaults on any covenant or breaches any agreement under the
indenture, the default
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or breach is materially adverse to noteholders and the default or breach
continues unremedied for 60 days after written notice of the default or breach
is given to the trust by the indenture trustee or to the trust and the
indenture trustee by holders of at least 25% in principal amount of the
affected notes; or
- - the occurrence of certain events of bankruptcy, insolvency, reorganization or
similar events relating to the trust.
See "The Indenture -- Events of Default; Rights upon Event of Default" in this
prospectus for a description of the events of default and their consequences to
noteholders.
It is not an event of default if the principal of a note is not paid on its
expected principal payment date.
EVENT OF DEFAULT REMEDIES
After an event of default and the acceleration of a series of notes, funds on
deposit in the collection account and any trust accounts with respect to that
series will be applied to pay principal of and interest on those notes to the
extent permitted by law. After an event of default, principal collections and
finance charge collections allocated to the Series of notes will be applied to
make monthly principal and interest payments on those notes until the earlier of
the date those notes are paid in full or the legal final maturity of those
notes.
After an event of default, the indenture trustee (acting on its own or at the
direction of holders of accelerated notes) will have a limited right to
foreclose on the portion of the receivables allocable to the accelerated notes
by causing the trust to sell an interest in the assets of the trust by issuing a
special investor certificate called a foreclosure certificate, which would
represent an undivided interest in the assets of the trust equal to the invested
amount securing the notes of the related series. See "The Indenture -- Events of
Default; Rights upon Event of Default" in this prospectus.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series may be included in a group of series. If specified in the prospectus
supplement for any of these series, to the extent that collections of finance
charge receivables allocated to a series are not needed for that series, those
collections may be applied to cover certain shortfalls of other series in the
same group. See "Description of the Notes -- Shared Excess Finance Charge
Collections" in this prospectus.
SHARED PRINCIPAL COLLECTIONS AND TRANSFEROR PRINCIPAL COLLECTIONS
If a series is identified in its prospectus supplement as being in a group of
series, to the extent that collections of principal receivables allocated to
that series are not needed for that series, those collections may be applied to
cover principal payments for other principal sharing series in the same group,
and vice versa. Certain principal payments for certain principal sharing series
in the same group may have priority in receiving those collections over other
principal payments for other principal sharing series in that group.
In addition, if a series is identified in its prospectus supplement as being in
a group of series, collections of principal receivables otherwise payable to the
transferor may be applied to cover principal payments for the series in that
group.
See "Description of the Notes -- Shared Principal Collections and Transferor
Principal Collections" in this prospectus.
CREDIT ENHANCEMENT
Each class of a series may be entitled to credit enhancement. Credit enhancement
for the notes of any class may take the form of one or more of the following:
- - subordination - letter of credit
- - collateral interest - surety bond
- - insurance policy - spread account
- - cash collateral - reserve account
- - guaranty or account - guaranteed rate
- - swap arrangements agreement
- - interest rate cap - tax protection
agreement agreement
The type, characteristics and amount of any credit enhancement for a series will
be:
- - based on several factors, including the characteristics of the receivables and
accounts at the time a series of notes is issued; and
- - established based on the requirements of the rating agencies.
See "Credit Enhancement" in this prospectus.
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TAX STATUS
Subject to important considerations described under "Federal Income Tax
Consequences" in this prospectus, Orrick, Herrington & Sutcliffe LLP, as special
tax counsel to the trust, is of the opinion that, for United States federal
income tax purposes (1) the notes will be treated as indebtedness and (2) the
trust will not be an association or a publicly traded partnership taxable as a
corporation. In addition, noteholders will agree, by acquiring notes, to treat
the notes as debt of the transferor for federal, state and local income and
franchise tax purposes.
NOTE RATINGS
Any note offered by this prospectus and an accompanying prospectus supplement
will be rated in one of the four highest rating categories by at least one
nationally recognized rating organization.
A rating is not a recommendation to buy, sell or hold securities, and may be
revised or withdrawn at any time by the assigning agency. Each rating should be
evaluated independently of any other rating. See "Note Ratings" in this
prospectus.
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RISK FACTORS
You should consider the following risk factors in deciding whether to purchase
the notes.
IT MAY NOT BE POSSIBLE TO FIND AN INVESTOR TO PURCHASE YOUR NOTES.
The underwriters may assist in resales of the notes but they are not required to
do so. A secondary market for any notes may not develop. If a secondary market
does develop, it might not continue or it might not be sufficiently liquid to
allow you to resell any of your notes.
SOME LIENS WOULD BE GIVEN PRIORITY OVER YOUR NOTES WHICH COULD CAUSE DELAYED OR
REDUCED PAYMENTS.
Each of the bank and Associates Credit Card Services, Inc. accounts for the
transfer of the receivables as a sale. Even so, a court could conclude that any
of the bank, Associates Credit Card Services, Inc. or the transferor owns the
receivables and that the trust holds only a security interest. Even if a court
would reach that conclusion, however, the indenture trustee will have a "first-
priority perfected security interest."
If a court were to conclude that the trust has only a security interest, a tax
or governmental lien (or other lien imposed under applicable state or federal
law without consent) on the property of the person that owns the receivables
arising before receivables come into existence may be senior to the trust's
interest in the receivables. Additionally, if a receiver or conservator were
appointed for the bank, the fees and expenses of the receiver or conservator
might be paid from the receivables before the trust receives any payments on the
receivables. If insolvency or bankruptcy proceedings were commenced by or
against the servicer or if certain time periods were to elapse, moreover, the
trust may not have a first-priority perfected security interest in collections
commingled and used for the benefit of the servicer. If any of these events were
to occur, payments to you could be delayed or reduced. See "Certain Legal
Aspects of the Receivables -- Transfer of Receivables" and "Description of the
Notes -- Representations and Warranties" in this prospectus.
IF A CONSERVATOR OR RECEIVER WERE APPOINTED FOR ASSOCIATES NATIONAL BANK
(DELAWARE), OR IF ASSOCIATES CREDIT CARD SERVICES, INC. OR ASSOCIATES CREDIT
CARD RECEIVABLES CORP. BECAME A DEBTOR IN A BANKRUPTCY CASE, DELAYS OR
REDUCTIONS IN PAYMENT OF YOUR NOTES COULD OCCUR.
The Federal Deposit Insurance Act, as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (the "FDIA"), provides that a
security interest granted by the bank in the receivables would be respected to
the extent that --
- - the receivables purchase agreement complies with the regulatory requirements
of the FDIA;
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- - the security interest granted under the receivables purchase agreement was
perfected before the Federal Deposit Insurance Corporation (the "FDIC") is
appointed as conservator or receiver for the bank; and
- - the security interest was not taken in contemplation of the bank's insolvency
or with the intent to hinder, delay or defraud the bank or its creditors.
Opinions and policy statements issued by the FDIC suggest that, because of the
manner in which these transactions are structured, the FDIC would respect the
security interest granted by the bank in the receivables. If the FDIC were to
assert a contrary position, however, payments of principal and interest on your
notes could be delayed and possibly reduced. Furthermore, the FDIC could --
- - require the indenture trustee to go through the administrative claims
procedure established by the FDIC in order to obtain payments on the notes;
- - request a stay of any actions by the indenture trustee to enforce the
receivables purchase agreement or the notes against the bank; or
- - repudiate the receivables purchase agreement and limit the claims of the
holders of the notes to their "actual direct compensatory damages."
If the FDIC were to take any of these actions, the amount payable to you could
be lower than the outstanding principal and accrued interest on the notes, thus
resulting in losses to you.
If Associates Credit Card Services, Inc. became a debtor in a bankruptcy case,
and if its transfer of the receivables to Associates Credit Card Receivables
Corp. were construed as the grant of a security interest to secure a borrowing,
your payments of outstanding principal and interest could be delayed and
possibly reduced. In addition, if Associates Credit Card Services, Inc. became a
debtor in a bankruptcy case and its assets and liabilities were substantively
consolidated with those of Associates Credit Card Receivables Corp., your
payments of outstanding principal and interest could be delayed and possibly
reduced.
If a conservator or receiver were appointed for the bank, or if Associates
Credit Card Services, Inc. or Associates Credit Card Receivables Corp. became a
debtor in a bankruptcy case, an early payment of principal on all outstanding
series could result. Under the terms of the transfer and servicing agreement,
new principal receivables would not be transferred to the trust. However, the
bankruptcy court, the conservator or the receiver may have the power, regardless
of the terms of the transfer and servicing agreement, (a) to delay any such
procedure, (b) to prevent the early payment of principal or (c) to require new
principal receivables to continue being transferred.
In addition, a court overseeing the servicer's bankruptcy case may have the
power to prevent either the indenture trustee or the noteholders from appointing
a new servicer.
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See "Certain Legal Aspects of the Receivables -- Certain Matters Relating to
Conservatorship, Receivership and Bankruptcy" in this prospectus.
THE ACCOUNT OWNER MAY CHANGE THE TERMS AND CONDITIONS OF THE ACCOUNTS IN A WAY
THAT REDUCES COLLECTIONS.
As owner of the accounts, the bank retains the right to change various account
terms including finance charges, other fees and the required monthly minimum
payment. Such changes may be voluntary on the part of the bank or may be forced
by law or market conditions. Changes in interest and fees could decrease the
effective yield on the accounts and this could result in an early payment of
principal of your notes. Changes could also cause a reduction in the credit
ratings on your notes.
CHANGES TO CONSUMER PROTECTION LAWS MAY IMPEDE COLLECTION EFFORTS OR REDUCE
COLLECTIONS.
Federal and state consumer protection laws regulate the creation and enforcement
of consumer loans, including credit card accounts and receivables. Changes or
additions to those regulations could make it more difficult for the servicer of
the receivables to collect payments on the receivables or reduce the finance
charges and other fees that the originator can charge on credit card account
balances, resulting in reduced collections.
Receivables that do not comply with consumer protection laws may not be valid or
enforceable under their terms against the obligors on those receivables.
If a cardholder sought protection under federal or state bankruptcy or debtor
relief laws, a court could reduce or discharge completely the cardholder's
obligations to repay amounts due on its account and, as a result, the related
receivables would be written off as uncollectible. See "Certain Legal Aspects of
the Receivables -- Consumer Protection Laws" in this prospectus.
LIMITED REMEDIES FOR BREACHES OF REPRESENTATIONS COULD REDUCE OR DELAY PAYMENTS.
Associates Credit Card Receivables Corp., as transferor of the receivables,
makes representations and warranties relating to the validity and enforceability
of the receivables arising under the accounts in the trust portfolio, and as to
the perfection and priority of the indenture trustee's interest in the
receivables. However, neither the owner trustee nor the indenture trustee will
make any examination of the receivables or the related assets to determine the
presence of defects, compliance with the representations and warranties or for
any other purpose.
If a representation or warranty relating to the receivables is violated, the
related obligors may have defenses to payment or offset rights, or creditors of
the originator or the transferor may claim rights to the trust assets. If a
representation or warranty is violated, the transferor may have an opportunity
to cure the
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violation. If it is unable to cure the violation within the specified time
period or if there is no right to cure the violation, the transferor must accept
reassignment of the receivables affected by the violation. These reassignments
are the only remedy for breaches of representations and warranties, even if your
damages exceed your share of the reassignment price. See "Description of the
Notes -- Representations and Warranties" in this prospectus.
PAYMENT PATTERNS OF RECEIVABLES COULD REDUCE COLLECTIONS.
The receivables transferred to the trust may be paid at any time. We cannot
assure the creation of additional receivables in the trust's accounts or that
any particular pattern of cardholder payments will occur. A significant decline
in the amount of new receivables generated could result in the occurrence of a
pay out event for one or more series and the commencement of the early
amortization period or, if applicable, the early accumulation period for each of
those series. If a pay out event occurs, you could receive payment of principal
sooner than expected. The bank's ability to compete in the current industry
environment will affect its ability to generate new receivables and might also
affect payment patterns on the receivables. In addition, changes in finance
charges can alter the monthly payment rates of cardholders. A significant
decrease in monthly payment rates could slow the return or accumulation of
principal during an amortization period or accumulation period. See "Maturity
Considerations" in this prospectus.
SUBORDINATED CLASSES BEAR LOSSES BEFORE SENIOR CLASSES.
One or more classes of notes in a series may be subordinated to one or more
senior classes of notes in the same series. Principal allocations to the
subordinated class or classes will not begin until each of the more senior
classes has been paid in full. Additionally, if collections of finance charge
receivables allocated to a series are insufficient to cover amounts due for that
series' senior notes, the Invested Amount for the series might be reduced. This
would reduce the amount of the collections of finance charge receivables
available to the subordinated notes in future periods and could cause a possible
delay or reduction in principal and interest payments on the subordinated notes.
ALLOCATIONS OF CHARGED-OFF RECEIVABLES COULD REDUCE PAYMENTS TO YOU.
The Servicer will write off the receivables arising in accounts in the trust
portfolio if the receivables become uncollectible. Your series will be allocated
a portion of these charged-off receivables. See "Description of Series
Provisions -- Allocation Percentages" and "The Bank's Credit Card
Portfolio -- Delinquency and Loss Experience" in the accompanying prospectus
supplement. If the amount of charged-off receivables allocated to your series of
notes exceeds the amount of funds available to reimburse those charge-offs, you
may not receive the full amount of principal and interest due to you. See
"Description of Series Provisions -- Reallocated
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Principal Collections," "-- Application of Collections" and "-- Defaulted
Receivables; Investor Charge-Offs" in the accompanying prospectus supplement.
RECHARACTERIZATION OF PRINCIPAL RECEIVABLES WOULD REDUCE PRINCIPAL RECEIVABLES
AND MAY REQUIRE ADDITION OF NEW RECEIVABLES.
The transferor may designate a percentage of the receivables that would
otherwise be treated as principal receivables to be treated as finance charge
receivables. This designation should decrease the likelihood of an early
amortization event occurring as a result of a reduction of the average net
portfolio yield for a given period. However, this designation will also reduce
the aggregate amount of principal receivables, which may increase the likelihood
that the transferor will be required to add receivables to the trust. If the
transferor were unable to add receivables and could not make a sufficient cash
deposit into the special funding account, one or more series of notes, including
your series, could go into early amortization.
THE NOTE INTEREST RATE AND THE RECEIVABLES INTEREST RATE MAY RE-SET AT DIFFERENT
TIMES, RESULTING IN REDUCED OR EARLY PAYMENTS TO YOU.
Some accounts may have finance charges set at a variable rate based on a
designated index (for example, the prime rate). A series of notes may bear
interest either at a fixed rate or at a floating rate based on a different
index. If the interest rate charged on the accounts declines, collections of
finance charge receivables may be reduced without a corresponding reduction in
the amounts of interest payable on your notes and other amounts required to be
paid out of collections of finance charge receivables. This could result in
delayed or reduced payments to you.
A decrease in the spread, or difference, between collections of finance charge
receivables and those collections allocated to make interest payments on your
notes could reduce the portfolio yield and increase the risk of early repayment
of your notes.
ISSUANCE OF ADDITIONAL SERIES BY THE TRUST MAY AFFECT THE TIMING OF PAYMENTS TO
YOU.
The trust is expected to issue additional series from time to time. The trust
may issue additional series with terms that are different from your series
without your prior review or consent. It is a condition to the issuance of each
new series that each rating agency that has rated an outstanding series confirm
in writing that the issuance of the new series will not result in a reduction or
withdrawal of its rating of any class of any outstanding series. The rating
agency confirmation primarily will be based on the trust's ability to pay
principal by the legal maturity date and interest on each distribution date. The
rating agency confirmation will not consider how the terms of a new series could
affect the timing and amounts of payments on your series.
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THE ISSUER
Associates Credit Card Master Note Trust is a statutory business trust
created under the laws of the State of Delaware on , 2000. It is
operated under a trust agreement, dated as of , 2000, between
Associates Credit Card Receivables Corp., as transferor, and Wilmington Trust
Company, as owner trustee. We refer to Associates Credit Card Master Note Trust
as the "ISSUER" or the "TRUST" and Wilmington Trust Company, in its capacity as
owner trustee of the issuer, as the "OWNER TRUSTEE."
The activities of the issuer are limited to:
- acquiring, owning and managing the trust assets and the proceeds of those
assets;
- issuing and making payments on the notes; and
- engaging in related activities.
Associates Credit Card Services, Inc., in its capacity as "ADMINISTRATOR"
under the administration agreement, dated as of , 2000, between the
administrator and the issuer, will provide the notices and perform on behalf of
the issuer certain other administrative obligations required by the transfer and
servicing agreement, the indenture and the indenture supplement for each series,
and will be compensated for acting as the administrator.
The issuer's principal offices are in Delaware, in care of Wilmington Trust
Company, as owner trustee, at the following address:
The transferor will pay the fees of the owner trustee and will reimburse it
for certain liabilities and expenses.
THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The portfolio of credit card accounts owned by Associates National Bank
(Delaware) (the "BANK"), referred to as the "BANK PORTFOLIO," currently consists
of MasterCard(R) and VISA(R) credit card accounts. Some of these accounts are
designated as trust accounts. The receivables which will be included in the
trust have been and will be generated from transactions made by holders of these
trust accounts. Associates Credit Card Services, Inc. ("ACCS"), which is an
affiliate of the bank, currently services the bank portfolio in the manner
described in the accompanying prospectus supplement. Certain data processing and
administrative functions associated with this servicing are performed on behalf
of ACCS by First Data Resources, Inc. ("FDR"). See "-- Description of FDR" in
this prospectus.
ORIGINATION
The bank originates credit card accounts through several different
programs: (1) direct Associates National Bank brand products, (2) partnership
products such as agent bank relationships with financial institutions and (3)
the acquisition of credit card portfolios from other financial institutions.
These programs (excluding portfolio acquisitions) emphasize segmentation and use
direct mail, telemarketing, take-one application displays, events, media and, to
a small extent, the Internet as channels to market the bank's products. The bank
also utilizes prospect lists obtained from its partnership relationships to
originate accounts.
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The bank issues direct products to a broad credit segment of the general
population. These accounts are given a plastic card with Associates National
Bank identified on the front. This broad segment includes the low risk segment
such as the VISA Platinum Card,(R) the middle market such as the VISA(R) and
MasterCard Classic Card,(R) and the lower tier such as the college and sub-prime
segment. These programs are offered through direct mail, telemarketing, take-one
applications and event tabling offers.
The bank has numerous partnership relationships. These partnerships
generally can be categorized in two broad areas: (1) agent bank relationships
with other financial institutions, such as medium or small regional depository
banks, and (2) co-branding relationships. Through these programs, participating
institutions offer VISA(R) and MasterCard(R) products to their customers without
becoming primary issuers. Typically, the name of the participating institution
appears on the front of the plastic card. The typical partnership and/or
co-branding relationship is structured with some form of revenue sharing
agreement where both the bank and the partner share in the profits and losses of
the program.
The bank has made portfolio acquisitions in the past and additional
acquisitions are possible in the future. Prior to acquiring a portfolio, the
bank reviews the historical performance and seasoning of the portfolio and the
policies and practices of the selling institution. All individual accounts are
re-underwritten by the bank after acquisition. There can be no assurance that
accounts acquired by this means were originated in a manner consistent with the
bank's policies or that the underwriting and qualification of these accounts
conformed to any given standards. The accounts in the trust portfolio include
accounts previously acquired by the bank. Those accounts and any accounts
acquired in the future may become additional accounts if they constitute
eligible accounts when they are added.
UNDERWRITING PROCEDURES
Under the bank's application processing system, each application must pass
a first screen that includes name, address, phone numbers, date of birth and
social security number. For missing information, a "soft decline" is issued with
a letter to obtain the data. If the necessary information is not received within
10 days, a "hard decline" is made. The bank processes and underwrites various
income levels. An online credit report is obtained from one of three bureaus for
each applicant. The applicant will be declined for presence of bankruptcy,
foreclosure, tax lien or judgment on the bureau. Other policy declines include
having excessive revolving debt and having multiple bankcards that have a high
average balance. The bank strives for automated processing and keeps manual
intervention low.
The applicant will then undergo a second screening that may use a
combination of application data, bureau data and internally developed scoring
systems that will evaluate the probability of charge-off and/or delinquency over
the next 12 to 18 months. Credit lines are assigned by a combination of
self-reported income and risk level. The approval and credit line decisions are
made for each applicant on an individual basis to determine the anticipated
profitability of the account. The overall strategy is to maximize profitability
at the account level. A major focus in the underwriting process is appropriate
credit line assignment.
Approvals are sent through VISA's ICS (Issuer's Clearing Service) to check
for external application velocity, bankruptcy and fraud. ICS results are
manually reviewed, then declined or blocked, if appropriate. Most approvals
process through address verification, with failures manually reviewed against
online bureaus and then directory assistance. Address verification failures are
sent a "soft decline" requesting proof of address such as a utility bill. Some
high line accounts receive employment verification.
After origination, each account is periodically monitored in order to
properly access and adjust credit lines. Credit lines are actively increased and
decreased as a part of proper account management strategies and to maximize
profitability.
DESCRIPTION OF FDR
With respect to the bank portfolio, certain data processing and
administrative functions associated with servicing the receivables are performed
by FDR.
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FDR is located in Omaha, Nebraska and provides computer data processing
services primarily to the bankcard industry. FDR is a subsidiary of First Data
Corp.
ACCS utilizes a variety of services provided by FDR in originating and
servicing the bank portfolio. These functions included transaction processing
and data management systems, fraud management and transaction level pricing.
ACCS currently does not employ any of FDR's direct customer service
capabilities. All direct customer service functions, such as collections and
customer service inquiries are handled directly by ACCS facilities.
INTERCHANGE
Creditors participating in the VISA(R) and MasterCard(R) associations
receive certain fees, called "INTERCHANGE," as partial compensation for taking
credit risk, absorbing fraud losses and funding receivables for a limited period
prior to initial billing. Under the VISA(R) and MasterCard(R) systems, a portion
of this Interchange in connection with cardholder charges for goods and services
is passed from banks which clear the transactions for merchants to credit card
issuing banks. MasterCard(R) and VISA(R) set Interchange fees annually based on
the number of credit card transactions and the amount charged per transaction.
The transferor may be required, as described in the accompanying prospectus
supplement, to transfer to the trust a percentage of the Interchange attributed
to cardholder charges for goods and services in the related accounts. If so,
Interchange arising under the accounts will be allocated to the related notes of
any series in the manner provided in the accompanying prospectus supplement,
and, if specified in the accompanying prospectus supplement, may be treated as
collections of finance charge receivables and used to pay required monthly
payments including interest on the related series of notes, and, in some cases,
to pay all or a portion of the servicing fee paid to the servicer as servicing
compensation.
COMPETITION IN THE CREDIT CARD INDUSTRY
The credit card industry is highly competitive. As new credit card
companies enter the market and all companies try to expand their market share,
effective advertising, target marketing and pricing strategies grow in
importance. The bank's ability to compete in this industry environment will
affect its ability to generate new receivables and might also affect payment
patterns on the receivables. If the rate at which the bank generates new
receivables declines significantly, the bank might be unable to transfer
additional receivables or designate additional accounts to the trust and a pay
out event could occur, resulting in payment of principal sooner than expected.
If the rate at which the bank generates new receivables decreases significantly
at a time when noteholders are scheduled to receive principal, noteholders might
receive principal more slowly than planned.
THE TRUST PORTFOLIO
The assets of the trust include receivables generated through accounts
designated as trust accounts, all of which are owned by the bank. These
designated accounts are referred to as the "TRUST PORTFOLIO." In addition to the
receivables in the trust portfolio, the trust assets include, to the extent
noted below:
- all monies due or to become due in payment of these receivables;
- all proceeds of these receivables;
- all proceeds of any credit insurance policies relating to these
receivables;
- Interchange, if the prospectus supplement for your series of notes so
indicates;
- any recoveries allocable to the trust because of these receivables;
- all monies on deposit in specified trust accounts or investments made
with these monies, including any earned investment proceeds if the
prospectus supplement for your series of notes so indicates;
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- proceeds of any credit enhancement, as described in the prospectus
supplement for your series of notes; and
- proceeds of any derivative contracts between the trust and a
counterparty, as described in the prospectus supplement for your series
of notes.
Receivables in the trust consist of:
- "PRINCIPAL RECEIVABLES," which are amounts charged by trust account
cardholders for goods and services, cash advances and consolidation or
transfer of balances from other credit cards; and
- "FINANCE CHARGE RECEIVABLES," which are periodic finance charges and
other amounts charged to trust accounts, including cash advance fees,
late fees and annual membership fees.
The trust considers collections of Interchange and recoveries as
collections of finance charge receivables. If the bank exercises the Discount
Option, an amount of monthly collections of principal receivables will be
considered finance charge collections. See "Description of the Notes -- Discount
Option" for a description of the manner of and the conditions to exercise of the
Discount Option.
Initially, a group of accounts were selected on , 2000 (the
"CUT-OFF DATE") and designated as trust accounts. In the future, additional
accounts may be designated for inclusion in the trust as well as participations
in lieu of, or in addition to, additional accounts. Accounts initially
designated as trust accounts and any future accounts designated for inclusion in
the trust must meet eligibility criteria set forth in the transfer and servicing
agreement. Receivables conveyed to the trust must also meet eligibility criteria
set forth in the transfer and servicing agreement. If receivables conveyed to
the trust are found to have been ineligible when created or designated for
inclusion, the transferor must accept retransfer of these receivables.
The transferor has the right, and may be required to, designate additional
accounts for inclusion in the trust portfolio, as described under "Description
of the Notes -- Addition of Trust Assets" in this prospectus.
The transferor also has the right to remove accounts from the trust
portfolio, as described under "Description of the Notes -- Removal of Accounts"
in this prospectus. If the transferor does so, the trust will reconvey all
receivables in these removed accounts, whether existing or to be created, to the
transferor.
When the trust issues a new series of notes, the transferor will represent
and warrant to the trust that, as of the closing date for the new series, the
accounts designated as trust accounts met the eligibility criteria set forth in
the transfer and servicing agreement at their time of designation. See
"Description of the Notes -- Representations and Warranties" in this prospectus
for more information on eligibility criteria for accounts and receivables.
The prospectus supplement relating to each series of notes will provide
certain information about the trust portfolio as of the date specified. This
information will include:
- the amount of principal receivables;
- the amount of finance charge receivables;
- the range and average of principal balances of the accounts;
- the range and average of credit limits of the accounts;
- the range and average of ages of the accounts;
- the geographic distribution of the accounts; and
- delinquency statistics relating to the accounts.
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MATURITY CONSIDERATIONS
Following its revolving period, each series of notes is expected to begin
to accumulate principal or begin to distribute principal to noteholders. The
accompanying prospectus supplement describes the conditions under which an
accumulation or amortization period will begin for your class of notes.
Principal will accumulate in a principal funding account if your series
features controlled accumulation or early accumulation and one of these
accumulation periods begins. As described in the accompanying prospectus
supplement, during controlled accumulation on each distribution date an amount
of principal, up to the amount specified, will be set aside in the principal
funding account. If a pay out event occurs and your series features early
accumulation, the full amount of principal available to your series will be
deposited in the principal funding account, up to the amount specified in the
related prospectus supplement. This accumulated principal will be paid to you on
the expected principal payment date for your class of notes, or earlier if an
amortization period begins before your expected principal payment date. Note
that although your series may feature an accumulation period, your class of
notes might not make use of it.
Principal will be paid to you in increments, up to the amount specified in
the accompanying prospectus supplement, if your series features controlled
amortization and this period begins. Your class of notes might also begin to pay
principal to you if the accompanying prospectus supplement specifies that your
class will begin early amortization. Early amortization will begin for all
classes of your series when a pay out event occurs. During any amortization
period, principal will be paid to you only on a distribution date.
If the series described in the accompanying prospectus supplement features
multiple classes, different classes of your series may have differing priorities
for the accumulation or payment of principal. This means that noteholders of
other classes could begin to receive payments of principal before you do.
We can give you no assurance that principal will be available when
expected, either to accumulate or to pay to you. The expected principal payment
date for your class of notes is based upon assumptions about payment rates on
the receivables, as detailed in the accompanying prospectus supplement. We can
give you no assurance that these payment rate assumptions will be correct.
Payment rates depend on collections of receivables. Collections can vary
seasonally and are also affected by general economic conditions and the payment
habits of individual cardholders. The accompanying prospectus supplement will
provide historical payment rates, total charge-offs and other information
relating to the bank portfolio. We cannot assure you that future events will be
consistent with this historical performance. The life of your notes might be
longer than expected if principal is collected more slowly. The accompanying
prospectus supplement may provide that if the principal payment rate falls below
a specified level, a pay out event will occur. The occurrence of any pay out
event may substantially shorten the average life of your notes.
USE OF PROCEEDS
The net proceeds from the sale of each series of notes offered by this
prospectus will be paid to the transferor. The transferor will use those
proceeds to pay ACCS the purchase price of the receivables transferred to the
transferor by ACCS pursuant to the ACCS receivables purchase agreement. ACCS
will use the proceeds received from the transferor to pay the bank the purchase
price of the receivables transferred to ACCS by the bank pursuant to the
receivables purchase agreement. The bank will use the proceeds received from
ACCS for its general corporate purposes.
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DESCRIPTION OF THE NOTES
The notes will be issued in series. Each series will represent an
obligation of the trust. Each series of notes will be issued pursuant to the
indenture, as supplemented by an indenture supplement, in each case entered into
by the trust and the indenture trustee. The following summaries describe certain
provisions common to each series of notes. The accompanying prospectus
supplement gives you additional information specific to the notes of your
series. The summaries are not complete and are subject to, and are qualified by,
all of the provisions of the transfer and servicing agreement, the indenture and
the related indenture supplement.
GENERAL
The notes will be secured by and paid from the assets of the trust. Each
series will be allocated collections of principal receivables and finance charge
receivables based on a percentage called the "INVESTOR PERCENTAGE." The Investor
Percentage will be based on the Invested Amount for a series. The "INVESTED
AMOUNT" for a series on any date will be equal to:
- the initial outstanding principal amount of that series of notes as of
the related closing date for that series (increased by the principal
balance of any notes of that series issued after the closing date for
that series); minus
- the amount of principal paid to the related noteholders prior to that
date; minus
- the amount of unreimbursed Investor Charge-Offs with respect to those
notes prior to that date.
If so specified in the prospectus supplement relating to any series of notes,
under certain circumstances the Invested Amount may be further adjusted by the
amount of principal allocated to noteholders, the funds on deposit in any
specified account, and any other amount specified in the accompanying prospectus
supplement.
Each series of notes may consist of one or more classes, one or more of
which may be senior notes and one or more of which may be subordinated notes.
Each class of a series will evidence the right to receive a specified portion of
each distribution of principal or interest or both. Each class of a series may
differ from other classes in some aspects, including:
- amounts allocated to principal payments;
- maturity date;
- interest rate; and
- availability and amount of enhancement.
Payments and deposits of interest and principal will be made on
distribution dates to noteholders in whose names the notes were registered on
the record dates specified in the accompanying prospectus supplement. Interest
will be distributed to noteholders in the amounts, for the periods and on the
dates specified in the accompanying prospectus supplement.
The transferor initially will own the "TRANSFEROR INTEREST" which
represents the right to receive all cash flows from the trust assets not
required to make payments on the notes or to credit enhancement providers. The
holder of the Transferor Interest, subject to certain limitations, will have the
right to a percentage, called the "TRANSFEROR PERCENTAGE," of all cardholder
payments from the receivables in the trust. The Transferor Interest may be
transferred, in whole or in part, subject to certain limitations and conditions
described in the trust agreement, and, at the discretion of the transferor, the
Transferor Interest may be held either in an uncertificated form or in the form
of a certificate representing the Transferor Interest, called a "TRANSFEROR
CERTIFICATE." See "-- Certain Matters Regarding the Transferor and the Servicer"
in this prospectus.
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During the revolving period, the Invested Amount of a series will remain
constant except under certain limited circumstances. See "-- Defaulted
Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs" in this
prospectus. The amount of principal receivables in the trust, however, will vary
each day as new principal receivables are created and others are paid. The
amount of the Transferor Interest will fluctuate each day, therefore, to reflect
the changes in the amount of the principal receivables in the trust. When a
series is amortizing, the Invested Amount of that series will decline as
customer payments of principal receivables are collected and distributed, or
accumulated for distribution, to the noteholders. As a result, the Transferor
Interest will generally increase to reflect reductions in the Invested Amount
for that series and will also change to reflect the variations in the amount of
principal receivables in the trust. The Transferor Interest may also be reduced
as the result of new issuances. See "-- New Issuances" in this prospectus.
Generally, notes offered through the prospectus and the accompanying
prospectus supplement:
- will be represented by notes registered in the name of a DTC nominee;
- will be available for purchase in minimum denominations of $1,000 and
multiples of $1,000 in excess of that amount; and
- will be available for purchase in book-entry form only.
The accompanying prospectus supplement will specify if your notes have
different characteristics from those listed above.
DTC has informed the transferor that its nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the holder of record of each series of
notes. As an owner of beneficial interests in the notes, called a "NOTE OWNER,"
you will generally not be entitled to a definitive note representing your
interest in the issued notes because you will own notes through a book-entry
record maintained by DTC. References in this prospectus and the accompanying
prospectus supplement to distributions, reports, notices and statements to
noteholders refer to DTC or Cede & Co., as registered holder of the notes, for
distribution to you in accordance with DTC procedures. All references in this
prospectus and the accompanying prospectus supplement to actions by noteholders
shall refer to actions taken by DTC upon instructions from DTC Participants.
The accompanying prospectus supplement may state that application will be
made to list your series or class of notes on the Luxembourg Stock Exchange or
another exchange.
BOOK-ENTRY REGISTRATION
Following is a description of the form your notes will take. We also
describe how your notes may be transferred and how payments will be made to you.
The information in this section concerning DTC and DTC's book-entry system
has been provided by DTC. The transferor has not independently verified the
accuracy of this information.
You may hold your notes through DTC in the U.S., Cedelbank or Euroclear in
Europe or in any other manner described in the accompanying prospectus
supplement. You may hold your notes directly with one of these systems if you
are a participant in the system, or indirectly through organizations which are
participants.
Cede & Co., as nominee for DTC, will hold the global notes. Cedelbank and
Euroclear will hold omnibus positions on behalf of the Cedelbank Customers and
the Euroclear Participants, respectively, through customers' securities accounts
in Cedelbank's and Euroclear's names on the books of their respective
depositaries collectively called the "DEPOSITARIES," which in turn will hold
such positions in customers' securities accounts in the depositaries' names on
the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York
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Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC was
created to hold securities for its participants and facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes in accounts of participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers (who may include the underwriters of any series), banks, trust companies
and clearing corporations and may include certain other organizations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies, as indirect participants, that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Cedelbank customers and Euroclear participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
customers or Euroclear participants, on the other, will be effected through DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedelbank customers and Euroclear
participants may not deliver instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Cedelbank or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Cedelbank customer or Euroclear participant on such business day. Cash received
in Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank customer or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Note owners that are not participants or indirect participants but desire
to purchase, sell or otherwise transfer ownership of, or other interest in,
notes may do so only through participants and indirect participants. In
addition, note owners will receive all distributions of principal of and
interest on the notes from the indenture trustee through the participants who in
turn will receive them from DTC. Under a book-entry format, note owners may
experience some delay in their receipt of payments, since such payments will be
forwarded by the indenture trustee to Cede & Co., as nominee for DTC. DTC will
forward such payments to its participants, which thereafter will forward them to
indirect participants or note owners. It is anticipated that the only
"noteholder" will be Cede & Co., as nominee of DTC. Note owners will not be
recognized by the indenture trustee as noteholders, as such term is used in the
indenture, and note owners will only be permitted to exercise the rights of
noteholders indirectly through the participants who in turn will exercise the
rights of noteholders through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among participants
on whose behalf it acts with respect to the notes and is required to receive and
transmit distributions of principal and interest on the notes. Participants and
indirect participants with which note owners have accounts with respect to the
notes similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective note owners. Accordingly,
although note owners will not possess notes, note owners will receive payments
and will be able to transfer their interests.
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Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a note owner
to pledge notes to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of those notes, may be limited due
to the lack of a physical certificate for those notes.
DTC has advised the transferor that it will take any action permitted to be
taken by a noteholder under the indenture only at the direction of one or more
participants to whose account with DTC the notes are credited. Additionally, DTC
has advised the transferor that it will take such actions with respect to
specified percentages of the Invested Amount only at the direction of and on
behalf of participants whose holdings include interests that satisfy such
specified percentages. DTC may take conflicting actions with respect to other
interests to the extent that such actions are taken on behalf of participants
whose holdings include such interests.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its customers and facilitates the
clearance and settlement of securities transactions between Cedelbank customers
through electronic book-entry changes in accounts of Cedelbank customers,
thereby eliminating the need for physical movement of notes. Transactions may be
settled in Cedelbank in any of 28 currencies, including United States dollars.
Cedelbank provides to its Cedelbank customers, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a registered bank in Luxembourg,
Cedelbank is subject to regulation by the Luxembourg Commission for the
Supervision of the Financial Sector. Cedelbank customers are world-wide
financial institutions, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
and may include the underwriters of any series of notes. Indirect access to
Cedelbank is also available to other institutions, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedelbank customer, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear System and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of notes and any
risk from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 27 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office as the Euroclear operator, under
contract with Euro-clear Clearance System, S.C., a Belgian cooperative
corporation. All operations are conducted by the Euroclear operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear operator, not the cooperative. The cooperative establishes
policy for the Euroclear System on behalf of Euroclear participants. Euroclear
participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of any series of notes. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law.
These rules and laws govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear System,
and receipts of payments with respect to securities in the Euroclear System. All
securities in the Euroclear System are held on a
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fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under these rules and
laws only on behalf of Euroclear participants and has no record of or
relationship with persons holding through Euroclear participants.
Distributions with respect to notes held through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank customers or Euroclear
participants in accordance with the relevant system's rules and procedures, to
the extent received by its depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Federal Income Tax Consequences" in this prospectus. Cedelbank or the
Euroclear operator, as the case may be, will take any other action permitted to
be taken by a noteholder under the indenture on behalf of a Cedelbank customer
or Euroclear participant only in accordance with its relevant rules and
procedures and subject to its depositary's ability to effect such actions on its
behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of DTC,
Cedelbank and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DEFINITIVE NOTES
We refer to notes issued in fully registered, certificated form as
"DEFINITIVE NOTES." The notes of each series will be issued as definitive notes
to note owners or their nominees, rather than to DTC or its nominee, only if:
- the transferor advises the indenture trustee for that series in writing
that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to that series of notes, and
the indenture trustee or the transferor is unable to locate a qualified
successor;
- the transferor, at its option, advises the indenture trustee in writing
that it elects to terminate the book-entry system through DTC; or
- after the occurrence of a Servicer Default, note owners representing not
less than 50% (or another percentage specified in the accompanying
prospectus supplement) of the Invested Amount advise the indenture
trustee and DTC through participants in writing that the continuation of
a book-entry system through DTC (or a successor thereto) is no longer in
the best interest of the note owners.
If any of these events occur, DTC must notify all participants of the
availability through DTC of definitive notes. Upon surrender by DTC of the
definitive instrument representing the notes and instructions for
re-registration, the indenture trustee will issue the notes as definitive notes,
and thereafter the indenture trustee will recognize the registered holders of
those definitive notes as noteholders under the indenture.
Distribution of principal and interest on the notes will be made by the
indenture trustee directly to holders of definitive notes in accordance with the
procedures set forth in this prospectus and in the indenture. Interest payments
and any principal payments on each distribution date will be made to holders in
whose names the definitive notes were registered at the close of business on the
related record date. Distributions will be made by check mailed to the address
of the noteholders as it appears on the register maintained by the indenture
trustee. The final payment on any note (whether definitive notes or the notes
registered in the name of Cede & Co. representing the notes), however, will be
made only upon presentation and surrender of that note at the office or agency
specified in the notice of final distribution to noteholders. The indenture
trustee will provide this notice to registered noteholders not later than the
fifth day of the month of the final distributions.
Definitive notes will be transferable and exchangeable at the offices of
the transfer agent and registrar, which will initially be the indenture trustee.
No service charge will be imposed for any registration of transfer or exchange,
but the transfer agent and registrar may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection with the
transfer or exchange. The transfer
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agent and registrar will not be required to register the transfer or exchange of
definitive notes for a period of fifteen days preceding the due date for any
payment on those definitive notes.
INTEREST PAYMENTS
For each series of notes and each related class, interest will accrue from
the relevant closing date on the applicable outstanding principal balance at the
applicable interest rate. The interest rate on any note may be a fixed, floating
or any other type of rate as specified in the accompanying prospectus
supplement. Interest will be paid, or deposited for later payment, to
noteholders on the distribution dates.
Interest payments or deposits on any distribution date will be funded from:
- collections of finance charge receivables allocated to the Invested
Amount during the preceding monthly period or periods;
- investment earnings, if any, on any funds held in trust accounts;
- any credit enhancement, to the extent described in the accompanying
prospectus supplement; and
- any derivative counterparty, to the extent described in the accompanying
prospectus supplement.
If interest payments will be made less frequently than monthly, an interest
funding account may be established to accumulate the required interest amount.
If a series has more than one class of notes, that series may have more than one
interest funding account.
Your class of notes will pay interest on the dates and at the interest rate
specified in the accompanying prospectus supplement. If your notes bear interest
at a floating or variable rate, the accompanying prospectus supplement will
describe how that rate is calculated.
PRINCIPAL PAYMENTS
Generally, each series will begin with a revolving period, which begins on
the closing date relating to that series and ends on the day before an
amortization period or accumulation period begins, during which no principal
payments will be made to the noteholders of that series.
During the controlled amortization period, which will be scheduled to begin
on the date specified in, or determined in the manner specified in, the
accompanying prospectus supplement, and during the early amortization period,
which will begin upon the occurrence of a pay out event or, if specified in the
accompanying prospectus supplement, the early accumulation period, principal
will be paid to any class of the series in the amounts and on the dates
specified in the accompanying prospectus supplement.
During an accumulation period, principal will be accumulated in a trust
account, called a "PRINCIPAL FUNDING ACCOUNT," established for the benefit of
that class of noteholders for later distribution to noteholders on the expected
principal payment date in the amounts specified in the accompanying prospectus
supplement.
Principal payments for any series or the related class will be funded from
collections of principal receivables received during the related monthly period
or periods as specified in the accompanying prospectus supplement and allocated
to that series or class and from certain other sources specified in the
accompanying prospectus supplement. In the case of a series with more than one
class of notes, the noteholders of one or more classes may receive payments of
principal at different times. The accompanying prospectus supplement will
describe the manner, timing and priority of payments of principal to noteholders
of each class.
Funds on deposit in any principal funding account for a series may be
subject to a guaranteed rate agreement or guaranteed investment contract or
other arrangement specified in the accompanying prospectus supplement intended
to assure a minimum rate of return on the investment of such funds. In order to
enhance the likelihood of the payment in full of the principal amount of a
series or a related class
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of notes at the end of an accumulation period, that series or class of notes may
be subject to a principal guaranty or other similar arrangement specified in the
accompanying prospectus supplement.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The bank has transferred and assigned to ACCS, for transfer and assignment
by ACCS to the transferor, and for transfer and assignment by the transferor to
the trust, all of the bank's right, title and interest in and to the receivables
in the accounts designated as accounts of the trust and future receivables
created in these accounts.
Each of the bank, ACCS and the transferor (including any additional
transferor) has indicated and, in connection with each future transfer of
receivables to the trust, will indicate in its computer files or books and
records that the receivables have been conveyed to the trust. In addition, each
of the bank, ACCS and the transferor (including any additional transferor) has
provided or caused to be provided to the owner trustee computer files or
microfiche lists, containing a true and complete list showing each account,
identified by account number and by total outstanding balance on the date of
transfer. None of the bank, ACCS or the transferor (including any additional
transferor) will deliver to the owner trustee any other records or agreements
relating to the accounts or the receivables, except in connection with additions
or removals of accounts. Except as stated above, the records and agreements
relating to the accounts and the receivables maintained by any of the bank, ACCS
and the transferor (including any additional transferor) are not and will not be
segregated from other documents and agreements relating to other credit card
accounts and receivables and are not and will not be stamped or marked to
reflect the transfers described above, but the computer records of each of the
bank, ACCS and the transferor (including any additional transferor) are and will
be required to be marked to evidence these transfers. Each of the bank, ACCS and
the transferor (including any additional transferor) has filed in all
appropriate jurisdictions Uniform Commercial Code financing statements with
respect to the receivables meeting the requirements of applicable law. See "Risk
Factors -- Some liens would be given priority over your notes which could cause
delayed or reduced payments" and "Certain Legal Aspects of the Receivables" in
this prospectus.
NEW ISSUANCES
The indenture provides that, pursuant to any one or more indenture
supplements, the transferor may cause the owner trustee, on behalf of the trust,
to issue one or more new series of notes and may define all principal terms of
those series. Each series issued may have different terms and enhancements than
any other series. Upon the issuance of an additional series of notes, none of
the transferor, the servicer, the indenture trustee or the trust will be
required or will intend to obtain the consent of any noteholder of any other
series previously issued by the trust. However, as a condition of a new
issuance, the indenture trustee must receive written confirmation that the new
issuance will not result in the reduction or withdrawal by any rating agency of
its rating of any outstanding series or class. The trust may offer any series
under a prospectus or other disclosure document in offerings pursuant to this
prospectus or in transactions either registered under the Securities Act of
1933, as amended (the "SECURITIES ACT"), or exempt from registration under the
Securities Act directly, through one or more other underwriters or placement
agents, in fixed-price offerings or in negotiated transactions or otherwise.
Unless otherwise specified in the accompanying prospectus supplement, a new
issuance may only occur upon the satisfaction of certain conditions provided in
the indenture. Under the indenture, the transferor may cause the owner trustee,
on behalf of the trust, to issue new series of notes by notifying the owner
trustee, the indenture trustee, the Servicer and each rating agency at least
five days in advance of the date upon which the new issuance is to occur. Under
the indenture, the notice will state the date upon which the new issuance is to
occur.
The owner trustee will execute, and the indenture trustee will
authenticate, the notes of any series only upon delivery to them of the
following items, or satisfaction of the following conditions, among others:
(1) an indenture supplement specifying the principal terms of the new
series;
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(2)(a)
an opinion of counsel to the effect that, except as otherwise
stated in the related indenture supplement, the notes of the new
series will be characterized as indebtedness for federal income
tax purposes; and
(b)
an opinion of counsel to the effect that, for federal income tax
purposes:
(i)
the issuance will not adversely affect the tax
characterization as debt of notes of any outstanding series or
class that were characterized as debt at the time of their
issuance;
(ii)
the new issuance will not cause the trust to be deemed to be
an association (or publicly traded partnership) taxable as a
corporation; and
(iii)
the new issuance will not cause or constitute an event in
which gain or loss would be recognized by any noteholder (an
opinion of counsel with respect to any matter to the effect
referred to in clause (b) with respect to any action is
referred to in this prospectus as a "TAX OPINION");
(3) if required by the related indenture supplement, the form of
credit enhancement and an appropriate credit enhancement agreement
with respect to that credit enhancement executed by the transferor
and the issuer of the credit enhancement;
(4) written confirmation from each rating agency that the new issuance
will not result in a reduction or withdrawal of its rating of any
outstanding series or class; and
(5)(a)
the new issuance will not:
(i)
cause a pay out event or an event of default; or
(ii)
materially and adversely affect the amount or timing of
payments to be made to the noteholders of any series or class
(any such effect referred to in clause (i) or this clause (ii)
with respect to any action is referred to in this prospectus
as an "ADVERSE EFFECT"); and
(b)
a certificate of an authorized officer of the transferor to the
effect that it reasonably believes the new issuance will not have
an adverse effect; and
(6) after giving effect to the new issuance, the total amount of
principal receivables plus the principal amount of any
participation interests previously transferred to the trust exceed
a specified minimum principal balance, called the "REQUIRED
MINIMUM PRINCIPAL BALANCE."
REPRESENTATIONS AND WARRANTIES
When the trust issues a new series of notes, the transferor will make
several representations and warranties to the trust in the transfer and
servicing agreement, including the following:
- the execution and delivery by the transferor of the transfer and
servicing agreement and each other document relating to the issuance to
which it is a party will not conflict with any law or any other agreement
to which the transferor is a party; and
- all required governmental approvals in connection with the execution and
delivery by the transferor of the transfer and servicing agreement and
each other document relating to the issuance have been obtained and
remain in force and effect.
If a representation or warranty made by the transferor is later found to be
materially incorrect when made, and:
- continues to be materially incorrect for 60 days after notice to the
transferor by the indenture trustee, or to the transferor and the
indenture trustee by any noteholder; and
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- as a result, the interests of the noteholders are materially and
adversely affected, and continue to be materially and adversely affected
during the 60-day period,
then the indenture trustee or noteholders holding more than 50% of the
then-outstanding principal balance of the notes of the affected series may give
notice to the transferor and the servicer (and to the indenture trustee if given
by the noteholders) declaring that a pay out event has occurred. Declaring a pay
out event will automatically begin early amortization or, if specified in the
accompanying prospectus supplement, early accumulation of principal.
The transferor will make other representations and warranties to the trust
in the transfer and servicing agreement, including the following:
- as of the closing date, the transferor is duly incorporated and in good
standing and has the authority to consummate the issuance;
- the transfer and servicing agreement and each other document relating to
the issuance to which it is a party constitutes a legal, valid and
binding obligation enforceable against the transferor; and
- the trust has all right, title and interest in the receivables in the
trust portfolio or has a first priority perfected security interest in
these receivables.
In the event:
- any representation or warranty described immediately above is breached;
and
- as a result, the interests of noteholders in the receivables in the trust
portfolio are materially and adversely affected;
then any of the owner trustee, the indenture trustee or noteholders representing
50% or more of the then-outstanding principal amount of all of the trust's
outstanding series may give notice to the transferor and the servicer (and to
the owner trustee and indenture trustee if given by the noteholders) directing
the transferor to accept reassignment of the entire trust portfolio and to pay
into the trust's collection account a cash deposit equal to the sum of the
amounts specified with respect to each outstanding series in the related
indenture supplement. However, no reassignment will be required if:
- within 60 days, or up to 120 days if specified in the notice, the
transferor cures the breach and any material adverse effect caused by the
breach; or
- on any day within the applicable 60-day to 120-day period the relevant
representation and warranty is then true and correct in all material
respects and the transferor delivers to the owner trustee a certificate
of an authorized officer describing the nature of the breach and the
manner in which the relevant representation and warranty became true and
correct.
Reassignment of the trust portfolio and the transferor's obligation to make
the cash deposit in the trust's collection account are the only remedies to any
breach of the representations and warranties described above.
The transferor makes representations and warranties in the transfer and
servicing agreement concerning the accounts and the receivables in the trust
portfolio. Only eligible accounts can be designated as accounts for the trust
portfolio. We can give you no assurance that eligible accounts will remain
eligible once added to the trust.
The transferor also represents that each receivable in the trust portfolio
is an eligible receivable when created. If a receivable in the trust portfolio
is found to be ineligible when created, and, as a result, the interests of
noteholders in any receivable in the trust portfolio are materially and
adversely affected, the transferor must accept reassignment of the principal
amount of this ineligible receivable. However, the transferor will have 60 days,
or up to 120 days if agreed to by the indenture trustee and the servicer, from
the earlier to occur of discovery of the breach by the transferor or receipt by
the transferor of written
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notice of the breach given by the owner trustee, the indenture trustee or the
servicer, to cure the ineligibility before reassignment is required.
The transferor will accept reassignment by directing the servicer to deduct
the principal amount of the ineligible receivable from the Transferor Interest.
If this would reduce the Transferor Interest below the Required Transferor
Interest, the transferor will make a cash deposit in the trust's special funding
account in the amount by which the Transferor Interest would have been reduced
below the Required Transferor Interest. Any deduction or deposit is considered a
repayment in full of the ineligible receivable. The transferor's obligation to
accept reassignment of any ineligible receivable is the only remedy for any
breach of a representation concerning eligibility of receivables.
The accompanying prospectus supplement may specify additional
representations and warranties made by the transferor when your notes are
issued. The indenture trustee is not required to make periodic examinations of
receivables in the trust portfolio or any records relating to them. However, the
servicer will deliver to the indenture trustee once each year an opinion of
counsel affirming, among other things, that no further action is necessary to
maintain the trust's perfected security interest in the receivables.
With respect to each series of notes, an "ELIGIBLE ACCOUNT" means, as of
the cut-off date (or, with respect to additional accounts, as of their date of
designation for inclusion in the trust), each account owned by the bank or other
account owner:
- which was in existence and maintained by the bank or other account owner,
as applicable;
- which is payable in United States dollars;
- the cardholder of which has provided, as his or her most recent billing
address, an address located in the United States or its territories,
possessions or military bases;
- which, except as provided below, has a cardholder who has not been
identified by the servicer in its computer files as currently being
involved in a bankruptcy proceeding;
- which has not been classified as stolen or lost;
- which has not been sold or pledged to any other party except for any sale
(i) to another account owner that has either entered into a receivables
purchase agreement or is an additional transferor or (ii) to Associates
Credit Card Services, Inc. pursuant to a receivables purchase agreement;
- which does not have receivables which have been sold or pledged by the
bank or any other account owner, as the case may be, to any other party
other than Associate Credit Card Services, Inc. pursuant to a receivables
purchase agreement;
- which, with respect to the initial accounts, is an account in existence
and maintained by the bank as of the cut-off date or as of its date of
designation for inclusion in the trust with respect to additional
accounts;
- which does not have any receivables that are defaulted receivables;
- which does not have any receivables that have been identified by the
servicer or the relevant cardholder as having been incurred as a result
of fraudulent use of any related credit card; and
- which, except as provided below, does not have any receivables that are
more than 180 days past due from the date of the initial billing
statement.
Eligible accounts may include accounts, the receivables of which have been
charged off, or with respect to which the servicer believes the related
cardholder is bankrupt, in each case as of the cut-off date or as of its date of
designation for inclusion in the trust, as applicable, if:
- the balance of all receivables included in those accounts is reflected on
the books and records of the transferor as "zero"; and
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- charging privileges for these accounts have been canceled in accordance
with the customary policies and procedures, as amended from time to time,
of the bank or other account owner, as applicable.
Under the transfer and servicing agreement, the definition of eligible
account may be changed by amendment to the agreement without the consent of the
noteholders if: (i) the transferor delivers to the owner trustee and the
indenture trustee a certificate of an authorized officer to the effect that, in
the reasonable belief of the transferor, the amendment will not as of the date
of the amendment adversely affect in any material respect the interest of the
noteholders, and (ii) the amendment will not result in a withdrawal or reduction
of the rating of any outstanding series under the trust.
With respect to each series of notes, an "ELIGIBLE RECEIVABLE" means each
receivable:
- which has arisen in an eligible account;
- which was created in compliance, in all material respects, with all
requirements of law applicable to the institution that owned the
receivable at the time of its creation, and under the terms of a credit
card agreement which complies in all material respects with all
requirements of law applicable to the bank or other account owner, as
applicable;
- with respect to which all consents, licenses or authorizations of, or
registrations with, any governmental authority required to be obtained or
given in connection with the creation of the receivable or the execution,
delivery and performance by the bank or other account owner, as
applicable, of the related credit card agreement have been duly obtained
or given and are in full force and effect;
- as to which, at the time of its transfer to the trust, the transferor or
the trust has good title, free and clear of all liens and security
interests arising under or through the transferor, other than some tax
liens for taxes not then due or which the transferor is contesting;
- which has been the subject of either a valid transfer and assignment from
the transferor to the trust of all of the transferor's right, title and
interest in the receivable (including any proceeds of the receivable), or
the grant of a first priority perfected security interest in the
receivable (and in the proceeds of the receivable), effective until the
termination of the trust;
- which is the legal, valid and binding payment obligation of the obligor
under the receivable, legally enforceable against that obligor in
accordance with its terms, subject to some bankruptcy-related exceptions;
- which, at the time of transfer to the trust, has not been waived or
modified except as permitted under the customary policies and procedures,
as amended from time to time, of the bank or other account owner, as
applicable, and then only if the waiver or modification is reflected in
the servicer's computer file of revolving credit card accounts;
- which, at the time of transfer to the trust, is not subject to any right
of rescission, setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the obligor, other
than defenses arising out of bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general;
- which, at the time of transfer to the trust, the bank or other account
owner, as applicable, has satisfied all of its obligations required to be
satisfied by that time;
- which, at the time of transfer to the trust, none of the transferor,
Associates Credit Card Services, Inc., the bank or any other account
owner, as applicable, has taken any action, or omitted to take any
action, that would impair the rights of the trust or the noteholders; and
- which constitutes an "account" or "general intangible" under Article 9 of
the UCC as then in effect in the State of Delaware or any other state
where the filing of a financing statement is required to perfect the
trust's interest in the receivables and the proceeds thereof.
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ADDITION OF TRUST ASSETS
As described above under "The Trust Portfolio," the transferor will have
the right to designate, from time to time, additional accounts to be included as
accounts for the trust. In addition, the transferor will be required to
designate additional accounts under the circumstances and in the amounts
specified in the accompanying prospectus supplement. The transferor will convey
to the trust its interest in all receivables of those additional accounts,
whether the receivables are then existing or subsequently created.
Each additional account must be an eligible account at the time of its
designation. However, additional accounts may not be of the same credit quality
as the initial accounts. Additional accounts may have been originated by the
bank or other account owner, as applicable, using credit criteria different from
those which were applied by the bank to the initial accounts or may have been
acquired by the bank or other account owner, as applicable, from an institution
which may have had different credit criteria.
The transferor is also permitted to add, from time to time, participations
and related collections to the trust. These "PARTICIPATIONS" must be undivided
interests in a pool of assets primarily consisting of receivables arising under
consumer revolving credit card accounts. Participations may be issued under
separate agreements that are similar to the agreements governing the issuance of
the notes and that entitle the holder of the participation to receive
percentages of collections generated by the pool of assets supporting the
participation. Participations may have their own credit enhancement, pay out
events, servicing obligations and servicer defaults, all of which are likely to
be enforceable by a separate trustee under these participation agreements and
may be different from those specified in this prospectus. The rights and
remedies of the trust as the holder of a participation (and, therefore, the
noteholders) will be subject to all the terms and provisions of those
participation agreements.
The transfer and servicing agreement may be amended to permit the addition
of a participation to the trust without noteholder consent if:
- the transferor delivers to the owner trustee and the indenture trustee a
certificate of an authorized officer to the effect that, in the
transferor's reasonable belief, adding the participation will not have a
material adverse effect on the interests of the noteholders; and
- the amendment allowing the addition of the participation will not result
in a withdrawal or reduction of the rating of any outstanding series
under the trust.
When the transferor transfers receivables in additional accounts or
participations, it must satisfy several conditions, including, as applicable:
- notice to the owner trustee, the indenture trustee, the servicer and each
rating agency;
- delivery and acceptance by the owner trustee of a written assignment of
receivables in the additional accounts or participations to the trust;
- delivery to the owner trustee of a computer file or microfiche list with
an accurate list of all additional accounts;
- delivery to the owner trustee and the indenture trustee of a certificate
of an authorized officer to the effect that:
- as of the date of assignment, called the "ADDITION DATE," each
additional account is an eligible account;
- any action necessary to perfect the trust's interest in the
receivables arising in the additional accounts has been taken;
- as of the addition date, none of the bank (or any other account
owner), Associates Credit Card Services, Inc. or the transferor is
insolvent; and
- in the transferor's reasonable belief, adding the receivables in
additional accounts or participations will not have a material
adverse effect on the interests of the noteholders;
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- delivery of certain opinions of counsel with respect to the transfer of
the receivables in the additional accounts or the participations to the
trust;
- in circumstances where the transferor, in its discretion, designates
additional accounts to be included as accounts for the trust or adds
participations to the trust, written confirmation from each rating agency
that the addition will not result in the reduction or withdrawal of its
rating of any outstanding series or class; and
- in circumstances where the transferor is required to designate additional
accounts to be included as accounts for the trust, or to add
participations to the trust, each rating agency then rating any series of
notes outstanding under the trust shall have previously, or, in certain
limited circumstances, within a three-month period, consented to the
designation of the additional accounts or the addition of the
participations.
In addition to the periodic reports otherwise required to be filed by the
servicer with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934, the servicer intends to file, on behalf of the
trust, a Report on Form 8-K with respect to any addition to the trust of
receivables in additional accounts or participations that would have a material
effect on the composition of the assets of the trust.
The transferor may, from time to time, designate one or more of its
affiliates as additional transferors under the transfer and servicing agreement.
In connection with this designation, the transferor will exchange the transferor
certificate for a newly issued transferor certificate modified to reflect any
additional transferor's interest in the Transferor Interest. The transfer and
servicing agreement may be amended to permit the designation of these additional
transferors and the exchange of the Transferor Certificate without noteholder
consent upon:
- delivery to the owner trustee and the indenture trustee of a tax opinion
regarding the exchange; and
- receipt of written confirmation from each rating agency that the exchange
will not result in a reduction or withdrawal of its rating of any
outstanding series or class.
REMOVAL OF ACCOUNTS
The transferor has the right to designate certain removed accounts and to
remove participations from the trust and to require the indenture trustee to
transfer all receivables in the removed accounts back to the transferor, whether
the receivables already exist or arise after the designation. The transferor's
rights to removal are subject to satisfaction of several conditions, including:
- written notice to the owner trustee, the indenture trustee, the servicer,
each rating agency and each series enhancer;
- delivery to the owner trustee for execution a written reassignment of
receivables in the removed accounts and removed participations to the
transferor or its designee;
- delivery to the owner trustee of a computer file or microfiche list with
an accurate list of all removed accounts;
- written confirmation from each rating agency that the removal will not
result in the reduction or withdrawal of its rating of any outstanding
series or class;
- delivery to the owner trustee and the indenture trustee a certificate of
an authorized officer to the effect that, in the transferor's reasonable
belief:
- the removal will not have a material adverse effect on the interests
of the noteholders;
- the removal will not cause a pay out event or event of default; and
- the accounts to be removed were not selected through a selection
process believed to be materially adverse to the interests of the
noteholders; and
- any other conditions specified in the accompanying prospectus supplement.
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The conditions described above relating to rating agency confirmation and
the delivery of an officer's certificate will not apply if the transferor is
purchasing receivables in accounts designated for re-purchase by a merchant or
co-branding participant upon termination of its affinity agreement with the bank
or other account owner, as applicable.
In all cases of removal, the transferor will purchase the related
receivables by directing the servicer to deduct the principal amount of those
receivables from the Transferor Interest. If this would reduce the Transferor
Interest below the Required Transferor Interest, the transferor will make a cash
deposit in the trust's special funding account in the amount by which the
Transferor Interest would have been reduced below the Required Transferor
Interest. Any deduction or deposit is considered a payment in full for those
receivables.
COLLECTION AND OTHER SERVICING PROCEDURES
For each series of notes, the servicer will be responsible for servicing
and administering the receivables in accordance with the servicer's policies and
procedures for servicing credit card receivables comparable to the receivables.
The servicer will be required to maintain fidelity bond coverage insuring
against losses through wrongdoing of its officers and employees who are involved
in the servicing of credit card receivables covering such actions and in such
amounts as the servicer believes to be reasonable from time to time.
With respect to the bank portfolio, certain data processing and
administrative functions associated with servicing the receivables are performed
by FDR. If FDR were to fail or become insolvent, delays in processing and
recovery of information with respect to charges incurred by the respective
cardholders could occur and the replacement of the services FDR currently
provides to ACCS could be time-consuming. As a result, delays in payments to
noteholders could occur.
DISCOUNT OPTION
The transferor, has the option to reclassify a percentage, called the
"DISCOUNT PERCENTAGE," of collections of principal receivables in the trust
portfolio as collections of finance charge receivables. This option is referred
to as the "DISCOUNT OPTION." The transferor may use the Discount Option to
compensate for a decline in the portfolio yield, but only if there would be
sufficient principal receivables to allow for that discounting. Exercise of the
Discount Option would result in a larger amount of collections of finance charge
receivables and a smaller amount of collections of principal receivables. By
doing so, the transferor would reduce the likelihood that a pay out event would
occur as a result of a decreased portfolio yield and, at the same time, would
increase the likelihood that the transferor will have to add principal
receivables to the trust.
If the Discount Percentage is greater than zero, an amount of collections
of principal receivables in the trust portfolio for each monthly period equal to
the product of:
- the Discount Percentage times
- total collections of principal receivables in the trust portfolio
will be considered collections of finance charge receivables in the trust
portfolio and allocated with all other collections of finance charge receivables
in the trust portfolio.
To exercise the Discount Option, the transferor must satisfy the conditions
in the transfer and servicing agreement, including written confirmation from
each rating agency that use of the Discount Option will not result in a
reduction or withdrawal of its rating of any outstanding series or class.
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TRUST ACCOUNTS
The servicer will establish and maintain in the name of the indenture
trustee, for the benefit of noteholders of all series, a "COLLECTION ACCOUNT,"
which shall be either (a) a segregated trust account established with the
corporate trust department of a securities intermediary or (b) a segregated
account with a securities intermediary that is an eligible institution (a
"QUALIFIED ACCOUNT"). The servicer will also establish and maintain with a
securities intermediary in the name of the indenture trustee, a "SPECIAL FUNDING
ACCOUNT," which also is required to be a qualified account. References to the
"SECURITIES INTERMEDIARY" shall refer to [ ] or to any other
entity which is a person, including a bank or broker, that in the ordinary
course of its business maintains securities accounts for others and is acting in
that capacity and which is also 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 having a
credit rating from each rating agency in one of its generic credit rating
categories which signifies investment grade. An "ELIGIBLE INSTITUTION" is
defined as:
(1)(a) a depository institution, which may include the owner trustee
or the indenture trustee;
(b) 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
(c) which at all times (i) is a member of the FDIC and (ii) has
either a long-term unsecured debt rating or a certificate of
deposit rating acceptable to each rating agency selected by the
transferor to rate a series or class of notes; or
(2) any other institution acceptable to each rating agency selected
by the transferor to rate a series or class of notes.
Funds in the collection account and the special funding account will be
assets of the trust and will be invested, at the direction of the servicer, in
"ELIGIBLE INVESTMENTS" consisting of securities, instruments, security
entitlements or other investment property (other than securities issued by, or
obligations of, Associates Credit Card Services, Inc.) which evidence:
(1) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States
of America;
(2) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of
depository institutions or trust companies incorporated under
the laws of the United States of America or any state thereof,
including the District of Columbia (or domestic branches of
foreign banks) and subject to supervision and examination of
federal or state banking or depository institution authorities;
provided, that at the time of the trust's investment or
contractual commitment to invest, the short-term debt rating of
that depository institution or trust company shall be in the
highest investment category of Standard & Poor's Ratings Group
("STANDARD & POOR'S") and Moody's Investors Service Inc.
("MOODY'S");
(3) commercial paper or other short-term obligations having
original or remaining maturities of no more than 30 days
(including short-term obligations of AFCC and Associates
Corporation of North America) having, at the time of the
trust's investment or contractual commitment to invest, a
rating in the highest rating category of Standard & Poor's and
Moody's;
(4) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC having, at the time of the
trust's investment, a rating in the highest rating category of
Standard & Poor's and Moody's;
(5) bankers' acceptances (having original maturities of no more
than 365 days) issued by any depository institution or trust
company referred to in clause (2) above;
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(6) money market funds having, at the time of the trust's
investment, a rating in the highest rating category of Standard
& Poor's and Moody's (including funds for which the indenture
trustee or any of its affiliates is investment manager or
advisor);
(7) time deposits (having maturities not later than the next
distribution date) other than those referred to in clause (4)
above, with a person whose commercial paper has a credit rating
satisfactory to Standard & Poor's and Moody's; or
(8) any other investment upon receipt of written confirmation from
each rating agency that the additional form of investment will
not result in a reduction or withdrawal of its rating of any
outstanding series or class.
The indenture trustee, acting as the initial paying agent (together with
any successor to the indenture trustee acting in that capacity, and any entity
specified in an indenture supplement to act in that capacity for the related
series, referred to collectively as the "PAYING AGENT"), will have the revocable
power to withdraw funds from the collection account for the purpose of making
payments to the noteholders of any series pursuant to the related indenture
supplement.
FUNDING PERIOD
For any series of notes, the total amount of principal receivables in the
trust available to that series may be less than the total principal amount of
the notes of that series. If this occurs, the initial Invested Amount for that
series of notes will be less than the principal amount of that series of notes.
In this case, the related prospectus supplement will set forth the terms of the
"FUNDING PERIOD," which is the period from that series' closing date to the
earlier of:
- the date that series' Invested Amount equals the principal amount of that
series of notes; and
- the date specified in the related prospectus supplement.
During the funding period, the portion of the series amount not invested in
receivables will be maintained in a "PRE-FUNDING ACCOUNT," which is a trust
account established with the indenture trustee for the benefit of the
noteholders of that series. On the closing date for that series of notes, this
amount may be up to 100% of the principal balance of that series of notes. The
Invested Amount for that series will increase as new receivables are transferred
to the trust or as the Invested Amounts of other outstanding series are reduced.
The Invested Amount may decrease due to charge-offs allocated to the series.
During the funding period, funds on deposit in the pre-funding account will
be paid to the transferor as the Invested Amount increases. If the Invested
Amount for that series is not increased so that it equals the principal balance
of the notes of that series by the end of the funding period, any amount
remaining in the pre-funding account will be repaid to noteholders. This type of
event may also cause repayment of other amounts to noteholders, as set forth in
the related prospectus supplement.
The prospectus supplement for a series with a funding period will set
forth:
- the series' initial Invested Amount;
- the series' full Invested Amount, which is the initial principal balance
of the series of notes;
- the date on which the series' Invested Amount is expected to equal the
full Invested Amount;
- the date by which the funding period will end; and
- what other events, if any, will occur if the end of the funding period is
reached before the full Invested Amount is funded.
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INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
The servicer will allocate all collections of finance charge receivables,
all collections of principal receivables and all receivables in accounts which
were written off as uncollectible by the servicer, called "DEFAULTED ACCOUNTS,"
among:
- each series issued and outstanding;
- the Transferor Interest; and
- if the related prospectus supplement so states, to any credit enhancement
providers.
All allocations of these amounts will be made through the respective Investor
Percentages for each series, the Transferor Percentage and, where applicable,
the percentage interest of certain credit enhancement providers, called the
"CREDIT ENHANCEMENT PERCENTAGE." The related prospectus supplements will set
forth how the Investor Percentages are calculated.
The Transferor Percentage is, in all cases, equal to 100% minus:
- the total Investor Percentages for all outstanding series; and, if
applicable, minus
- the total Credit Enhancement Percentages for all outstanding series.
APPLICATION OF COLLECTIONS
Except in the circumstance described below, the servicer must deposit into
the collection account, no later than two business days after processing, all
payments made on receivables in the trust portfolio. The servicer must also
allocate these deposits between accounts and to various parties, as described
below. However, the servicer will be able to make these deposits on a monthly or
other periodic basis if one of the following is true:
(1)(a) Associates Credit Card Services, Inc. remains the servicer
under the transfer and servicing agreement;
(b) Associates First Capital Corporation maintains a commercial
paper rating of not less than A-1 by Standard & Poor's and P-1
by Moody's; and
(c) Associates Credit Card Services, Inc. remains a wholly-owned
subsidiary of Associates First Capital Corporation (directly or
indirectly) and, in the event of a material change in the
financial relationship between them:
(i) Associates Credit Card Services, Inc. notifies each
rating agency; and
(ii) written confirmation is received from each rating agency
that the material change will not result in a reduction
or withdrawal of its rating of any outstanding series or
class; or
(2) any other arrangements are made and written confirmation is
received from each rating agency that the arrangements will not
result in a reduction or withdrawal of its rating of any
outstanding series or class.
The servicer must make daily or periodic deposits to the collection account
only to the extent that the funds are needed for deposit into other trust
accounts or distribution to noteholders or other parties. If the collection
account balance ever exceeds this amount for deposit or distribution, the
servicer will be able to withdraw the excess. Subject to the immediately
preceding sentence, the servicer may retain its servicing fee with respect to
any series and will not be required to deposit it in the collection account.
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Each time a collection account deposit is made, the servicer will withdraw
from, or retain in, the collection account, as applicable, the following amounts
and apply them as indicated:
(1) the Transferor Percentage of collections of finance charge
receivables and principal receivables in the trust portfolio will
be paid or held for payment to the holders of the transferor
certificates, provided that collections of principal receivables
allocable to the holders of the transferor certificates will be:
(a) paid to the holders of the transferor certificates only if the
Transferor Interest exceeds zero; or
(b) deposited in the special funding account;
(2) for each series, the relevant Investor Percentage of collections
of finance charge receivables in the trust portfolio will be
retained in the collection account for allocation and payment as
set forth in the related prospectus supplement;
(3) if the series is in its revolving period, the applicable Investor
Percentage of collections of principal receivables in the trust
portfolio allocated to the series will be paid or held for payment
to the holders of the transferor certificates, provided that
collections of principal receivables will be:
(a) paid to the holders of the transferor certificates only if the
Transferor Interest is greater than a specified minimum level,
called the "REQUIRED TRANSFEROR INTEREST"; or
(b) deposited in the special funding account;
(4) if the series is in its controlled accumulation period, controlled
amortization period or early accumulation period, as applicable,
the applicable Investor Percentage of collections of principal
receivables in the trust portfolio allocated to the series up to
the amount, if any, specified in the accompanying prospectus
supplement will be retained in the collection account or deposited
in a principal funding account, as applicable, for allocation and
payment to noteholders as described in the accompanying prospectus
supplement; provided that if collections of principal receivables
exceed the principal payments which may be allocated or
distributed to noteholders, the excess will be paid to the holders
of the transferor certificates, subject to the limitations
described in clause (3) above; and
(5) if the series is in its early amortization period, the applicable
Investor Percentage of collections of principal receivables in the
trust portfolio will be retained in the collection account for
application and payment as provided in the accompanying prospectus
supplement.
In the case of a series of notes having more than one class, the amounts in
the collection account will be allocated and applied to each class in the manner
and order of priority described in the accompanying prospectus supplement.
Any amounts collected in respect of principal receivables and not paid to
the holders of the transferor certificates because the Transferor Interest is
less than the Required Transferor Interest as described in paragraph (3) above
(with respect to each series, "UNALLOCATED PRINCIPAL COLLECTIONS"), together
with any adjustment payments as described below, will be paid to and held in the
special funding account and paid to the holders of the transferor certificates
if, and only to the extent that, the Transferor Interest is greater than the
Required Transferor Interest. If an amortization period or accumulation period
has commenced, unallocated principal collections will be held for distribution
to the noteholders on the dates specified in the accompanying prospectus
supplement or accumulated for distribution on the expected principal payment
date, as applicable, and distributed to the noteholders of each class or held
for and distributed to the noteholders of other series of notes issued by the
trust in the manner and order of priority specified in the accompanying
prospectus supplement.
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SHARED EXCESS FINANCE CHARGE COLLECTIONS
If a series is identified in the prospectus supplement for that series as
included in a group, collections of finance charge receivables in the trust
portfolio allocated to the series in excess of the amount needed to make
deposits or payments may be shared with other series identified in the
prospectus supplements for those other series as included in the same group. If
one series requires more collections of finance charge receivables than
allocated through its Investor Percentage, it will have access to all of these
shared excess finance charge collections in other series in its group. If two or
more series require more collections of finance charge receivables, excess
finance charge collections in the group will be shared among the series in the
manner and priority set forth in the related prospectus supplements.
SHARED PRINCIPAL COLLECTIONS AND TRANSFEROR PRINCIPAL COLLECTIONS
If a series is allocated principal in excess of the amount needed for
deposit or distribution, this excess amount will be available to make principal
payments or deposits required by other series. These shared principal
collections may be limited to series identified in the prospectus supplements
for those series as included in the same group. If collections of principal
receivables in the trust portfolio allocated to a series are shared with another
series, the Invested Amount for the series from which collections were shared
will not be reduced.
In addition, collections of principal receivables in the trust portfolio
otherwise payable to the holders of the transferor interest may be available to
make principal payments or deposits required by noteholders of one or more
series. These shared transferor principal collections may be limited to series
identified in the prospectus supplements for those series as included in the
same group.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES; INVESTOR CHARGE-OFFS
Unless otherwise specified in the accompanying prospectus supplement, for
each series of notes, on the earlier of (a) the third business day and (b) the
fifth calendar day (or, if the fifth calendar day is not a business day, then
the preceding business day) preceding the seventeenth day of each calendar month
(the "DETERMINATION DATE"), the servicer will calculate the aggregate Investor
Default Amount for the preceding monthly period, which will be equal to the
aggregate amount of the Investor Percentage of principal receivables in
defaulted accounts; that is, accounts which in that monthly period were written
off as uncollectible in accordance with the servicer's policies and procedures
for servicing credit card receivables, comparable to the receivables. If so
provided in the accompanying prospectus supplement, an amount equal to the
Investor Default Amount for any monthly period may be paid from other amounts,
including from credit enhancement, and applied to pay principal to noteholders
or, subject to certain limitations, the holder of the Transferor Interest, as
appropriate.
With respect to each series of notes, the Invested Amount with respect to
that series will be reduced by the amount of Investor Charge-Offs for any
monthly period. Investor Charge-Offs will be reimbursed on any distribution date
to the extent amounts on deposit in the collection account and otherwise
available exceed the interest, fees and any aggregate Investor Default Amount
payable on that date. This reimbursement of Investor Charge-Offs will result in
an increase in the Invested Amount with respect to that series.
If the servicer adjusts the amount of any principal receivable because of
transactions occurring in respect of a rebate or refund to a cardholder, or
because that principal receivable was created in respect of merchandise which
was refused or returned by a cardholder, then the Transferor Interest will be
reduced, on a net basis, by the amount of the adjustment. In addition, the
Transferor Interest will be reduced, on a net basis, as a result of transactions
in respect of any principal receivable which was discovered as having been
created through a fraudulent or counterfeit charge.
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DEFEASANCE
If so specified in the prospectus supplement relating to a series, the
transferor may terminate its substantive obligations in respect of that series
or the trust by depositing with the indenture trustee, from amounts
representing, or acquired with, collections of receivables, money or eligible
investments sufficient to make all remaining scheduled interest and principal
payments on that series or all outstanding series of notes of the trust, as the
case may be, on the dates scheduled for those payments and to pay all amounts
owing to any credit enhancement provider with respect to that series or all
outstanding series, as the case may be, if that action would not result in a pay
out event for any series. Prior to its first exercise of its right to substitute
money or eligible investments for receivables, the transferor will deliver to
the indenture trustee an opinion of counsel to the effect that:
- for federal income tax purposes, the deposit and termination of
obligations will not cause the trust, or any portion of the trust, to be
deemed to be an association (or publicly traded partnership) taxable as a
corporation;
- the deposit and termination of obligations will not result in the trust
being required to register as an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; and
- if the transferor's long-term unsecured debt obligations are not rated at
least P-3 or Baa3, respectively, by Moody's, the deposit and termination
of obligations would not be a fraudulent conveyance (based in reliance on
certain certificates to the effect that the receivables in the trust
portfolio and termination of obligations constitute fair value for
consideration paid and as to the solvency of the transferor).
FINAL PAYMENT OF PRINCIPAL; TERMINATION
For each series, the transferor has the option to repurchase the notes at
any time after the remaining outstanding principal amount of that series is 10%
or less of the initial principal amount of that series (as increased by the
principal balance of any notes of that series issued after the related closing
date) if certain conditions set forth in the related indenture supplement are
met. The repurchase price will equal:
- the outstanding principal amount of the notes of that series, plus
- any accrued and unpaid interest through the day preceding the
distribution date on which the repurchase occurs or, if the repurchase
occurs on any other date, through the day preceding the distribution date
immediately following the repurchase date.
Any amounts on deposit in the principal funding account for that series
will be applied toward the repurchase price on behalf of the transferor.
For any series of notes, the related prospectus supplement may specify
different conditions to the transferor's repurchase option and a different
method for determining the repurchase price.
The notes of each series will be retired on the day following the date on
which the final payment of principal is scheduled to be made to the noteholders,
whether as a result of optional reassignment to the transferor or otherwise.
Each prospectus supplement will specify the series termination date with respect
to the related series of notes. However, the notes may be subject to prior
termination as provided above. For any series the failure to pay principal of
the related notes on the series termination date will be an event of default and
the indenture trustee or holders of a specified percentage of the notes of that
series will have certain rights described under "The Indenture -- Events of
Default; Rights upon Event of Default" in this prospectus.
Unless the servicer and the holder of the Transferor Interest instruct the
indenture trustee otherwise, the trust will terminate on the earlier of (a) the
day after the distribution date on which the aggregate Invested Amount and
Enhancement Invested Amount, if any, with respect to each series outstanding is
zero, or (b) January 1, 20 , (this date, the "TRUST TERMINATION DATE"). Upon
the termination of the
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trust and the surrender of the transferor certificates, the indenture trustee
shall convey to the holders of the transferor certificates all right, title and
interest of the trust in and to the receivables and other funds of the trust.
PAIRED SERIES
The prospectus supplement for a series of notes will specify whether that
series may be paired with a previously or later issued series so that a decrease
in the Invested Amount of the previously issued series results in a
corresponding increase in the Invested Amount of the later issued series. We
call each of these series a "PAIRED SERIES." In general, a series may be issued
as a paired series so the trust can fund the amount by which the previously
issued series has amortized and will amortize in the future.
If a pay out event occurs for the previously issued series or its paired
series when the previously issued series is amortizing, the Investor Percentage
for the allocation of collections of principal receivables for the previously
issued series may be reset to a lower percentage as described in the prospectus
supplement for that series and the period over which it will amortize may be
lengthened as a result. The extent to which the period over which it amortizes
is lengthened will depend on many factors, only one of which is the reduction of
its Investor Percentage. For a discussion of these factors, see "Risk Factors --
Issuance of additional series by the trust may affect the timing of payments to
you" in this prospectus and "Maturity Considerations" in the accompanying
prospectus supplement.
PAY OUT EVENTS
Unless otherwise specified in the accompanying prospectus supplement, as
described above, the revolving period will continue through the date specified
in the accompanying prospectus supplement unless a pay out event occurs prior to
that date. A "PAY OUT EVENT" occurs with respect to all series issued by the
trust upon the occurrence of any of the following events:
(a) certain bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the transferor (including
any additional transferor), Associates Credit Card Services, Inc. or
the bank, unless written confirmation is received from each rating
agency that the removal of the bank from this pay out event will not
result in a reduction or withdrawal of its rating of any outstanding
series or class;
(b) the transferor is unable for any reason to transfer receivables to
the trust in accordance with the provisions of the transfer and
servicing agreement; or
(c) the trust becomes subject to regulation as an "investment company"
within the meaning of the Investment Company Act of 1940.
In addition, a pay out event may occur with respect to any series upon the
occurrence of any other event specified in the accompanying prospectus
supplement. On the date on which a pay out event is deemed to have occurred, the
early amortization period or, if so specified in the accompanying prospectus
supplement, the early accumulation period will commence. If, because of the
occurrence of a pay out event, the early amortization period begins earlier than
the scheduled commencement of an amortization period or prior to an expected
principal payment date, noteholders will begin receiving distributions of
principal earlier than they otherwise would have, which may shorten the average
life of the notes.
In addition to the consequences of a pay out event discussed above, unless
otherwise specified in the accompanying prospectus supplement, if certain
bankruptcy, insolvency or similar proceedings under the Bankruptcy Code or
similar laws occur with respect to the transferor, on the day of that event the
transferor will immediately cease to transfer principal receivables to the trust
and promptly give notice to the indenture trustee and the owner trustee of this
event. Any principal receivables transferred to the trust prior to the event, as
well as collections on those principal receivables and finance charge
receivables accrued at any time with respect to those principal receivables,
will continue to be part of the trust assets
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and will be applied as specified above in "-- Application of Collections" and in
the accompanying prospectus supplement.
If the only pay out event to occur is either the insolvency of the
transferor or the commencement of a bankruptcy case by or against the
transferor, the bankruptcy court may have the power to require the continued
transfer of principal receivables to the trust. See "Risk Factors -- If a
conservator or receiver were appointed for Associate National Bank (Delaware),
or if Associates Credit Card Services, Inc. or Associates Credit Card
Receivables Corp. became a debtor in a bankruptcy case, delays or reductions in
payment of your notes could occur" in this prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer receives a fee for its servicing activities and reimbursement
of expenses incurred in administering the trust. This servicing fee accrues for
each outstanding series in the amounts and calculated on the balances set forth
in the related prospectus supplement. Each series' servicing fee is payable each
period from collections of finance charge receivables allocated to the series;
some series, however, may direct all or a portion of the Interchange arising
from the accounts toward paying the servicing fee. Neither the trust nor the
noteholders are responsible for any servicing fee allocable to the Transferor
Interest.
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The servicer may not resign from its obligations and duties under the
transfer and servicing agreement, except:
- upon a determination that performance of its duties is no longer
permissible under applicable law; or
- upon assumption of its obligations and duties by one of its affiliates
that is a wholly owned subsidiary of Associates First Capital Corporation
or by appointment of any other eligible successor if written confirmation
is received from each rating agency that the appointment will not result
in a reduction or withdrawal of its rating of any outstanding series or
class.
If:
- within 120 days of the determination that the servicer is no longer
permitted to act as servicer; and
- the indenture trustee is unable to appoint a successor,
the indenture trustee will act as servicer. If the indenture trustee is unable
to act as servicer, it will petition an appropriate court to appoint an eligible
successor.
The servicer may not resign until the indenture trustee or another
successor has assumed the servicer's obligations and duties. Associates Credit
Card Services, Inc. is permitted to assign part or all of its obligations and
duties as servicer to one of its affiliates if it guarantees its affiliates
performance.
The servicer will indemnify the trust, the owner trustee and the indenture
trustee for any losses suffered as a result of (a) its actions or omissions as
servicer or (b) the administration by the owner trustee of the trust, except in
each case, for losses resulting from the negligence or willful misconduct of the
owner trustee or the indenture trustee, as applicable.
Neither the servicer nor any of its directors, officers, employees or
agents will be under any other liability to the trust, the owner trustee, the
indenture trustee, the noteholders, any series enhancer or any other person for
any action taken, or for refraining from taking any action, in good faith under
the transfer and servicing agreement. However, none of them will be protected
against any liability resulting from willful wrongdoing, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of obligations and duties under the transfer and servicing agreement. In
addition, the transfer and servicing agreement provides that the servicer is not
under any obligation to appear in, prosecute or defend
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any legal action which is not incidental to its servicing responsibilities under
the transfer and servicing agreement and which in its opinion may expose it to
any expense or liability.
Each transferor will be severally, but not jointly, liable for all of its
obligations, covenants, representations and warranties under the transfer and
servicing agreement. No transferor nor any of its directors, officers,
employees, incorporators or agents will be liable to the trust, the owner
trustee, the indenture trustee, the noteholders, any series enhancer or any
other person for any action taken, or for refraining from taking any action, in
good faith under the transfer and servicing agreement. However, none of them
will be protected against any liability resulting from willful wrongdoing, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of obligations and duties under the transfer and servicing
agreement.
The trust agreement provides that the transferor may transfer its interest
in all or a portion of the transferor certificate by exchanging its transferor
certificate for a newly issued transferor certificate and a second certificate,
called a "SUPPLEMENTAL CERTIFICATE." The terms of the supplemental certificate
must be defined in a supplement to the trust agreement. Before a supplemental
certificate is issued, the following must occur:
- notice of the exchange to the owner trustee, the indenture trustee, the
servicer and each rating agency;
- delivery to the owner trustee and the indenture trustee of an executed
supplement to the trust agreement;
- written confirmation from each rating agency that the exchange will not
result in a reduction or withdrawal of its rating of any outstanding
series or class;
- delivery to the owner trustee and the indenture trustee of a certificate
of an authorized officer of the transferor to the effect that it
reasonably believes the exchange will not have an adverse effect;
- delivery to the owner trustee and the indenture trustee of a tax opinion
regarding the exchange; and
- the total amount of principal receivables in the trust portfolio, plus
the principal amount of any participations transferred to the trust must
exceed the Required Minimum Principal Balance on the date of the
exchange.
No supplemental certificate may be transferred or exchanged unless a tax
opinion is delivered to the owner trustee and the indenture trustee regarding
the exchange.
The transferor or the servicer may consolidate with, merge into, or sell
its business to, another entity, in accordance with the transfer and servicing
agreement, and the surviving entity will be the successor to the transferor or
servicer, as the case may be, on the following conditions:
- execution of an agreement relating to the succession that supplements the
transfer and servicing agreement;
- in the case of a succession relating to the transferor, (i) delivery to
the owner trustee and the indenture trustee of a certificate of an
authorized officer of the transferor and an opinion of counsel, each
addressing compliance with the applicable provisions of the transfer and
servicing agreement and the validity and enforceability of the
supplemental agreement and (ii) written confirmation from each rating
agency that the succession will not result in a reduction or withdrawal
of its rating of any outstanding series or class; and
- in the case of a succession relating to the servicer, (i) delivery to the
owner trustee and the indenture trustee of a certificate of an authorized
officer of the servicer and an opinion of counsel, each addressing
compliance with the applicable provisions of the transfer and servicing
agreement, (ii) notification of the succession to each rating agency and
(iii) that the successor is eligible to act as servicer.
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SERVICER DEFAULT
The transfer and servicing agreement specifies the duties and obligations
of the servicer. A failure by the servicer to perform its duties or fulfill its
obligations can result in a Servicer Default.
A "SERVICER DEFAULT" includes each of the following:
(1) failure by the servicer to make any payment, transfer or deposit,
or to give instructions or to give notice to the indenture trustee
to do so, on the required date under the transfer and servicing
agreement, the indenture or any indenture supplement or within the
applicable grace period not exceeding 5 business days;
(2) failure on the part of the servicer to observe or perform any of
its other covenants or agreements if the failure:
(a) materially adversely affects noteholders of any series issued
and outstanding under the trust; and
(b) continues unremedied for a period of 60 days after written
notice to (i) the servicer by the owner trustee or the
indenture trustee, or (ii) the servicer, the owner trustee and
the indenture trustee by noteholders of 10% or more of the
then-outstanding principal amount of all of the trust's
outstanding series (or, where the servicer's failure does not
relate to all series, 10% or more of the then-outstanding
principal amount of all series affected); or
(c) the assignment or the delegation by the servicer of its duties,
except as specifically permitted under the transfer and
servicing agreement;
(3) any representation, warranty or certification made by the servicer
in the transfer and servicing agreement, or in any certificate
delivered pursuant to the transfer and servicing agreement, proves
to have been incorrect when made if it:
(a) materially adversely affects noteholders of any series issued
and outstanding under the trust; and
(b) continues to be incorrect and to materially adversely affect
those noteholders for a period of 60 days after written notice
to (i) the servicer by the owner trustee or the indenture
trustee, or (ii) the servicer, the owner trustee and the
indenture trustee by noteholders of 10% or more of the
then-outstanding principal amount of all of the trust's
outstanding series (or, where the servicer's inaccuracy does
not relate to all series, 10% or more of the then-outstanding
principal amount of all series affected);
(4) specific bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to the servicer; or
(5) any other event specified in the accompanying prospectus
supplement.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in clause (1) above for a period of 10 business days after the
applicable grace period, or referred to under clause (2) or (3) for a period of
60 business days after the applicable grace period, will not constitute a
Servicer Default if the delay or failure could not be prevented by the exercise
of reasonable diligence by the servicer and the delay or failure was caused by
an act of God or other similar occurrence. Upon the occurrence of any of these
events, the servicer shall not be relieved from using all commercially
reasonable efforts to perform its obligations in a timely manner in accordance
with the terms of the transfer and servicing agreement and the servicer must
provide the indenture trustee, the owner trustee each transferor and any
provider of enhancement and/or any issuer of any third-party credit enhancement
(a "SERIES ENHANCER") with an officer's certificate giving prompt notice of its
failure or delay, together with a description of its efforts to perform its
obligations.
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If a Servicer Default occurs, for as long as it has not been remedied, the
indenture trustee or noteholders representing a majority of the then-outstanding
principal amount of all of the trust's outstanding series may give a notice to
the servicer and the owner trustee (and to the indenture trustee if given by the
noteholders) terminating all of the rights and obligations of the servicer under
the transfer and servicing agreement and the indenture trustee may appoint a new
servicer. The indenture trustee will as promptly as possible appoint an eligible
successor to the servicer. If no successor has been appointed or has accepted
the appointment by the time the servicer ceases to act as servicer, the
indenture trustee will automatically become the successor. If the indenture
trustee is unable to obtain bids from eligible servicers and the servicer
delivers a certificate of an authorized officer to the effect that it cannot in
good faith cure the Servicer Default which gave rise to a transfer of servicing,
and if the indenture trustee is legally unable to act as successor, then the
indenture trustee will give the transferor a right of first refusal to purchase
the interests of the noteholders in the trust on the distribution date in the
next calendar month at a price equal to the sum of the amounts specified for
each series outstanding in the related indenture supplement.
The rights and obligations of the transferor under the transfer and
servicing agreement will be unaffected by any change in servicer.
In the event of the bankruptcy of the servicer, the bankruptcy court may
have the power to prevent either the indenture trustee or the noteholders from
appointing a successor servicer.
REPORTS TO NOTEHOLDERS
Noteholders of each series issued by the trust will receive reports with
information on the series and the trust. The paying agent will forward to each
noteholder of record a report, prepared by the servicer, for its series on the
distribution dates for that series. The report will set forth information as
specified in the related prospectus supplement. If a series has multiple
classes, information will be provided for each class, as specified in the
related prospectus supplement.
Periodic information to noteholders generally will include:
- the total amount distributed;
- the amount of principal and interest for distribution
- collections of principal receivables and finance charge receivables
allocated to the series;
- the aggregate amount of principal receivables, the Invested Amount and
the Invested Amount as a percentage of the aggregate amount of the
principal receivables in the trust portfolio;
- the aggregate outstanding balance of accounts broken out by delinquency
status;
- the aggregate defaults allocated to the series;
- Investor Charge-Offs for the series and any reimbursements of previous
Investor Charge-Offs;
- the monthly servicing fee for that series;
- the amount available under any enhancement and credit enhancement, if
any, for the series or each class of the series;
- the "pool factor," which is the ratio of the current Invested Amount to
the initial Invested Amount;
- the Base Rate and Portfolio Yield (each as defined in the accompanying
prospectus supplement) for the series; and
- if the series or a class of the series bears interest at a floating or
variable rate, information relating to that rate.
By January 31 of each calendar year, the paying agent will also provide to
each person who at any time during the preceding calendar year was a noteholder
of record a statement, prepared by the servicer, containing the type of
information presented in the periodic reports, aggregated for that calendar year
or
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the portion of that calendar year that the person was a noteholder, together
with other information that is customarily provided to holders of debt, to
assist noteholders in preparing their United States tax returns.
EVIDENCE AS TO COMPLIANCE
The transfer and servicing agreement provides that on or before April 30 of
each calendar year, the servicer will have a firm of independent certified
public accountants furnish a report showing that, for the prior calendar year:
- the accounting firm has reviewed management's assertion that the system
of internal control over servicing of securitized credit card receivables
met the criteria for effective internal control and that, in the
accounting firm's opinion, management's assertion is fairly stated in all
material respects, and
- the accounting firm has compared certain amounts set forth in the
periodic reports prepared by the servicer for the prior calendar year
with the servicer's computer reports and that, in the accounting firm's
opinion, the amounts are in agreement, except for any discrepancies
disclosed.
The transfer and servicing agreement also provides that by April 30 of each
calendar year, the servicer will deliver to the owner trustee, the indenture
trustee and each rating agency a certificate of an authorized officer to the
effect that the servicer has fully performed its obligations under the transfer
and servicing agreement during the preceding year, or, if there has been a
default in the performance of any of its obligations, specifying the nature and
status of default.
AMENDMENTS
The transfer and servicing agreement may be amended by the transferor, the
servicer and the owner trustee, without the consent of the indenture trustee or
the noteholders of any series, on the following conditions:
- the transferor delivers to the owner trustee and the indenture trustee a
certificate of an authorized officer stating that, in the transferor's
reasonable belief, the amendment will not have a material adverse effect
on the interests of the noteholders; and
- written confirmation from each rating agency that the amendment will not
result in a reduction or withdrawal of its rating of any outstanding
series or class.
The transfer and servicing agreement may also be amended by the servicer
and the owner trustee at the direction of the transferor, without the consent of
the indenture trustee, the noteholders of any series or the series enhancers for
any series to add, modify or eliminate any provisions necessary or advisable in
order to enable the trust or any portion of the trust to (i) qualify as, and to
permit an election to be made for the trust to be treated as, a "financial asset
securitization investment trust" under the Internal Revenue Code of 1986, as
amended and (ii) avoid the imposition of state or local income or franchise
taxes on the trust's property or its income. The following conditions apply for
the amendments described in this paragraph:
- delivery to the owner trustee and the indenture trustee of a certificate
of an authorized officer of the transferor to the effect that the
requirements under the transfer and servicing agreement applicable to the
proposed amendments have been met;
- receipt of written confirmation from each rating agency that the
amendment will not result in a reduction or withdrawal of its rating of
any outstanding series or class; and
- the amendment must not affect the rights, duties or obligations of the
indenture trustee or the owner trustee under the transfer and servicing
agreement.
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The amendments which the transferor may make without the consent of the
noteholders of any series or the series enhancers for any series in accordance
with the preceding paragraph may include, without limitation, the addition of a
sale of receivables in the trust portfolio.
The transfer and servicing agreement may also be amended by the transferor,
the servicer and the owner trustee with the consent of noteholders representing
at least 66 2/3% of the then-outstanding principal balance of the notes of all
series adversely affected by the amendment. Even with consent, no amendment may
occur if it:
(1) reduces the amount of, or delays the timing of:
(a) any distributions to be made to noteholders of any series
(changes in pay out events or events of default that decrease
the likelihood of the occurrence of those events will not be
considered delays in the timing of distributions for purposes
of this clause);
(b) deposits of amounts to be distributed; or
(c) the amount available under any series enhancement, without the
consent of each affected noteholder;
(2) changes the manner of calculating the interests of any noteholder,
without the consent of each affected noteholder;
(3) reduces the percentage of the outstanding principal balance of the
notes required to consent to any amendment, without the consent of each
affected noteholder; or
(4) adversely affects the rating of any series or class by each rating
agency, without the consent of noteholders representing at least 66 2/3% of
the then-outstanding principal balance of the notes of each affected series
or class.
THE INDENTURE
The following summarizes certain terms of the indenture and is qualified in
its entirety by reference to the indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
With respect to the notes of any series, "EVENTS OF DEFAULT" under the
indenture will be any of the following:
- the trust fails to pay principal when it becomes due and payable on the
series termination date for that series of notes;
- the trust fails to pay interest when it becomes due and payable and the
default continues for a period of 35 days;
- certain bankruptcy, insolvency, conservatorship, receivership,
liquidation or similar events relating to the trust; or
- the trust fails to observe or perform covenants or agreements made in the
indenture, and:
- the failure continues, or is not cured, for 60 days after notice to
the trust by the indenture trustee or to the trust and the indenture
trustee by noteholders representing 25% or more of the
then-outstanding principal amount of all of the trust's outstanding
series; and
- as a result, the interests of the noteholders are materially and
adversely affected, and continue to be materially and adversely
affected during the 60-day period.
Failure to pay the full principal amount of a note on its expected
principal payment date will not constitute an event of default.
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An event of default with respect to one series of notes will not
necessarily be an event of default with respect to any other series of notes.
If an event of default should occur and be continuing with respect to the
notes, the indenture trustee or noteholders holding more than 50% of the
then-outstanding principal balance of the notes of the affected series may
declare the principal of the notes of that series to be immediately due and
payable. This declaration may, under certain circumstances, be rescinded by
noteholders holding more than 50% of the then-outstanding principal balance of
the notes of that series.
Generally, in the case of any event of default, the indenture trustee will
be under no obligation to exercise any of the rights or powers under the
indenture if requested or directed by any of the holders of the notes of the
affected series if the indenture trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities which might
be incurred by it in complying with that request. Subject to those provisions
for indemnification and certain limitations contained in the indenture,
noteholders holding more than 50% (or not less than 66 2/3% if an event of
default has occurred and is continuing) of the then-outstanding principal
balance of the notes of the affected series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the indenture trustee, and noteholders holding more than 50% of the
then-outstanding principal balance of the notes of the affected series may, in
certain cases, waive any default with respect to the notes, except a default in
the payment of principal or interest or a default relating to a covenant or
provision of the indenture that cannot be modified without the waiver or consent
of all noteholders of the affected series.
After acceleration of a series of notes, principal collections and finance
charge collections allocated to those notes will be applied to make monthly
principal and interest payments on the notes until the earlier of the date the
notes are paid in full or the legal maturity date of the notes. Funds in the
collection account and other trust accounts for an accelerated series of notes
will be applied immediately to pay principal of and interest on those notes.
Upon acceleration of the maturity of a series of notes following an event
of default, the indenture trustee will have a lien on the collateral for those
notes for its unpaid fees and expenses that ranks senior to the lien of those
notes on the collateral.
In general, the indenture trustee will enforce the rights and remedies of
the holders of accelerated notes. However, noteholders will have the right to
institute any proceeding with respect to the indenture if the following
conditions are met:
- the noteholder gives the indenture trustee written notice of a continuing
event of default;
- the noteholders of at least 25% of the Invested Amount of the affected
series make a written request of the indenture trustee to institute a
proceeding as indenture trustee;
- the noteholders offer reasonable indemnification to the indenture trustee
against the costs, expenses and liabilities of instituting a proceeding;
- the indenture trustee has not instituted a proceeding within 60 days
after receipt of the request and offer of indemnification; and
- the indenture trustee has not received from noteholders holding more than
50% of the then-outstanding principal balance of the notes of that series
a direction inconsistent with the request.
If any series of notes has been accelerated following an event of default,
and the indenture trustee has not received any valid directions from those
noteholders, the indenture trustee may elect to continue to hold the portions of
the trust assets that secures those notes and apply distributions on the trust
assets to make payments on those notes to the extent funds are available.
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Subject to the provisions of the indenture relating to the duties of the
indenture trustee, in case any event of default occurs and is continuing with
respect to the notes, the indenture trustee:
- may institute proceedings in its own name for the collection of all
amounts then payable on the notes of the affected series; or
- may take any other appropriate action to protect and enforce the rights
and remedies of the indenture trustee and the noteholders of the affected
series.
Subject to the conditions described below, the indenture trustee also:
- may, at its own election, foreclose on the portion of the receivables
which secure a series of accelerated notes by causing the trust to sell
an interest in the assets of the trust by issuing a foreclosure
certificate to the holders of those notes;
- may, at its own election, foreclose on the portion of the receivables
which secure a series of accelerated notes by causing the trust to sell
an interest in the assets of the trust by issuing a foreclosure
certificate to a third party selected by the indenture trustee, but only
if it determines that the proceeds of the issuance of the foreclosure
certificate to that third party will be sufficient to pay principal of
and interest on the accelerated series of notes in full; and
- must, at the direction of noteholders holding more than 50% of the
then-outstanding principal balance of the series of accelerated notes,
foreclose on the portion of the receivables which secure that series of
accelerated notes by causing the trust to sell an interest in the assets
of the trust by issuing a foreclosure certificate to the holders of that
series of notes or to one or more third parties.
The conditions that must be satisfied for the indenture trustee to exercise
one of these foreclosure remedies include:
(1)(a) the indenture trustee must receive the consent of all
noteholders of the affected series;
(b) the indenture trustee determines that any proceeds from exercising
the foreclosure remedy that are to be distributed to the
noteholders of that series are sufficient to discharge in full all
principal and interest due on those notes; or
(c) the indenture trustee determines that the trust assets may not
continue to provide sufficient funds for the payment of principal
and interest on those notes as they would have become due if the
notes had not been accelerated, and the indenture trustee obtains
the consent of noteholders holding at least 66 2/3% of the
then-outstanding principal balance of each class of the notes of
the affected series; and
(2) the indenture trustee has obtained an opinion of counsel:
(a) that exercise of the foreclosure remedy will not cause the trust
or any portion of the trust to be classified as an association (or
a publicly traded partnership) taxable as a corporation for
federal income tax purposes; and
(b) that exercise of the foreclosure remedy complies with applicable
federal and state securities laws.
A "FORECLOSURE CERTIFICATE" is an investor certificate issued by the trust
as a result of a foreclosure on a portion of the receivables that corresponds to
the portion of the receivables that secured the accelerated notes. The
foreclosure certificate represents an undivided interest in the assets of the
trust. The principal amount of the foreclosure certificate would be equal to the
principal amount of the accelerated series of notes, and the invested amount of
the foreclosure certificate would be equal to the Invested Amount of the
accelerated series of notes.
When a foreclosure certificate is issued with respect to accelerated notes,
those notes will be deemed to have been paid in full by the trust and not
outstanding, and the holders of the accelerated notes will no
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longer have any claim against the trust. Accordingly, the Invested Amount
securing the accelerated notes will be allocable to the holders of the
foreclosure certificate.
A foreclosure certificate held by a noteholder or a third party will be
subject to restrictions on transfer, including:
- restrictions required to prevent the trust from becoming a publicly
traded partnership taxable as a corporation for federal income tax
purposes, including a limitation on the number of holders or interests in
the foreclosure certificate and restrictions on transfers to holders that
are partnerships, Subchapter S corporations or grantor trusts for United
States federal income tax purposes;
- restrictions on transfers of interest in the foreclosure certificate to
non-U.S. persons;
- restrictions on transfers to employee benefit plans, or any entity whose
underlying assets include "plan assets"; and
- other restrictions that counsel to the trust may require to avoid adverse
tax and other consequences to the trust or the noteholders.
The indenture trustee and the noteholders will covenant that they will not
at any time institute against the trust or the transferor any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.
None of the transferor, the administrator, the owner trustee, the indenture
trustee, the servicer, the bank or the trust, in its individual capacity, nor
any holder of an ownership interest in the trust, nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, successors or
assigns shall, in the absence of an express agreement to the contrary, be
personally liable for the payment of the principal of or interest on the notes
or for the agreements of the trust contained in the indenture. The notes will
represent obligations solely of the trust, and the notes will not be insured or
guaranteed by the transferor, the servicer, the administrator, the owner
trustee, the indenture trustee, the bank or any other person or entity.
CERTAIN COVENANTS
The indenture provides that the trust may not consolidate with, merge into
or sell its business to, another entity, unless:
- the entity formed by or surviving the consolidation or merger, or that
acquires the Issuer's business, is organized under the laws of the United
States, any state thereof or the District of Columbia;
- the entity is not subject to regulation as an "investment company" under
the Investment Company Act of 1940, as amended;
- the entity expressly assumes, by supplemental indenture, the trust's
obligation to make due and punctual payments upon the notes and the
performance of every covenant of the trust under the indenture;
- no payout event or event of default shall have occurred and be continuing
immediately after the merger, consolidation or sale;
- written confirmation is received from each rating agency that the
transaction will not result in a reduction or withdrawal of its rating of
any outstanding series or class;
- the trust has received an opinion of counsel to the effect that the
consolidation, merger or sale would have no material adverse federal
income tax consequence to any noteholder;
- any action as is necessary to maintain the lien and security interest
created by the indenture shall have been taken; and
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- the trust has delivered to the indenture trustee an opinion of counsel
and officer's certificate each stating that the consolidation, merger or
sale satisfies all requirements under the indenture and that the
supplemental indenture is duly authorized, executed and delivered and is
valid, binding and enforceable.
The trust will not, among other things:
- except as expressly permitted by the indenture, the transfer and
servicing agreement or certain related documents, sell, transfer,
exchange or otherwise dispose of any of the assets of the trust, unless
directed to do so by the indenture trustee;
- claim any credit on or make any deduction from payments in respect of the
principal of and interest on the notes (other than amounts withheld under
the Code or applicable state law) or assert any claim against any present
or former noteholders because of the payment of taxes levied or assessed
upon the trust;
- voluntarily dissolve or liquidate in whole or in part; or
- permit (A) the validity or effectiveness of the indenture to be impaired,
or permit the lien under the indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any person to be
released from any covenants or obligations with respect to the notes
under the indenture except as may be expressly permitted by the
indenture, (B) any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise
arise upon or burden the assets of the trust or any part thereof, except
as may be created by the terms of the indenture; or (C) the lien of the
indenture not to constitute a valid first priority perfected security
interest in the assets of the trust that secure the notes.
The trust may not engage in any activity other than as specified under "The
Issuer" in this prospectus. The trust will not incur, assume or guarantee any
indebtedness other than indebtedness incurred pursuant to the notes and the
indenture.
MODIFICATION OF THE INDENTURE
The trust and the indenture trustee may, without the consent of any
noteholders, enter into one or more supplemental indentures, upon receiving
written confirmation from each rating agency that the action will not result in
a reduction or withdrawal of its rating of any outstanding series or class, for
any of the following purposes:
- to correct or enhance the description of any property subject to the lien
of the indenture, or to take any action that will enhance the indenture
trustee's lien under the indenture, or to add to the property pledged to
secure the notes;
- to reflect the agreement of another person to assume the role of the
trust;
- to add to the covenants of the trust, for the benefit of the noteholders,
or to surrender any right or power of the trust;
- to transfer or pledge any property to the indenture trustee;
- to cure any ambiguity, to correct or supplement any provision in the
indenture or in any supplemental indenture that may be inconsistent with
any other provision in the indenture or in any supplemental indenture if
that action would not materially and adversely affect the interests of
the noteholders;
- to appoint a successor to the indenture trustee with respect to the notes
and to add to or change any of the provisions of the indenture to allow
more than one indenture trustee to act under the indenture;
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- to modify, eliminate or add to the provisions of the indenture as
necessary to qualify the indenture under the Trust Indenture Act of 1939,
as amended, or any similar federal statute later enacted;
- to permit the issuance of one or more new series of notes in accordance
with the indenture; or
- to terminate any interest rate swap agreement or other credit enhancement
in accordance with the related indenture supplement.
The trust and the indenture trustee may also, without the consent of any
noteholders, enter into one or more supplemental indentures to add provisions
to, change in any manner or eliminate any provision of the indenture, or to
change the rights of the noteholders under the indenture, upon:
- receipt of written confirmation from each rating agency that the action
will not result in a reduction or withdrawal of its rating of any
outstanding series or class; and
- receipt of a certificate of an authorized officer of the transferor to
the effect that, in the transferor's reasonable belief, the action will
not have a material adverse effect on the interests of the noteholders of
any outstanding series.
The trust and the indenture trustee may also, without the consent of the
noteholders of any series or the series enhancers for any series, enter into one
or more supplemental indentures to add, modify or eliminate any provisions
necessary or advisable in order to enable the trust or any portion of the trust
to (i) qualify as, and to permit an election to be made for the trust to be
treated as, a "financial asset securitization investment trust" under the
Internal Revenue Code of 1986, as amended and (ii) to avoid the imposition of
state or local income or franchise taxes on the trust's property or its income.
The following conditions apply for the amendments described in this paragraph:
- delivery to the owner trustee and the indenture trustee of a certificate
of an authorized officer of the transferor to the effect that the
requirements under the indenture applicable to the proposed amendments
have been met;
- receipt of written confirmation from each rating agency that the action
will not result in a reduction or withdrawal of its rating of any
outstanding series or class; and
- the amendment must not affect the rights, duties or obligations of the
indenture trustee or the owner trustee under the indenture.
The trust and the indenture trustee will not, without prior notice to each
rating agency and without the consent of each noteholder affected, enter into
any supplemental indenture to:
- change the date of payment of any installment of principal of or interest
on any note or reduce the principal amount of a note, the note interest
rate or the redemption price of the note or change any place of payment
where, or the currency in which, any note is payable;
- impair the right to institute suit for the enforcement of specified
payment provisions of the indenture;
- reduce the percentage of the aggregate principal amount of the notes of
any series, whose consent is required (a) for execution of any
supplemental indenture or (b) for any waiver of compliance with specified
provisions of the indenture or of some defaults under the indenture and
their consequences provided in the indenture;
- reduce the percentage of the aggregate outstanding amount of the notes
required to direct the indenture trustee to sell or liquidate the trust
assets if the proceeds of the sale would be insufficient to pay the
principal amount and interest due on those notes;
- decrease the percentage of the aggregate principal amount of the notes
required to amend the sections of the indenture that specify the
percentage of the principal amount of the notes of a series necessary to
amend the indenture or other related agreements;
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- modify any provisions of the indenture regarding the voting of notes held
by the trust, any other party obligated on the notes, or Associates
Credit Card Services, Inc., the bank, any other account owner or any of
their affiliates; or
- permit the creation of any lien superior or equal to the lien of the
indenture with respect to any of the collateral for any notes or, except
as otherwise permitted or contemplated in the indenture, terminate the
lien of the indenture on the collateral or deprive any noteholder of the
security provided by the lien of the indenture.
The trust and the indenture trustee may otherwise, with prior notice to
each rating agency and with the consent of noteholders holding more than 50% of
the then-outstanding principal balance of the notes of each series adversely
affected, enter into one or more supplemental indentures to add provisions to,
change in any manner or eliminate any provision of the indenture, or to change
the rights of the noteholders under the indenture.
ANNUAL COMPLIANCE STATEMENT
The trust will be required to present to the indenture trustee each year a
written statement as to the performance of its obligations under the indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT
The indenture trustee will be required to mail to the noteholders each year
a brief report relating to its eligibility and qualification to continue as
indenture trustee under the indenture, the property and funds physically held by
the indenture trustee and any action it took that materially affects the notes
and that has not been previously reported.
LIST OF NOTEHOLDERS
Upon the issuance of definitive notes, three or more holders of the notes
who have each owned a note for at least six months may obtain access to the list
of noteholders the indenture trustee maintains for the purpose of communicating
with other noteholders. The indenture trustee may elect not to allow the
requesting noteholders access to the list of noteholders if it agrees to mail
the requested communication or proxy, on behalf and at the expense of the
requesting noteholders, to all noteholders of record.
SATISFACTION AND DISCHARGE OF INDENTURE
An indenture will be discharged with respect to the notes upon the delivery
to the indenture trustee for cancellation of all the notes or, with specific
limitations, upon deposit with the indenture trustee of funds sufficient for the
payment in full of all the notes.
THE INDENTURE TRUSTEE
The indenture trustee may resign at any time, in which event your
administrator will appoint a successor indenture trustee for your series. The
administrator may also remove the indenture trustee if it ceases to be eligible
to continue as an indenture trustee under the indenture or if the indenture
trustee becomes insolvent. The administrator will then be obligated to appoint a
successor indenture trustee for your series. If an event of default occurs under
the indenture and the accompanying prospectus supplement provides that a given
class of notes of your series is subordinated to one or more other classes of
notes of your series, under the Trust Indenture Act of 1939, as amended, the
indenture trustee may be deemed to have a conflict of interest and be required
to resign as indenture trustee for one of more of those classes of notes. In
that case, a successor indenture trustee will be appointed for one or more of
those classes of notes and may provide for rights of senior noteholders to
consent to or direct actions by the indenture trustee which are different from
those of subordinated noteholders. Any resignation or removal of the indenture
trustee and appointment of a successor indenture trustee for any series of notes
will not become effective until the successor indenture trustee accepts its
appointment for your series.
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CERTAIN MATTERS REGARDING THE ADMINISTRATOR
The administrator will, to the extent provided in the administration
agreement, provide the notices and perform on behalf of the trust other
administrative obligations required by the indenture.
CREDIT ENHANCEMENT
GENERAL
For any series, credit enhancement may be provided with respect to one or
more of the related classes. Credit enhancement may be in the form of the
subordination of one or more classes of the notes of that series, a letter of
credit, the establishment of a cash collateral guaranty or account, a surety
bond, an insurance policy, a spread account, a reserve account, the use of cross
support features or another method of credit enhancement described in the
accompanying prospectus supplement, or any combination of these. If so specified
in the accompanying prospectus supplement, any form of credit enhancement may be
structured so as to be drawn upon by more than one class to the extent described
in that accompanying prospectus supplement.
Unless otherwise specified in the accompanying prospectus supplement for a
series, the credit enhancement will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance of the
notes and interest thereon. If losses occur which exceed the amount covered by
the credit enhancement or which are not covered by the credit enhancement,
noteholders will bear their allocable share of deficiencies.
If credit enhancement is provided with respect to a series, the
accompanying prospectus supplement will include a description of:
- the amount payable under that credit enhancement;
- any conditions to payment not described here;
- the conditions, if any, under which the amount payable under that credit
enhancement may be reduced and under which that credit enhancement may be
terminated or replaced; and
- any material provision of any agreement relating to that credit
enhancement.
Additionally, the accompanying prospectus supplement may set forth certain
information with respect to any credit enhancement provider, including:
- a brief description of its principal business activities;
- its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
- if applicable, the identity of regulatory agencies which exercise primary
jurisdiction over the conduct of its business; and
- its total assets, and its stockholders' or policy holders' surplus, if
applicable, and other appropriate financial information as of the date
specified in the prospectus supplement.
If so specified in the accompanying prospectus supplement, credit
enhancement with respect to a series may be available to pay principal of the
notes of that series following the occurrence of certain pay out events with
respect to that series. In this event, the credit enhancement provider will have
an interest in certain cash flows in respect of the receivables to the extent
described in that prospectus supplement called the "ENHANCEMENT INVESTED
AMOUNT").
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SUBORDINATION
If so specified in the accompanying prospectus supplement, one or more
classes of any series will be subordinated as described in the accompanying
prospectus supplement to the extent necessary to fund payments with respect to
the senior notes. The rights of the holders of these subordinated notes to
receive distributions of principal and/or interest on any distribution date for
that series will be subordinate in right and priority to the rights of the
holders of senior notes, but only to the extent set forth in the accompanying
prospectus supplement. If so specified in the accompanying prospectus
supplement, subordination may apply only in the event of certain types of losses
not covered by another credit enhancement.
The accompanying prospectus supplement will also set forth information
concerning:
- the amount of subordination of a class or classes of subordinated notes
in a series;
- the circumstances in which that subordination will be applicable;
- the manner, if any, in which the amount of subordination will decrease
over time; and
- the conditions under which amounts available from payments that would
otherwise be made to holders of those subordinated notes will be
distributed to holders of senior notes.
If collections of receivables otherwise distributable to holders of a
subordinated class of a series will be used as support for a class of another
series, the accompanying prospectus supplement will specify the manner and
conditions for applying that cross-support feature.
LETTER OF CREDIT
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes will be provided by one or more
letters of credit. A letter of credit may provide limited protection against
certain losses in addition to or in lieu of other credit enhancement. The issuer
of the letter of credit, referred to as the "L/C BANK," will be obligated to
honor demands with respect to that letter of credit, to the extent of the amount
available thereunder, to provide funds under the circumstances and subject to
any conditions as are specified in the accompanying prospectus supplement.
The maximum liability of an L/C bank under its letter of credit will
generally be an amount equal to a percentage specified in the accompanying
prospectus supplement of the initial Investor Amount of a series or a class of
that series. The maximum amount available at any time to be paid under a letter
of credit will be set forth in the accompanying prospectus supplement.
CASH COLLATERAL GUARANTY OR ACCOUNT
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes will be provided by a guaranty,
referred to as the "CASH COLLATERAL GUARANTY" secured by the deposit of cash or
certain permitted investments in an account, referred to as the "CASH COLLATERAL
ACCOUNT," reserved for the beneficiaries of the cash collateral guaranty or by a
cash collateral account alone. The amount available pursuant to the cash
collateral guaranty or the cash collateral account will be the lesser of amounts
on deposit in the cash collateral account and an amount specified in the
accompanying prospectus supplement. The accompanying prospectus supplement will
set forth the circumstances under which payments are made to beneficiaries of
the cash collateral guaranty from the cash collateral account or from the cash
collateral account directly.
SURETY BOND OR INSURANCE POLICY
If so specified in the accompanying prospectus supplement, insurance with
respect to a series or one or more of the related classes will be provided by
one or more insurance companies. Such insurance will guarantee, with respect to
one or more classes of the related series, distributions of interest or
principal in the manner and amount specified in the accompanying prospectus
supplement.
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If so specified in the accompanying prospectus supplement, a surety bond
will be purchased for the benefit of the holders of any series or class of that
series to assure distributions of interest or principal with respect to that
series or class of notes in the manner and amount specified in the accompanying
prospectus supplement.
SPREAD ACCOUNT
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes will be provided by the periodic
deposit of certain available excess cash flow from the trust assets into an
account, referred to as the "SPREAD ACCOUNT," intended to assist with subsequent
distribution of interest and principal on the notes of that class or series in
the manner specified in the accompanying prospectus supplement.
RESERVE ACCOUNT
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes or any related enhancement will be
provided by the establishment of an account, referred to as the "RESERVE
ACCOUNT." The reserve account may be funded, to the extent provided in the
accompanying prospectus supplement, by an initial cash deposit, the retention of
certain periodic distributions of principal or interest or both otherwise
payable to one or more classes of notes, including the subordinated notes, or
the provision of a letter of credit, guarantee, insurance policy or other form
of credit or any combination of these arrangements. The reserve account will be
established to assist with the subsequent distribution of principal or interest
on the notes of that series or the related class or any other amount owing on
any related enhancement in the manner provided in the accompanying prospectus
supplement.
DESCRIPTION OF THE PURCHASE AGREEMENTS
The following summary is qualified in its entirety by the receivables
purchase agreement entered into by the bank and ACCS (the "RECEIVABLES PURCHASE
AGREEMENT") and the receivables purchase agreement entered into by ACCS and the
transferor (the "ACCS RECEIVABLES PURCHASE AGREEMENT") which were entered into
in the ordinary course of their respective businesses. Forms of these agreements
are filed as exhibits to the registration statement of which this prospectus is
a part.
Sale of Receivables. The receivables transferred to the trust by the
transferor were acquired by the transferor from ACCS pursuant to the ACCS
receivables purchase agreement. The receivables transferred to the transferor by
ACCS have been acquired by ACCS from the bank pursuant to the receivables
purchase agreement. In connection with the sale of the receivables to ACCS, the
bank has (i) filed appropriate UCC financing statements to evidence that sale
and perfect ACCS's right, title and interest in those receivables and (ii)
indicated in its computer files that the receivables have been sold to ACCS by
the bank and that those receivables will be sold or transferred by ACCS to the
transferor.
Pursuant to the ACCS receivables purchase agreement, ACCS sold and, in the
future, may sell to the transferor all of its right, title and interest in and
to (i) all of the receivables existing in the initial accounts as of the cut-off
date and in additional accounts as of their date of designation for inclusion in
the trust and (ii) recoveries allocable to those receivables and certain other
property.
Pursuant to the receivables purchase agreement, the bank sold and, in the
future, may sell to ACCS all of its right, title and interest in and to (i) all
of the receivables existing in the initial accounts as of the cut-off date and
in additional accounts as of their date of designation for inclusion in the
trust and (ii) recoveries allocable to those receivables and certain other
property.
In connection with this sale of receivables to the transferor, ACCS will
indicate in its files that those receivables have been sold to the transferor by
ACCS and that those receivables will be sold or transferred by the transferor to
the trust. The records and agreements relating to the accounts and receivables
for the trust portfolio may not be segregated by ACCS from other documents and
agreements relating to other
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credit accounts and receivables. ACCS and the transferor will file UCC financing
statements meeting the requirements of applicable law in each of the
jurisdictions necessary to perfect the ownership or security interest of the
transferor in those receivables. See "Risk Factors -- Some liens would be given
priority over your notes which would cause delayed or reduced payments" and
"Certain Legal Aspects of the Receivables" in this prospectus.
Representations and Warranties. In the ACCS receivables purchase agreement,
ACCS represents and warrants to the transferor to the effect that, among other
things, as of the date of the ACCS receivables purchase agreement and, with
respect to any receivables in any designated additional accounts, as of the date
of designation of those additional accounts, it is duly organized and in good
standing and has the authority to consummate the transactions contemplated by
the ACCS receivables purchase agreement. In the ACCS receivables purchase
agreement, ACCS additionally represents and warrants that as of the initial
cut-off date and, with respect to any receivables in any designated additional
accounts, as of each date of designation of those additional accounts, each
receivable transferred thereunder is an eligible receivable. In the event of a
breach of any representation and warranty set forth in the ACCS receivables
purchase agreement which results in the requirement that the transferor accept
retransfer of an ineligible receivable under the transfer and servicing
agreement, then ACCS will repurchase that ineligible receivable from the
transferor on the date of the retransfer. The purchase price for the ineligible
receivables will be the principal amount of those receivables plus applicable
finance charges.
ACCS also represents and warrants to the transferor in the ACCS receivables
purchase agreement that, among other things, as of the date of the ACCS
receivables purchase agreement and, with respect to any receivables in any
designated additional accounts, as of each date of designation of those
additional accounts (a) the ACCS receivables purchase agreement constitutes a
valid and binding obligation of ACCS and (b) the ACCS receivables purchase
agreement constitutes a valid sale to the transferor of all right, title and
interest of ACCS in and to the receivables existing in the accounts as of the
initial cut-off date and, with respect to any receivables in any designated
additional accounts, as of each date of designation of those additional accounts
to the trust portfolio and in the proceeds thereof. If the breach of any of the
representations or warranties described in this paragraph results in the
obligation of the transferor under the transfer and servicing agreement to
accept retransfer of the receivables, ACCS will repurchase the receivables
retransferred to the transferor for an amount of cash at least equal to the
amount of cash the transferor is required to deposit under the transfer and
servicing agreement in connection with the retransfer.
Amendments. The ACCS receivables purchase agreement may be amended by the
transferor and ACCS without the consent of the noteholders. No amendment,
however, may have a materially adverse effect on the interest of the noteholders
and no amendment may change, modify, delete or add any other obligation of ACCS
or the transferor unless written confirmation is received from each rating
agency that the amendment will not result in a reduction or withdrawal of its
rating of any outstanding series or class.
Termination. The ACCS receivables purchase agreement will terminate
immediately after the trust terminates. In addition, if a receiver or
conservator is appointed for the bank or ACCS becomes a debtor in a bankruptcy
case or certain other liquidation, bankruptcy, insolvency or similar events
occur, ACCS will immediately cease to sell receivables to the transferor and
promptly give notice of that event to the transferor and the indenture trustee,
unless the bankruptcy court, receiver or conservator instructs otherwise.
NOTE RATINGS
Any rating of the notes by a rating agency will indicate:
- its view on the likelihood that noteholders will receive required
interest and principal payments; and
- its evaluation of the receivables and the availability of any credit
enhancement for the notes.
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Among the things a rating will not indicate are:
- the likelihood that interest or principal payments will be paid on a
scheduled date;
- the likelihood that a pay out event will occur;
- the likelihood that a U.S. withholding tax will be imposed on non-U.S.
noteholders;
- the marketability of the notes;
- the market price of the notes; or
- whether the notes are an appropriate investment for any purchaser.
A rating will not be a recommendation to buy, sell or hold the notes. A
rating may be lowered or withdrawn at any time by a rating agency.
The transferor will request a rating of the notes offered by this
prospectus and the accompanying prospectus supplement from at least one rating
agency. Rating agencies other than those requested could assign a rating to the
notes and, if so, that a rating could be lower than any rating assigned by a
rating agency chosen by the transferor. Except as otherwise expressly stated,
any reference in this prospectus or the accompanying prospectus supplement to a
"RATING AGENCY" refers to a rating agency selected by the transferor to rate the
notes of a series or class issued by the trust.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Each of ACCS in the ACCS receivables purchase agreement and the bank in the
receivables purchase agreement will represent and warrant that its respective
transfer of receivables constitutes a valid sale and assignment of all of its
right, title and interest in and to the receivables. In the transfer and
servicing agreement, the transferor will represent and warrant that its transfer
of receivables constitutes a valid sale and assignment of all of its right,
title and interest in and to the receivables, except for its interest as the
holder of the transferor certificate, or creates in favor of the trust a valid
first-priority perfected security interest in the transferor's rights in the
receivables in existence at the time that the trust is formed or at the time
that receivables in additional accounts are transferred, as the case may be, and
a valid first-priority perfected security interest in the transferor's rights in
the receivables arising in accounts already designated for the trust on and
after their creation, in each case until termination of the trust. For a
discussion of the trust's rights arising from these representations and
warranties not being satisfied, see "The Transfer and Servicing Agreement
Generally -- Representations and Warranties" in this prospectus.
Each of the transferor in the transfer and servicing agreement, ACCS in the
ACCS receivables purchase agreement and the bank in the receivables purchase
agreement will represent that the receivables are "accounts" or "general
intangibles" for purposes of the UCC. Both the sale of accounts and the transfer
of accounts as security for an obligation are subject to the provisions of
Article 9 of the UCC. In addition, a transfer of general intangibles as security
for an obligation is subject to the provisions of Article 9 of the UCC.
Therefore, the bank, ACCS and the transferor will file appropriate UCC financing
statements to perfect the respective transferee's security interest in the
receivables. Article 9 of the UCC, however, does not apply to the sale of
general intangibles. As a consequence, some other action under applicable state
law may be required in order to perfect such a sale against the interests of
third parties.
There are certain limited circumstances in which prior or subsequent
transferees of receivables coming into existence after a series closing date
could have an interest in such receivables with priority over the trust's
interest. Under the receivables purchase agreement, however, the bank will
represent and warrant that it has transferred the receivables to ACCS free and
clear of the lien of any third party (other than the indenture trustee). In
addition, the bank will covenant that it will not sell, pledge, assign, transfer
or grant any lien on any receivable (or any interest in any receivable) other
than to ACCS or the indenture
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trustee. Under the ACCS receivables purchase agreement, ACCS will represent and
warrant that it has transferred the receivables to the transferor free and clear
of the lien of any third party (other than the indenture trustee). In addition,
ACCS will covenant that it will not sell, pledge, assign, transfer or grant any
lien on any receivable (or any interest in any receivables) other than to the
transferor. Similarly, under the transfer and servicing agreement, the
transferor will represent and warrant that it has transferred the receivables to
the trust free and clear of the lien of any third party (other than the
indenture trustee), and the transferor will covenant that it will not sell,
pledge, assign, transfer, or grant any lien on any receivable (or any interest
in any receivable) other than to the trust. Nevertheless, a tax, governmental or
other nonconsensual lien on property of the transferor, ACCS or the bank arising
prior to the time a receivable comes into existence may have priority over the
interest of the trust in such receivable. Furthermore, if the FDIC were
appointed as a receiver or conservator of the bank, certain administrative
expenses of the receiver or conservator may have priority over the interest of
the trust in the receivables.
For as long as:
(1) (a) Associates Credit Card Services, Inc. remains the servicer
under the transfer and servicing agreement;
(b) Associates First Capital Corporation maintains a commercial
paper rating of not less than A-1 by Standard & Poor's and P-1
by Moody's; and
(c) Associates Credit Card Services, Inc. remains a wholly-owned
subsidiary of Associates First Capital Corporation (directly or
indirectly) and, in the event of a material change in the
financial relationship between them:
(i) Associates Credit Card Services, Inc. notifies each rating
agency; and
(ii) written confirmation is received from each rating agency
that the material change will not result in a reduction or
withdrawal of its rating of any outstanding series or
class; or
(2) any other arrangements are made and written confirmation is
received from each rating agency that the arrangements will not
result in a reduction or withdrawal of its rating of any
outstanding series or class.
cash collections held by the servicer may be commingled and used for the benefit
of the servicer prior to each distribution date and, in the event of the
insolvency or bankruptcy of the servicer or, in certain circumstances, the lapse
of certain time periods, the trust may not have a first-priority perfected
security interest in such collections. In such an event, the amount payable to
you could be lower than the outstanding principal and accrued interest on the
notes, thus resulting in losses to you. However, if the conditions specified in
(1) or (2) above are not satisfied, the servicer will begin within five business
days to deposit collections directly into the collection account within two
business days of each date of processing.
CERTAIN MATTERS RELATING TO CONSERVATORSHIP, RECEIVERSHIP AND BANKRUPTCY
The bank is chartered as a national banking association and is regulated
and supervised by the Office of the Comptroller of the Currency, which is
authorized to appoint the FDIC as conservator or receiver for the bank if
certain events occur relating to the bank's financial condition or the propriety
of its actions. In addition, the FDIC could appoint itself as conservator or
receiver for the bank.
To the extent that (i) the receivables purchase agreement complies with the
regulatory requirements of the FDIA, (ii) the security interest granted under
the receivables purchase agreement was perfected before the FDIC is appointed as
conservator or receiver for the bank, and (iii) the security interest was not
taken in contemplation of the bank's insolvency or with the intent to hinder,
delay or defraud the bank or its creditors, the FDIA provides that the security
interest should be respected. In addition, opinions and policy statements issued
by the FDIC suggest that, because of the manner in which these transactions are
structured, the FDIC would respect the security interest granted by the bank in
the receivables.
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Nevertheless, if the FDIC were to assert a contrary position, or were to require
the indenture trustee to go through the administrative claims procedure
established by the FDIC in order to obtain payments on the notes, or were to
request a stay of any actions by the indenture trustee to enforce the
receivables purchase agreement or the notes against the bank, delays in payments
on outstanding series of notes and possible reductions in the amount of those
payments could occur.
In addition, the FDIC as conservator or receiver for the bank could
repudiate the receivables purchase agreement. The FDIA would limit the damages
for any such repudiation to the trust's "actual direct compensatory damages"
determined as of the date that the FDIC were appointed as conservator or
receiver for the bank. The FDIC, moreover, could delay its decision whether to
repudiate the receivables purchase agreement for a reasonable period following
its appointment as conservator or receiver for the bank. Therefore, if the FDIC
as conservator or receiver for the bank were to repudiate the receivables
purchase agreement, the amount payable to you could be lower than the
outstanding principal and accrued interest on the notes, thus resulting in
losses to you.
In addition, regardless of the terms of the indenture, the FDIC as
conservator or receiver for the bank may have the power to prevent the
commencement of an early amortization period, to prevent or limit the early
liquidation of the receivables and termination of the trust, or to require the
continued transfer of new principal receivables. Regardless of the instructions
of those authorized to direct the indenture trustee's action, moreover, the FDIC
as conservator or receiver for the bank may have the power to require the early
liquidation of the receivables, to require the early termination of the trust
and the retirement of the notes, or to prohibit or limit the continued transfer
of new principal receivables.
If ACCS were to become a debtor in a bankruptcy case and a creditor or
bankruptcy trustee of ACCS or ACCS as a debtor-in-possession were to take the
position that the sale of receivables from ACCS to the transferor should be
recharacterized as a pledge of such receivables to secure a borrowing by ACCS,
then delays in remitting collections of receivables to the transferor (and
therefore to the trust and the noteholders) could occur and possible reductions
in the amount of such payments could result.
In the event of the bankruptcy of the servicer, the bankruptcy court may
have the power to prevent either the indenture trustee or the noteholders from
appointing a successor servicer. In addition, if the servicer becomes a debtor
in a bankruptcy case, the servicer's rights under the transfer and servicing
agreement (including the right to service the receivables) would be property of
the estate of the servicer and, under the Bankruptcy Code, subject to the
servicer's right to assume or reject such agreement. See "Description of the
Notes -- Servicer Default" in this prospectus.
The transferor has been structured such that (i) the filing of a voluntary
or involuntary petition for relief by or against the transferor under the
Bankruptcy Code and (ii) the substantive consolidation of the assets and
liabilities of the transferor with those of ACCS is unlikely. The transferor is
a separate, limited purpose corporation, and its certificate of incorporation
contains limitations on the nature of its business and restrictions on its
ability to commence a voluntary case or proceeding under the Bankruptcy Code or
similar laws without the prior unanimous consent of all of its directors. In
addition, the indenture trustee will covenant in the indenture that it will not
at any time institute against the transferor any bankruptcy, insolvency or
similar proceedings under the Bankruptcy Code or similar laws. Nevertheless, if
the transferor were to become a debtor in a bankruptcy case and if a bankruptcy
trustee or creditor of the transferor or the transferor as debtor-in-possession
were to take the position that the transfer of the receivables by the transferor
to the trust should be characterized as a pledge of those receivables, or if the
assets and liabilities of the transferor were substantively consolidated with
those of an entity in bankruptcy, then delays in payments on the notes and
possible reductions in the amount of those payments could result.
If bankruptcy, insolvency or similar proceedings under the Bankruptcy Code
or similar laws occur with respect to the transferor, the transferor will
promptly notify the indenture trustee and a pay out event will occur with
respect to each series. Pursuant to the transfer and servicing agreement, newly
created receivables will not be transferred to the trust on and after any such
event. Any principal receivables transferred to the trust prior to the event, as
well as collections on those principal receivables and finance
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charge receivables accrued at any time with respect to those principal
receivables, will continue to be part of the trust assets and will be applied as
specified above in "Description of the Notes -- Application of Collections" and
in the accompanying prospectus supplement.
The bankruptcy court, however, may have the power to delay any such
procedure or to require the continued transfer of principal receivables to the
trust. See "Risk Factors -- If a conservator or receiver were appointed for
Associate National Bank (Delaware), or if Associates Credit Card Services, Inc.
or Associates Credit Card Receivables Corp. became a debtor in a bankruptcy
case, delays or reductions in payment of your notes could occur" in this
prospectus.
CONSUMER PROTECTION LAWS
The relationship of the consumer and the provider of consumer credit is
extensively regulated by federal and state consumer protection laws. With
respect to credit accounts issued by the bank, the most significant federal laws
include the Federal Truth-in-Lending, Equal Credit Opportunity, Fair Credit
Reporting and Fair Debt Collection Practices Acts. These statutes impose various
disclosure requirements either before or when an account is opened, or both, and
at the end of monthly billing cycles, and, in addition, limit account holder
liability for unauthorized use prohibit certain discriminatory practices in
extending credit, and regulate practices followed in collections. In addition,
account holders are entitled under these laws to have payments and credits
applied to the revolving credit account promptly and to request prompt
resolution of billing errors. Congress and the states may enact new laws and
amendments to existing laws to regulate further the consumer revolving credit
industry. The trust may be liable for certain violations of consumer protection
laws that apply to the receivables, either as assignee from the transferor with
respect to obligations arising before transfer of the receivables to the trust
or as the party directly responsible for obligations arising after the transfer.
In addition, an account holder may be entitled to assert such violations by way
of set-off against the obligation to pay the amount of receivables owing. All
receivables that were not created in compliance in all material respects with
the requirements of such laws (if such noncompliance has a material adverse
effect on the noteholders' interest therein) will be reassigned to the
transferor. The servicer has also agreed in the transfer and servicing agreement
to indemnify the trust, among other things, for any liability arising from such
violations. For a discussion of the trust's rights if the receivables were not
created in compliance in all material respects with applicable laws, see
"Description of the Notes -- Representations and Warranties" in this prospectus.
Application of federal and state bankruptcy and debtor relief laws would
affect the interests of the noteholders if such laws result in any receivables
being charged-off as uncollectible. See "Description of the Notes -- Defaulted
Receivables; Rebates and Fraudulent Charges Investor Charge-Offs" in this
prospectus.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary describes generally the material United States
federal income tax consequences of an investment in the notes. Additional
federal income tax considerations relevant to a particular series may be set
forth in the accompanying prospectus supplement. The following summary has been
prepared and reviewed by Orrick, Herrington & Sutcliffe LLP as special tax
counsel to the Issuer ("SPECIAL TAX COUNSEL"). The summary is based on the
Internal Revenue Code of 1986, as amended (the "CODE") as of the date hereof,
and existing final, temporary and proposed Treasury regulations, revenue rulings
and judicial decisions, all of which are subject to prospective and retroactive
changes. The summary is addressed only to original purchasers of the notes,
deals only with notes held as capital assets within the meaning of Section 1221
of the Code and, except as specifically set forth below, does not address tax
consequences of holding notes that may be relevant to investors in light of
their own investment circumstances or their special tax situations, such as
certain financial institutions, tax-exempt organizations, life insurance
companies, dealers in securities, non-U.S. persons, or investors holding the
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notes as part of a conversion transaction, as part of a hedge or hedging
transaction, or as a position in a straddle for tax purposes. Further, this
discussion does not address alternative minimum tax consequences or any tax
consequences to holders of interests in a noteholder. Special Tax Counsel is of
the opinion that the following summary of federal income tax consequences is
correct in all material respects. An opinion of Special Tax Counsel, however, is
not binding on the Internal Revenue Service ("IRS") or the courts, and no ruling
on any of the issues discussed below will be sought from the IRS. Moreover,
there are no authorities on similar transactions involving interests issued by
an entity with terms similar to those of the notes described in this prospectus.
Accordingly, persons considering the purchase of notes should consult their own
tax advisors with regard to the United States federal income tax consequences of
an investment in the notes and the application of United States federal income
tax laws, as well as the laws of any state, local or foreign taxing
jurisdictions, to their particular situations.
TAX CHARACTERIZATION OF THE TRUST AND THE NOTES
Treatment of the Trust as an Entity Not Subject to Tax. Special Tax Counsel
is of the opinion that, although no transaction closely comparable to that
contemplated herein has been the subject of any Treasury Regulation, revenue
ruling or judicial decision, the trust will not be classified as an association
or as a publicly traded partnership taxable as a corporation for federal income
tax purposes. As a result, the trust will not be subject to federal income tax.
However, as discussed above, this opinion is not binding on the IRS and no
assurance can be given that this characterization will prevail.
The precise tax characterization of the trust for federal income tax
purposes is not certain. It might be viewed as merely holding assets on behalf
of the transferor as collateral for notes issued by the transferor. On the other
hand, the trust could be viewed as a separate entity for tax purposes issuing
its own notes. This distinction, however, should not have a significant tax
effect on noteholders except as stated below under "Possible Alternative
Characterizations."
Treatment of the Notes as Debt. Special Tax Counsel is of the opinion that,
although no transaction closely comparable to that contemplated herein has been
the subject of any Treasury regulation, revenue ruling or judicial decision, the
notes will be characterized as debt for United States federal income tax
purposes. Additionally, the trust will agree by entering into the Indenture, and
the noteholders will agree by their purchase and holding of notes, to treat the
notes as debt for United States federal income tax purposes.
Possible Alternative Characterizations. If, contrary to the opinion of
Special Tax Counsel, the IRS successfully asserted that a series or class of
notes did not represent debt for United States federal income tax purposes,
those notes might be treated as equity interests in the trust or some other
entity for such purposes. If so treated, investors could be treated for such
purposes either as partners in a partnership or, alternatively, as shareholders
in a taxable corporation. Treatment of a noteholder as a partner could have
adverse tax consequences to certain holders; for example, income to foreign
persons generally would be subject to United States tax and United States tax
return filing and withholding requirements, and individual holders might be
subject to certain limitations on their ability to deduct their share of
partnership expenses. If notes instead were treated as corporate stock, the
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on notes recharacterized as equity, and any increase in the
corporate tax imposed with respect to such corporation could materially reduce
cash available to make payments on the notes; further, noteholders might not be
entitled to any dividends received deduction in respect of payments of interest
on notes treated as dividends. In addition, even if the notes are treated as
debt, the trust is also able to issue other securities which may be treated as
debt or as equity interests in the trust. The issuance of such securities
requires the delivery of a new opinion of counsel generally to the effect that
such issuance will not cause the trust to become taxable as a separate entity
for federal income tax purposes; however, any such new opinion would not bind
the IRS, and the trust could become taxable as a corporation as a result of such
issuance, potentially diminishing cash available to make payments on the notes.
Prospective investors should consult with their own tax advisors with regard to
the consequences of each such possible alternative characterization to them in
their
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particular circumstances; the following discussion assumes that the
characterization of the notes as debt is correct.
CONSEQUENCES TO HOLDERS OF THE OFFERED NOTES
Interest and Original Issue Discount. In general, stated interest on a note
will be includible in gross income as it accrues or is received in accordance
with an noteholder's usual method of tax accounting. If a class of notes is
issued with original issue discount ("OID"), the provisions of Sections 1271
through 1273 and 1275 of the Code will apply to those notes. Under those
provisions, a holder of such a note (including a cash basis holder) generally
would be required to include the OID on a note in income for federal income tax
purposes on a constant yield basis, resulting in the inclusion of OID in income
in advance of the receipt of cash attributable to that income. In general, a
note will be treated as having OID to the extent that its "stated redemption
price" exceeds its "issue price," if such excess equals or exceeds 0.25 percent
multiplied by the weighted average life of the note (determined by taking into
account the number of complete years following issuance until payment is made
for each partial principal payment). Under Section 1272(a)(6) of the Code,
special provisions apply to debt instruments on which payments may be
accelerated due to prepayments of other obligations securing those debt
instruments. However, no regulations have been issued interpreting those
provisions, and the manner in which those provisions would apply to the notes is
unclear, but the application of Section 1272(a)(6) could affect the rate of
accrual of OID and could have other consequences to holders of the notes.
Additionally, the IRS could take the position based on Treasury regulations that
none of the interest payable on a note is "unconditionally payable" and hence
that all of such interest should be included in the note's stated redemption
price at maturity. If sustained, such treatment should not significantly affect
tax liabilities for most holders of the notes, but prospective noteholders
should consult their own tax advisors concerning the impact to them in their
particular circumstances. The trust intends to take the position that interest
on the notes constitutes "qualified stated interest" and that the above
consequences do not apply.
Market Discount. A holder of a note who purchases an interest in a note at
a discount that exceeds any OID not previously includible in income may be
subject to the "market discount" rules of Sections 1276 through 1278 of the
Code. These rules provide, in part, that gain on the sale or other disposition
of a note and partial principal payments on a note are treated as ordinary
income to the extent of accrued market discount. The market discount rules also
provide for deferral of interest deductions with respect to debt incurred to
purchase or carry a note that has market discount.
Market Premium. A holder of a note who purchases an interest in a note at a
premium may elect to amortize the premium against interest income over the
remaining term of the note in accordance with the provisions of Section 171 of
the Code.
Disposition of the Notes; Defeasance. Upon the sale, exchange or retirement
of a note, the holder of the note generally will recognize taxable gain or loss
in an amount equal to the difference between the amount realized on the
disposition (other than amounts attributable to accrued interest) and the
holder's adjusted tax basis in the note. A taxable exchange of a note could also
occur as a result of the transferor's substitution of money or investments for
the receivables in the trust portfolio. See "Description of the
Notes -- Defeasance" in this prospectus. The holder's adjusted tax basis in the
note generally will equal the cost of the note to such holder, increased by any
market or original issue discount previously included in income by such holder
with respect to the note, and decreased by the amount of any bond premium
previously amortized and any payments of principal or OID previously received by
such holder with respect to such note. Any such gain or loss generally will be
capital gain or loss, except to the extent of accrued market discount not
previously included in income, and will be long-term capital gain or loss if at
the time of sale the note has been held for more than one year.
Foreign Holders. Under United States federal income tax law now in effect,
payments of interest by the trust to a holder of a note who, as to the United
States, is a nonresident alien individual or a foreign corporation (a "foreign
person") generally will be considered "portfolio interest," and generally will
not be subject to United States federal income tax and withholding tax, provided
the interest is not effectively
58
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connected with the conduct of a trade or business within the United States by
the foreign person and the foreign person (i) is not for United States federal
income tax purposes (a) actually or constructively a "10 percent shareholder" of
the transferor or the trust, (b) a "controlled foreign corporation" with respect
to which the transferor or the trust is a "related person" within the meaning of
the Code, or (c) a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business, and (ii) provides the
person who is otherwise required to withhold United States tax with respect to
the notes with an appropriate statement (on IRS Form W-8 or a substitute form),
signed under penalties of perjury, certifying that the beneficial owner of the
note is a foreign person and providing the foreign person's name and address. If
a note is held through a securities clearing organization or certain other
financial institutions (as is expected to be the case unless definitive notes
are issued), the organization or institution may provide the relevant signed
statement generally to the withholding agent; in that case, however, the signed
statement generally must be accompanied by an IRS Form W-8 or substitute form
provided by the foreign person that owns the note. If such interest is not
portfolio interest, then it will be subject to United States federal income and
withholding tax at a rate of 30%, unless reduced or eliminated pursuant to an
applicable tax treaty or such interest is effectively connected with the conduct
of a trade or business within the United States and, in either case, the
appropriate statement has been provided. The U.S. Treasury Department recently
issued final Treasury regulations which will revise some of the foregoing
procedures whereby a foreign person may establish an exemption from withholding
generally beginning January 1, 2001; foreign persons should consult their tax
advisors concerning the impact to them, if any, of such revised procedures.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a foreign person will be exempt from United
States federal income tax and withholding tax, provided that (i) such gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, such individual is not present in the United States for 183 days or more
in the taxable year.
Backup Withholding. Payments of principal and interest, as well as payments
of proceeds from the sale, retirement or disposition of a note, may be subject
to "backup withholding" tax under Section 3406 of the Code at a rate of 31% if a
recipient of such payments fails to furnish to the payor certain identifying
information. Any amounts deducted and withheld would be allowed as a credit
against such recipient's United States federal income tax, provided appropriate
proof is provided under rules established by the IRS. Furthermore, certain
penalties may be imposed by the IRS on a recipient of payments that is required
to supply information but that does not do so in the proper manner. Backup
withholding will not apply with respect to payments made to certain exempt
recipients, such as corporations and financial institutions. Holders of the
notes should consult their tax advisors regarding their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY, MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR TAX SITUATION, AND DOES NOT PURPORT TO ADDRESS THE ISSUES DESCRIBED
WITH THE DEGREE OF SPECIFICITY THAT WOULD BE PROVIDED BY A TAXPAYER'S OWN TAX
ADVISOR. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL TAX
LAWS.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the taxation of the trust or the tax
consequences of the purchase, ownership or disposition of an interest in the
notes under any state or local tax law. Each investor should consult its own tax
adviser regarding state and local tax consequences.
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ERISA CONSIDERATIONS
Subject to the considerations described below and in the accompanying
prospectus supplement, the notes may be purchased by, on behalf of, or with
"plan assets" of any employee benefit or other plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (each, a "PLAN").
Any Plan fiduciary that proposes to cause a Plan to acquire any of the notes
should consult with its counsel with respect to the potential consequences under
ERISA and the Code of the Plan's acquisition and ownership of such Certificates.
See "ERISA Considerations" in the accompanying prospectus supplement.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code
(collectively, "PARTIES IN INTEREST") with respect to the Plan. A violation of
these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and Section 4975 of the Code for such persons, unless a
statutory, regulatory or administrative exemption is available.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of such plans may be invested in the notes without
regard to the ERISA considerations described herein, subject to the provisions
or other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
is subject to the prohibited transaction rules set forth in Section 503 of the
Code.
Fiduciaries or other persons contemplating purchasing the notes on behalf
or with "plan assets" of any Plan should consult their own counsel regarding
whether the trust assets represented by the notes would be considered "plan
assets," the consequences that would apply if the trust's assets were considered
"plan assets," and the availability of exemptive relief from the prohibited
transaction rules.
Finally, Plan fiduciaries and other Plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
Plan's particular circumstances before authorizing an investment of a portion of
the Plan's assets in the notes. Accordingly, among other factors, Plan
fiduciaries and other Plan investors should consider whether the investment (i)
satisfies the diversification requirement of ERISA or other applicable law, (ii)
is in accordance with the Plan's governing instruments, and (iii) is prudent in
light of the "Risk Factors" and other factors discussed in the accompanying
prospectus supplement.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
to be entered into with respect to each series of notes, the transferor will
cause the notes to be sold by the trust to each of the underwriters named in
that underwriting agreement and in the accompanying prospectus supplement, and
each of those underwriters will severally agree to purchase from the trust, the
principal amount of notes set forth in that underwriting agreement and in the
accompanying prospectus supplement (subject to proportional adjustment on the
terms and conditions set forth in the related underwriting agreement in the
event of an increase or decrease in the aggregate amount of notes offered by
this prospectus and by the accompanying prospectus supplement).
In each underwriting agreement, the several underwriters will agree,
subject to the terms and conditions set forth in that underwriting agreement, to
purchase all the notes offered by this prospectus and by the accompanying
prospectus supplement if any of those notes are purchased. In the event of a
default by any underwriter, each underwriting agreement will provide that, in
certain circumstances, purchase commitments of the nondefaulting underwriters
may be increased or the underwriting agreement may be terminated.
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110
Each prospectus supplement will set forth the price at which each series of
notes or class being offered initially will be offered to the public and any
concessions that may be offered to certain dealers participating in the offering
of those notes. After the initial public offering, the public offering price and
such concessions may be changed.
Each underwriting agreement will provide that the transferor will indemnify
the related underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
The place and time of delivery for any series of notes in respect of which
this prospectus is delivered will be set forth in the accompanying prospectus
supplement.
REPORTS TO NOTEHOLDERS
The servicer will prepare monthly and annual reports that will contain
information about the trust. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principles. Unless and until definitive notes are issued, the reports will be
sent to Cede & Co. which is the nominee of The Depository Trust Company and the
registered holder of the notes. No financial reports will be sent to you. See
"Description of the Notes -- Book-Entry Registration," "-- Reports to
Noteholders" and "-- Evidence as to Compliance" in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the notes with the SEC. This
prospectus is part of the registration statement, but the registration statement
includes additional information.
The servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the trust.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room in Washington, D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
on the SEC Internet site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus or the accompanying prospectus supplement. We incorporate by
reference any future annual, monthly and special SEC reports and proxy materials
filed by or on behalf of the trust until we terminate our offering of the notes.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: Associates Credit Card Services, Inc., P.O. Box 660237, Dallas,
Texas 75266-0237, Attention: Secretary, Telephone: (972) 652-4000.
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INDEX OF TERMS FOR PROSPECTUS
TERM PAGE
- ---- ----
ACCS.................................. 11
ACCS receivables purchase agreement... 51
addition date......................... 27
administrator......................... 11
adverse effect........................ 23
bank.................................. 11
bank portfolio........................ 11
cash collateral account............... 50
cash collateral guaranty.............. 50
Code.................................. 56
collection account.................... 30
controlled accumulation period........ 2
controlled amortization period........ 2
Credit Enhancement Percentage......... 32
cut-off date.......................... 14
defaulted accounts.................... 32
definitive notes...................... 20
depositaries.......................... 17
determination date.................... 34
Discount Option....................... 29
Discount Percentage................... 29
early accumulation period............. 2
early amortization period............. 2
eligible account...................... 25
eligible institution.................. 30
eligible investments.................. 30
eligible receivable................... 26
Enhancement Invested Amount........... 49
ERISA................................. 60
events of default..................... 42
expected principal payment date....... 3
FDIA.................................. 6
FDIC.................................. 7
FDR................................... 11
finance charge receivables............ 14
foreclosure certificate............... 44
funding period........................ 31
Interchange........................... 13
Invested Amount....................... 16
Investor Percentage................... 16
IRS................................... 57
issuer................................ 11
TERM PAGE
- ---- ----
L/C bank.............................. 50
Moody's............................... 30
note owner............................ 17
OID................................... 58
owner trustee......................... 11
paired series......................... 36
participations........................ 27
Parties in Interest................... 60
pay out event......................... 36
paying agent.......................... 31
Plan.................................. 60
pre-funding account................... 31
principal funding account............. 21
principal receivables................. 14
qualified account..................... 30
rating agency......................... 53
receivables purchase agreement........ 51
Required Minimum Principal Balance.... 23
Required Transferor Interest.......... 33
reserve account....................... 51
revolving period...................... 2
SEC................................... 28
Securities Act........................ 22
securities intermediary............... 30
series enhancer....................... 39
series termination date............... 3
servicer.............................. 1
Servicer Default...................... 39
special funding account............... 30
special tax counsel................... 56
spread account........................ 51
Standard & Poor's..................... 30
supplemental certificate.............. 38
tax opinion........................... 23
transferor certificate................ 16
Transferor Percentage................. 16
Transferor Interest................... 16
trust................................. 11
trust portfolio....................... 13
trust termination date................ 35
unallocated principal collections..... 33
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Associates
Credit Card Master Note Trust Asset Backed Notes (the "global securities") to be
issued in series from time to time (each, a "series") will be available only in
book-entry form. Investors in the global securities may hold those global
securities through any of The Depository Trust Company ("DTC"), Cedelbank or
Euroclear. The global securities will be tradable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding global securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding global securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
participants holding notes will be effected on a delivery-against-payment basis
through the respective depositaries of Cedelbank and Euroclear (in such
capacity) and as DTC participants.
Non-U.S. holders (as described below) of global securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All global securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the global securities will
be represented through financial institutions acting on their behalf as direct
and indirect participants in DTC. As a result, Cedelbank and Euroclear will hold
positions on behalf of their participants through their respective depositaries,
which in turn will hold such positions in accounts as DTC participants.
Investors electing to hold their global securities through DTC (other than
through accounts at Cedelbank or Euroclear) will follow the settlement practices
applicable to U.S. corporate debt obligations. Investor securities custody
accounts will be credited with their holdings against payment in same-day funds
on the settlement date.
Investors electing to hold their global securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds in registered form. Global securities will be credited to
the securities custody accounts on the settlement date against payment for value
on the settlement date.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants (other than Citibank, N.A. ("Citibank") and Morgan Guaranty Trust
Company of New York ("Morgan") as depositories for Cedelbank and Euroclear,
respectively) will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
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Trading between Cedelbank Customers and/or Euroclear Participants.
Secondary market trading between Cedelbank customers or Euroclear participants
will be settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
global securities are to be transferred from the account of a DTC participant
(other than Citibank and Morgan as depositories for Cedelbank and Euroclear,
respectively) to the account of a Cedelbank customer or a Euroclear participant,
the purchaser must send instructions to Cedelbank prior to settlement date
12:30. Cedelbank or Euroclear, as the case may be, will instruct Citibank or
Morgan, respectively, to receive the global securities for payment. Payment will
then be made by Citibank or Morgan, as the case may be, to the DTC participant's
account against delivery of the global securities. After settlement has been
completed, the global securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Cedelbank customer's or Euroclear participant's account. Credit for the
global securities will appear the next day (European time) and the cash debit
will be back-valued to, and the interest on the global securities will accrue
from, the value date (which would be the preceding day when settlement occurred
in New York). If settlement is not completed on the intended value date (i.e.,
the trade fails), the Cedelbank or Euroclear cash debit will be valued instead
as of the actual settlement date.
Cedelbank customers and Euroclear participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedelbank or Euroclear. Under this approach,
they may take on credit exposure to Cedelbank or Euroclear until the global
securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank customers or Euroclear participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedelbank customers or Euroclear participants
purchasing global securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the global securities were credited to their
accounts. However, interest on the global securities would accrue from the value
date. Therefore, in many cases the investment income on the global securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedelbank
customer's or Euroclear participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities to
Citibank or Morgan for the benefit of Cedelbank customers or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently from a trade between two DTC participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank customers and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through Citibank or Morgan, to another DTC participant. The seller will send
instructions to Cedelbank before settlement date 12:30. In these cases,
Cedelbank or Euroclear will instruct Citibank or Morgan, as appropriate, to
credit the global securities to the DTC participant's account against payment.
The payment will then be reflected in the account of the Cedelbank customer or
Euroclear participant the following day, and receipt of the cash proceeds in the
Cedelbank customer's or Euroclear participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). If the Cedelbank customer or Euroclear participant has a line of
credit with its respective clearing system and elects to draw on such line of
credit in anticipation of receipt of the sale proceeds in its account, the
back-valuation may substantially reduce or offset any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended value
date (i.e., the trade fails), receipt of
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the cash proceeds in the Cedelbank customer's or Euroclear participant's account
would instead be valued as of the actual settlement date.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of global securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless, under currently applicable law, (i) each
clearing system, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of notes that
are non-U.S. Persons generally can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are note owners residing in a country that
has a tax treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption
or Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by the note owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The note owner of a global
security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States, any state thereof, or any political subdivision of either
(including the District of Columbia), or (iii) an estate or trust the income of
which is includible in gross income for United States tax purposes regardless of
its source. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the global
securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the global securities.
Further, the U.S. Treasury Department has recently finalized new regulations
that will revise some aspects of the current system for withholding on amounts
paid to foreign persons. Under these regulations, interest or OID paid to a
nonresident alien would continue to be exempt from U.S. withholding taxes
(including backup withholding) provided that the holder complies with the new
certification procedures.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSOCIATES CREDIT CARD MASTER NOTE TRUST
Issuer
ASSOCIATES CREDIT CARD RECEIVABLES CORP.
Transferor
ASSOCIATES CREDIT CARD SERVICES, INC.
Servicer
Series 2000-
$
Class A Floating Rate Asset Backed Notes
$
Class B Floating Rate Asset Backed Notes
$
Class C Floating Rate Asset Backed Notes
---------------------
PROSPECTUS SUPPLEMENT
---------------------
UNDERWRITERS OF THE CLASS A NOTES
UNDERWRITERS OF THE CLASS B NOTES
UNDERWRITERS OF THE CLASS C NOTES
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THE NOTES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS AS OF ANY DATE OTHER THAN THE DATES STATED ON
THEIR RESPECTIVE COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS
UNDERWRITERS OF THE NOTES AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS. IN ADDITION, ALL DEALERS SELLING THE NOTES WILL DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS UNTIL , 2000.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
116
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder, other
than underwriting discounts and commissions.
Registration Fee............................................ $ 264*
Printing and Engraving Expenses............................. **
Trustee's Fees and Expenses................................. **
Legal Fees and Expenses..................................... **
Accountants' Fees and Expenses.............................. **
Blue Sky Fees and Expenses.................................. **
Rating Agency Fees.......................................... **
Miscellaneous Expenses...................................... **
-----
Total............................................. $ **
=====
- ---------------
* Actual
** To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal
proceedings, had no reasonable cause to believe his or her conduct was illegal.
A Delaware corporation may indemnify officers and directors against expenses
(including attorneys' fees) in connection with the defense or settlement of an
action by or in the right of the corporation under the same conditions, except
that no Indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses which such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Certificate of Incorporation of
Associates Credit Card Receivables Corp. ("ACCR") contains a provision to limit
the personal liability of the directors of ACCR for violations of their
fiduciary duty. This provision eliminates each director's liability to ACCR or
its stockholders for monetary damages except (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware Law providing for
liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
Pursuant to underwriting agreements filed as exhibits to registration
statements relating to underwritten offerings of securities, the underwriters
parties thereto have agreed to indemnify each officer
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and director of ACCR and each person, if any, who controls ACCR within the
meaning of the Securities Act of 1933, against certain liabilities, including
liabilities under said Act.
The directors and officers of ACCR are covered by directors' and officers'
insurance policies relating to Associates First Capital Corporation and its
subsidiaries.
The Certificate of Incorporation of ACCR provides for indemnification of
the officers and directors of ACCR to the full extent permitted by applicable
law.
ITEM 16. EXHIBITS.
(a) Exhibits.
1.1 -- Form of Underwriting Agreement*
4.1 -- Form of Master Indenture*
4.2 -- Form of Indenture Supplement, including form of Notes*
4.3 -- Form of Transfer and Servicing Agreement*
4.4 -- Certificate of Trust of Associates Credit Card Master
Note Trust*
4.5 -- Form of Trust Agreement of Associates Credit Card Master
Note Trust*
4.6 -- Form of Administration Agreement*
5.1 -- Opinion of Michael J. Forde with respect to legality*
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with
respect to tax matters*
23.1 -- Consent of Michael J. Forde (included in Exhibit 5.1)*
23.2 -- Consent of Orrick, Herrington & Sutcliffe LLP (included
in Exhibit 8.1)*
24.1 -- Powers of Attorney (included on page II-4)
25.1 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as indenture trustee under the Indenture*
- ---------------
* To be filed by amendment.
(b) Financial Statements
All financial statements, schedules and historical information have been
omitted as they are not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
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118
than 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that (a)(1)(i) and (a)(1)(ii) will not apply if the
information required to be included in a post-effective amendment thereby
is contained in periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering hereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described
under Item 15 above, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of each issue.
(d)(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, has reasonable grounds to believe
that the security rating requirement contained in Transaction Requirement B.5.
of Form S-3 will be met by the time of the sale of the securities registered
hereunder and has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Irving,
state of Texas, on January 18, 2000.
ASSOCIATES CREDIT CARD
RECEIVABLES CORP.,
as originator of the Trust and
Registrant
By: /s/ STEPHEN R. JOHNSTON
-----------------------------------
Name: Stephen R. Johnston
Title: Senior Vice President
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen R. Johnston, Chester D. Longenecker and
Michael J. Forde, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for and in his own
name, place and stead, in any and all capacities to sign any and all amendments
(including post-effective amendments) to this registration statement, any
registration statement for additional Asset Backed Notes that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933 and any or
all other documents in connection therewith, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting unto
said persons authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and
purposes as might or could be done in person, hereby ratifying and confirming
all said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on January 18, 2000 by the following
persons in the capacities indicated.
SIGNATURE TITLE
--------- -----
/s/ JOSEPH N. SCARPINATO President, Director
- ----------------------------------------------------- (Principal Executive Officer)
JOSEPH N. SCARPINATO
/s/ JOSEPH A. BENEDETTO Executive Vice President, Director
- -----------------------------------------------------
JOSEPH A. BENEDETTO
/s/ STEPHEN R. JOHNSTON Senior Vice President, Controller, Director
- ----------------------------------------------------- (Principal Financial Officer and Controller)
STEPHEN R. JOHNSTON
/s/ JAMES W. PARKER Director
- -----------------------------------------------------
JAMES W. PARKER
/s/ LAWRENCE F. PITTROFF Director
- -----------------------------------------------------
LAWRENCE F. PITTROFF
/s/ JOSEPH E. THEIS Director
- -----------------------------------------------------
JOSEPH E. THEIS
II-4