As filed with the Securities and Exchange Commission on July 1, 2003
Registration Nos. 333- -01
333- -02
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
FIRST NATIONAL MASTER NOTE TRUST
(Issuer of the Notes)
FIRST BANKCARD MASTER CREDIT CARD TRUST
(Issuer of the Collateral Certificate)
(Exact name of registrant as specified in its charter)
-----------------------------
FIRST NATIONAL FUNDING LLC
(Transferor to each of the trusts)
(Exact name of registrant as specified in its charter)
<Table>
Nebraska 02-0598125
(State of Formation) (I.R.S. Employer
Identification No.)
</Table>
1620 Dodge Street
Omaha, Nebraska 68102
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MATTHEW W. LAWVER
FIRST NATIONAL BANK OF OMAHA
1620 DODGE STREET
OMAHA, NEBRASKA 68102
(402) 341-0500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<Table>
MARK A. ELLIS JEAN L. KOENCK MARY C. FONTAINE
KUTAK ROCK LLP FIRST NATIONAL BANK OF OMAHA MAYER, BROWN, ROWE & MAW LLP
1650 FARNAM STREET 1620 DODGE STREET 190 SOUTH LASALLE STREET
OMAHA, NEBRASKA 68102-2186 OMAHA, NEBRASKA 68102 CHICAGO, ILLINOIS 60603-3441
(402) 346-6000 (402) 341-0500 (312) 782-0600
</Table>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
Asset Backed Notes........................... $1,000,000 100% $1,000,000 $80.90
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Collateral Certificate(2).................... $1,000,000 -- -- --
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</Table>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) No additional consideration will be paid by the purchasers of the Asset
Backed Notes for the Collateral Certificate, which is pledged as security
for the Asset Backed Notes and issued by First Bankcard Master Credit Card
Trust.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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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- --------------------------------------------------------------------------------
[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. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS ARE NOT AN OFFER TO SELL AND ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.]
SUBJECT TO COMPLETION, DATED , 200
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 200
[FIRST NATIONAL BANK OMAHA LOGO]
FIRST NATIONAL MASTER NOTE TRUST
Issuer
<Table>
FIRST NATIONAL FUNDING LLC FIRST NATIONAL BANK OF OMAHA
Transferor Servicer
</Table>
SERIES 200_-_ ASSET BACKED NOTES
<Table>
<Caption>
CLASS A NOTES CLASS B NOTES CLASS C NOTES
---------------- ---------------- ----------------
Principal amount $ $ $
Interest rate [One-month LIBOR [One-month LIBOR [One-month LIBOR
plus] [ ]% per plus] [ ]% per plus] [ ]% per
year year year
Interest payment dates monthly, monthly, monthly,
beginning beginning beginning
_________ , 200_ _________ , 200_ _________ , 200_
Expected principal payment
date _________ , 200_ _________ , 200_ _________ , 200_
Final maturity date _________ , 200_ _________ , 200_ _________ , 200_
Price to public $(or %) $(or %) $(or %)
Underwriting discount $(or %) $(or %) $(or %)
Proceeds to issuer $(or %) $(or %) $(or %)
</Table>
SUBORDINATION
- The Class B notes will be subordinated to the Class A notes.
- The Class C notes will be subordinated to the Class A and Class B
notes.
The notes will be paid from the issuer's assets consisting primarily of an
interest in receivables in a portfolio of VISA(R) and MasterCard(R) revolving
credit card accounts owned by First National Bank of Omaha.
We expect to issue your series of notes in book-entry form on or about
__________ , 200_.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-[11] IN THIS
PROSPECTUS SUPPLEMENT AND PAGE 3 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 First
National Master Note Trust only and are not obligations of First National
Funding LLC, First National Bank of Omaha 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 Class A notes, Class B notes and Class C notes
__________ , 200_
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We (First National Funding LLC) 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.
Whenever the information in this prospectus supplement is more specific
than the information in 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.
i
NOTICE TO RESIDENTS OF THE UNITED KINGDOM
THIS PROSPECTUS SUPPLEMENT MAY ONLY BE COMMUNICATED OR CAUSED TO BE
COMMUNICATED IN THE UNITED KINGDOM TO PERSONS AUTHORIZED TO CARRY ON A REGULATED
ACTIVITY ("AUTHORIZED PERSONS") UNDER THE FINANCIAL SERVICES AND MARKETS ACT
2000 (THE "FSMA") OR TO PERSONS OTHERWISE HAVING PROFESSIONAL EXPERIENCE IN
MATTERS RELATING TO INVESTMENTS AND QUALIFYING AS INVESTMENT PROFESSIONALS UNDER
ARTICLE 19 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2001, AS AMENDED OR TO PERSONS QUALIFYING AS HIGH NET WORTH PERSONS UNDER
ARTICLE 49 OF THAT ORDER OR TO ANY OTHER PERSON TO WHOM THIS PROSPECTUS
SUPPLEMENT MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED.
NO PROSPECTUS RELATING TO THE NOTES HAS BEEN REGISTERED IN THE UNITED
KINGDOM AND ACCORDINGLY, THE NOTES MAY NOT BE, AND ARE NOT BEING, OFFERED IN THE
UNITED KINGDOM EXCEPT TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN
ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT)
FOR THE PURPOSES OF THEIR BUSINESS OR EXCEPT IN CIRCUMSTANCES WHICH WOULD NOT
RESULT IN AN OFFER TO THE PUBLIC IN THE UNITED KINGDOM WITHIN THE MEANING OF THE
PUBLIC OFFERS OF SECURITIES REGULATIONS 1995, AS AMENDED.
NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE NOTES ARE OR WILL BE AVAILABLE
TO OTHER CATEGORIES OF PERSONS IN THE UNITED KINGDOM AND NO ONE FALLING OUTSIDE
SUCH CATEGORIES IS ENTITLED TO RELY ON, AND THEY MUST NOT ACT ON, ANY
INFORMATION IN THIS PROSPECTUS SUPPLEMENT. THE COMMUNICATION OF THIS PROSPECTUS
SUPPLEMENT TO ANY PERSON IN THE UNITED KINGDOM OTHER THAN THE CATEGORIES STATED
ABOVE IS UNAUTHORIZED AND MAY CONTRAVENE THE FSMA.
ii
TABLE OF CONTENTS
<Table>
SUMMARY OF TERMS........................ S-1
SERIES 200 - .......................... S-1
OFFERED NOTES........................... S-2
STRUCTURAL SUMMARY...................... S-3
The Issuer............................ S-3
Collateral for the Notes.............. S-3
First Bankcard Master Credit Card
Trust.............................. S-3
Other Claims on the Receivables....... S-4
Allocations of Collections and
Losses............................. S-4
Discount Option....................... S-5
[Funding Period....................... S-5]
Application of Finance Charge
Collections........................ S-6
Application of Principal
Collections........................ S-6
Credit Enhancement.................... S-7
Pay Out Events........................ S-8
Events of Default..................... S-9
Optional Redemption................... S-9
Tax Status............................ S-9
ERISA Considerations.................. S-10
Risk Factors.......................... S-10
Ratings............................... S-10
[Exchange Listing..................... S-10]
First National Funding LLC............ S-10
RISK FACTORS............................ S-11
RECEIVABLES PERFORMANCE................. S-12
Delinquency and Loss Experience....... S-12
Revenue Experience.................... S-13
Interchange........................... S-14
THE TRUST PORTFOLIO..................... S-15
MATURITY CONSIDERATIONS................. S-19
Accumulation Period................... S-19
Rapid Amortization Period............. S-19
Payment Rates......................... S-20
Reduced Principal Allocations......... S-20
DESCRIPTION OF SERIES PROVISIONS........ S-21
Collateral Amount..................... S-22
Allocation Percentages................ S-22
Interest Payments..................... S-23
[Pre-Funding.......................... S-24]
Principal Payments and Deposits....... S-25
Accumulation Period................... S-26
Suspension and Postponement of
Accumulation Period................ S-27
Rapid Amortization Period............. S-28
Subordination......................... S-29
Application of Finance Charge
Collections........................ S-30
Reallocation of Principal
Collections........................ S-31
Investor Charge-Offs.................. S-32
Sharing Provisions.................... S-33
Foreign Accounts...................... S-33
Principal Accumulation Account........ S-33
Spread Account; Required Spread
Account Amount..................... S-34
Reserve Account....................... S-35
[Cash Collateral Account.............. S-37]
[Paired Series........................ S-38]
Pay Out Events........................ S-39
Events of Default..................... S-41
Servicing Compensation and Payment of
Expenses........................... S-41
UNDERWRITING............................ S-42
LEGAL MATTERS........................... S-44
GLOSSARY OF TERMS FOR PROSPECTUS
SUPPLEMENT............................ S-45
OTHER SECURITIES ISSUED AND
OUTSTANDING........................... S-47
</Table>
iii
SUMMARY OF TERMS
<Table>
Issuer: First National Master Note Trust
Transferor of Receivables to the First National Funding LLC
Trust:
Servicer: First National Bank of Omaha
Indenture Trustee: The Bank of New York
Owner Trustee: Wilmington Trust Company
Expected Closing Date: ________, 200_
Clearance and Settlement: DTC/Clearstream/Euroclear
Minimum Denominations: $1,000
Servicing Fee Rate: [2]% per annum
[Initial Spread Account Balance: $______(__% of the collateral
amount)]
Initial Collateral Amount: $________
Primary Assets of the Issuer: An interest in receivables originated
in VISA(R) and MasterCard(R)
revolving credit card accounts owned
by First National Bank of Omaha.
Offered Notes: The Class A, Class B, and Class C
notes are offered by this prospectus
supplement and the accompanying
prospectus.
</Table>
SERIES 200_ - _
<Table>
<Caption>
% OF SERIES 200 -
CLASS AMOUNT NOTES
----- -------- ------------------------
Class A notes $ %
Class B notes %
Class C notes %
-------- ---
Total $ 100%
======== ===
</Table>
S-1
OFFERED NOTES
<Table>
<Caption>
CLASS A CLASS B CLASS C
------------------------ --------------------- ---------------------
Initial Principal
Amount: $ $ $
Anticipated
Ratings:(1)
(Moody's/ S&P/Fitch) Aaa/AAA/AAA A2/A/A+ Baa/BBB/BBB
Credit Enhancement: subordination of Class B subordination of spread account [and
and Class C notes [and Class C notes [and cash collateral
cash collateral account] cash collateral account]
account]
Interest Rate: [One-month LIBOR plus] [One-month LIBOR [One-month LIBOR
[ ]% per year plus] [ ]% per year plus] [ ]% per year
Interest Accrual
Method: [actual] [30]/360 [actual] [30]/360 [actual] [30]/360
Payment Dates: 15(th) day of each 15(th) day of each 15(th) day of each
month, or if that day is month, or if that day month, or if that day
not a business day, the is not a business is not a business
next business day day, the next day, the next
business day business day
First Interest
Payment Date: ________, 200_ ________, 200_ ________, 200_
[Interest Rate Index
Reset Date:] [2 London business days [2 London business [2 London business
before each payment days before each days before each
date] payment date] payment date]
Commencement of
Accumulation Period
(subject to
adjustment): ________, 200_ ________, 200_ ________, 200_
Expected Principal
Payment Date: ________, 200_ ________, 200_ ________, 200_
Final Maturity Date: ________, 200_ ________, 200_ ________, 200_
ERISA eligibility: Yes, subject to important considerations described under "ERISA
Considerations" in the accompanying prospectus.
Debt for United
States Federal Income
Tax Purposes: Yes, subject to important considerations described under "Federal Income
Tax Consequences" in the accompanying prospectus.
</Table>
- ---------------
(1) It is a condition to issuance that ratings from at least two
of these credit rating agencies be obtained.
S-2
STRUCTURAL SUMMARY
This summary is a simplified presentation of the major structural components of
Series 200 -_. It 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 First National Master Note Trust, a Delaware
statutory trust, under an indenture supplement to an indenture, each between the
issuer and the indenture trustee.
The indenture trustee is The Bank of New York.
COLLATERAL FOR THE NOTES
The notes are secured by a beneficial interest in a pool of receivables that
arise under First National Bank of Omaha's VISA and MasterCard revolving credit
card accounts.
The bank has designated eligible accounts from its portfolio of VISA and
MasterCard credit card accounts and has transferred the receivables in those
accounts either directly to First Bankcard Master Credit Card Trust or to us. We
have transferred the receivables sold to us by the bank to First Bankcard Master
Credit Card Trust. We refer to the accounts that have been designated as trust
accounts, as the trust portfolio. First Bankcard Master Credit Card Trust has
issued a collateral certificate representing an interest in the receivables and
the other assets of First Bankcard Master Credit Card Trust to us, and we have
transferred that collateral certificate to the issuer. The issuer has
transferred the collateral certificate to the indenture trustee as collateral
for the notes.
The receivables in First Bankcard Master Credit Card Trust as of ________ were
approximately as follows:
-- total receivables: $____
-- principal receivables: $____
-- finance charge receivables: $____
-- total accounts designated to First Bankcard Master Credit Card Trust:
_______
FIRST BANKCARD MASTER CREDIT CARD TRUST
First Bankcard Master Credit Card Trust was formed under Nebraska law by the
bank in 1995 under a pooling and servicing agreement. The terms of the trust
were amended and restated on June 26, 1997, have been amended subsequent to the
restatement in 1997 and may in the future be amended from time to time. The
October 2002 amendment, among other things, designated us as transferor in
replacement of First National Bank of Omaha. The bank has transferred some of
the VISA and MasterCard credit card receivables directly to First Bankcard
Master Credit Card Trust under the pooling and servicing agreement prior to the
2002 amendment. We entered into a receivables purchase agreement with the bank
at the time of the amendment in order to create obligations of the bank to us
that parallel some, but not all, of our obligations to the trust. We have
transferred the receivables sold to us by the bank to First Bankcard Master
Credit Card Trust under the pooling and servicing agreement.
The trustee for First Bankcard Master Credit Card Trust is The Bank of New York.
S-3
After all outstanding series of investor certificates that have been issued by
First Bankcard Master Credit Card Trust have been retired, other than the
collateral certificate held by the issuer, we may cause First Bankcard Master
Credit Card Trust to terminate, at which time the receivables will be
transferred to the issuer and held directly by the issuer as collateral for the
notes. We refer to the entity--either First Bankcard Master Credit Card Trust or
the issuer--that holds the receivables at any given time as the trust.
OTHER CLAIMS ON THE RECEIVABLES
OTHER SERIES OF NOTES
Series 200_-_ is the ________ series of notes issued by the issuer. The issuer
may issue other series of notes from time to time in the future. Neither you nor
any other noteholder will have the right to consent to the issuance of future
series of notes.
OUTSTANDING SERIES OF INVESTOR CERTIFICATES
In addition to the collateral certificate, there will be ________ series of
investor certificates issued by First Bankcard Master Credit Card Trust that
remain outstanding on the closing date. Each series of investor certificates
represents a beneficial interest in the receivables and the other trust assets.
A summary of the other outstanding series of investor certificates is in "Annex
I: Other Securities Issued and Outstanding" included at the end of this
prospectus supplement. Neither you nor any other noteholder will have the right
to consent to the issuance of future series of investor certificates.
THE TRANSFEROR INTEREST
We own the interest, called the transferor interest, in the receivables and the
other assets of the trust not supporting your series or any other series of
notes or series of investor certificates. The transferor interest does not
provide credit enhancement for your series or any other series.
ALLOCATIONS OF COLLECTIONS AND LOSSES
Your notes represent the right to payments from a portion of the collections on
the receivables. The servicer will also allocate to your series a portion of
defaulted receivables and will also allocate a portion of the dilution on the
receivables to your series if the dilution is not offset by the amount of the
transferor interest and the transferor fails to comply with its obligation to
reimburse the trust for the dilution. Dilution means any reduction to the
principal balances of receivables made by the servicer because of merchandise
returns or any other reason except losses or payments. Dilution also includes
reductions due to a debt cancellation or reduction program that cannot be
recovered from insurance or the program's reserves.
The portion of collections, defaulted receivables and uncovered dilution
allocated to your series will be based mainly upon the ratio of the amount of
collateral for your series to the sum of the total amount of principal
receivables in the trust and any balance in the trust's excess funding account.
The way this ratio is calculated will vary during each of three periods that may
apply to your notes:
-- The revolving period, which will begin on the closing date and end when
either of the other two periods begins.
-- The accumulation period, which is scheduled to begin on ____________ and
end on ____________ . However, if a pay out event occurs before the
accumulation period begins, there will be no accumulation period and a
rapid amortization period will begin. If a pay out event occurs during the
accumulation period, the accumulation period will end, and a rapid
amortization period will begin.
S-4
Under some circumstances, the beginning of the accumulation period may be
delayed, or if it has already begun, may be suspended. During this delay or
upon the suspension of the accumulation period, the revolving period shall
continue or resume, as appropriate. Throughout the accumulation period we
will accumulate collections of principal receivables for later distribution
to you.
-- The rapid amortization period, which will only occur if one or more adverse
events, known as pay out events, occurs.
For most purposes, the collateral amount used in determining these ratios will
be measured as of and will be reset no less frequently than at the end of each
month. There are exceptions, as follows. For allocations of finance charge
collections during the rapid amortization period, the amounts as of the end of
the revolving period or, if applicable, the end of the accumulation period will
be used. For allocations of principal collections during the accumulation period
or the rapid amortization period, the collateral amount at the end of the
revolving period will be used. We may request a decrease in the amount used,
provided that the rating agencies confirm that the decrease will not impair
their ratings of your notes.
The collateral amount for your series is:
-- the original principal amount of the notes, minus
-- principal payments on the notes (except payments made from the spread
account) and the balance held in the principal accumulation account for
principal payments, minus
-- the amount of any principal collections reallocated to cover interest and
servicing payments for your series, minus
-- your series' share of defaults and uncovered dilution to the extent not
reimbursed from finance charge collections and investment earnings
allocated to your series.
A reduction to the collateral amount because of reallocated principal
collections or defaults or uncovered dilution will be reversed to the extent
that your series has available finance charge collections and investment
earnings in future periods.
DISCOUNT OPTION
Subject to some limitations, we may elect to treat up to 4% of the principal
receivables in the trust as finance charge receivables for purposes of the
allocations described in this prospectus supplement. We may from time to time,
and subject to some limitations, increase--to a percentage not greater than
4%--or reduce or eliminate the percentage used for this purpose. [This
percentage will initially be zero.]
[FUNDING PERIOD
On the closing date, we will deposit $________ into a pre-funding account
established by the indenture trustee. The funding period will commence on the
closing date and end on the first to occur of (1) the date on which the initial
collateral amount equals the initial principal balance of the notes, (2) the
commencement of a rapid amortization period and (3) ________, 200_. The
indenture trustee will invest funds on deposit in the pre-funding account in
eligible investments at the direction of the servicer. Investment earnings on
amounts on deposit in the pre-funding account will be treated as finance charge
collections.
During the funding period, the initial collateral amount will increase on each
distribution date, to reflect any increase in the amount of principal
receivables in the trust to the extent that the transferor interest exceeds the
minimum transferor's interest
S-5
required under the indenture, but may not increase by an amount greater than the
funds on deposit in the pre-funding account on that date. On any distribution
date on which the initial collateral amount is so increased, the indenture
trustee will withdraw funds on deposit in the pre-funding account in an amount
equal to the increase and pay those amounts over to us. You will have no further
rights to the funds on deposit in the pre-funding account once they are released
to us. Should the amount on deposit in the pre-funding account be greater than
zero at the end of the funding period, the remaining amounts will be payable as
principal on a pro rata basis to the Class A noteholders, Class B noteholders
and Class C noteholders based upon their respective outstanding principal
balances.]
APPLICATION OF FINANCE CHARGE COLLECTIONS
Collections of finance charge receivables allocated to your series during each
month will be applied on the distribution date falling in the next 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 servicing fees for your series to any unaffiliated successor
servicer should the bank no longer be the servicer to the trust;
-- to pay interest on the Class C notes;
-- to cover your series' share of defaulted receivables and uncovered dilution
for the prior calendar month;
-- to reinstate any prior reductions in your series collateral amount on
account of defaulted receivables, uncovered dilution or reallocated
principal collections, in each case that have not been reimbursed;
-- in limited circumstances, to make deposits into a reserve account;
-- to pay servicing fees to the bank or any of its affiliates;
-- to make deposits, if required, into [the collateral account, and then into]
the spread account;
[ -- to pay other amounts owed in connection with the Class C notes;]
-- to other series that share excess finance charge collections with Series
200_-_;
-- following a servicer default and the appointment of a successor servicer,
to pay to the successor servicer any excess servicing fees; and
-- any remaining balance to us or our assigns.
APPLICATION OF PRINCIPAL COLLECTIONS
The issuer will apply your series' share of collections of principal receivables
each month as follows:
REVOLVING PERIOD
During the revolving period, no principal will be paid or accumulated in a trust
account for you.
ACCUMULATION PERIOD
During the accumulation period, your series' share of principal collections will
be deposited in a trust account, up to a specified controlled accumulation
amount on each distribution date. Amounts on deposit in that account will be
paid, first, to the Class A noteholders until the Class A notes are paid in
full, then to the Class B noteholders until the Class B notes are paid in full,
and then to the Class C noteholders until the Class C notes are paid in full, on
the expected principal payment date for the notes, unless a pay out event
occurs.
S-6
RAPID AMORTIZATION PERIOD
A rapid amortization period for your series will start if a pay out event
occurs. The pay out events for your series are described below in this summary
and under "Description of Series Provisions--Pay Out Events" in this prospectus
supplement. During the rapid amortization period, your series' share of
principal collections will be paid monthly--without any limitation based on the
controlled accumulation amount--first to the Class A noteholders, then to the
Class B noteholders and then to the Class C noteholders, in each case until the
specified class of notes is paid in full.
REALLOCATION OF PRINCIPAL COLLECTIONS
During any of the above periods, principal collections allocated to your series
may be reallocated, if necessary, to make required payments of interest on the
Class A notes and the Class B notes and monthly servicing fee payments payable
to a servicer other than the bank or one of its affiliates, that are not made
from your series' share of finance charge collections, other amounts treated as
finance charge collections and excess finance charge collections available from
other series that share with your series. This reallocation is one of the ways
that the more senior classes of notes obtain the benefit of subordination, as
described in the next section of this summary. The amount of reallocated
principal collections is limited by the amount of available subordination.
EXCESS PRINCIPAL COLLECTIONS
At all times, collections of principal receivables allocated to your series that
are not needed for payments on your series will first be made available to other
series, second, deposited in the excess funding account if needed and third,
paid to us or our assigns.
CREDIT ENHANCEMENT
Credit enhancement for your series includes subordination[, a cash collateral
account] and, for the Class C noteholders, a spread account, each as described
below.
Credit enhancement for your series is for the benefit of your series only, and
you are not entitled to the benefits of credit enhancement available to other
series.
SUBORDINATION
Credit enhancement for the Class A notes includes the subordination of the Class
B notes and the Class C notes.
Credit enhancement for the Class B notes includes the subordination of the Class
C notes.
Subordination serves as credit enhancement in the following way. The more
subordinated, or junior, classes of notes will not receive payment of interest
or principal until required payments have been made to the more senior classes.
As a result, subordinated classes will absorb any shortfalls in collections or
deterioration in the collateral for the notes prior to senior classes. Any
shortfall will reduce the principal of the notes, beginning with reductions to
the most subordinated class of notes then outstanding.
[CASH COLLATERAL ACCOUNT
A cash collateral account will provide additional credit enhancement for your
series. On the closing date, we will deposit $________ into the cash collateral
account, which represents ____% of the initial principal amount of the notes.
The cash collateral account will be used to make payments on the notes if
collections of finance charge receivables allocated to this series are
insufficient to make required payments.]
S-7
SPREAD ACCOUNT
Credit enhancement is also available to the Class C noteholders in the form of a
spread account. [The spread account will be funded with an initial deposit on
the closing date.] The trust will make monthly deposits into the spread account
from finance charge receivable collections allocated to your series and excess
finance charge collections allocated to your series to the extent the spread
account is not funded to the required level. The required level will be adjusted
based on the performance of the receivables. If payments of principal and
finance charge collections available to the Class C notes are insufficient to
pay the principal and interest due on the Class C notes, the indenture trustee
will use the funds on deposit in the spread account, if any, to make up the
shortfall.
PAY OUT EVENTS
The issuer will begin to repay the principal of the notes before the expected
principal payment date if a pay out event occurs. A pay out event will occur if
the finance charge collections on the receivables are too low or if defaults are
too high. The minimum yield that must be available for your series in any month,
referred to as the base rate, is the annualized percentage equivalent of (x) the
sum of the interest payable on the Series 200_-_ notes for the related interest
period, plus your series' share of the servicing fee for the related calendar
month divided by (y) the collateral amount of your series plus amounts on
deposit in the principal accumulation account. If the annualized percentage
equivalent of (x) the average yield for your series, including recoveries, after
deducting your series share of defaulted receivables and uncovered dilution,
divided by (y) the collateral amount for your series plus amounts on deposit in
the principal accumulation account, for any three consecutive calendar months is
less than the average base rate for your series for the same three consecutive
calendar months, a pay out event will occur.
The other pay out events are:
-- Our failure to make required payments or deposits or material failure to
perform other obligations, subject to applicable grace periods;
-- Material inaccuracies in our representations and warranties, subject to
applicable grace periods;
-- Any Series 200_-_ notes are not paid in full on the [applicable] expected
principal payment date;
-- Bankruptcy, insolvency or similar events relating to us or the bank;
-- Our failure to designate receivables arising in additional accounts to the
trust as required, subject to a grace period; provided that no pay out
event will occur if we reduce the invested amount of a variable funding
note issued by the issuer or a variable funding certificate issued under
the pooling and servicing agreement, and after such reduction the
transferor interest is not less than the minimum transferor's interest
required under the indenture and the aggregate principal receivables are
not less than the required minimum;
-- Material servicer defaults;
-- Our inability to transfer receivables to the trust or the bank's inability
to transfer receivables to us;
-- First Bankcard Master Credit Card Trust or the issuer becomes subject to
regulation as an "investment company" under the Investment Company Act of
1940; or
-- An event of default occurs for the Series 200_-_ notes and their final
maturity date is accelerated.
S-8
EVENTS OF DEFAULT
The Series 200_-_ notes are subject to events of default described under "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 when it is due on the final maturity
date.
In the case of an event of default involving bankruptcy, insolvency or similar
events relating to the issuer, the principal amount of the Series 200_-_ notes
automatically will become immediately due and payable. If any other event of
default occurs and continues with respect to the Series 200_-_ notes, the
indenture trustee or holders of more than 50% of the then-outstanding principal
balance of the Series 200_-_ notes may declare the principal amount of the
Series 200_-_ notes to be immediately due and payable. These declarations may be
rescinded by holders of more than 50% of the then-outstanding principal balance
of the Series 200_-_ notes if the related event of default has been cured,
subject to the conditions described under "The Indenture--Events of Default;
Rights upon Event of Default" in the accompanying prospectus.
After an event of default and the acceleration of the Series 200_-_ notes,
collections allocated to Series 200_-_ and the series' share of funds on deposit
in the collection account and the excess funding account will be applied to pay
principal of and interest on the Series 200_-_ notes to the extent permitted by
law. Principal collections and finance charge collections allocated to Series
200_-_ will be applied first to pay any amounts owed to the indenture trustee
pursuant to the indenture and then, to make monthly principal and interest
payments on the Series 200_-_ notes until the earlier of the date those notes
are paid in full or the final maturity date of those notes.
Amounts in the spread account will be available to pay interest payments on the
Class C notes, and upon the earlier to occur of the Series 200_-_ final maturity
date, the date the outstanding principal balances of Class A and Class B are
reduced to zero or an event of default and acceleration of the Series 200_-_
notes, these amounts will be used to fund any shortfall in principal payments on
the Class C notes.
If the Series 200_-_ notes are accelerated or the issuer fails to pay the
principal of the Series 200_-_ notes on the final maturity date, subject to the
conditions described in the prospectus under "The Indenture--Events of Default;
Rights upon Event of Default", the indenture trustee may, if legally permitted,
cause the trust to sell (1) principal receivables in an amount equal to the
collateral amount for Series 200_-_ and (2) the related finance charge
receivables.
OPTIONAL REDEMPTION
At the option of the servicer or any of its affiliates, which may include the
transferor, if the servicer or such affiliate so elects, the transferor will
purchase your notes when the outstanding principal amount for your series has
been reduced to 10% or less of the initial principal amount. See "Description of
the Notes--Final Payment of Principal" in the accompanying prospectus.
TAX STATUS
Subject to important considerations described under "Federal Income Tax
Consequences" in the accompanying prospectus, Kutak Rock LLP as special federal
tax counsel to the issuer, is of the opinion that under existing law the Class
A, Class B and Class C notes will be characterized as debt for federal income
tax purposes and that neither First Bankcard Master Credit Card Trust nor the
issuer will be classified as an
S-9
association or constitute a publicly traded partnership taxable as a corporation
for U.S. federal income tax purposes. By your acceptance of a Series 200_-_
note, you will agree to treat your Series 200_-_ 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
the accompanying prospectus, the Class A, Class B and Class C notes are eligible
for purchase by persons investing assets of employee benefit plans or individual
retirement accounts. If you are contemplating purchasing the Series 200_-_ notes
on behalf of or with plan assets of any plan or account, we suggest that you
consult with counsel regarding whether the purchase or holding of the Series
200_-_ notes could give rise to a transaction prohibited or not otherwise
permissible under ERISA or Section 4975 of the Internal Revenue Code.
RISK FACTORS
There are material risks associated with an investment in the Series 200_-_
notes, and you should consider the matters set forth under "Risk Factors"
beginning on page S-[11] below and on page 3 of the accompanying prospectus.
RATINGS
It is a condition to the issuance of your notes that two of the ratings set
forth for each class of Series 200_-_ notes in the "Summary of Terms" above be
obtained.
Any rating assigned to the notes by a credit rating agency will reflect the
rating agency's assessment solely of the likelihood that noteholders will
receive the payments of interest and principal required to be made under the
terms of the series and will be based primarily on the value of the receivables
in the trust and the credit enhancement provided. The rating is not a
recommendation to purchase, hold or sell any notes. The rating does not
constitute a comment as to the marketability of any notes, any market price or
suitability for a particular investor. Any rating can be changed or withdrawn by
a rating agency at any time.
[EXCHANGE LISTING
We will apply to list the Series 200_-_ notes on the Luxembourg Stock Exchange.
We cannot guarantee that the application for the listing will be accepted.]
FIRST NATIONAL FUNDING LLC
Our address is 1620 Dodge Street, Omaha, Nebraska 68197-3198. Our phone number
is (402) 341-0500.
This prospectus supplement uses defined terms. You can find a glossary of terms
under the caption "Glossary of Terms for Prospectus Supplement" beginning on
page S-[45] in this prospectus supplement and under the caption "Glossary of
Terms for Prospectus" beginning on page [85] in the accompanying prospectus.
S-10
RISK FACTORS
In addition to the risk factors described in the prospectus, you should
consider the following risk factors before deciding whether to purchase the
Series 200_-_ notes.
[Insert any additional risk factors applicable for this series.]
S-11
RECEIVABLES PERFORMANCE
The tables below contain performance information for the receivables
trust portfolio for each of the periods shown. The composition of the trust
portfolio has changed, and is expected to continue to change, over time. The
actual performance of the receivables in the current trust portfolio may be
different from that set forth below.
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for
cardholder payments on the credit card accounts in the trust portfolio for each
of the dates or periods shown. Because we have the right, and, in some
circumstances, the obligation, to designate additional accounts, actual
historical delinquency and loss experience with respect to the receivables may
be different from that set forth below for the trust portfolio. Average
receivables outstanding is the average of the receivables balance during the
period indicated. We cannot assure you that the future delinquency and loss
experience for the trust's receivables will be similar to the historical
experience of the trust portfolio set forth below. The following tables include
information with respect to each account from the date such account was
designated to the trust, and do not reflect the delinquency and loss information
as if all accounts and the related receivables had been designated throughout
each of the periods shown. [In addition, the figures for the period ending
________, 20__ have been annualized and are not necessarily indicative of
results for the entire year.]
[Discussion of any relevant changes in loss and delinquency performance.]
DELINQUENCY EXPERIENCE
TRUST PORTFOLIO
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
[ MONTHS ENDED -----------------------------------------------------------
, 200 ] 2002 2001
----------------------- ---------------------------- ----------------------------
[PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL
[AMOUNT] RECEIVABLES] AMOUNT RECEIVABLES AMOUNT RECEIVABLES
-------- ------------ -------------- ----------- -------------- -----------
Receivables
Outstanding........ $2,122,250,016 100.00% $1,908,556,162 100.00%
RECEIVABLES
Delinquent 31 to 60
days............... $36,648,155 1.73% $25,615,150 1.34%
61 to 90 days........ $20,248,523 0.95% $18,035,816 0.94%
91 or more........... $41,905,378 1.97% $32,154,565 1.68%
-------- -------- -------------- ------ -------------- ------
TOTAL................ $98,802,056 4.65% $75,805,531 3.96%
-------- -------- -------------- ------ -------------- ------
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------
2000
----------------------------
PERCENTAGE
OF TOTAL
AMOUNT RECEIVABLES
-------------- -----------
Receivables
Outstanding........ $1,418,882,641 100.00%
RECEIVABLES
Delinquent 31 to 60
days............... $19,801,128 1.40%
61 to 90 days........ $11,233,213 0.79%
91 or more........... $20,223,474 1.43%
-------------- ------
TOTAL................ $51,257,815 3.62%
-------------- ------
</Table>
S-12
NET CHARGE-OFF EXPERIENCE
TRUST PORTFOLIO
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
[ MONTHS ENDED ------------------------------------------------------------------
, 200 ] 2002 2001 2000
---------------------- -------------------- -------------------- --------------------
Average Receivables
Outstanding................ $1,921,598,750 $1,596,696,941 $1,101,343,983
Total Gross Charge-Offs.... $127,737,119 $95,370,366 $63,227,001
Recoveries................. $7,673,808 $6,293,229 $5,425,886
Net Charge-Offs............ $120,063,311 $89,077,137 $57,801,115
Net Charge-Off as a
Percentage of Average
Receivables Outstanding
[(Annualized)]............. 6.25% 5.58% 5.25%
</Table>
Average receivables outstanding is the average of the daily total
receivables balance during the period indicated. Gross charge-offs are the total
principal charge-offs before recoveries and do not include the amount of any
reductions in average receivables outstanding due to reversals of fees and
finance charges, returned goods, customer disputes or other miscellaneous credit
adjustments. Annualized figures are not necessarily indicative of results for
the entire year.
REVENUE EXPERIENCE
The gross revenues from finance charges and fees billed to accounts and
estimated interchange collections on accounts in the trust portfolio for each of
the three calendar years contained in the period ended December 31 and the
________ months ended ________, 200_ are set forth in the following table.
The following table shows the historical yields from finance charges and
fees, calculated on a collected basis. The following table includes information
with respect to each account from the date such account was designated to the
trust, and does not reflect the historical yields as if all accounts and the
related receivables had been designated throughout each of the periods shown.
The yield will be affected by numerous factors, including:
-- the monthly periodic finance charges on the receivables;
-- the amount of the annual cardholder 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.
S-13
REVENUE EXPERIENCE AND
PORTFOLIO YIELD
TRUST PORTFOLIO
<Table>
<Caption>
[ MONTHS YEAR ENDED DECEMBER 31,
ENDED , ---------------------------------------------------------------
200 ] 2002 2001 2000
------------------- ------------------- ------------------- -------------------
Average Receivables Outstanding..... $1,921,598,750 $1,596,696,941 $1,101,343,983
Finance Charges and Fees
Collected........................... $289,814,407 $258,796,930 $190,040,963
Yield from Finance Charges and Fees
Collected [(Annualized)]............ 15.08% 16.21% 17.26%
Estimated Interchange............... $37,046,878 $29,741,024 $20,836,655
Estimated Yield from Interchange.... 1.93% 1.86% 1.89%
Total Average Yield
[(Annualized)]...................... 17.01% 18.07% 19.15%
</Table>
In the above table, yield from finance charges is calculated by dividing
finance charges, cash advance fees, annual membership fees, late fees and other
fees by the average receivables outstanding, and estimated yield from
interchange is calculated by dividing actual interchange received from Visa and
MasterCard by the average receivables outstanding. Average receivables
outstanding is the average of the daily total receivables balances during the
period indicated.
The revenue for the trust portfolio shown in the above table is comprised
of the following components:
(a) monthly periodic finance charges,
(b) annual cardholder fees, and
(c) other service charges, including fees, and estimated interchange.
As payment rates decline, the balances subject to monthly periodic
finance charges tend to grow, assuming no change in the level of purchasing
activity. Accordingly, under these circumstances, the yield related to monthly
periodic finance charges normally increases. The yield related to service
charges varies with the type and volume of activity in and the amount of each
account. As account balances increase, annual cardholder fees, which remain
constant, represent a smaller percentage of the aggregate account balances. The
yield related to interchange generally varies with the number of credit card
transactions and the amount charged per transaction, which has historically been
higher in the last six months of the year than in the first six months, due to
the seasonal patterns in cardholder behavior.
INTERCHANGE
Creditors participating in the VISA and MasterCard associations receive
interchange, which are funds paid as partial compensation for taking credit
risk, absorbing fraud losses and funding receivables for a limited period of
time prior to initial billing. Under the VISA and MasterCard systems, a portion
of the interchange in connection with cardholder charges for merchandise and
services is passed from banks that clear the transactions for merchants to
S-14
credit card issuing banks. Interchange fees are set annually by VISA and
MasterCard and are based on the number of credit card transactions and the
amount charged per transaction. The bank will be required, pursuant to the terms
of the receivables purchase agreement, to transfer to us a percentage of the
interchange attributed to cardholder charges for merchandise and services in the
trust accounts. Under the pooling and servicing agreement and/or the transfer
and servicing agreement, we will be required to transfer a portion of these
amounts to the trust. VISA and MasterCard may from time to time change the
amount of interchange reimbursed to banks issuing their credit cards.
Interchange will be treated as collections of finance charge receivables for the
purposes of allocating collections of finance charge receivables to Series
200_-_.
THE TRUST PORTFOLIO
The receivables in the trust portfolio arise in accounts selected from
the VISA and MasterCard credit card accounts owned by the bank (or its South
Dakota affiliate) on the basis of criteria set forth in the pooling and
servicing agreement as applied on July 31, 1995, and, with respect to additional
accounts, as of the related date of their designation. All current trust
accounts are now owned by the bank. We will have the right, subject to some
limitations and conditions, and in some circumstances will be obligated, to
designate from time to time additional accounts and to transfer to the trust all
receivables arising in or which arose under those additional accounts, whether
those receivables are then existing or thereafter created. Any additional
accounts must be eligible accounts as of the date that we designate the accounts
as additional accounts. We will also have the right, subject to some limitations
and conditions, to designate some accounts as removed accounts and to require
the trustee to reconvey all receivables in those removed accounts to us.
Throughout the term of the trust, the accounts from which the receivables arise
will be the accounts designated on July 31, 1995, plus any additional accounts
and minus any removed accounts. The limitations and conditions which apply to
addition and removal of accounts are described in the prospectus under the
headings "Description of the Notes--Addition of Trust Assets" and "--Removal of
Accounts."
The VISA and MasterCard accounts may be used to purchase merchandise or
services and to obtain cash advances. A cash advance occurs when a credit card
is used to obtain cash from a financial institution or automated teller machine.
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 personal check. Amounts due from both purchases and cash advances
will be included in the receivables. A description of the bank's credit card
business is contained in the prospectus under the heading "The Bank's Credit
Card Activities."
As of the end of the day on ____________:
-- The receivables in the trust portfolio included approximately
$________ of total receivables.
-- The accounts designated for the trust portfolio had an average
principal receivable balance of $________ and an average credit
limit of $________.
S-15
-- The percentage of the aggregate total receivable balance to the
aggregate total credit limit was ____%.
-- The average age of the accounts by outstanding receivables balance
was approximately ________ months.
-- Cardholders whose accounts are designated for the trust portfolio
had billing addresses in all 50 states, the District of Columbia and
some U.S. territories.
The following tables describe the trust portfolio by various criteria at
the end of the day on ________. Because the future composition of the trust
portfolio will change over time, these tables are not necessarily indicative of
the composition of the trust portfolio at any subsequent time.
COMPOSITION BY OUTSTANDING ACCOUNT BALANCE
TRUST PORTFOLIO AT ________
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE
ACCOUNT NUMBER OF TOTAL NUMBER OF TOTAL
BALANCE RANGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
------------- --------- ------------- ----------- -----------
Credit Balance.............................. % $ %
Zero Balance................................ % %
$0.01 - $1,000.00........................... % %
$1,000.01 - $2,000.00....................... % %
$2,000.01 - $5,000.00....................... % %
$5,000.01 - $8,000.00....................... % %
$8,000.01 - $10,000.00...................... % %
$10,000.01 - $13,000.00..................... % %
$13,000.01 - $15,000.00..................... % %
$15,000.01 - $18,000.00..................... % %
$18,000.01 - $20,000.00..................... % %
Greater than $20,000.00..................... --% %
------ ------ ------ ------
TOTAL..................................... 100.00% $ 100.00%
====== ====== ====== ======
</Table>
S-16
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO AT ____________
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE
CREDIT NUMBER OF TOTAL NUMBER OF TOTAL
LIMIT RANGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
----------- --------- ------------- ----------- -----------
$0.00-$1,000.00............................. % $ %
$1,000.01 - $2,500.00....................... % %
$2,500.01 - $5,000.00....................... % %
$5,000.01 - $7,500.00....................... % %
$7,500.01 - $10,000.00...................... % %
$10,000.01 - $12,500.00..................... % %
$12,500.01 - $15,000.00..................... % %
$15,000.01 - $17,500.00..................... % %
$17,500.01 - $20,000.00..................... % %
$20,000.01 - $22,500.00..................... % %
$22,500.01 - $25,000.00..................... % %
Greater than $25,000.00..................... % %
------ ------ ------ ------
TOTAL..................................... 100.00% $ 100.00%
====== ====== ====== ======
</Table>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO AT ____________
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE
NUMBER OF TOTAL NUMBER OF TOTAL
ACCOUNT AGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
----------- --------- ------------- ----------- -----------
Not more than 12 months..................... % $ -- %
Over 12 months through 24 months............ % %
Over 24 months through 36 months............ % %
Over 36 months through 48 months............ % %
Over 48 months through 60 months............ % %
Over 60 months through 72 months............ % %
Over 72 months through 84 months............ % %
Over 84 months through 96 months............ % %
Over 96 months through 108 months........... % %
Over 108 months through 120 months.......... % %
Over 120 months............................. % %
------ ------ ------ ------
TOTAL..................................... 100.00% $ 100.00%
====== ====== ====== ======
</Table>
DISTRIBUTION BY FIXED/VARIABLE ANNUAL RATE OF RETURN
TRUST PORTFOLIO AT ____________
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE
NUMBER OF TOTAL NUMBER OF TOTAL
ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
--------- ------------- ----------- -----------
Total Fixed................................. % $ %
Total Variable.............................. % $ %
------ ------ ------ ------
TOTAL..................................... 100.00% $ 100.00%
====== ====== ====== ======
</Table>
S-17
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO AT ________
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE
NUMBER OF TOTAL NUMBER OF TOTAL
STATES ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
------ --------- ------------- ----------- -----------
Alabama..................................... % $ %
Alaska...................................... % %
Arizona..................................... % %
Arkansas.................................... % %
California.................................. % %
Colorado.................................... % %
Connecticut................................. % %
Delaware.................................... % %
Florida..................................... % %
Georgia..................................... % %
Hawaii...................................... % %
Idaho....................................... % %
Illinois.................................... % %
Indiana..................................... % %
Iowa........................................ % %
Kansas...................................... % %
Kentucky.................................... % %
Louisiana................................... % %
Maine....................................... % %
Maryland.................................... % %
Massachusetts............................... % %
Michigan.................................... % %
Minnesota................................... % %
Mississippi................................. % %
Missouri.................................... % %
Montana..................................... % %
Nebraska.................................... % %
Nevada...................................... % %
New Hampshire............................... % %
New Jersey.................................. % %
New Mexico.................................. % %
New York.................................... % %
North Carolina.............................. % %
North Dakota................................ % %
Ohio........................................ % %
Oklahoma.................................... % %
Oregon...................................... % %
Pennsylvania................................ % %
Rhode Island................................ % %
South Carolina.............................. % %
South Dakota................................ % %
Tennessee................................... % %
Texas....................................... % %
Utah........................................ % %
Vermont..................................... % %
Virginia.................................... % %
Washington.................................. % %
West Virginia............................... % %
Wisconsin................................... % %
Wyoming..................................... % %
Other....................................... % $ %
----- ------ ------- ------
TOTAL..................................... 100.00% $ 100.00%
===== ====== ======= ======
</Table>
S-18
MATURITY CONSIDERATIONS
Series 200_-_ will always be in one of three periods--the revolving
period, the accumulation period or the rapid amortization period. Unless a pay
out event occurs, each class of notes will not receive payments of principal
until the expected principal payment date for that class. The expected principal
payment date[s] for the Class A, Class B and Class C notes will be ____________.
We expect the issuer to have sufficient funds to pay the full principal amount
of each class of Series 200_-_ notes on the expected principal payment date[s].
However, if a pay out event occurs, principal payments for any class may begin
prior to the expected principal payment date[s].
ACCUMULATION PERIOD
During the accumulation period, principal allocated to the Series
200_-_noteholders will accumulate in the principal accumulation account in an
amount calculated to pay the Series 200_-_ notes in full on the expected
principal payment date. We expect, but cannot assure you, that the amounts
available in the principal accumulation account on the expected principal
payment date for the Series 200_-_ notes will be sufficient to pay in full the
outstanding principal amount of the Series 200_-_ notes. If there are not
sufficient funds on deposit in the principal accumulation account to pay your
notes on the expected principal payment date, a pay out event will occur and the
rapid amortization period will begin.
RAPID AMORTIZATION PERIOD
If a pay out event occurs during either the revolving period or the
accumulation period, the rapid amortization period will begin. If a pay out
event occurs during the accumulation period, on the next distribution date any
amount on deposit in the principal accumulation 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 addition, if the outstanding principal balance of the notes has not
been paid in full, the issuer will continue to pay principal in the priority
noted above to the noteholders on each distribution date during the rapid
amortization period until the Series 200_-_ final maturity date, which is the
____________, 20__ distribution date. No principal will be paid on the Class C
notes until the Class A and Class B notes have been paid in full, and no
principal will be paid on the Class B notes until the Class A notes have been
paid in full. However, Class C noteholders will receive principal payments as of
the Series 200_-_ final maturity date or upon the occurrence of an event of
default and acceleration of the Series 200_-_ notes even if the Class A or Class
B notes have not been paid in full, but only from amounts on deposit in the
spread account as described under "Description of Series Provisions--Spread
Account; Required Spread Account Amount" below.
S-19
PAYMENT RATES
The payment rate on the receivables is the most important factor that
will determine the size of principal payments during a rapid amortization period
and whether the issuer has funds available to repay your notes on their
[respective] expected principal payment date[s]. The following table sets forth
the highest and lowest cardholder monthly payment rates on the credit card
accounts in the trust portfolio 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
that would be deemed collections of principal receivables and finance charge
receivables with respect to the accounts. The table includes information with
respect to each account from the date such account was designated to the trust
and does not reflect the payment rates as if all accounts and related
receivables had been designated throughout each of the periods shown.
Although we have provided historical data concerning the payment rates on
the receivables in the trust portfolio, because of the factors described in the
prospectus under "Risk Factors" we cannot provide you with any assurance that
the levels and timing of payments on receivables in the trust portfolio from
time to time will be similar to the historical experience described in the
following table or that deposits into the principal accumulation account will be
in accordance with the applicable controlled accumulation amount. The servicer
may shorten the accumulation period and, in that event, we cannot provide any
assurance that there will be sufficient time to accumulate all amounts necessary
to pay the outstanding principal amount of the Series 200_-_notes on the
expected principal payment date.
CARDHOLDER MONTHLY PAYMENT RATES
TRUST PORTFOLIO
<Table>
<Caption>
YEAR ENDED
[ MONTHS DECEMBER 31,
ENDED -----------------------
, 200 ] 2002 2001 2000
--------------- ----- ----- -----
Lowest(1).............................................. % 11.19% 10.66% 10.68%
Highest(1)............................................. % 14.56% 14.09% 14.01%
Monthly Average........................................ % 12.38% 12.26% 12.18%
</Table>
- ---------------
(1) Monthly payment rates are the result of dividing total payments received
during a month by beginning total receivables outstanding for each month.
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.
REDUCED PRINCIPAL ALLOCATIONS
The issuer may issue another series of notes as a paired series for
Series 200_-_. If issued, a paired series may have terms that are different than
the terms of Series 200_-_ and other series. For example, the pay out events for
the paired series may vary from the pay out events for Series 200_-_ and may
include pay out events that are unrelated to the status of
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the issuer or the servicer, such as pay out events related to the continued
availability and rating of the providers of credit enhancement for the paired
series. If a pay out event occurs with respect to the paired series prior to the
payment in full of the Series 200_-_ notes, the allocation percentage used to
determine your series' share of principal collections may be reduced, which may
delay the final payment of principal for your series. See "Description of Series
Provisions--Paired Series" in this prospectus supplement. Even if there is no
paired series, at any time prior to the occurrence of a pay out event for your
series we may request a reduction to the allocation percentage used to determine
your series' share of principal collections and finance charge collections,
which will only be permitted upon satisfying the following conditions:
-- written notice delivered to the indenture trustee and the servicer;
-- each rating agency confirms that the reduction will not impair its
rating of the Series 200_-_ notes or any other outstanding
securities; and
-- we certify that in our reasonable belief the reduction will not
cause a pay out event with respect to Series 200_-_.
DESCRIPTION OF SERIES PROVISIONS
We have summarized the material terms of the Series 200_-_ notes below
and under "Description of the Notes" in the accompanying prospectus.
The Class A notes, the Class B notes and the Class C notes comprise the
Series 200_-_ notes and will be issued under the indenture, as supplemented by
the Series 200_-_ indenture supplement, in each case between the issuer and the
indenture trustee.
The Series 200_-_ 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 & Co., as nominee of DTC. See "Description of the
Notes," "--Book Entry Registration" and "--Definitive Notes" in the accompanying
prospectus. Payments of interest and principal will be made on each distribution
date on which those amounts are due to the noteholders in whose names the Series
200_-_ notes were registered on the related record date, which will be the last
day of the calendar month preceding that distribution date.
[We will apply 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.]
S-21
COLLATERAL AMOUNT
Your notes are secured by collateral consisting of an interest in the
receivables. At any time, the amount of the collateral for your notes, which we
call the collateral amount, is calculated as follows:
-- the original principal amount of the notes, less
-- all previous principal payments made on your series (except payments
made from the spread account) and the balance held in the principal
accumulation account for such payments, less
-- all unreimbursed reductions to the collateral amount as a result of
defaulted receivables or uncovered dilution allocated to your series
or reallocations of principal collections to cover interest or the
servicing fee for your series if the bank or one of its affiliates
is not the servicer.
The collateral amount cannot be less than zero.
ALLOCATION PERCENTAGES
The servicer will allocate among your series, other series of notes
issued and outstanding, outstanding series of investor certificates issued by
First Bankcard Master Credit Card Trust and our transferor interest in the trust
the following items: collections of finance charge receivables and principal
receivables and defaulted receivables. Your series will also be allocated its
share of any dilution amounts that are not offset by our transferor interest or
by our deposits into the excess funding account as described under "--Investor
Charge-Offs" below. On any day, the allocation percentage for your series will
be the percentage equivalent--which may not exceed 100%--of a fraction:
-- the numerator of which is:
-- for purposes of allocating finance charge collections during
the revolving period and the accumulation period, defaulted
receivables at all times and principal collections during the
revolving period, equal to the collateral amount as measured
at the end of the prior calendar month or, in the case of the
month during which the closing date occurs, on the closing
date; and
-- for purposes of allocating finance charge collections during a
rapid amortization period and allocating principal collections
during the accumulation period and the rapid amortization
period, equal to the collateral amount as of the end of the
revolving period unless the numerator is reduced as described
below or, with respect to allocating finance charge
collections, if later, as of the last day of the accumulation
period, if any; and
-- the denominator of which is the greater of:
(a) the sum of the total amount of principal receivables in the
trust and the amount in the excess funding account, in each
case determined as of the last day of the immediately
preceding monthly period except as described below; and
S-22
(b) the sum of the numerators used to calculate the applicable
allocation percentages for all series of notes or investor
certificates outstanding as of the date of determination.
The denominator referred to above will initially be set as of the closing
date and generally will only be reset for purposes of allocating principal
collections, finance charge collections and defaulted receivables at the end of
each calendar month. However, the denominator referred to above will also be
reset during any month in which:
-- accounts are added to, or removed from, the trust,
-- a variable series is increased, or
-- a new series is issued.
If one or more of these events occur in a monthly period, the denominator
referred to above for the portion of the monthly period falling on and after
such reset date and prior to any subsequent reset date will be recalculated for
such period using amounts determined as of the close of business on the date of
such event.
As discussed in "Maturity Considerations--Reduced Principal Allocations,"
we may, by written notice delivered to the indenture trustee and the servicer,
designate a reduced numerator for allocating principal collections or finance
charge collections to each class of your series, provided, however, that we
receive written confirmation from each rating agency that the reduction will not
impair its rating of the Series 200_-_ notes or any other outstanding securities
and we deliver an officer's certificate to the effect that in the reasonable
belief of such officer, such reduction will not cause a pay out event or
potential pay out event to occur. In addition, we may designate the numerator
for finance charge collections during the rapid amortization period will be the
collateral amount at the end of the last day of the prior monthly period by
notice to the servicer and the indenture trustee, provided, however, that we
receive written confirmation from each rating agency that the reduction will not
impair its rating of the Series 200_-_ notes or any other outstanding
securities.
INTEREST PAYMENTS
The Class A notes will accrue interest from and including the closing
date through but excluding ________, 200_, and for each following interest
period, at a rate of ____% per year [above LIBOR for the related interest
period].
The Class B notes will accrue interest from and including the closing
date through but excluding ________, 200_, and for each following interest
period, at a rate of ____% per year [above LIBOR for the related interest
period].
The Class C notes will accrue interest from and including the closing
date through but excluding ________, 200_, and for each following interest
period, at a rate of ____% per year [above LIBOR for the related interest
period].
Each interest period will begin on and include a distribution date and
end on but exclude the next distribution date. However, the first interest
period will begin on and include the closing date.
[For purposes of determining the interest rates applicable to each
interest period, LIBOR will be determined two London business days before that
interest period begins
S-23
except that LIBOR with respect to the first interest period shall be determined
on ________, 200_. For each date of determination, LIBOR will equal the rate for
deposits in United States dollars for a one-month period [(or, solely for
purposes of determining LIBOR for the first interest period as described in the
following paragraph, a two-month period)] which appears on the display page
currently designated as "Telerate Page 3750" 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 as of 11:00 a.m., London
time, on that date. If that rate does not appear on that display page, the rate
for that 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 [(or, solely for purposes of determining
LIBOR for the first interest period as described in the following paragraph, a
two-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 interest period will be the
arithmetic mean of the quotations. If fewer than two quotations are provided,
the rate for that interest period 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.]
[LIBOR for the first interest period will be determined by straight-line
interpolation, based on the actual number of days in the period from the closing
date through and including [________], between two rates determined in
accordance with the preceding paragraph, one of which will be determined for a
maturity of one month and one of which will be determined for a maturity of two
months.]
[The interest rates applicable to the then current and immediately
preceding interest period may be obtained by telephoning the indenture trustee
at its corporate trust office at [________].]
Interest on the [Class A,] [Class B] [and] [Class C] notes will be
calculated on the basis of [the actual number of days in the related interest
period and] a year of 360 days [and interest on the [Class A,] [Class B] [and]
[Class C] notes will be calculated on the basis of a 360-day year of twelve
30-day months].
If the issuer does not pay interest as calculated above to any class when
due on a distribution date, the amount not paid will be due on the next
distribution date, together with interest on the overdue amount of regular
monthly interest at the interest rate payable on the notes for the applicable
class.
[PRE-FUNDING
The indenture trustee will establish and maintain a segregated trust
account held in the name of the issuer for the benefit of noteholders to serve
as the pre-funding account. On the closing date, we will deposit $________ into
the pre-funding account. All amounts on deposit in this account will be invested
by the indenture trustee, at the direction of the servicer, in highly rated
liquid investments that meet the criteria described in the indenture supplement.
Investment earnings on amounts on deposit in the pre-funding account will be
treated as finance charge collections.
S-24
The funding period will commence on the closing date and end on the first
to occur of (1) the date on which the initial collateral amount equals the
initial principal balance of the notes, (2) the commencement of a rapid
amortization period and (3) ________, 200_.
During the funding period, the initial collateral amount will increase on
each distribution date, to reflect any increase in the amount of principal
receivables in the trust to the extent that the transferor interest will not be
less than the Minimum Transferor's Interest, but may not increase by an amount
greater than the funds on deposit in the pre-funding account on that date. On
any distribution date on which the initial collateral amount is so increased,
the indenture trustee will withdraw funds on deposit in the pre-funding account
in an amount equal to the increase and pay those amounts over to us. You will
have no further rights to the funds on deposit in the pre-funding account once
they are released to us. Should the amount on deposit in the pre-funding account
be greater than zero at the end of the funding period, the remaining amounts
will be payable as principal on a pro rata basis to the Class A noteholders,
Class B noteholders and Class C noteholders based upon their respective
outstanding principal balances.]
PRINCIPAL PAYMENTS AND DEPOSITS
During the revolving period and the accumulation period, no principal
payments will be made on your notes. During the accumulation period and the
rapid amortization period, deposits to the principal accumulation account and
principal payments, respectively, on the Series 200_-_ notes will be made on
each transfer date and distribution date, respectively, from the following
sources:
(a) principal collections allocated to your series based on your
allocation percentage and retained in [a segregated trust account
established for your series] [the collection account] during the
prior calendar month, less any amounts required to be reallocated
to cover interest payments on the Class A and Class B notes or
servicing fee payments payable if the bank or its affiliate is not
the servicer; plus
(b) any finance charge collections or other amounts required to be
treated as principal collections in order to cover the share of
defaulted receivables and uncovered dilution amounts allocated to
your series or to reinstate prior reductions to the collateral
amount for your series; plus
(c) any principal collections from other series that are shared with
your series.
Deposits into the principal accumulation account and principal payments
on the Series 200_-_ notes will begin on the transfer date and distribution
date, respectively, in the month following the month in which the accumulation
period or rapid amortization period commences. We refer to the business day
before a distribution date as the transfer date.
For purposes of clause (a) above, except during the rapid amortization
period, so long as the transferor interest equals or exceeds the Minimum
Transferor's Interest and the amount then on deposit in the spread account
equals or exceeds the required spread account amount, your series' share of
principal collections received for any monthly period is only required to be
retained in the collection account or in a segregated trust account established
for your series, as applicable, up to an amount equal to the required principal
payments or deposits on the related distribution date.
S-25
ACCUMULATION PERIOD
The accumulation period is scheduled to commence on ________ and to last
________ months. However, the revolving period will be extended and the
commencement of the accumulation period will be postponed, subject to the
conditions described under "--Suspension and Postponement of Accumulation
Period" below. The accumulation period will be postponed only if the number of
months needed to fully fund the principal accumulation account to pay the Series
200_-_ notes on their expected principal payment date is less than ________
months. In no event will the beginning of the accumulation period be postponed
to later than ________.
The servicer may also elect to suspend the accumulation period, subject
to the conditions described under "--Suspension and Postponement of Accumulation
Period" below.
On each transfer date relating to the accumulation period prior to the
date on which the Series 200_-_ notes have been paid in full, the indenture
trustee will deposit in the principal accumulation account an amount equal to
the least of:
(1) funds available for this purpose for your series with respect to
that transfer date;
(2) an amount equal to ________ of the Series 200_-_ collateral amount
as of the beginning of the accumulation period or, if the
commencement of the accumulation period is postponed, any higher
accumulation amount as the servicer's calculations shall require,
as set forth in "Description of Series Provisions--Suspension and
Postponement of Accumulation Period" below, to fully fund the
principal accumulation account by the expected principal payment
date, plus any amounts required to be deposited to the principal
accumulation account on prior transfer dates that have not yet been
deposited;
(3) an amount equal to the outstanding principal amount of the Series
200_-_ notes, minus the amount on deposit in the principal
accumulation account prior to any deposits on that date; and
(4) the collateral amount, after taking into account any adjustments to
be made on the related distribution date with respect to defaulted
receivables or uncovered dilution allocated your series or
reallocations of principal collections to cover interest or the
servicing fee for your series if the bank or one of its affiliates
is not the servicer, but prior to any deposit into the principal
accumulation account on that transfer date.
If the rapid amortization period has not commenced, amounts in the
principal accumulation account will be paid on the [applicable] expected
principal payment date[s] first to the Class A noteholders and then to the Class
B noteholders and then to the Class C noteholders, in each case until the
specified class of notes is paid in full.
During the accumulation period, the portion of funds available but not
required to be deposited in the principal accumulation account on a distribution
date:
-- first, will be made available to investors in other series as shared
principal collections,
-- second, at our option, will be applied as principal with respect to
any variable funding notes in your group,
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-- third, will be deposited in the excess funding account if necessary
to maintain the Minimum Transferor's Interest, and
-- fourth, will be paid to us.
SUSPENSION AND POSTPONEMENT OF ACCUMULATION PERIOD
The revolving period may be automatically extended and, upon notice to
the indenture trustee, the servicer may elect to suspend the controlled
accumulation, subject to the conditions described below.
Beginning ______ months prior to the scheduled start of the accumulation
period, on each determination date until the accumulation period begins for your
series, the servicer will calculate the amount of expected principal collections
and determine the number of months expected to be required to fully fund the
principal accumulation account by the related expected principal payment date
for each class of notes in your series. If the number of months needed to fully
fund the principal accumulation account by the related expected principal
payment date for each class is less than the number of months in the scheduled
accumulation period, the servicer will notify the indenture trustee, us and each
rating agency and the accumulation period will automatically be postponed. The
servicer's calculations will assume (a) that the principal receivables in the
trust and the amounts in the excess funding account will remain constant, (b) no
pay out event will occur for any series, (c) no additional series will be issued
and (d) a principal payment rate no greater than the lowest monthly principal
payment rate for the receivables for the last ______ months (or such lower
payment rate as the servicer may designate). In no case will the accumulation
period for your series be reduced to less than ______ month[s].
The method for determining the number of months required to fully fund
the principal accumulation account may be changed if each rating agency confirms
that the change will not impair its rating of any outstanding series or class of
securities.
The servicer may also elect, at its option, to suspend the accumulation
period if the issuer obtains a qualified maturity agreement in which an eligible
institution agrees to deposit in the principal accumulation account on or before
the [applicable] expected principal payment date[s] for each class of notes in
your series [an] amount[s] equal to the initial principal amount of those notes,
reduced by any amount on deposit in the principal accumulation account [and
reductions to the collateral amount due to investor charge-offs, not to exceed
the Class C initial principal amount]; provided that the amount to be deposited
may be reduced by any amount funded, at our election, from the proceeds of a new
series of notes on or before the expected principal payment dates and by any
amount on deposit in the principal accumulation account. The qualified maturity
agreement may require that during the period when the accumulation period is
suspended, upon the occurrence of certain events, available principal
collections are to be deposited into the principal accumulation account. To be
an eligible institution, the counterparty must have short-term ratings no less
than P-1/A-1+ by Moody's and S&P, respectively, or alternatively, long-term
unsecured ratings no less than Aa3/AA- by Moody's and S&P, respectively.
The servicer may make this election at any time, up to the distribution
date preceding the expected principal payment date for [your series] [the Class
A and Class B notes].
S-27
The issuer will pledge to the indenture trustee, for the benefit of the
noteholders of your series, all right, title and interest in any qualified
maturity agreement.
A qualified maturity agreement for your series or any class will
terminate at the close of business on the expected principal payment date [for
your series] [for the Class A and Class B notes]. However, if the reserve
account is funded to the required level:
(1) the servicer may terminate a qualified maturity agreement earlier
than the expected principal payment date if one of the following
occurs:
(a) the issuer obtains a substitute qualified maturity agreement,
(b) the institution providing the qualified maturity agreement
ceases to be an eligible institution and the issuer is unable
to obtain a substitute qualified maturity agreement, or
(c) a pay out event occurs for your series, or an event which may
be declared a pay out event for your series occurs, whether or
not it is declared; and
(2) the servicer may terminate a qualified maturity agreement prior to
the later of:
(a) the date on which the accumulation period was scheduled to
begin, before giving effect to the suspension of the
accumulation period, and
(b) the date to which the commencement of the accumulation period
would otherwise be postponed, as determined on the
determination date preceding the termination of the qualified
maturity agreement.
If the institution providing a qualified maturity agreement ceases to be
an eligible institution, the issuer will use its best efforts to obtain a
substitute qualified maturity agreement, unless the issuer elects to terminate
the qualified maturity agreement and is not required to obtain a substitute
qualified maturity agreement for any of the reasons described in the preceding
paragraph.
If a qualified maturity agreement is terminated prior to the earlier of
the expected principal payment date for your series or the related class and the
commencement of the rapid amortization period for that series, and the issuer
does not obtain a substitute qualified maturity agreement, the accumulation
period will begin on the latest of:
-- the date on which the accumulation period was scheduled to begin,
before giving effect to the postponement of the accumulation period;
-- the date to which the accumulation period is automatically
postponed, as determined on the date of termination of the qualified
maturity agreement; and
-- the first day of the calendar month following the termination of the
qualified maturity agreement.
RAPID AMORTIZATION PERIOD
On each distribution date relating to the rapid amortization period, the
Class A noteholders will be entitled to receive funds available for principal
payments for Series 200_-_ for the related calendar month in an amount up to the
outstanding principal balance of the Class A notes.
S-28
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 rapid amortization period, the remaining available funds
for principal payments for Series 200_-_ for the related calendar month 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 A
and Class B notes, the Class C noteholders will be entitled to receive, on each
distribution date relating to the rapid amortization period, the remaining
available funds for principal payments for Series 200_-_ for the related month
in an amount up to the outstanding principal balance for the Class C notes.
See "--Pay Out Events" below for a discussion of events that might lead
to the commencement of the rapid amortization period.
SUBORDINATION
The Class B notes and Class C notes are subordinated to the Class A
notes. The Class C notes are subordinated to the Class A notes and the Class B
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.
However, Class C noteholders will receive principal payments as of the Series
200_-_ final maturity date even if the Class A or Class B notes have not been
paid in full, but only from amounts on deposit in the spread account as
described under "--Spread Account; Required Spread Account Amount" below.
The collateral amount for your series will be reduced as the collateral
is applied for the benefit of your series, for instance as principal payments
are made on your series. In addition, the collateral amount can be applied for
the benefit of your series in two other ways:
-- by reallocating principal collections to make Class A and Class B
interest payments and to pay the servicing fee for your series
payable when the bank or its affiliate is not the servicer, when
finance charge collections and investment earnings are not
sufficient to make these payments; and
-- to absorb your series' share of defaulted receivables and any
uncovered dilution amounts, when finance charge collections and
investment earnings are not sufficient to cover these amounts.
If the total amount of these reductions exceeds the principal amount of
the Class C notes, then the Class B notes may not be repaid in full. If the
total exceeds the sum of principal amounts of the Class C and Class B notes,
then the Class A notes may not be repaid in full.
If receivables are sold after an event of default, the net proceeds of
that sale would be paid, after any amounts due to the indenture trustee have
been paid, as either deemed principal collections or finance charge collections
in the same proportion as (x) the outstanding principal balance of the Series
200_-_ notes bears to (y) the sum of the accrued
S-29
and unpaid interest on the Series 200_-_ notes and other fees and expenses
payable in connection therewith under the indenture supplement; first to the
Class A notes, then to the Class B notes and finally to the Class C notes, in
each case until the outstanding principal amount of the specified class and all
accrued and unpaid interest payable to that class have been paid in full.
APPLICATION OF FINANCE CHARGE COLLECTIONS
We refer to your series' share of finance charge collections, including
recoveries, interchange, net investment proceeds transferred from the excess
funding account, [the cash collateral account,] [the pre-funding account,] the
reserve account and the principal accumulation account, any available excess
finance charge collections from other series, and certain amounts withdrawn from
[the cash collateral account,] [the spread account,] [and] the reserve account,
and any principal receivables treated as finance charge receivables through the
discount option, collectively, as finance charge collections. On each transfer
date, the servicer will direct the indenture trustee to apply your series' share
of finance charge collections for the prior month in the following order:
(1) to pay interest on the Class A notes, including any overdue
interest and additional interest on the overdue interest, on
the related distribution date;
(2) to pay interest on the Class B notes, including any overdue
interest and additional interest on the overdue interest, on
the related distribution date;
(3) on each transfer date on which the bank or one of its
affiliates is not the servicer, to pay the servicing fee for
your series for the prior calendar month and any overdue
servicing fee (to the extent not retained by the servicer
during the month);
(4) to pay interest on the Class C notes, including any overdue
interest and additional interest on the overdue interest, on
the related distribution date;
(5) an amount equal to your series' share of the defaulted
receivables and uncovered dilution, if any, for the related
calendar month, will be treated as principal collections for
the prior calendar month;
(6) an amount equal to any unreimbursed reductions to the
collateral amount on account of defaulted receivables,
uncovered dilution or reallocations of principal collections
will be treated as principal collections for the prior calendar
month;
(7) on and after the reserve account funding date (but prior to
termination of the reserve account), 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;
(8) on each transfer date on which the bank or one of its
affiliates is the servicer, to pay the servicing fee for your
series for the prior calendar month and any overdue servicing
fee (to the extent not retained by the servicer during the
month);
S-30
(9) [an amount equal to the excess, if any, of the required cash
collateral account amount over the amount then on deposit in
the cash collateral account will be deposited into the cash
collateral account and then] 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;
[(10) to pay other amounts owed in connection with the Class C notes;]
[(11)] all remaining amounts will constitute excess finance charge
collections and will be available to cover any shortfalls in
finance charge collections for other outstanding series in group
____________;
[(12)] following a servicer default and the appointment of a successor
servicer, to pay to the successor servicer the excess servicing
fee described in "--Servicing Compensation and Payment of
Expenses" below; and
[(13)] any remaining amount will be paid to us or our assigns.
If your series' share of finance charge collections for any month is
insufficient to pay interest on the Class C notes--including any overdue
interest and additional interest on the overdue interest--when due, a draw will
be made from the amounts available in the spread account and will be paid to the
Class C noteholders on the related distribution date.
REALLOCATION OF PRINCIPAL COLLECTIONS
If your series' share of finance charge collections is not sufficient to
pay the aggregate amount of interest on the Class A notes and the Class B notes
and any servicing fee for your series payable to a servicer other than the bank
or one of its affiliates[, after giving effect to any withdrawal from the [cash
collateral account] to cover such payments, then your series' share of principal
collections will be reallocated to cover these amounts, except as described
below.
Any reallocation of principal collections is a use of the collateral for
your notes. Consequently, these uses will reduce the remaining collateral amount
by a corresponding amount. The amount of principal collections that will be
reallocated on any distribution date may not exceed:
-- the lower of:
-- the excess of the amounts needed to pay current, overdue and
additional interest on the Class A notes over the amount of finance
charge collections allocated to your series that are available to
cover these amounts; and
-- the greater of (1)(a) ____% of the initial Series 200_-_ collateral
amount minus (b) the sum of (i) the amount of unreimbursed investor
charge-offs after giving effect to investor charge-offs for the
related calendar month and (ii) the amount of unreimbursed
reallocated principal collections as of the previous distribution
date and (2) zero; plus
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-- the lower of:
-- the excess of the sum of the amounts needed to pay current, overdue
and additional interest on the Class B notes and the current and
past due servicing fee for your series over the amount of finance
charge collections allocated to your series that are available to
cover these amounts; and
-- the greater of (1)(a) ____% of the initial Series 200_-_ collateral
amount minus (b) the sum of (i) the amount of unreimbursed investor
charge-offs after giving effect to investor charge-offs for the
related calendar month and (ii) the amount of unreimbursed
reallocated principal collections as of the previous distribution
date and after giving effect to the reallocation of principal
collections to make required interest payments for the Class A
notes on the then-current distribution date and (2) zero.
To the extent available, reductions to the collateral amount for your
notes due to reallocation of principal receivables may be reinstated as
described under "--Application of Finance Charge Collections" above.
INVESTOR CHARGE-OFFS
The notes will be allocated a portion of the defaulted receivables for
each calendar month. For this purpose, defaulted receivables for any monthly
period are principal receivables that were charged-off as uncollectable in that
monthly period, except that defaulted receivables that the transferor is
required to purchase as a result of any breach of representation, warranty or
covenant will be excluded. Defaulted receivables will be allocated at all times
to your series based upon the allocation percentage for defaulted receivables
for your series. The allocation percentage is described under "--Allocation
Percentages" above.
Dilution will also be allocated to your series in the circumstances
described in "Description of the Notes--Defaulted Receivables; Dilution;
Investor Charge-Offs" in the accompanying prospectus. If dilution is allocated
among series, your series' share of dilution will equal:
(1) dilution to be allocated to all series of notes or investor
certificates for that calendar month, times
(2) a fraction,
-- the numerator of which is the numerator used in determining your
series' allocation percentage for purposes of allocating finance
charge collections for that calendar month, as described under
"--Allocation Percentages" above, and
-- the denominator of which is the sum of the numerators used in
determining the allocation percentages used by all outstanding
series of notes or investor certificates for purposes of allocating
finance charge collections for that calendar month;
provided that, if the allocation percentage for finance charge collections
for any series has been reset during that calendar month, the fraction
described in clause (2) above will be calculated on a weighted average
basis for that calendar month.
On each distribution date, if the sum of the defaulted receivables and
any remaining uncovered dilution allocated to your series is greater than the
finance charge collections used
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to cover those amounts, then the collateral amount will be reduced by the amount
of the excess.
Any such reductions in the collateral amount, called charge-offs, will be
reinstated to the extent that finance charge collections are available for that
purpose on any subsequent distribution date.
SHARING PROVISIONS
Your series is in group ____________ for purposes of sharing excess
finance charge collections. Your series will share excess finance charge
collections with other series of notes in group ____________ and other series of
investor certificates in group ____________ for First Bankcard Master Credit
Card Trust. See "Description of the Notes--Shared Excess Finance Charge
Collections" in the accompanying prospectus.
[Your series is also a principal sharing series. See "--Description of
the Notes--Shared Principal Collections" and "Excess Funding Account" in the
accompanying prospectus.]
FOREIGN ACCOUNTS
So long as Series 200_-_ notes are outstanding, notwithstanding the
proviso in clause (d) of the definition of Eligible Account in the "Glossary of
Terms" in the accompanying prospectus, receivables arising in foreign accounts
shall constitute Eligible Receivables for all purposes except that they may not
be counted for purposes of determining compliance with the tests for the Minimum
Transferor's Interest and the Minimum Aggregate Principal Receivables. For
purposes of these requirements, a foreign account means an account, which as of
the cut off date (or, with respect to additional accounts, as of the relevant
addition date) was an Eligible Account, but subsequent to such date the obligor
of which has provided, as its most recent billing address, an address which is
not located in the United States or its territories or possessions.
PRINCIPAL ACCUMULATION ACCOUNT
The indenture trustee will establish and maintain a segregated trust
account in the name of the issuer held for the benefit of the noteholders to
serve as the principal accumulation account. During the accumulation period, the
indenture trustee at the direction of the servicer will make deposits to the
principal accumulation account as described under "--Principal Payments and
Deposits" in this prospectus supplement.
Funds on deposit in the principal accumulation account will be invested
to the following transfer date by the indenture trustee at the direction of the
servicer in highly rated liquid investments that meet the criteria described in
the indenture supplement. On each transfer date, investment earnings, net of
investment losses and expenses, on funds on deposit in the principal
accumulation account will be deposited in [a segregated trust account
established for your series] [the collection account] and treated as finance
charge collections available to your series for the related interest period.
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If, for any transfer date, these net investment earnings are less than
the sum of:
(a) the product of (1) the balance of the principal accumulation
account, up to the outstanding principal balance of the Class A
notes, on the record date immediately preceding that distribution
date, (2) the Class A interest rate, and (3) a fraction the
numerator of which is [the actual number of days in the related
interest period] [30] and the denominator of which is 360, plus
(b) the product of (1) the balance of the principal accumulation
account in excess of the outstanding principal balance of the Class
A notes, up to the outstanding principal balance of the Class B
notes, on the record date immediately preceding that distribution
date, (2) the Class B interest rate, and (3) a fraction the
numerator of which is [the actual number of days in the related
interest period] [30] and the denominator of which is 360, plus
(c) the product of (1) the balance of the principal accumulation
account in excess of the outstanding principal balance of the Class
A and Class B notes, up to the outstanding principal balance of the
Class C Notes, on the record date immediately preceding that
distribution date, (2) the Class C interest rate, and (3) a
fraction the numerator of which is [the actual number of days in
the related interest period] [30] and the denominator of which is
360,
then the indenture trustee will withdraw the shortfall, to the extent available,
from the reserve account and deposit it in [a segregated trust account
established for your series] [the collection account] for use as finance charge
collections that are available to your series.
SPREAD ACCOUNT; REQUIRED SPREAD ACCOUNT AMOUNT
The indenture trustee will establish and maintain a segregated trust
account held for the benefit of the Class C noteholders to serve as the spread
account. The balance in the spread account will initially be [$0.00] [an amount
equal to ____% multiplied by the initial Series 200_-_ collateral amount].
All amounts on deposit in the spread account will be invested by the
indenture trustee, at the direction of the servicer, in highly rated liquid
investments that meet the criteria described in the indenture supplement and
mature on or before the next transfer date. Except as noted below, so long as
the required spread account amount is on deposit in the spread account, the
interest and other investment income, net of losses and investment expenses,
earned on these investments will be withdrawn on each transfer date and paid to
us. For purposes of determining the availability of funds or the balance of the
spread account, with few exceptions, all investment earnings will be deemed not
to be available or on deposit.
[The balance of the spread account will initially be an amount equal to
____% multiplied by the initial Series 200_-_ collateral amount and will
increase further thereafter to the extent that collections of finance charge
receivables and excess finance charge collections allocable to the Series 200_-_
notes are required to be deposited in order to meet the required spread account
amount.]
Withdrawals will be made from the spread account (including interest and
investment income, if needed) to pay the Class C monthly interest, including
overdue interest and interest thereon, if there are insufficient funds available
to pay interest through the collection
S-34
of finance charge receivables. On the Series 200_-_ final maturity date or, if
sooner, the distribution date on which the outstanding principal balances of the
Class A and Class B notes are reduced to zero, available funds in the spread
account (including interest and investment income, if needed), after giving
effect to the withdrawals above, will be used to fund any shortfall in the
payment of the Class C outstanding principal balance.
The required spread account amount applicable on any date of
determination will be determined as follows:
(a) prior to a pay out event, the required spread account amount will
equal the product of (1) the Spread Account Percentage and (2) the [initial
Series 200_-_ collateral amount, except that the required spread account amount
will not exceed the Class C outstanding principal balance reduced by the excess
of the principal accumulation account balance over the sum of the Class A
outstanding principal balance and the Class B outstanding principal balance;
(b) after a pay out event, the required spread account amount will
equal the Class C outstanding principal balance].
If, after giving effect to all withdrawals from and deposits into the
spread account with respect to any transfer date, the amount on deposit would
exceed the required spread account amount then in effect, the indenture trustee
will, at the written direction of the servicer, treat these excess amounts as
finance charge collections available to your series for the related interest
period.
On any day following the occurrence of an event of default with respect
to Series 200_-_ and acceleration of the Series 200_-_ notes pursuant to the
indenture, the servicer will withdraw available amounts from the spread account,
and the servicer or indenture trustee will deposit such amounts in a segregated
trust account established for your series for distribution to the Class C
noteholders until the outstanding Class C note principal balance is paid in
full[, then to the Class A noteholders until the outstanding Class A note
principal balance is paid in full,] [and then to the Class B noteholders until
the outstanding Class B note principal balance is paid in full] [in that order
of priority,] in accordance with the Series 200_-_ indenture supplement, to fund
any shortfalls in amounts owed to such Series 200_-_ noteholders.
RESERVE ACCOUNT
The indenture trustee will establish and maintain a segregated trust
account held in the name of the issuer for the benefit of the noteholders to
serve as the reserve account. The reserve account is established to assist with
the distribution of interest on the notes during the accumulation period and on
the first distribution date with respect to the rapid amortization period. On
each transfer date from and after the reserve account funding date, but prior to
the termination of the reserve account, the indenture trustee will apply finance
charge collections allocated to your series to increase the amount on deposit in
the reserve account to the extent the amount on deposit in the reserve account
is less than the required reserve account amount.
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The reserve account funding date is the transfer date designated by the
servicer and which occurs no later than the earliest of the following:
(a) the transfer date with respect to the monthly period which
commences ____________ months prior to the then scheduled commencement of the
accumulation period,
(b) [ the first transfer date for which the quarterly net yield is less
than ____%, but in such event the reserve account funding date shall not occur
earlier than the transfer date with respect to the ____________ month prior to
the then scheduled commencement of the accumulation period,
(c) the first transfer date for which the quarterly net yield is less
than ____%, but in such event the reserve account funding date shall not occur
earlier than the transfer date with respect to the ____________ month prior to
the then scheduled commencement of the accumulation period, and
(d) the first transfer date for which the quarterly net yield is less
than ____%, but in such event the reserve account funding date shall not occur
earlier than the transfer date with respect to the ____________ month prior to
the then scheduled commencement of the accumulation period.]
The net yield means, with respect to any monthly period, the Portfolio
Yield, as defined in the Glossary hereto, with respect to that monthly period
minus the Base Rate, as defined in the Glossary hereto, with respect to the same
monthly period.
The quarterly net yield means, for any distribution date, the average of
the net yields for each of the three preceding monthly periods and, for purposes
of the ____________ 200_ and ____________ 200_ distribution dates, the net
yields for ____________ and ____________ of 200_ will be deemed to be ____% and
____%, respectively.
The required reserve account amount for any transfer date on or after the
reserve account funding date will be equal to (a) ____________% of the
outstanding principal balance of the Series 200_-__ notes or (b) any other
amount designated by us. We may only designate a lesser amount if each rating
agency confirms that the designation will not impair its rating of any
outstanding series or class of securities and we certify to the indenture
trustee that, based on the facts known to the certifying officer at the time, in
our reasonable belief, the designation will not cause a pay out event to occur
for Series 200_-__.
On each transfer date, after giving effect to any deposit to be made to,
and any withdrawal to be made from, the reserve account on that transfer 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, and the amount withdrawn will be applied,
first, to fund any shortfall in the spread account, and then distributed to us
or our assigns. Any amounts withdrawn from the reserve account and distributed
to us or our assigns will not be available for distribution to the noteholders.
All amounts on deposit in the reserve account on any transfer date--after
giving effect to any deposits to, or withdrawals from, the reserve account to be
made on that transfer date--will be invested to the following transfer date by
the indenture trustee as required under the indenture in highly rated liquid
investments that meet the criteria described in the indenture supplement. The
interest and other investment income, net of losses and investment
S-36
expenses, 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, and any excess will be deposited in [the collection account] [a
segregated trust account established for your series] and treated as finance
charge collections available to your series.
On or before each transfer date with respect to the accumulation period
and on or before the first transfer date with respect to the rapid amortization
period, the indenture trustee will withdraw from the reserve account and deposit
in [the collection account] [a segregated trust account established for your
series] an amount equal to the least of:
(1) the amount then on deposit in the reserve account with respect to
that transfer date; and
(2) the amount of the shortfall described under "--Principal
Accumulation Account" above.
Amounts withdrawn from the reserve account on any transfer date will be
included as finance charge collections available to your series for the related
distribution date.
The reserve account will be terminated upon the earliest to occur of:
(1) the first transfer date for the rapid amortization period;
(2) the transfer date immediately preceding the expected principal
payment date; and
(3) the termination of the trust.
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, will be deposited in the spread account to the extent
funds available in the spread account are less than the required spread account
amount, and any remaining deposits will be distributed to us or our assigns. Any
amounts withdrawn from the reserve account and distributed to us or our assigns
will not be available for distribution to the noteholders.
[CASH COLLATERAL ACCOUNT
The indenture trustee will establish and maintain a segregated trust
account held in the name of the issuer for the benefit of the noteholders to
serve as the cash collateral account. The interest of the Class B noteholders in
the cash collateral account will be subordinated to the interests of the Class A
noteholders as described in this prospectus supplement. The interest of the
Class C noteholders in the cash collateral account will be subordinated to the
interests of the Class A and Class B noteholders.
All amounts on deposit in the cash collateral account will be invested by
the indenture trustee, at the direction of the servicer, in highly rated liquid
investments that meet the criteria described in the indenture supplement. The
interest and other investment income, net of losses and investment expenses,
earned on these investments will be treated as collections of finance charge
receivables. For purposes of determining the availability of funds or the
balance of the cash collateral account, all investment earnings will be deemed
not to be available or on deposit.
S-37
On each transfer date, the servicer will calculate for each monthly
period the required draw amount and required cash collateral amount for the
related distribution date. The required draw amount will be equal to the
shortfall, if any, in interest payable on the notes, any servicing fees due if
the bank or one of its affiliates is not the servicer and defaulted receivables
and uncovered dilution allocated to your series, after the application of
amounts available from finance charge collections. See "--Application of Finance
Charge Collections." The available cash collateral amount for any transfer date
will equal the lesser of (a) the amount on deposit in the cash collateral
account on that date prior to giving effect to any deposits or withdrawals for
that date and (b) the required cash collateral amount for that transfer date.
The required cash collateral amount for any transfer date will be an
amount equal to the greater of:
-- ____% of the collateral amount after taking into account deposits
into the principal accumulation account and payments to be made on
that distribution date; or
-- $________.
However, if a pay out event occurs for this series, the required cash
collateral amount for that transfer date will equal ____% of the collateral
amount as of the close of business as of the last day of the revolving period.
Also, notwithstanding the other calculations described above, the required cash
collateral amount will never exceed the sum of the outstanding principal
balances of the Series 200_-__ notes, as of the last day of the monthly period
preceding that transfer date minus amounts on deposit in the principal
accumulation account after taking into account the payments to be made on the
related distribution date and any deposits to be made to the principal
accumulation account on that transfer date.
We may designate a lesser amount for the required cash collateral amount
if each rating agency confirms that the designation will not impair its rating
of any outstanding series or class of securities.
If on any transfer date, the required draw amount is greater than zero,
the indenture trustee will withdraw, to fund the deficiency in the finance
charge collections, the lesser of (1) the required draw amount and (2) the
amount on deposit in the cash collateral account on that date prior to giving
effect to any deposits or withdrawals for that date and the required cash
collateral amount.
If on any transfer date, the available cash collateral amount exceeds the
required cash collateral amount, the indenture trustee will withdraw the excess
amount from the cash collateral account and will deposit the excess amount into
the spread account to the extent the amount on deposit in the spread account is
less than the required spread account amount, and will then pay any remaining
excess amount to us.]
[PAIRED SERIES
Your series may be paired with one or more other series issued at a later
time. We call each of these later issued series a paired series. See
"Description of the Notes--Paired Series" in the accompanying prospectus. The
issuance of the paired series will be subject to the conditions described under
"Description of the Notes--New Issuances of Notes" in the accompanying
prospectus.
S-38
We cannot guarantee that the terms of any paired series will not have an
impact on the calculation of the allocation percentage used to allocate
principal collections to your series or the timing or amount of payments
received by you as a Series 200_-_ noteholder. In particular, the numerator for
the allocation percentage used to allocate principal collections to your series
may be reduced upon the occurrence of a pay out event for a paired series. 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 allocation percentage.]
PAY OUT EVENTS
A pay out event will occur for the Series 200_-_ notes upon the
occurrence of any of the following events:
(a) our failure (1) to make any payment or deposit on the date required
to be made under the pooling and servicing agreement, the
collateral series supplement, the transfer and servicing agreement,
the indenture or the Series 200_-_ indenture supplement within the
applicable grace period which shall not exceed five business days
after the day that payment or deposit is required to be made or (2)
to observe or perform in any material respect our other covenants
or agreements set forth in the pooling and servicing agreement or
the collateral series supplement, the transfer and servicing
agreement, the indenture or the Series 200_-_ indenture supplement,
which failure has a material adverse effect on the Series 200_-_
noteholders which continues unremedied for a period of 60 days
after written notice of the failure, requiring the same to be
remedied is given to us by the indenture trustee, or to us and the
indenture trustee by Series 200_-_ noteholders evidencing interests
aggregating more than 25% of the aggregate unpaid principal amount
of the Series 200_-_ notes and which continues to materially and
adversely affect the interest of the Series 200_-_ noteholders;
(b) any representation or warranty made by us under the pooling and
servicing agreement or the transfer and servicing agreement or any
supplement to either of these documents 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 is given to us by the
indenture trustee, or to us and the indenture trustee by Series
200_-_ noteholders evidencing interests aggregating more than 25%
of the aggregate unpaid principal amount of the Series 200_-_
notes, 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 described in
this subparagraph (b) will not occur if we have accepted
reassignment of the related receivable or all related receivables,
if applicable, within the designated period;
(c) our failure to designate receivables in additional accounts to the
trust within five business days after we are required to do so,
provided that such failure will not give rise to a pay out event
if, prior to the date on which such conveyance was required to be
completed, we cause a reduction in the invested amount of any
S-39
variable funding notes of the issuer or any variable funding
certificate issued under the pooling and servicing agreement to
occur, so that after giving effect to that reduction, the
transferor interest is not less than the Minimum Transferor's
Interest and the Aggregate Principal Receivables are not less than
the Minimum Aggregate Principal Receivables;
(d) any servicer default occurs that would have a material adverse
effect on your series;
(e) the average of the Portfolio Yields for any three consecutive
calendar months is less than the average of the Base Rates for the
same calendar months;
(f) the outstanding principal balance of the Class A notes, the Class
B notes or the Class C notes are not paid in full on the
[applicable] expected principal payment date[s];
(g) specified bankruptcy, insolvency, liquidation, reorganization,
winding-up, conservatorship, receivership or similar events
relating to us or the bank;
(h) we are unable for any reason to transfer receivables to the trust
or the bank is unable for any reason to transfer receivables to us;
(i) First Bankcard Master Credit Card Trust or the issuer 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 200 - and an acceleration of the
maturity of the Series 200 - notes occurs under the indenture.
In the case of any event described in clause (a), (b) or (d) 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
200_-_ noteholders evidencing interests aggregating more than 50% of the
aggregate unpaid principal amount of the Series 200_-_ notes, by written notice
to us, the servicer and, if notice is given by the Series 200_-_ noteholders,
the indenture trustee, declare that a pay out event has occurred with respect to
the Series 200_-_ 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), (f) or (j), a pay out event with respect to only
the Series 200_-_ notes, will occur without any notice or other action on the
part of the indenture trustee or the Series 200_-_ noteholders immediately upon
the occurrence of the event.
On the day on which a pay out event is deemed to have occurred, the rapid
amortization period will begin.
See "Description of the Notes--Pay Out Events" in the accompanying
prospectus for an additional discussion of the consequences of insolvency,
conservatorship or receivership events related to us and the bank.
S-40
EVENTS OF DEFAULT
The events of default for Series 200_-_, as well as the rights and
remedies available to the indenture trustee and the Series 200_-_ noteholders
when an event of default occurs, are described under "The Indenture--Events of
Default; Rights Upon Event of Default" in the accompanying prospectus.
In the case of an event of default involving bankruptcy, insolvency or
similar events relating to the issuer, the principal amount of the Series 200_-_
notes and all other series of notes automatically will be deemed to be
immediately due and payable. If any other event of default for Series 200_-_
occurs, the indenture trustee or the holders of more than 50% of the
then-outstanding principal balance of the Series 200_-_ notes may declare the
Series 200_-_ notes to be immediately due and payable. If the Series 200_-_
notes are accelerated, you may receive principal prior to the expected principal
payment date for your class of notes.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicing fee rate for your series is [2.0]% per year. Following a
servicer default and the appointment of a successor servicer, fees payable to
the successor servicer in excess of [2.0]%, referred to as the excess servicing
fee, will be payable to the successor servicer from finance charge collections
after all other distributions as set forth above in "--Application of Finance
Charge Collections", but before any payments to us from such collections. Your
series' share of the servicing fee for each month will be calculated as
described under "Description of the Notes--Servicing Compensation and Payment of
Expenses" in the accompanying prospectus. However, the monthly servicing fee
allocable to your series for the first distribution date will equal $________.
S-41
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement between us and the underwriters named below, we have agreed to sell to
the underwriters, and each of the underwriters has severally agreed to purchase,
the principal amount of the Class A notes, Class B notes and Class C notes set
forth opposite its name:
<Table>
<Caption>
PRINCIPAL AMOUNT OF
CLASS A UNDERWRITERS CLASS A NOTES
- ---------------------------------------------------------------------
Total............ $
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT OF
CLASS B UNDERWRITERS CLASS B NOTES
- ---------------------------------------------------------------------
Total............ $
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT OF
CLASS C UNDERWRITERS CLASS C NOTES
- ---------------------------------------------------------------------
Total............ $
</Table>
The underwriters of each class of notes have advised us that they propose
initially to offer the notes in that class to the public at the prices set forth
in this prospectus supplement, and to dealers chosen by the underwriters at the
prices set forth in this prospectus supplement less a concession not in excess
of the percentages set forth in the following table. The underwriters of each
class of notes and those dealers may reallow a concession not in excess of the
percentages set forth in the following table. After the initial public offering
of the notes, the public offering prices and the concessions referred to in this
paragraph may be changed. Additional offering expenses are estimated to be
$________.
<Table>
<Caption>
CLASS A CLASS B CLASS C
NOTES NOTES NOTES
----- ----- -----
Concessions....................... % % %
Reallowances...................... % % %
</Table>
The underwriters will be compensated as set forth in the following table:
<Table>
<Caption>
UNDERWRITERS' AMOUNT
DISCOUNTS AND PER $1,000
COMMISSIONS OF PRINCIPAL TOTAL AMOUNT
----------- ------------ ------------
Class A Notes....................... % $ $
Class B Notes....................... % $ $
Class C Notes....................... % $ $
Total Class A, Class B and Class
C................................ $
</Table>
Each underwriter has severally represented, warranted and agreed with the
issuer that:
-- it has not offered or sold and prior to the expiry of a period of
six months from the closing date, will not offer or sell any notes
to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding,
S-42
managing, or disposing of investments (as principal or agent) for
the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in
the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, as amended;
-- it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21
of the Financial Services and Markets Act 2000 ("FSMA")) received by
it in connection with the issue or sale of any notes in
circumstances in which section 21(1) of the FSMA does not apply to
the issuer and shall procure that the notes are not offered or sold
in the United Kingdom other than to persons authorized under the
FSMA or to persons otherwise having professional experience in
matters relating to investments and qualifying as investment
professionals under Article 19 of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2001, as amended or to persons
qualifying as high net worth persons under Article 49 of that Order
or to any other person to whom the notes may otherwise lawfully be
offered or to whom an invitation or inducement to engage in
investment activity in connection with the issue or sale of the
notes may otherwise lawfully be communicated or caused to be
communicated;
-- it has complied, and will comply, with all applicable provisions of
the FSMA with respect to anything done by it in relation to the
notes in, from or otherwise involving the United Kingdom; and
-- it has acted and will act in accordance with the other United
Kingdom selling restrictions set out in this Prospectus Supplement.
We will indemnify the underwriters against the liabilities specified in
the underwriting agreement, including liabilities under the Securities Act, or
will contribute to payments the underwriters may be required to make in
connection with those liabilities.
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. The underwriters do not have an
"overallotment" option to purchase additional notes in the offering, so
syndicate sales in excess of the offering size will result in a naked short
position. The underwriters must close out any naked short position through
syndicate covering transactions in which the underwriters purchase notes in the
open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the notes in the open market after pricing that would adversely affect investors
who purchase in the offering. Stabilizing transactions permit bids to purchase
the notes so long as the stabilizing bids do not exceed a specified maximum.
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
have the effect of raising or maintaining the market price of the notes or
preventing or retarding a decline in the market price of the notes. As a result,
the price of the notes may
S-43
be higher than the price that might otherwise exist in the open market. Neither
we 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.
In the ordinary course of their respective businesses, the underwriters
and their respective affiliates have engaged and may in the future engage in
investment banking or commercial banking transactions with us and our
affiliates. [We may use a portion of the net proceeds of the sale of the Series
200_-_ notes to reduce outstandings under various credit facilities provided by
some of the underwriters, their affiliates and special purpose entities
administered by some of the underwriters and their affiliates.]
LEGAL MATTERS
Certain legal matters relating to the issuance of the Series 200_-_ notes
will be passed upon for us by Kutak Rock LLP as special counsel for us. Certain
legal matters relating to the federal tax consequences of the issuance of the
Series 200_-_ notes will be passed upon for us by Kutak Rock LLP. Certain legal
matters relating to the issuance of the Series 200_-_ notes will be passed upon
for the underwriters by Mayer, Brown, Rowe & Maw LLP.
S-44
GLOSSARY OF TERMS FOR PROSPECTUS SUPPLEMENT
"BASE RATE" means, with respect to any calendar month, the annualized
percentage equivalent of a fraction:
(a) the numerator of which is the sum of (x) the interest due on the
Series 200_-_ notes on the following distribution date and (y) your
series' share of the monthly servicing fee for the related
distribution date; and
(b) the denominator of which is the Series 200_-_ collateral amount, plus
amounts on deposit in the principal accumulation account, each as of
the first day of that calendar month.
"PORTFOLIO YIELD" means, with respect to any calendar month, the
annualized percentage equivalent of a fraction:
-- the numerator of which is the sum of (a) the amount of finance
charge collections available to your series, excluding excess
finance charge collections from other series in group one and any
amounts withdrawn from [the spread account,] [the cash collateral
account,] [or] [the pre-funding account,] except that excess finance
charge collections from other series applied for the benefit of the
Series 200_-_ notes may be included if the rating agencies have
confirmed that the inclusion would not impair its rating of the
Series 200_-_ notes or any other outstanding series or class of
securities, minus (b) the amount of defaulted receivables and
uncovered dilution allocated to your series for that calendar month;
and
-- the denominator of which is the Series 200_-_ collateral amount,
plus amounts on deposit in the principal accumulation account, each
as of the first day of that calendar month.
["REQUIRED RETAINED TRANSFEROR PERCENTAGE" means, for purposes of Series
200_-_, ____%.]
S-45
"SPREAD ACCOUNT PERCENTAGE" means, for any distribution date, the
percentage determined as follows:
<Table>
<Caption>
- ----------------------------------------------------------------------
IF THE QUARTERLY NET YIELD IS
- --------------------------------------------- THEN THE SPREAD
GREATER THAN OR ACCOUNT
EQUAL TO: AND LESS THAN: PERCENTAGE WILL EQUAL;
- ----------------------------------------------------------------------
5.50% %(1)
- ----------------------------------------------------------------------
5.25% 5.50% %
- ----------------------------------------------------------------------
5.00% 5.25% %
- ----------------------------------------------------------------------
4.75% 5.00% %
- ----------------------------------------------------------------------
4.50% 4.75% %
- ----------------------------------------------------------------------
4.00% 4.50% %
- ----------------------------------------------------------------------
3.50% 4.00% %
- ----------------------------------------------------------------------
3.00% 3.50% %
- ----------------------------------------------------------------------
2.00% 3.00% %
- ----------------------------------------------------------------------
-- 2.00% %
- ----------------------------------------------------------------------
</Table>
(1) The Spread Account Percentage will be __% on the
closing date and may not be reduced on any
distribution date unless the quarterly net yield on
each of the last three distribution dates (including
the current distribution date) qualifies for the lower
percentage.
S-46
Annex I
OTHER SECURITIES ISSUED AND OUTSTANDING
The principal characteristics of the other outstanding series of investor
certificates issued by First Bankcard Master Credit Card Trust and notes issued
by First National Master Note Trust as of ____________, 200__ are set forth in
the tables below. All of the outstanding series of investor certificates and
notes are in group[s] [____].
<Table>
<Caption>
1. SERIES 2000-1
Initial Invested Amount: $220,000,000
Current Invested Amount $_________
Certificate Rate: Floating Rate
Controlled distribution amount: Variable
Commencement of controlled amortization period: July 1, 2005*
Series Servicing Fee Percentage: 2%
Initial Collateral Interest: $20,000,000
Class A scheduled payment date: January 15, 2006*
2. SERIES 2000-2
Initial Invested Amount: $450,000,000
Current Invested Amount $_________
Certificate Rate: Floating Rate
Controlled accumulation amount: Variable
Commencement of controlled accumulation period: August 1, 2003*
Series Servicing Fee Percentage: 2%
Initial CTO investor interest: $41,625,000
Expected final distribution date: November 17, 2003
3. SERIES 2000-3
Initial Invested Amount: $165,000,000
Current Invested Amount $_________
Certificate Rate: Floating Rate
Controlled distribution amount: Variable
Commencement of controlled amortization period: October 1, 2005*
Series Servicing Fee Percentage: 2%
Initial Collateral Interest: $16,500,000
Class A scheduled payment date: April 15, 2006*
4. SERIES 2001-1
Initial Investor Interest: $400,000,000
Current Investor Interest $_________
Interest Rate: Floating Rate
Controlled accumulation amount: Variable
Commencement of accumulation period: March 1, 2004*
Series Servicing Fee Percentage: 2%
Initial CTO investor interest: $37,000,000
Expected final distribution date: June 15, 2004
5. SERIES 2002-1
Initial Collateral Amount: $400,000,000
Current Collateral Amount $_________
Interest Rate: Floating Rate
Controlled accumulation amount: Variable
Commencement of accumulation period: October 1, 2004*
Series Servicing Fee Percentage: 2%
Initial Class C note principal balance: $37,000,000
Expected final distribution date: October 17, 2005
</Table>
- ---------------
<Table>
* Subject to adjustment.
</Table>
S-47
<Table>
<Caption>
6. SERIES 2002-2
Initial Collateral Amount: $100,000,000
Current Collateral Amount: $_________
Maximum Collateral Amount: $150,000,000
Interest Rate: Floating Rate
Controlled distribution amount: Variable
Commencement of controlled amortization period: December 31,
2005*
Series Servicing Fee Percentage: 2%
Initial Class B note principal balance: $13,875,000
Class A scheduled payment date: December 15, 2006
7. SERIES 2003-1
Initial Collateral Amount: $500,000,000
Current Collateral Amount: $_________
Interest Rate: Floating Rate
(Class A and
Class C)
2.76% (Class B)
Controlled accumulation amount: Variable
Commencement of accumulation period: March 1, 2005*
Series Servicing Fee Percentage: 2%
Initial Class C note principal balance: $46,250,000
Expected final distribution date: March 15, 2006
</Table>
- ---------------
<Table>
* Subject to adjustment.
</Table>
S-48
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 ________, 200_
PROSPECTUS
[FIRST NATIONAL BANK OMAHA LOGO]
FIRST NATIONAL MASTER NOTE TRUST
Issuer
<Table>
FIRST NATIONAL FUNDING LLC FIRST NATIONAL BANK OF OMAHA
Transferor Servicer
</Table>
Asset Backed Notes
THE ISSUER --
- may periodically issue asset backed notes in one or more series with one or
more classes; and
- will have a direct or indirect interest in --
- receivables in a portfolio of Visa(R) and MasterCard(R) revolving credit
card accounts owned by First National Bank of Omaha;
- 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.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 3 IN THIS
PROSPECTUS AND PAGE S-11 IN YOUR PROSPECTUS SUPPLEMENT.
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 First National Master Note Trust only and are not
obligations of First National Funding LLC, First National Bank of Omaha 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 OR DISAPPROVED OF THESE NOTES OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________, 200
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We (First National Funding LLC) 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.
i
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SUMMARY: OVERVIEW OF TRANSACTIONS........ 1
RISK FACTORS............................. 3
It may not be possible to find an
investor to purchase your notes........ 3
Some liens would be given priority over
your notes which could cause delayed or
reduced payments....................... 3
If a conservator or receiver were
appointed for First National Bank of
Omaha, or if we become a debtor in a
bankruptcy case, delays or reductions
in payment of your notes could occur... 4
The bank may change the terms and
conditions of the accounts in a way
that reduces collections............... 6
Allocations of charged-off receivables or
uncovered dilution could reduce
payments to you........................ 6
Current and proposed regulation and
legislation may impede collection
efforts or reduce collections or
restrict the manner in which the bank
may conduct its activities............. 7
Limited remedies for breaches of
representations could reduce or delay
payments............................... 8
Payment and origination patterns of
receivables could reduce collections... 8
The bank depends on its ability to sell
and securitize its credit card
receivables to fund new receivables.... 9
Subordinated classes bear losses before
senior classes......................... 10
Commingling of collections............... 10
Recharacterization of principal
receivables would reduce principal
receivables and may require the
addition of new receivables............ 11
The note interest rate and the
receivables interest rate may reset at
different times, or the interest rate
terms of the receivables and the notes
may otherwise differ, resulting in
reduced or early payments to you....... 11
We may assign our obligations as
transferor and the bank may assign its
obligations as servicer................ 11
Some jurisdictions may hold over-limit
fees to be unenforceable against
obligors, which could cause delayed or
reduced payments on your notes......... 12
</Table>
<Table>
<Caption>
PAGE
----
IMPORTANT PARTIES........................ 13
The Issuer............................. 13
First National Funding LLC............. 13
First Bankcard Master Credit Card
Trust............................... 13
First National of Nebraska, Inc. and
First National Bank of Omaha........ 14
THE BANK'S CREDIT CARD ACTIVITIES........ 15
Acquisition............................ 16
Underwriting........................... 16
Billing and Payments................... 17
Delinquency, Charge-Offs and
Recoveries.......................... 18
Account Servicing...................... 20
Processing............................. 20
THE TRUST PORTFOLIO...................... 20
USE OF PROCEEDS.......................... 22
DESCRIPTION OF THE NOTES................. 22
Book-Entry Registration................ 24
Definitive Notes....................... 27
Interest Payments...................... 28
Principal Payments..................... 29
Transfer and Assignment of
Receivables......................... 29
New Issuances of Notes................. 30
Representations and Warranties......... 31
Addition of Trust Assets............... 34
Removal of Accounts.................... 36
Collection and Other Servicing
Procedures.......................... 36
Discount Option........................ 37
Trust Accounts......................... 37
Funding Period......................... 38
Application of Collections............. 39
Shared Excess Finance Charge
Collections......................... 39
Shared Principal Collections........... 40
Excess Funding Account................. 40
Defaulted Receivables; Dilution;
Investor Charge-Offs................ 41
Final Payment of Principal............. 42
Paired Series.......................... 42
Pay Out Events......................... 43
Servicing Compensation and Payment of
Expenses............................ 44
Matters Regarding the Transferor and
the Servicer........................ 44
Servicer's Representations, Warranties
and Covenants....................... 47
</Table>
ii
TABLE OF CONTENTS -- (CONTINUED)
<Table>
<Caption>
PAGE
----
Servicer Default....................... 48
Reports to Noteholders................. 50
Evidence as to Compliance.............. 51
Amendments............................. 52
THE INDENTURE............................ 53
Events of Default; Rights upon Event of
Default............................. 53
Covenants.............................. 57
Agreements by Noteholders.............. 58
Modification of the Indenture.......... 59
Annual Compliance Statement............ 60
Indenture Trustee's Annual Report...... 61
List of Noteholders.................... 61
Satisfaction and Discharge of
Indenture........................... 61
The Indenture Trustee.................. 61
Matters Regarding the Administrator.... 62
POOLING AND SERVICING AGREEMENT.......... 62
New Issuances of Investor
Certificates........................ 62
Amendments............................. 63
CREDIT ENHANCEMENT....................... 64
Subordination.......................... 65
Letter of Credit....................... 65
Cash Collateral Guaranty, Cash
Collateral Account or Excess
Collateral.......................... 66
Surety Bond or Insurance Policy........ 66
Spread Account......................... 67
Reserve Account........................ 67
DESCRIPTION OF THE RECEIVABLES PURCHASE
AGREEMENT.............................. 67
Sale of Receivables.................... 67
Representations and Warranties......... 68
</Table>
<Table>
<Caption>
PAGE
----
Covenants.............................. 69
Amendments............................. 69
Termination............................ 69
NOTE RATINGS............................. 70
MATERIAL LEGAL ASPECTS OF THE
RECEIVABLES............................ 71
Transfer of Receivables................ 71
Conservatorship and Receivership....... 72
Consumer Protection Laws............... 74
FEDERAL INCOME TAX CONSEQUENCES.......... 75
Tax Classification of the Issuer and
the Notes........................... 76
Consequences to Holders of the Offered
Notes............................... 78
State and Local Tax Consequences....... 81
ERISA CONSIDERATIONS..................... 81
PLAN OF DISTRIBUTION..................... 82
REPORTS TO NOTEHOLDERS................... 83
WHERE YOU CAN FIND MORE INFORMATION...... 83
GLOSSARY OF TERMS FOR PROSPECTUS......... 85
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES............... A-1
Initial Settlement..................... A-1
Secondary Market Trading............... A-2
Certain U.S. Federal Income Tax
Documentation Requirements.......... A-3
</Table>
iii
SUMMARY: OVERVIEW OF TRANSACTIONS
Each series of notes will be issued by First National Master Note Trust and will
include one or more classes of notes, representing debt of the issuer. Each
series and class may differ as to timing and priority of distributions,
allocations of losses, interest rates, amount of distributions in respect of
principal or interest and credit enhancement. We, First National Funding LLC,
will disclose the details of these timing, priority and other matters in a
prospectus supplement for each series.
Initially, the primary asset of the issuer will be a collateral certificate
issued by First Bankcard Master Credit Card Trust to us and transferred to the
issuer under a transfer and servicing agreement. It represents a beneficial
interest in the assets of First Bankcard Master Credit Card Trust. First
Bankcard Master Credit Card Trust owns primarily credit card receivables arising
in VISA(R) and MasterCard(R)(1) revolving credit card accounts.
The credit card receivables will either be originated by First National Bank of
Omaha or one of its affiliates or will be acquired by the bank from third-party
financial institutions. The receivables comprising the trust have been
transferred directly or indirectly by the bank to the trust.
Under the pooling and servicing agreement initially entered into by the bank in
1995, the bank, in its capacity as transferor, designated some eligible accounts
from its portfolio of VISA and MasterCard credit card accounts and transferred
the receivables in those accounts to the trust. For a period from December 31,
1995 through September 30, 2000, First National Bank South Dakota, an affiliate
of First National Bank of Omaha, was the owner of some or all of the credit card
accounts and the transferor or a co-transferor under the pooling and servicing
agreement. Effective October 1, 2000, the credit card accounts were transferred
to First National Bank of Omaha, which then again became sole transferor under
the pooling and servicing agreement.
The transactions described above were implemented, in part, through amendments
to the pooling and servicing agreement.
The applicable transferor or co-transferor that was party to the pooling and
servicing agreement continued to transfer additional receivables generated in
those accounts, and from time to time designated additional accounts, to First
Bankcard Master Credit Card Trust until the October 2002 amendment to the
pooling and servicing agreement. The amendment, among other things, designated
us as the transferor replacing the bank. At the same time, we entered into a
receivables purchase agreement with the bank whereby the bank designated some
eligible accounts to us and transferred the receivables created in the accounts
after the date of the agreement to us. Under the receivables purchase agreement,
the bank will, from time to time, designate additional accounts to us and
transfer additional receivables to us and will also occasionally remove accounts
previously designated. Under the amended pooling and servicing agreement, in our
capacity as transferor, we will transfer all receivables sold to us by the bank
under the receivables purchase agreement to the trust and designate to the trust
all accounts designated to us by the bank.
- ---------------
(1) VISA(R) and MasterCard(R) are federally registered servicemarks of VISA
U.S.A., Inc. and MasterCard International Inc., respectively.
1
The bank will continue to own the accounts that are designated to the trust.
After all outstanding series of investor certificates that have been issued by
First Bankcard Master Credit Card Trust have been retired, we may cause First
Bankcard Master Credit Card Trust to terminate, at which time the receivables
remaining in First Bankcard Master Credit Card Trust will be transferred to the
issuer and held directly by the issuer. We refer to the entity--either First
Bankcard Master Credit Card Trust or the issuer--that holds the receivables at
any given time as the trust.
The notes will represent the right to payments from a portion of collections on
the credit card receivables held by the trust.
In addition, a portion of certain fees payable by VISA and MasterCard to the
bank, which are attributable to cardholder charges for merchandise and services,
known as interchange, will be treated as collections of finance charge
receivables.
All new receivables generated in the designated accounts will be automatically
transferred to the trust. The total amount of receivables held by the trust will
fluctuate daily as new receivables are generated and payments are received on
existing receivables.
The bank continues to service the receivables that are transferred to the trust
and will act as the issuer's administrator. The Bank of New York is the trustee
for First Bankcard Master Credit Card Trust. The Bank of New York will also act
as indenture trustee for the issuer. The issuer will grant a security interest
in its assets--including the collateral certificate or, if First Bankcard Master
Credit Card Trust has been terminated, the receivables--to the indenture trustee
for the benefit of the noteholders.
2
RISK FACTORS
The following is a summary of the principal risk factors that apply to an
investment in the notes. You should consider the following risk factors and any
risk factors in the accompanying prospectus supplement before 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. We and the bank account for the transfer of
the receivables as a sale. Even so, a court
could conclude that we or the bank own the
receivables and that the trust holds only a
security interest. Even if a court would reach
that conclusion, however, steps will be taken
to give the indenture trustee a first-priority
perfected security interest, either directly
or through First Bankcard Master Credit Card
Trust.
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 our property or the bank's property
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. In addition, the trust may not
have a first-priority perfected security
interest in collections commingled and used
for the benefit of the servicer if (a)
insolvency proceedings were commenced by or
against the servicer or (b) a twenty day
period were to elapse after receipt by the
servicer of collections that have been
commingled with other funds. If any of these
events were to occur, payments to you could be
delayed or reduced. See "Material Legal
Aspects of the Receivables--Transfer of
Receivables" and "Description of the
Notes--Representations and Warranties" in this
prospectus.
3
IF A CONSERVATOR OR RECEIVER
WERE APPOINTED FOR FIRST
NATIONAL BANK OF OMAHA, OR
IF WE BECOME A DEBTOR IN A
BANKRUPTCY CASE, DELAYS OR
REDUCTIONS IN PAYMENT OF YOUR
NOTES COULD OCCUR. If the bank were to become insolvent, the FDIC
could act as conservator or receiver for the
bank. In that role, the FDIC would have broad
powers to repudiate contracts to which the
bank was party if the FDIC determined that the
contracts were burdensome and that repudiation
would promote the orderly administration of
the bank's affairs. Also, if the FDIC were
acting as the bank's conservator or receiver,
the FDIC might have the power to extend its
repudiation and avoidance powers to us because
we are a wholly-owned subsidiary of the bank.
The FDIC has adopted a rule stating that, if
certain conditions are met, the FDIC shall not
use its repudiation power to reclaim, recover
or recharacterize as property of an
FDIC-insured bank any financial assets
transferred by that bank in connection with a
securitization transaction. Although the FDIC
has the power to repeal or amend its own
rules, the securitization rule states that any
repeal or amendment of that rule will not
apply to any transfers of financial assets
made before the repeal or modification.
We have structured the issuance of the notes
with the intention that the transfers of the
receivables by the bank would have the benefit
of this rule. If the FDIC were to assert that
the rule does not apply to these transfers of
receivables or that these transactions do not
comply with certain banking laws, however,
payments of principal and interest on your
notes could be delayed and, if the FDIC were
successful, possibly reduced. Furthermore, if
the FDIC were successful, the FDIC could--
- require the indenture trustee or any
of the other transaction parties to go
through the administrative claims
procedure established by the FDIC in
order to obtain payments on the notes;
- obtain a stay of any actions by any of
those parties to enforce the
transaction documents against the
bank; or
- repudiate the transaction documents
and limit the affected parties' claims
to their "actual direct compensatory
damages" (as defined in the statute
that governs the FDIC's authority and
actions as a receiver or conservator).
4
If the FDIC were to successfully 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.
We are a wholly-owned bankruptcy remote
subsidiary of the bank and our limited
liability company agreement limits the nature
of our business. If, however, we became a
debtor in a bankruptcy case, and our transfer
of the receivables to the trust were construed
as a grant of a security interest to secure a
borrowing, your payments of outstanding
principal and interest could be delayed and
possibly reduced.
Because we are a wholly-owned subsidiary of
the bank, certain banking laws and regulations
may apply to us, and if we were found to have
violated any of these laws or regulations,
payments to you could be delayed or reduced.
In addition, if the bank entered
conservatorship or receivership, the FDIC
could seek to exercise control over the
receivables or our other assets on an interim
or a permanent basis. Although steps have been
taken to minimize this risk, the FDIC could
argue that--
- our assets (including the receivables)
constitute assets of the bank
available for liquidation and
distribution by a conservator or
receiver for the bank;
- we and our assets (including the
receivables) should be substantively
consolidated with the bank and its
assets; or
- the FDIC's control over the
receivables is necessary for the bank
to reorganize or to protect the public
interest.
If these or similar arguments were made,
whether successfully or not, payments to you
could be delayed or reduced. Furthermore,
regardless of any decision made by the FDIC or
ruling made by a court, the fact that the bank
has entered conservatorship or receivership
could have an adverse effect on the liquidity
and value of the notes. If a conservator or
receiver were appointed for the bank, or if we
were to become a debtor in a bankruptcy case,
an early payment of principal on all
outstanding series could result. Under the
terms of the agreement that governs the
transfer of the receivables from us to the
trust, new principal receivables would not
5
be transferred to the trust. However, the
conservator or the receiver may have the
power, regardless of the terms of that
agreement, to prevent the early payment of
principal or to require new principal
receivables to continue being transferred. In
addition, the conservator or receiver would
have the power to prevent either the indenture
trustee or the noteholders from appointing a
new servicer or to direct the servicer to stop
servicing the receivables. See "Material Legal
Aspects of the Receivables--Conservatorship
and Receivership" in this prospectus.
THE BANK 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. These
changes may be voluntary on the part of the
bank or may be required 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.
ALLOCATIONS OF CHARGED-OFF
RECEIVABLES OR UNCOVERED
DILUTION
COULD REDUCE PAYMENTS TO YOU. The primary risk associated with extending
credit under the credit card accounts is the
risk of default or bankruptcy of the customer,
resulting in the customer's account balance
being charged-off as uncollectable. We rely
principally on the customer's creditworthiness
for repayment of the account. The bank may not
be able to successfully identify and evaluate
the creditworthiness of cardholders to
minimize delinquencies and losses. General
economic factors, such as the rate of
inflation, unemployment levels and interest
rates, may result in greater delinquencies
that lead to greater credit losses.
Unlike charged-off receivables, reductions in
the receivables due to returns of merchandise,
unauthorized charges or disputes between a
cardholder and a merchant and reductions in
the receivables due to debt cancellation or
debt deferral programs of the bank which are
not covered by insurance or reserves, called
dilution, are typically absorbed by reductions
in our interest in the trust, which is
referred to as the transferor interest, or
reimbursed by us through cash deposits to the
excess funding account and are not intended to
be allocated to investors. However, to the
extent our transferor interest is insufficient
to cover dilution for any calendar month and
we then default in
6
our obligation to compensate the trust for
these reductions, your series will be
allocated a portion of the uncovered dilution.
If the amount of charged-off receivables and
any uncovered dilution allocated to your
series of notes exceeds the amount of funds
available to reimburse those amounts, you may
not receive the full amount of principal and
interest due to you. See "Description of
Series Provisions--Investor Charge-Offs" in
the accompanying prospectus supplement and
"Description of the Notes--Defaulted
Receivables; Dilution; Investor Charge-Offs"
in this prospectus.
CURRENT AND PROPOSED REGULATION
AND LEGISLATION MAY IMPEDE
COLLECTION EFFORTS OR REDUCE
COLLECTIONS OR RESTRICT THE
MANNER IN WHICH THE BANK MAY
CONDUCT ITS ACTIVITIES. Various federal and state consumer protection
laws regulate the creation and enforcement of
consumer loans, including credit card accounts
and receivables. Such laws and regulations,
among other things, limit the fees and other
charges that the bank can impose on customers,
limit or prescribe certain other terms of the
bank's products and services or require
specified disclosures to consumers. General
banking laws, regulations and guidelines
specify minimum capital levels and address
allowances for loan and lease losses for
financial institutions. In some cases, the
precise application of these statutes and
regulations is not clear. In addition,
numerous legislative and regulatory proposals
are advanced each year which, if adopted,
could have a material adverse effect on the
amount of collections available to the trust
or further restrict the manner in which the
bank may conduct its activities, including its
securitizations of credit card receivables.
The failure to comply with, or adverse changes
in, these laws or regulations or adverse
changes in their interpretation, 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 can be charged, 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
uncollectable. See "Material Legal Aspects of
the Receivables--Consumer Protection Laws" in
this prospectus.
7
LIMITED REMEDIES FOR BREACHES OF
REPRESENTATIONS COULD REDUCE
OR DELAY PAYMENTS. When we transfer the receivables to the trust,
we make representations and warranties
relating to the validity and enforceability of
the receivables arising under the accounts
designated to the trust, and as to the
perfection and priority of the trustee's
interest in the receivables and the indenture
trustee's interest in the collateral
certificate or, after First Bankcard Master
Credit Card Trust terminates, the receivables.
However, neither the trustee for First
Bankcard Master Credit Card Trust, nor the
owner trustee for First National Master Note
Trust nor the indenture trustee will make any
examination of the receivables or the related
assets to determine the presence of defects or
compliance with the representations and
warranties or for any other purpose.
A representation or warranty relating to the
receivables may be violated if the related
obligors have defenses to payment or offset
rights, or our creditors or creditors of the
bank claim rights to the trust assets. If a
representation or warranty is violated, we may
have an opportunity to cure the violation. If
we are unable to cure the violation within the
specified time period or if there is no right
to cure the violation, we 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 AND ORIGINATION PATTERNS
OF RECEIVABLES COULD REDUCE
COLLECTIONS. The receivables transferred to the trust may
be paid at any time. Prepayments represent
principal reductions in excess of the
contractually scheduled reductions. The rate
of cardholder prepayments or defaults on
credit card balances may be affected by a
variety of economic factors, including
interest rates and the availability of
alternative financing, most of which are not
within our control or the control of the bank.
We cannot assure the creation of additional
receivables in the accounts designated to the
trust or that any particular pattern of
cardholder payments will occur. A significant
decline in either monthly payment rates or 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 rapid amortization period for each of
those series. If a pay out event occurs, you
could receive payment of principal sooner than
8
expected. 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 the
accompanying prospectus supplement.
The credit card industry is highly
competitive. There is increased competitive
use of advertising, target marketing and
pricing competition. Both traditional and new
credit card issuers seek to expand or to enter
the market and compete for customers. Congress
and the states may enact new laws and
amendments to existing laws to regulate
further the credit card industry or to reduce
finance charges or other fees or charges
applicable to credit card accounts. In
addition, certain credit card issuers assess
periodic finance charges or other fees or
charges at rates lower than the rate currently
being assessed on most of the accounts.
If cardholders choose to utilize other
competing sources of credit, the rate at which
new receivables are generated in the accounts
may be reduced and purchase and payment
patterns with respect to receivables may be
affected. The trust will be dependent upon the
bank's continued ability to generate new
receivables. If the rate at which new
receivables are generated declines
significantly and the bank does not add
additional accounts to the trust, a pay out
event could occur.
THE BANK DEPENDS ON ITS ABILITY
TO SELL AND SECURITIZE ITS
CREDIT CARD RECEIVABLES TO
FUND NEW RECEIVABLES. The bank's ability to originate and service
receivables depends upon its continued access
to funding sources. The bank uses
securitization of its credit card receivables
as a significant funding vehicle, although its
primary funding source is its retail consumer
deposits. A number of factors affect
securitization transactions, some of which are
beyond the bank's control, including:
- conditions in the securities
markets in general and the
asset-backed securitization
market in particular;
- interpretation and application of
complex regulations and
accounting rules, and changes
therein;
- conformity in the quality of
credit card receivables to rating
agency requirements and changes
in those requirements; and
9
- availability of credit
enhancement.
These factors could adversely affect the
bank's ability to effect securitization
transactions or the benefits to the bank of
securitization transactions.
Failure to obtain acceptable credit ratings or
more stringent credit enhancement requirements
could decrease the efficiency of or have an
adverse effect on the timing of, or the bank's
ability to effect, future securitizations.
The bank intends to continue securitizations
of its credit card receivables. The inability
to securitize credit card receivables due to
changes in the market, the unavailability of
credit enhancements, or any other circumstance
or event could have a material adverse effect
on the bank's operating results and ability to
generate new receivables.
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 may 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 or to pay servicer fees
related to that series or to reimburse for
that series' share of charged-off receivables
or uncovered dilution, the collateral amount
for the series might be reduced. This would
reduce the amount of finance charge
collections available to the series in future
periods and could cause a possible delay or
reduction in principal and interest payments
on the subordinated notes.
COMMINGLING OF COLLECTIONS. While First National Bank of Omaha is the
servicer, collections held by the bank may,
subject to some conditions, be commingled and
used for the bank's own benefit prior to the
business day before each distribution date. As
a result, in the event of the insolvency or
receivership of the bank or, in some
circumstances, the lapse of certain time
periods as provided under the applicable UCC,
the trust may not have a perfected interest in
those collections.
In addition, prior to the occurrence of
certain adverse events with respect to the
servicer, the collection account may be
maintained with the servicer. Upon the
occurrence of any such event with respect to
the
10
servicer, the servicer shall deposit all
collections into the collection account which
shall be established with a qualified
institution other than the servicer.
RECHARACTERIZATION OF PRINCIPAL
RECEIVABLES WOULD REDUCE
PRINCIPAL RECEIVABLES AND MAY
REQUIRE THE ADDITION OF NEW
RECEIVABLES. As described under "Description of the
Notes--Discount Option," we 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 a pay out 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 we will
be required to add receivables to the trust.
If we were unable to add receivables and could
not make a sufficient cash deposit into the
excess funding account, one or more series of
notes, including your series, could go into a
rapid amortization period.
THE NOTE INTEREST RATE AND THE
RECEIVABLES INTEREST RATE MAY
RESET AT DIFFERENT TIMES, OR
THE INTEREST RATE TERMS OF THE
RECEIVABLES AND THE NOTES MAY
OTHERWISE DIFFER, RESULTING
IN REDUCED OR EARLY PAYMENTS
TO YOU. Accounts may have finance charges assessed at
either a fixed rate or at a variable rate with
a fixed rate floor. A series of notes may bear
interest either at a fixed rate or at a
floating rate based on an index that may
differ from that applicable to the accounts.
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. If the interest
rate on the accounts declines or the interest
rate on a series increases, this could
decrease the spread, or difference, between
collections of finance charge receivables and
those collections allocated to make interest
payments, servicing fee payments and some
other amounts on your notes as set forth in
the related prospectus supplement. This would
increase the risk of early repayment of your
notes, as well as the risk that there may not
be sufficient collections to make all required
payments on your notes.
WE MAY ASSIGN OUR OBLIGATIONS AS
TRANSFEROR AND THE BANK MAY
ASSIGN ITS OBLIGATIONS AS
SERVICER. In our capacity as transferor and the bank's
capacity as servicer, either of us may
transfer our rights and obligations under the
pooling and servicing agreement and transfer
and servicing agreement to one or more
entities without noteholders' consent so long
as specific conditions are satisfied. The
entity assuming the rights and obligations may
or may not be affiliated with us or the bank.
After the assignment, either we or the bank,
11
as the case may be, would have no further
liability or obligation under the pooling and
servicing agreement or transfer and servicing
agreement, other than those liabilities that
arose prior to the transfer.
SOME JURISDICTIONS MAY HOLD
OVER-LIMIT FEES TO BE
UNENFORCEABLE AGAINST
OBLIGORS,
WHICH COULD CAUSE DELAYED OR
REDUCED PAYMENTS ON YOUR
NOTES. In July, 2002, the Sixth Circuit held that not
disclosing over-limit fees as finance charges
on an obligor's monthly statement violated the
Truth in Lending Act ("TILA"), despite the
defendant's reliance on the Federal Reserve
Board's Regulation Z, which expressly states
that over-limit fees are not finance charges
under TILA (Pfennig v. Household Credit
Servs., Inc., 295 F.3d 522 (6th Cir. 2002)).
However, the bank believes that it can
distinguish its practices from those of the
defendant in Pfennig, since the bank has
strict over-limit fee policies and does not
allow obligors to routinely and repeatedly
exceed their limits, as was allowed by the
defendant in Pfennig. However, if a court did
hold over-limit fees to be improperly
disclosed finance charges, these amounts may
not be available as collections to be applied
for payments on your notes. For additional
discussion about our and the bank's
obligations under these circumstances, see
"Material Legal Aspects of the
Receivables--Consumer Protection Laws."
This prospectus uses defined terms. You can find a glossary of these
terms under the caption "Glossary of Terms for Prospectus" beginning on page 85
in this prospectus.
12
IMPORTANT PARTIES
THE ISSUER
The issuer of your notes will be First National Master Note Trust. The
issuer will be a statutory trust created under the laws of the State of
Delaware. It will be operated under a trust agreement, dated as of October 16,
2002, between us and Wilmington Trust Company, as 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.
The issuer's principal offices are in Wilmington, Delaware in care of
Wilmington Trust Company, as owner trustee, at the following address: Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Administration.
We will pay the fees of the owner trustee and will reimburse it for
various liabilities and expenses.
FIRST NATIONAL FUNDING LLC
We--First National Funding LLC--are a limited liability company formed
under the laws of the State of Nebraska on April 16, 2002, and have two members:
First National Bank of Omaha and First National Funding Corporation. We were
organized for the limited purpose of purchasing, holding, owning and
transferring receivables and related activities.
FIRST BANKCARD MASTER CREDIT CARD TRUST
The notes are secured by a beneficial interest in a pool of receivables
that arise under VISA and MasterCard credit card accounts owned by the bank and
designated by the bank as trust accounts. The receivables are currently held by
First Bankcard Master Credit Card Trust, which was formed under the laws of the
State of Nebraska. First Bankcard Master Credit Card Trust is operated under a
pooling and servicing agreement amended and restated in October, 2002, among us,
as transferor, the bank, as servicer, and The Bank of New York, as trustee. The
Bank of New York was appointed as trustee in April, 2002 and replaced Bank One,
National Association.
First Bankcard Master Credit Card Trust has issued a collateral
certificate to us that represents a beneficial interest in the receivables. We
have transferred this collateral certificate to the issuer under a transfer and
servicing agreement between us, as transferor, the bank, as servicer, and the
issuer. The other outstanding series of investor certificates issued by First
Bankcard Master Credit Card Trust and the notes are referred to in this
prospectus, collectively, as the securities, and the holders of those securities
are referred to as the securityholders. After all the outstanding series of
investor certificates issued by First Bankcard Master Credit Card Trust are
retired, we may cause First Bankcard Master Credit Card Trust to terminate, at
which time the receivables will be transferred to the issuer under the transfer
and servicing agreement and held directly by the issuer. Concurrently therewith,
13
the bank will designate the underlying accounts to us and we will designate them
to the issuer.
FIRST NATIONAL OF NEBRASKA, INC. AND FIRST NATIONAL BANK OF OMAHA
First National of Nebraska, Inc. is an interstate financial holding
company headquartered in Omaha, Nebraska with total managed assets of
approximately $13 billion at December 31, 2002. It became a private company on
October 9, 2002 when the registration of its common stock was terminated.
Organized in 1968, its principal subsidiaries include:
- First National Bank of Omaha and its subsidiaries;
- First National Bank and Trust Company of Columbus;
- First National Bank (doing business as First National Bank of Alliance
- Chadron - Gering - North Platte - Scottsbluff and, in Chadron, as
First National Bank North Platte);
- Platte Valley State Bank & Trust Company;
- The Fremont National Bank and Trust Company;
- First National of Illinois, Inc.;
- First National Bank of Kansas;
- First National Bank South Dakota;
- First National of Colorado, Inc. and its wholly owned subsidiaries,
including First National Bank, Ft. Collins, First National Bank of
Colorado, and Union Colony Bank; and
- InfiCorp Holdings, Inc.
The bank subsidiaries offer banking and trust services to the retail,
commercial and agricultural areas which they serve. First National of Nebraska,
Inc. has nonbanking subsidiaries, which in the aggregate are not material.
First National Bank of Omaha is a nationally chartered, OCC regulated
bank headquartered in Omaha, Nebraska. It was chartered in 1863 and is the
oldest national bank west of the Mississippi River.
First National of Nebraska, Inc., including First National Bank of Omaha
and other subsidiaries, has [over] 50 years of experience providing credit card
services and was one of the originators of the bank credit card industry. In
2002, the First National of Nebraska, Inc. group was ranked the eighth largest
bank issuer of credit cards and the fifteenth largest overall issuer based on
the amount of managed credit card loans outstanding. In addition to servicing
accounts owned by it, First National Bank of Omaha performs credit card
servicing activities on behalf of other banks owned by First National of
Nebraska, Inc., including data processing, payment processing, statement
rendering, marketing, customer service, credit administration and card
embossing.
First National of Nebraska, Inc. continues to make substantial
investments in data processing technology for its own data processing needs and
to provide various data processing services for unaffiliated parties. The
services provided include automated clearinghouse
14
transactions, merchant credit card processing and check processing. In 2002,
First National of Nebraska, Inc. group ranked the ninth largest merchant credit
card processor in the United States, with $28.7 billion in sales volume in 2002
and $26.6 billion in sales volume in 200l and one of the top twenty largest
automated clearinghouse processors in the country.
The bank acts as administrator for the note trust.
THE BANK'S CREDIT CARD ACTIVITIES
The receivables that have been and will be conveyed to the trust pursuant
to the pooling and servicing agreement have been and will be generated under the
VISA and MasterCard International programs and were originated by the bank or an
affiliate or acquired by the bank or an affiliate. On December 31, 1995, some of
the First National Bank of Omaha's credit card accounts were consolidated at
First National Bank South Dakota, the bank's affiliate, to take advantage of
compounding interest, effectively raising its portfolio yield. For this reason,
as of January 1, 1996, substantially all of the bank's credit card accounts were
owned by this affiliate. Following changes in Nebraska law, all non-delinquent
credit card accounts were reconveyed to, and consolidated at, First National
Bank of Omaha effective October 1, 2000. Delinquent credit card accounts were
either charged off and closed or reconveyed to First National Bank of Omaha
after the delinquency was cured. First National Bank of Omaha services the
accounts at its facilities located in Omaha, Bloomfield, Kearney and Wayne,
Nebraska, as well as Yankton, South Dakota.
In July 1995, accounts with an aggregate receivables balance of
approximately $450 million were designated for inclusion in the trust. In order
to support the issuance of subsequent series, additional accounts were added to
the trust between 1997 and now.
The bank issued its first credit card in 1953, and has [over] 50 years of
operating history. Throughout this time period, management has been focused on
developing the credit card business. The bank has been among the first to
introduce new concepts within the credit card industry, such as exporting
interest rates across state borders in the early 1970s and converting the
managed portfolio to variable rate pricing in 1983.
Under agent bank agreements, a card is issued to a customer of the agent
bank with the name of the agent bank prominently displayed on the front of the
card, but the cardholder agreement is with the bank. For the entire portfolio of
accounts managed by the bank, agent bank accounts have grown from approximately
1% at the end of 1996 to approximately 14.8% as of May 31, 2003, measured by
total managed receivables. As of May 31, 2003, approximately 19.24% of the total
receivables in the trust portfolio arose under agent bank accounts. In some
cases, when an agent bank relationship is established, the bank may purchase
existing accounts from the agent bank. The bank conducts a due diligence review
of purchased accounts to confirm that the accounts were acquired under
origination policies which do not differ significantly from those used by the
bank. As of May 31, 2003, one agent bank's accounts constituted approximately
6.4% of the trust portfolio, measured by total receivables.
The trust portfolio also includes affinity cards and co-branded cards,
which constituted less than 2.5% of the total receivables in the trust portfolio
as of May 31, 2003. All affinity cards and co-branded cards included in the
trust portfolio were originated by the bank.
15
ACQUISITION
The bank focuses on prime-quality customers and targets customers who
tend to revolve their debt. As a result, based on self-reported information from
the largest issuers, management estimates that the portion of the managed
portfolio represented by customers who revolve their credit card balances is
approximately 5% higher than the industry average. No assurances can be given
that this tendency will continue.
The bank obtains compiled lists from various sources to review for
potential credit card customers. The bank then contacts targeted customers
either by telemarketing or direct mail. Other application sources include
magazine and catalog inserts, and "take-one" application invitations at the
branches of the bank, its affiliates and agent banks.
The bank offers a variety of credit card products to its customers,
including standard cards, gold and platinum cards, lifestyle cards, affinity
cards, and a limited number of co-branded offers.
Historically, the bank has relied more heavily on invitation-to-apply
solicitations than pre-approved offers. The bank targeted pre-approved
solicitations to only more creditworthy prospects, while it solicited a broader
class of prospective customers with invitation-to-apply applications. The bank
believes that this strategy helped it to maintain stronger credit quality by
reducing adverse cardholder selection. With the development of more accurate
scoring and predictive behavior models, the bank has shifted its strategy to
focus its efforts on pre-approved marketing campaigns that are more competitive
in today's marketplace. The majority of the marketing efforts are implemented
in-house, although the bank makes limited use of third-party providers for some
direct mail and telemarketing services.
UNDERWRITING
Most applications are compatible for scanning into an imaging system that
uses intelligent character recognition, known as ICR. Non-ICR applications,
limited in number, must be keyed directly from the application. Telemarketing
applications are fed electronically. Applications are processed through an
automated credit application processing system licensed from a third party.
Custom scorecards and a third-party credit bureau risk score are both
used to determine the creditworthiness of non-pre-approved applicants. The
custom scorecards were statistically developed and are empirically derived based
on the bank's portfolio history. The bank benefits from a long history in the
credit card business and is currently using fourth generation scorecards. The
scorecards are validated internally on a quarterly basis. The most recent
scorecards were implemented during the fourth quarter of 2000. These scorecards
were developed and limited to the use of information provided by credit bureaus.
Information provided by applicants is no longer used. Credit bureau reports are
requested from one or more of the three credit bureau agencies for all
non-pre-approved applicants. A custom score is system-generated from each
applicant's respective credit bureau report.
Non-pre-approved applications are automatically declined if the custom
score and the credit bureau report risk score are both unacceptable. All other
non-pre-approved applications are queued for a manual judgmental review, which
includes some recommended auto-approvals, based on credit scores and other
minimum credit standards. A credit analyst reviews each of these applications to
evaluate the credit quality of the applicants. Also,
16
necessary background checks are performed as needed; this includes address
verification, employment verification, and verification of bank references.
Minimum standards must be met before credit will be granted. These standards
include, but are not limited to, a minimum annual income level, a maximum
debt-to-income percentage, employment, established credit, no confirmed
bankruptcies or recent delinquencies, and a maximum number of active credit
cards and credit inquiries. If any of these standards are not met, the
application will be declined but the applicant may be invited to apply for an
account with lower standards.
The third-party credit bureau risk score, a credit bureau bankruptcy
score, and other credit characteristics, similar to the non-pre-approved minimum
standards, are used to pre-qualify individuals for pre-approved offers. Back-end
credit bureau reports are requested for all pre-qualified responders.
Pre-approved applications are automatically declined if the bankcard adjusted
credit bureau risk score is unacceptable. All other pre-approved applications
are queued for a manual judgmental review, which includes some recommended
auto-approvals, based on pre-qualified offer conditions. A credit analyst
reviews each of these applications and compares the offer conditions to the
responder's current credit profile. The analyst will also perform necessary
verification checks. Subject to applicable laws and regulations, including the
Fair Credit Reporting Act, the bank may choose to decline pre-qualified
responders if the credit review process reveals the offer conditions are no
longer satisfied. Bank management believes the risk associated with pre-approved
solicitations is mitigated due to the back-end review process.
The credit analysts have the authority to override the minimum standards
for both pre-approved and non-pre-approved applications. Documentation is
required for all overrides.
All credit limits, pre-approved and non-pre-approved, are system-assigned
using an internal matrix based on the bankcard adjusted credit bureau risk score
and the applicant's total income. The maximum system-generated limit is $25,000.
The credit analyst may override the system assigned limit, up to their lending
authority with some product restrictions. A credit analyst may approve up to
$15,000. A senior credit analyst may approve up to $20,000. Credit acquisition
managers may approve up to $25,000. Senior bankcard risk managers approve all
limits greater than $25,000 with required supporting documentation such as
financial statements, tax returns, paycheck stubs, and bank references. Three
senior bankcard risk managers' signatures are required, along with supporting
documentation, for lines of $50,000 and higher.
The bank employs customary industry techniques for fraud prevention and
detection which begins once an application is received. Each application passes
through two "negative" files; the internal fraud database and an external card
association database. A team of credit analysts reviews all
suspicious/fraudulent applications. Other bank employees review suspicious
account activity, suspicious payments, and alert reports for fraudulent activity
or indications of credit risk. Further, the bank maintains a group of fraud
investigators to pursue fraud suspects in coordination with local and federal
law enforcement. Fraud prevention and detection personnel use a variety of
available verification tools to assist in their efforts.
BILLING AND PAYMENTS
The bank offers both fixed and floating rate credit cards to its
customers, with more emphasis on the floating rate products. Substantially all
floating rate cards are indexed to the
17
one-month London Interbank Offered Rate, which is referred to as LIBOR; the
interest rates on these cards are reset monthly. The interest rates on the
floating rate cards are not reset lower than a specified minimum rate. As of
December 31, 2002, the interest rate on substantially all of the floating rate
credit cards are at the specified minimum percentage. The bank has numerous
pricing points for both its fixed-rate and floating rate accounts. Most new
accounts are established with a temporary low introductory rate which resets to
a higher standard floating rate at the end of the introductory period. The
introductory period may be three, six or twelve months; however, the
introductory period for most accounts is six months. In general, accounts have a
higher floating rate for cash advances and are subject to even higher-rate
penalty pricing for violating terms of the cardholder agreement. All fixed rate
accounts provide the bank with the option of switching to a variable rate upon
proper disclosure.
A billing statement is sent to each cardholder at the end of any billing
cycle during which the account had a balance or any other activity. A minimum
monthly payment, generally the lesser of (1) $10 plus billed finance charges and
fees, and (2) the greater of 2.0% of the outstanding balance or $10, is billed
in each such month. The bank, as servicer, receives payments at a lockbox in
Omaha, Nebraska and processes payments.
The bank may assess a late fee if it does not receive the minimum payment
by the payment due date. The bank may also assess a fee for checks that are
dishonored for any reason. An over-limit fee may also be assessed if the
cardholder's account is over its credit limit when billed. These fees, generally
$29 to $35, in addition to administrative fees for services requested by the
cardholder, are added to the account balance and treated as a purchase.
A monthly periodic finance charge is generally not assessed on new
purchases if all balances shown on the billing statement are paid by the payment
due date. Otherwise, finance charges accrue on new purchases from the date they
are posted to the account. Finance charges accrue on cash advances from the date
of transaction.
DELINQUENCY, CHARGE-OFFS AND RECOVERIES
An account is contractually delinquent if the minimum monthly payment is
not received by the payment due date. A scoring strategy based on, among other
things, behavior scores is employed to prioritize the past due accounts for
collection activity. The bank uses collection system software originally
purchased from a third party vendor in 1990. This software has been upgraded and
maintained with in-house technology staff. The collection system documents the
efforts of each collector and has real-time reporting capabilities providing
timely statistics at the collector, group, class and system levels.
Accounts that are delinquent are handled by collection departments in
Bloomfield, Nebraska, Wayne, Nebraska and Yankton, South Dakota, which also
handle some collections for third parties. Accounts from five to twenty-nine
days past due are handled by two predictive dialers to support and enhance
collection performance. The predictive dialers allow for high-speed dialing and
a significantly improved contact per collector hour rate. The dialers presently
support in excess of 156 stations and over 450,000 dial attempts each month.
Accounts that are more than 30 days past due are processed by all three
facilities. The Yankton facility is capable of staffing up to 250 collectors,
the Wayne facility is capable of
18
handling up to 150 collectors and the Bloomfield facility is capable of handling
up to 32 collectors. As of December 31, 2002, there were 198 collectors at the
Yankton facility, 117 collectors at the Wayne facility and 25 collectors at the
Bloomfield facility. New collectors receive over 80 hours of training, while
experienced collectors receive 40 hours of additional training each year. The
average tenure for a full time collector is over eight and one-half years.
Delinquent accounts are assigned to queues within the collection system.
Typically the accounts are grouped together by the stage of delinquency,
although some accounts are segregated for other reasons. These reasons may
include consumer credit counseling services, debt management repayment plans,
specific letter programs or legal and regulatory requirements. Each queue varies
in size with the number of accounts on the class assignment. Accounts are
classified by the system at billing. However, the accounts are reviewed by the
collection system each night and may be reclassified if a new condition exists,
typically payments, that will change the delinquency classification.
All delinquent accounts stay in the collection system until they are paid
current or charged-off. The bank uses a system of automated charge-offs that
removes and reclassifies accounts based on the status of the account. Accounts
are automatically charged-off the night of the beginning of the seventh past due
billing cycle, which is when the accounts are 180 days past due. Accounts coded
as bankrupt are charged-off 60 days after bankruptcy confirmation. Accounts of
deceased cardholders are charged-off automatically 15 days after determination
that there are no proceeds from an estate. Fraud accounts are automatically
charged-off 90 days from the date of the last financial activity. Settlement
accounts are charged-off by the system upon receipt of the agreed amount. In all
cases aging takes precedence and should an account reach the seventh delinquent
billing cycle, the account will be charged-off automatically.
The bank's re-aging policy allows for an account to be returned to
current status if three consecutive minimum payments are received on a
delinquent account over the course of three months. Re-ages on accounts more
than 90 days delinquent are reviewed and approved by a collector. Accounts are
only eligible for re-aging once in a calendar year, no more than twice in a
five-year period and no more than three times ever. All collection account
re-ages are reviewed and approved by a collector in accordance with regulatory
guidelines.
Post charge-off accounts are handled by the recovery department located
in Omaha, Nebraska. The recovery department is responsible for claims on the
accounts of deceased cardholders and bankrupt accounts, post charge-off
settlement arrangements, collection agency selection and placement, and attorney
selection and placement. Additionally, this department handles all objections to
bankruptcy cases and represents the bank in litigation for the recovery of the
credit card accounts. An automated system is used to select and track the
placement and performance of accounts that are assigned to collection agencies.
Current recovery strategies allow for placement through a series of agencies
which may include an affiliate of the servicer. Timing of placements varies
through the process and the contingency fee rises as the accounts cycle through
the process.
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ACCOUNT SERVICING
The bank's strategy is to provide quality products and quality customer
service. The bank supports this focus with credit card customer service centers
in Omaha and Kearney, Nebraska. The bank utilizes technology to enhance customer
service, rather than to lower operating expenses. Based on industry
self-reporting, management of the bank believes its voluntary attrition rate to
be less than the industry average.
The bank utilizes a predictive behavior scoring system developed by a
third party for account risk assessment and scoring. In addition to updating
credit bureau scores quarterly, this system produces a monthly behavior score
under one of six scorecards using information on cardholder performance. These
scores are used to dictate collection activity in a variety of customer
retention and activation programs, including determining credit limit increase
or decrease actions, and assisting in account pricing and reissue decisions.
Credit limits on existing accounts are automatically reviewed each month for
adjustment upward or downward, although credit limits are increased no more than
once every six months.
PROCESSING
With respect to the accounts, all processing functions are performed by
the bank. These processing functions have been performed internally since the
inception of the bank's credit card business. The bank believes internal
processing provides many advantages over the bank's competition, including
offering new products and services more quickly, rapid creation and
implementation of new management reports and the efficient integration of new
technology.
The bank's disaster recovery plan includes a long-term contract with a
third party. The contract provides for a remote hot site and the disaster
recovery plan and the hot site is tested once each year. If communication
problems occur, phone and data communication lines can be rerouted to the bank's
various sites. The rerouting plan is also tested twice each year.
THE TRUST PORTFOLIO
We refer to the accounts that have been designated as trust accounts as
the trust portfolio. References to the trustee in this prospectus will refer to
(a) The Bank of New York, as trustee of First Bankcard Master Credit Card Trust
under the pooling and servicing agreement for so long as First Bankcard Master
Credit Card Trust holds the receivables, or (b) The Bank of New York, as
indenture trustee, if the issuer holds the receivables.
In addition to the receivables in the trust portfolio, the notes will be
secured by:
- all proceeds of these receivables and related payments under credit
insurance policies and similar debt cancellation and debt deferral
programs provided directly or indirectly by the bank and/or its
affiliates, and other related recoveries, net of expenses of
collection;
- 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;
20
- our rights under the receivables purchase agreement;
- the right to receive related interchange; and
- proceeds of any related credit enhancement or derivative contracts,
consisting of interest rate swaps, currency swaps, credit swaps,
interest rate caps, interest rate floors or bankruptcy options, which
are instruments under which a counterparty assumes the risk of an
increase in bankruptcies in exchange for payment, each 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, services and cash advances; and
- finance charge receivables, which include interchange, periodic finance
charges and other amounts charged to trust accounts, including cash
advance fees, annual cardholder fees, over-limit fees, late fees and
returned check fees.
The receivables arise in the bank's VISA and MasterCard credit card
accounts. In addition, we have the right, and in some cases the obligation, to
designate from time to time additional Eligible Accounts to the trust portfolio
and to convey to the trust all receivables in those additional accounts, whether
those receivables are then existing or thereafter created. The accounts and the
related receivables may be originated by the bank or, with rating agency
approval, acquired by the bank from others. The designation of new accounts and
sale of related receivables to the trust will be limited by the conditions
described in "Description of the Notes--Addition of Trust Assets" in this
prospectus.
Some, but not all, designations of new accounts require confirmation from
each of the rating agencies that the addition will not impair its rating of any
outstanding securities. Our right to automatically add additional Eligible
Accounts to the trust as they arise is subject to the quantitative limitations
described in "Description of the Notes--Addition of Trust Assets" in this
prospectus.
The accounts must be Eligible Accounts as of the date we designate them
as additional accounts. Once these accounts are designated, only the receivables
arising under these accounts, and not the accounts themselves, are sold. In
addition, as of the date on which any new receivables are created, we will
represent and warrant to the trust that the receivables conveyed to the trust on
that day are Eligible Receivables. However, we cannot guarantee that all the
accounts will continue to meet the applicable eligibility requirements
throughout the life of the trust.
Under some circumstances, with rating agency approval, we may also
designate that some accounts will no longer be trust accounts, and the
receivables originated under these accounts will be removed from the trust.
Throughout the term of the trust, the trust portfolio will consist of
receivables originated in the initial accounts plus receivables originated in
any additional accounts and minus receivables originated in any removed
accounts.
We cannot assure you that additional accounts will be of the same credit
quality as the initial accounts. Moreover, additional accounts may contain
receivables which consist of fees, charges and amounts which are different from
the fees, charges and amounts described in this prospectus. Additional accounts
may also have different credit guidelines, balances and
21
ages. Consequently, we cannot assure you that the accounts will continue to have
the characteristics described in this prospectus as additional accounts are
added. In addition, if we designate additional accounts with lower periodic
finance charges, that may have the effect of reducing the portfolio yield.
The prospectus supplement relating to each series of notes will provide
the following information about the trust portfolio of VISA and MasterCard
accounts, as of the date specified:
- the amount of principal receivables;
- the amount of finance charge receivables;
- the range of 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.
USE OF PROCEEDS
We will receive the net proceeds from the sale of each series of notes
offered by this prospectus and will use those proceeds (a) to retire existing
series of investor certificates, and (b) for general corporate purposes.
DESCRIPTION OF THE NOTES
The issuer will issue one or more series of notes under a master
indenture and an indenture supplement entered into by the issuer and the
indenture trustee. The following summaries describe all material provisions
common to each series of notes. The accompanying prospectus supplement gives you
all of the additional material terms specific to the notes of your series. The
summaries are qualified by all of the provisions of the transfer and servicing
agreement, the indenture and the related indenture supplement and the pooling
and servicing agreement and the related collateral series supplement. We have
filed forms of each of the pooling and servicing agreement, the related
collateral series supplement for First Bankcard Master Credit Card Trust, the
transfer and servicing agreement, the indenture and an indenture supplement with
the SEC as exhibits to the registration statement relating to the notes.
The notes will be secured by and paid from the assets of the issuer. The
amount of collateral allocated for any series of notes, called its collateral
amount, will be specified in the related prospectus supplement. Each series of
notes will be allocated collections of principal receivables and finance charge
receivables based on its allocation percentage, which will be based on the
collateral amount for that series and will be calculated as described in the
related 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
22
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 and interest payments;
- maturity date;
- interest rate; and
- availability and amount of enhancement.
We or our assigns will have the right to receive all cash flows from the
assets of the trust not required to make payments on the securities, payments of
servicing fees or payments to provide credit enhancement for any series of
securities.
During the revolving period, the amount of collateral for a series will
remain constant unless reduced on account of:
- defaulted receivables or uncovered dilution or;
- reallocation of principal collections to cover shortfalls in the
payment of interest, servicing fees if the bank is not the servicer or
other specified amounts to be paid from finance charge collections.
See "--Defaulted Receivables; Dilution; 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. Our
interest in the trust, called the transferor interest, will fluctuate each day
to reflect the changes in the amount of the principal receivables in the trust
and certain amounts available in the excess funding account. When a series is
amortizing, the collateral 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 collateral amount for that
series and will also change to reflect the variations in the amount of principal
receivables in the trust and the amount available in the excess funding account.
The transferor interest may also be reduced as the result of new issuances by
the issuer, see "--New Issuances of Notes" in this prospectus, or increases in
variable funding certificates issued by the issuer or First Bankcard Master
Credit Card Trust.
Generally, notes offered under this 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 us 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, 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
23
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 an application will
be submitted to list your series or class of notes on the Luxembourg Stock
Exchange or another exchange.
BOOK-ENTRY REGISTRATION
This section describes the form your notes will take, 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. We have not independently verified the accuracy
of this information.
You may hold your notes through DTC in the U.S., Clearstream 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. If the
aggregate principal amount of any class of any series of notes exceeds
$500,000,000, one global note will be issued with respect to each $500,000,000
of principal amount and an additional global note will be issued with respect to
any remaining principal amount of such class. Clearstream and Euroclear will
hold omnibus positions on behalf of the Clearstream customers and the Euroclear
participants, respectively, through customers' securities accounts in
Clearstream's and Euroclear's names on the books of their respective
depositaries, which in turn will hold those positions in customers' securities
accounts in the depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered under 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, banks, trust
companies and clearing corporations and may include other organizations.
Participants also may include the underwriters of any series. Indirect access to
the DTC system also is available to others, including 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 Clearstream customers and Euroclear participants will
occur in accordance with their applicable rules and operating procedures.
24
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
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, those cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in that system in accordance with its rules and
procedures and within its established deadlines, which will be based on 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.
Clearstream customers and Euroclear participants may not deliver instructions
directly to Clearstream's and Euroclear's depositaries.
Because of time-zone differences, credits of securities in Clearstream or
Euroclear as a result of a transaction with a participant will be made during
the subsequent securities settlement processing day, dated the business day
following the DTC settlement date, and those credits or any transactions in
those securities settled during that processing day will be reported to the
relevant Clearstream customer or Euroclear participant on that business day.
Cash received in Clearstream or Euroclear as a result of sales of securities by
or through a Clearstream customer or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
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 made by 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 payments will be
forwarded by the indenture trustee to Cede & Co., as nominee for DTC. DTC will
forward those 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 that 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 those 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.
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
25
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 us 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 us that it will take those actions with respect to specified
percentages of the collateral amount only at the direction of and on behalf of
participants whose holdings include interests that satisfy those specified
percentages. DTC may take conflicting actions with respect to other interests to
the extent that those actions are taken on behalf of participants whose holdings
include those interests.
Clearstream is incorporated under the laws of Luxembourg. Clearstream
holds securities for its customers and facilitates the clearance and settlement
of securities transactions between Clearstream customers through electronic
book-entry changes in accounts of Clearstream customers, thereby eliminating the
need for physical movement of notes. Transactions may be settled in Clearstream
in any of 34 currencies, including United States dollars. Clearstream provides
to its Clearstream customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream also deals with domestic
securities markets in over 30 countries through established depository and
custodial relationships. Clearstream is registered as a bank in Luxembourg, and
therefore is subject to regulation by the Commission de Surveillance du Secteur
Financier, which supervises Luxembourg banks. Clearstream's customers are
world-wide financial institutions, including underwriters, securities brokers
and dealers, banks, trust companies and clearing corporations, among others, and
may include the underwriters of any series of notes. Clearstream's U.S.
customers are limited to securities brokers and dealers and banks. Currently,
Clearstream has approximately 2,000 customers located in over 80 countries,
including all major European countries, Canada and the United States. Indirect
access to Clearstream is also available to other institutions that clear through
or maintain a custodial relationship with an account holder of Clearstream.
Clearstream has established an electronic bridge with Euroclear Bank S.A./N.V.
as the operator of the Euroclear System in Brussels to facilitate settlement of
trades between Clearstream and Euroclear.
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 34 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 Euroclear Bank S.A./N.V. as
the Euroclear operator. All operations are conducted by the Euroclear operator,
and all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear operator. Euroclear participants include central
banks and other 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.
26
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System. These terms and
conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
operator acts under 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 Clearstream or Euroclear
will be credited to the cash accounts of Clearstream customers or Euroclear
participants in accordance with the relevant system's rules and procedures, to
the extent received by its depositary. Those distributions will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. See "Federal Income Tax Consequences" in this prospectus.
Clearstream or the Euroclear operator, as the case may be, will take any other
action permitted to be taken by a noteholder under the indenture on behalf of a
Clearstream customer or Euroclear participant only in accordance with its
relevant rules and procedures and subject to its depositary's ability to effect
those actions on its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of DTC,
Clearstream and Euroclear, they are under no obligation to perform or continue
to perform those procedures and those procedures may be discontinued at any
time.
DEFINITIVE NOTES
Notes that are initially cleared through DTC will be issued in
definitive, fully registered, certificated form to note owners or their
nominees, rather than to DTC or its nominee, only if:
- we advise the indenture trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as
depository with respect to that series or class of notes, and the
indenture trustee or the issuer is unable to locate a qualified
successor;
- we, at our option, advise the indenture trustee in writing that we
elect to terminate the book-entry system through DTC with respect to
that series or class of notes; or
- after the occurrence of a servicer default, a pay out event or an event
of default, note owners representing more than 50%--or another
percentage specified in the accompanying prospectus supplement--of the
outstanding principal amount of the notes of that series or class
advise the indenture trustee and DTC through participants in writing
that the continuation of a book-entry system through DTC or a successor
to DTC is no longer in the best interest of those 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 issuer will execute and the indenture trustee will
authenticate the notes as definitive notes, and thereafter the indenture
27
trustee will recognize the registered holders of those definitive notes as
noteholders under the indenture.
Distributions 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. However, the final payment on any note--whether definitive notes or the
notes registered in the name of Cede & Co. representing the notes--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 issuer and 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 agent and registrar will not be
required to register the transfer or exchange of definitive notes for a period
of twenty days preceding the due date for any payment on those definitive notes.
INTEREST PAYMENTS
Your class of notes will pay interest on the dates and at the interest
rate specified in the accompanying prospectus supplement. The interest rate on
any note may be a fixed, floating or any other type of rate as 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.
Interest payments or deposits on any distribution date or on the business
day before a distribution date, which we refer to as a transfer date, will be
funded from:
- collections of finance charge receivables allocated to the series
during the preceding monthly period or periods, including net
recoveries, interchange and collections of excess finance charge
receivables allocated to the series from other series;
- investment earnings, if any, on any funds held in trust accounts, to
the extent described in the accompanying prospectus supplement;
- any credit enhancement or derivative instrument, to the extent
described in the accompanying prospectus supplement; and
- collections of principal receivables treated as collections of finance
charge receivables as described under "--Discount Option," 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. For any
28
series, all accrued and unpaid interest will be due and payable on the final
maturity date of such series.
PRINCIPAL PAYMENTS
Each series will begin with a revolving period during which no principal
payments will be made to the noteholders of that series. However, if specified
in the accompanying prospectus supplement, principal may be payable during the
revolving period in connection with a partial amortization. A partial
amortization would occur if the transferor were required to add receivables and
was unable to designate sufficient Eligible Accounts and the transferor elected
to avoid a pay out event by commencing a partial amortization.
The revolving period for each series will be scheduled to end on or no
later than a specified date, at which time a new period will begin during which
principal collections available to that series will be set aside on a daily
basis to repay the series. That new period is called an amortization period if
partial principal payments are made each month and an accumulation period if the
available principal is accumulated for a series over one or more months to pay
off a class in full. If the amount paid or accumulated each month is limited to
some specified figure, then the amount paid or accumulated is called a
controlled distribution amount or controlled accumulation amount.
However, each series will also be subject to pay out events, which could
cause the revolving period to end earlier than scheduled or could terminate an
existing amortization period or accumulation period. Upon a pay out event, a
rapid amortization period will begin, during which available principal will be
distributed monthly and will not be limited to any controlled distribution
amount or controlled accumulation amount provision. Finally, a series with an
accumulation period may specify some adverse events as accumulation events,
rather than pay out events, resulting in an early start to an accumulation
period or removing any limitation based on a controlled accumulation amount.
Principal payments for any series or class will be funded from
collections of principal receivables allocated to that series or class and from
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 accumulation account for a series may
be subject to a guaranteed rate agreement or guaranteed investment contract or
other arrangement intended to assure a minimum rate of return on the investment
of those funds if specified in the related prospectus supplement. In order to
enhance the likelihood of the payment in full of the principal amount of a
series or a related class 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 if specified in the related prospectus supplement.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The receivables comprising the trust have been transferred either
directly by the bank to the trust or by the bank to us, and in turn, by us to
the trust. Under the pooling and servicing agreement entered into by the bank in
1995, the bank, in its capacity as transferor,
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transferred the receivables in designated accounts to the trust. The pooling and
servicing agreement was amended and restated in 1997, and was subsequently
amended. In particular, it was amended and restated in October 2002, to
designate us as the transferor in replacement of the bank. At the same time, we
entered into a receivables purchase agreement with the bank whereby the bank
designated the accounts previously designated to the trust to us and transferred
the receivables created after the date of the agreement, together with its
rights under the pooling and servicing agreement, to us. The bank will also
transfer and assign future receivables created in these accounts and additional
accounts to us. Under the amended pooling and servicing agreement or the
transfer and servicing agreement in our capacity as transferor, we transfer all
receivables sold to us by the bank under the receivables purchase agreement to
the trust.
We and the bank have indicated and, in connection with each future
transfer of receivables to the trust, will indicate in our computer files that
the receivables have been conveyed to the trust. In addition, the servicer has
provided or caused to be provided to the trustee and the trust computer files or
microfiche lists, containing a true and complete list showing each account,
identified by account number and by total outstanding balance as of a specified
date on or prior to the date of transfer. Neither we nor the bank will deliver
to the trustee or the trust any other records or agreements relating to the
accounts or the receivables, except in connection with additions or removals of
accounts. Except as stated in this paragraph, the records and agreements that
the bank maintains relating to the accounts and the receivables 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 in this paragraph. We and the bank have 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 "Material Legal Aspects of the Receivables" in
this prospectus.
NEW ISSUANCES OF NOTES
We may cause the owner trustee, on behalf of the issuer, to issue one or
more new series of notes. We will define all principal terms of each new series
in an indenture supplement. Each series issued may have terms and enhancements
that are different than those for any other series. No prior noteholders'
consent will be required for the issuance of an additional series of notes, and
we do not expect to request such consents. We may offer any series under a
prospectus or other disclosure document in transactions either registered under
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 First Bankcard Master Credit Card Trust has been terminated, the
interests of all series of notes in the receivables and the other trust assets
will be evidenced by a single global certificate held by the issuer. A new
collateral series will be issued and evidenced by the global certificate upon
the issuance of each series of notes.
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No new series may be issued unless we satisfy various conditions,
including that:
(1) each rating agency confirms that the new issuance will not impair
its rating of any outstanding series or class of securities;
(2) we certify that we reasonably believe, based on the facts known to
the certifying officer, that the new issuance will not cause a pay
out event, an event of default or materially and adversely affect
the amount or timing of distributions to be made to the
noteholders of any series or class;
(3) after giving effect to the new issuance, the transferor interest
is not less than the Minimum Transferor's Interest and the
Aggregate Principal Receivables are not less than the Minimum
Aggregate Principal Receivables;
(4) we deliver an opinion of counsel to the effect that, for federal
income tax purposes:
(a) except as otherwise stated in the related indenture
supplement, the notes of the new series will be
characterized as debt;
(b) the issuance will not adversely affect the tax
characterization as debt of the notes of any outstanding
series or class that were characterized as debt at the time
of their issuance as confirmed by an opinion of counsel to
that effect delivered at the time of such issuance;
(c) the new issuance will not cause the issuer to be deemed to
be an association or publicly traded partnership taxable as
a corporation; and
(d) the new issuance will not cause or constitute an event in
which gain or loss would be recognized by any noteholder;
and
(5) unless First Bankcard Master Credit Card Trust has been
terminated, all of the conditions required for it to issue a new
series of investor certificates are satisfied, as described under
"Pooling and Servicing Agreement--New Issuances of Investor
Certificates" in this prospectus.
Holders of notes of any outstanding series or class will not have the
right to review or consent to any subsequent issuance of notes. A series or
class of notes may be issued privately, which series or class would therefore
not be offered pursuant to this prospectus and a prospectus supplement.
REPRESENTATIONS AND WARRANTIES
As of the closing date for each series of securities and the date each
account is designated for inclusion to the trust, we represent to the trust
that:
- each account is an Eligible Account as of the date it is designated to
the trust and each receivable is an Eligible Receivable on the date it
is transferred to the trust;
- the account schedule and information contained therein is accurate and
complete in all material respects;
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- we own all right, title and interest in each such receivable and have
the right to transfer it to the trust; and
- all governmental approvals required to be obtained by us or the bank in
connection with the transfer of each such receivable to the trust have
been obtained and remain in full force and effect.
If any of these representations is not true in any material respect for
any receivables as of the date specified in the representation and as a result
of the untrue statement or breach the related account becomes a defaulted
account or the trust's rights in the receivables or the proceeds of the
receivables are impaired or are not available to the trust free and clear of any
lien, we are required to accept reassignment of the affected receivable. Except
in limited circumstances, we will be permitted 60 days to cure the breach.
As of the closing date for each series of securities and the date each
account is designated for inclusion to the trust, we represent to the trust that
each receivable has been conveyed to the trust free and clear of any liens,
other than liens permitted by the pooling and servicing agreement and the
transfer and servicing agreement, and in compliance in all material respects
with all laws applicable to us and/or the bank. If such representation is
breached, or a receivable is not an Eligible Receivable because the trust does
not have good and marketable title to a receivable, and in either case, one of
the specified conditions as to the result or the nature of the breach is met,
then receivables in the account containing such affected receivables will be
automatically removed from the trust as required in the pooling and servicing
agreement or transfer and servicing agreement.
We will accept retransfer of any receivable affected as described above
by directing the servicer to deduct the principal amount of the receivable from
the transferor interest. If this would reduce the transferor interest below the
Minimum Transferor's Interest, or cause the Aggregate Principal Receivables to
be less than the Minimum Aggregate Principal Receivables, we will make a cash
deposit in the excess funding account in the amount sufficient to cure the
greater of such shortfalls, within 10 business days after such event. Any
deduction or deposit is considered a repayment in full of the ineligible
receivable.
On the closing date for each series, and on each addition date, in our
capacity as transferor, we will also make representations and warranties to the
trust as to:
- our valid existence and good standing as a limited liability company
under the laws of the State of Nebraska and our ability to perform our
obligations under each transaction document;
- our qualification to do business and good standing in any state
required in order to conduct business and our possession of necessary
licenses and approvals required under federal and Nebraska law (no
representation or warranty is made with respect to any qualifications,
licenses or approvals which the trustee would have to obtain to do
business in any state in which the trustee seeks to enforce any
receivable);
- the due authorization, execution, delivery and performance of each
transaction document to which we are a party;
- the enforceability of each transaction document against us as legal,
valid and binding obligations;
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- the effectiveness of the agreement governing our transfer of the
receivables to the trust as either a valid sale, transfer and
assignment of, or a grant of a first priority perfected security
interest in, the receivables, other than liens permitted by that
transfer agreement; and
- the absence of any transferor claims or interests in the collection
account, excess funding account, series accounts or credit enhancement
for a series, except as otherwise expressly provided in the transaction
documents.
If any of these representations and warranties is false in any material
respect and the breach of the representation or warranty has a material adverse
effect on the receivables or the availability of the proceeds of the receivables
to the trust, then either the trustee or securityholders holding more than 50%
of the principal amount of all series of securities may direct us to accept
retransfer of the entire trust portfolio. We will be permitted 60 days after the
direction is given, or a longer period, as may be specified in the direction, to
cure the breach.
The reassignment price would equal the aggregate outstanding principal
amounts for all series of securities, in each case as of the last day of the
monthly period preceding the date on which the reassignment is scheduled to be
made, plus accrued and unpaid interest on the securities through that last day,
minus any principal or interest paid or allocated to the holders of securities
of any series on the related distribution date in the monthly period in which
that reassignment occurs plus or minus any other amounts specified in any
prospectus supplement.
Reassignment of any affected receivables or the entire trust portfolio to
us, as the case may be, is the sole remedy with respect to any breach of the
representations and warranties described in this section.
On the closing date for each series prior to termination of First
Bankcard Master Credit Card Trust, in our capacity as transferor, we will also
make the following representations and warranties to the issuer:
- the transfer and assignment of the collateral certificate under the
transfer and servicing agreement constitutes:
(a) either a sale of the collateral certificate;
(b) a grant of a perfected security interest therein from us to the
issuer; or
(c) a grant of a perfected security interest in the collateral
certificate from us to the indenture trustee.
- the collateral certificate has not been sold, transferred, assigned or
pledged by us to any person other than pursuant to the transfer and
servicing agreement;
- immediately prior to our transfer and assignment to the issuer, we have
good and marketable title to the collateral certificate free and clear
of all liens, other than liens permitted by the transfer and servicing
agreement;
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- immediately upon our transfer and assignment of the collateral
certificate to the issuer, the issuer will have either (a) good and
marketable title to the collateral certificate free and clear of all
liens, other than liens permitted by the transfer and servicing
agreement or (b) a perfected security interest in the collateral
certificate; and
- all actions necessary under the applicable Uniform Commercial Code have
been taken to give either the issuer or the indenture trustee a first
priority perfected security interest or ownership interest in the
collateral certificate.
ADDITION OF TRUST ASSETS
We may, at our option, designate additional accounts to the trust, the
receivables in which will be sold and assigned to the trust. We have agreed to
exercise this right when requested to do so by the bank. We are permitted to
continue designating additional accounts without obtaining confirmation of the
rating of any outstanding securities so long as the following limits are not
exceeded:
- for any monthly period, there may be no more than one designation and
no designation may include any accounts acquired by the bank from
third-party financial institutions;
- the principal balance of the additional accounts does not exceed
either:
- the product of:
(a) 15% and
(b) the aggregate amount of principal receivables in the trust as
of the first day of the third preceding monthly period;
minus the principal receivables in the additional accounts added
since that date, measured for each such additional account as of the
date that additional account was added to the trust, or
- the product of:
(a) 20% and
(b) the aggregate amount of principal receivables in the trust as
of the first day of the calendar year in which the addition is
to occur;
minus the principal receivables in the additional accounts added
since that date, measured for each such additional account as of the
date that additional account was added to the trust.
We may exceed these limitations or add accounts acquired by the bank from
third-party financial institutions if the rating agencies for all outstanding
series confirm that doing so will not impair their ratings of any outstanding
securities. Following the termination of First Bankcard Master Credit Card
Trust, there will be an additional limitation to those in
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the preceding paragraph, which requires that the number of the additional
accounts does not exceed either:
- the product of:
(a) 15% and
(b) the number of accounts in the trust as of the first day of the
third preceding monthly period;
minus the number of additional accounts added since that date, or
- the product of:
(a) 20% and
(b) the number of accounts in the trust as of the first day of the
calendar year in which the addition is to occur;
minus the number of additional accounts added since that date.
We may also exceed these limitations if the rating agencies for all
outstanding series confirm that doing so will not impair their ratings of any
outstanding securities.
In addition, we will be required to make an addition of accounts to the
trust on or before the tenth business day following (i) any monthly period
during which the transferor interest averaged over that period is less than the
Minimum Transferor's Interest and (ii) any monthly period for which the
Aggregate Principal Receivables as of the last business day are less than the
Minimum Aggregate Principal Receivables. The amount of the required addition is
the amount necessary to cure the deficit.
When we transfer receivables in additional accounts to the trust, we must
satisfy several conditions, including:
- we must give each rating agency, the indenture trustee and the servicer
prior notice of each addition, and if the additional accounts would
exceed the limits described above for additional accounts or include
accounts purchased from third-party financial institutions, then each
rating agency must confirm that the addition will not impair its rating
of any outstanding securities;
- we must deliver a written assignment to the trustee;
- we must represent and warrant that:
- each additional account is an Eligible Account and each receivable in
such additional account is an Eligible Receivable;
- no selection procedures that we believe to be materially adverse to
the securityholders were used in selecting the additional accounts;
- we are not insolvent;
- the transfer of the additional receivables constitutes a valid
transfer and assignment to the trust of all our right, title or
interest in the receivables in the additional accounts or the grant of
a first priority perfected security interest in those receivables free
and clear of any liens except for liens permitted under the pooling
and servicing agreement or the transfer and servicing agreement; and
35
- we must deliver an opinion of counsel with respect to the perfection of
the transfer and related matters and an officer's certificate
certifying matters regarding the accounts, the assignment, the marking
of its computer files to identify the additional accounts and the
delivery of a schedule of the additional accounts.
REMOVAL OF ACCOUNTS
We have the right to remove accounts from the list of designated accounts
and to require the reassignment to us or our designee of all receivables in the
removed accounts. Our right to remove accounts is subject to the satisfaction of
several conditions, including that:
(1) each rating agency confirms that the removal will not impair its
rating of any outstanding securities,
(2) the removal will not, in our reasonable belief:
- cause a pay out event to occur for any series,
- cause the transferor interest to be less than the Minimum
Transferor's Interest, or cause the Aggregate Principal
Receivables to be less than the Minimum Aggregate Principal
Receivables, or
- result in the failure to make any payment specified in the
related supplement with respect to any series of securities,
(3) we represent and warrant that:
- accounts, or administratively convenient groups of accounts, such
as billing cycles, were chosen for removal randomly or otherwise
not on a basis intended to select particular accounts or groups
of accounts for any reason other than administrative convenience
and no selection procedure was used by us that is materially
adverse to the interests of the holders of securities or
- accounts were identified because of a third-party cancellation,
or expiration without renewal, of an affinity, private-label or
similar arrangement,
(4) the principal receivables of the removed accounts are less than 5%
of the aggregate amount of principal receivables in the trust, or
if a series has been paid in full, the initial principal amount of
that series,
(5) we deliver to the owner trustee, indenture trustee and the trustee
for First Bankcard Master Credit Card Trust, if applicable, the
written assignment, the computer file listing removed accounts,
and our officer's certificate confirming compliance with the
conditions, and
for any monthly period, there may be no more than one removal.
However, defaulted accounts, and the receivables in such accounts, will
be removed from the list of designated accounts without satisfying the
conditions specified above.
COLLECTION AND OTHER SERVICING PROCEDURES
As servicer, the bank will be responsible for servicing and administering
the receivables in the trust portfolio in accordance with the bank's policies
and procedures for servicing credit card receivables comparable to the
receivables in the trust portfolio. The
36
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.
DISCOUNT OPTION
We have the option to reclassify up to 4% of collections of principal
receivables in the trust portfolio as collections of finance charge receivables.
If we do so, the reclassified percentage of collections of principal receivables
for the trust portfolio for each monthly period will be considered collections
of finance charge receivables and will be allocated with all other collections
of finance charge receivables in the trust portfolio.
We may exercise this option in order to compensate for a decline in the
portfolio yield, but only if in our reasonable belief there would be sufficient
principal receivables to allow for that discounting. Exercise of this 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, we 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 we will have to add principal receivables to the trust.
We may not designate receivables for reclassification unless each rating
agency confirms that doing so will not impair its rating of any outstanding
series or class of securities. We may not designate receivables for
reclassification if in our reasonable belief a pay out event would occur.
TRUST ACCOUNTS
The servicer has established and will maintain a collection account as a
segregated account for the benefit of the securityholders. The trust documents
also establish an excess funding account for the benefit of the securityholders,
which account may be a subaccount of the collection account. Each of the
collection account and the excess funding account must be set up with a
Qualified Institution.
The funds on deposit in these accounts may be invested at the direction
of the servicer in highly rated liquid investments that meet the criteria
described in the indenture or the related indenture supplement for that series.
Any investments will be required to mature monthly on or before the business day
prior to the related distribution date. Net earnings on the collection account
will be remitted to the servicer and not be considered part of the trust estate.
Net earnings on the excess funding account will be treated as collections of
finance charge receivables.
So long as the bank is servicer, it is authorized pursuant to the
indenture to withdraw from the collection account any funds not required by the
indenture or an indenture supplement to be deposited into the collection
account.
A reserve account and/or a spread account may be established in
connection with a series of notes. Unless otherwise specified in the related
series supplement, net earnings on such investments will be treated as follows.
So long as the required reserve account amount is on deposit in the reserve
account, any net investment earnings will be withdrawn and deposited into the
collection account and will be treated as collections of finance charge
receivables. So long as the required spread account amount is on deposit in the
spread
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account, any earnings, net of losses and investment expenses, will be withdrawn
and paid to us. Any remaining earnings on the spread account will not be
considered part of the account or as trust assets and will be remitted to us.
FUNDING PERIOD
On the closing date 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
collateral 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 earliest of:
- the date that series' collateral amount equals the principal amount of
that series of notes;
- the date specified in the related prospectus supplement, which will be
no later than one year after that series' closing date; and
- the commencement of a rapid amortization period.
During the funding period, the portion of the collateral 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
collateral amount for that series will increase as new receivables are
transferred to the trust or as the collateral amounts of other outstanding
series of securities are reduced. The collateral amount may decrease due to
principal payments or investor charge-offs and uncovered dilution allocated to
the series.
During the funding period, funds on deposit in the pre-funding account
will be paid to us as the collateral amount increases. If the collateral amount
for that series is not increased so that the initial collateral amount equals
the initial principal balance of the notes of that series, less any principal
payments on that series and any investor charge-offs and uncovered dilution
allocated to that series, by the end of the funding period, any amount remaining
in the pre-funding account will be repaid to noteholders.
The prospectus supplement for a series with a funding period will set
forth:
- the series' initial collateral amount;
- the initial principal balance of the series of notes;
- the date on which the series' collateral amount is expected to equal
the series' initial principal balance, less any principal payments on
that series and any investor charge-offs and uncovered dilution
allocated to that series;
- 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 collateral amount is funded.
We will file a Current Report on Form 8-K with the SEC following the
termination of any funding period containing updated trust portfolio
information.
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APPLICATION OF COLLECTIONS
Except as described in this paragraph and the second following paragraph,
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. However, the servicer will be able to use for its own benefit all
collections received relating to the receivables in each monthly period until
the business day preceding the related distribution date if:
(1) the bank remains the servicer; and
(2) the servicer either:
- provides a letter of credit, surety bond or similar arrangement
covering the collection and payment obligations of the servicer
acceptable to each rating agency, as evidenced by a letter from
each rating agency,
- has and maintains a certificate of deposit or short-term debt
rating of at least A-1 by Standard & Poor's, P-1 by Moody's and
F1 by Fitch or, in each case, a lower rating satisfactory to the
applicable rating agency, or
- makes other arrangements such that each rating agency confirms
that this action will not impair the ratings of any outstanding
series or class of securities.
The servicer currently has not provided a letter of credit or made other
arrangements, and does not maintain the rating necessary to satisfy any of the
preceding clauses.
The servicer is only required to make daily or periodic deposits to the
collection account during any calendar month to the extent that the funds are
needed for deposit into other trust accounts or distribution to securityholders
or other parties on or prior to the related distribution date. If the collection
account balance ever exceeds the amount needed for those deposits or
distributions, the servicer may (1) discontinue daily deposits for that calendar
month, (2) withdraw the excess and pay that amount to us or our assigns and (3)
withdraw or retain its servicing fee for any series for that month.
The servicer will then allocate all collections of finance charge
receivables and principal receivables among each series of securities and the
transferor interest based on the respective allocation percentages for each
series and the transferor's percentage. The transferor's percentage at any time
will equal 100% minus the total of the applicable allocation percentages for all
outstanding series of notes and investor certificates. To the extent that the
transferor interest is greater than the Minimum Transferor's Interest, any
principal collections allocated to the transferor interest will be paid to us or
our assigns as collected. If the transferor interest is less than the Minimum
Transferor's Interest, principal collections allocated to the transferor
interest will be deposited in the excess funding account. The collections
allocated to each series will be retained in the collection account or applied
as described in the related prospectus supplement.
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 allocated to that
series in excess of the amount needed to make deposits or payments for the
benefit of that series will be shared with
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other series of securities that have been designated for inclusion in the same
group. The servicer will allocate the aggregate of the excess finance charge
collections for all series of securities in the same group to cover any payments
required to be made out of finance charge collections for any series in that
group that have not been covered out of the finance charge collections allocable
to those series. If the finance charge shortfalls exceed the excess finance
charge collections for any group for any calendar month, excess finance charge
collections will be allocated pro rata among the applicable series of securities
based on the relative amounts of finance charge shortfalls. Unless otherwise
provided in the related prospectus supplement, excess finance charge collections
remaining after covering shortfalls with respect to all outstanding series in a
group will be paid to us. We cannot assure you that there will be any excess
finance charge collections for any month.
SHARED PRINCIPAL COLLECTIONS
If a series is identified in the related prospectus supplement as
included in a group, collections of principal receivables allocated to that
series in excess of amounts needed to make deposits or payments for the benefit
of that series will be shared with other series of securities designated for
inclusion in the same group--including any series of investor certificates
designated to the same group. The servicer will allocate the aggregate of the
shared principal collections for all series of securities in the same group to
cover any required principal distributions to securityholders and deposits to
principal accumulation accounts, if any, for any series that have not been
covered out of the collections of principal receivables allocable to those
series, and then, at our option, for application as principal with respect to
any variable interest in the group. Shared principal collections will not be
used to cover investor charge-offs for any series of securities.
If the principal shortfalls exceed the amount of shared principal
collections for any calendar month, shared principal collections for all series
in the group will be allocated pro rata among the applicable series based on the
relative amounts of principal shortfalls. If shared principal collections exceed
principal shortfalls, the balance will be paid to us or our assigns or deposited
in the excess funding account under the circumstances described under "--Excess
Funding Account" below. We cannot assure you that there will be any shared
principal collections for any month.
EXCESS FUNDING ACCOUNT
On each business day on which the transferor interest is less than the
Minimum Transferor's Interest, the servicer will deposit collections of
principal receivables allocable to the transferor interest and excess shared
principal collections otherwise distributable to us or our assigns, into the
excess funding account until the transferor interest equals the Minimum
Transferor's Interest. Funds may also be deposited in the account to cover
dilution, as described below under "--Defaulted Receivables; Dilution; Investor
Charge-Offs." Funds on deposit in the excess funding account will be withdrawn
and paid to us or our assigns on each day to the extent that the transferor
interest exceeds the Minimum Transferor's Interest. In addition, when any series
is in an accumulation, amortization or other similar period, the principal
balance on deposit in the excess funding account will be treated like shared
principal collections.
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Net investment income earned on amounts in the excess funding account
will be withdrawn monthly from the excess funding account and treated as
collections of finance charge receivables.
DEFAULTED RECEIVABLES; DILUTION; INVESTOR CHARGE-OFFS
Receivables in any account will be charged-off as uncollectable in
accordance with the bank's credit card guidelines and the bank's customary and
usual policies and procedures for servicing revolving credit card receivables
comparable to the receivables. The bank's current policy is to charge-off the
receivables in an account when that account becomes 180 days delinquent. An
account becomes delinquent if the minimum payment is not made by the payment
date. On the date on which a receivable is charged-off, the receivable will no
longer be shown as an amount payable on the servicer's records and will cease to
be a receivable.
Each series will be allocated a portion of defaulted receivables in an
amount equal to its allocation percentage for defaulted receivables, as
specified in the related prospectus supplement, of the aggregate amount of
principal receivables in any accounts charged-off during each calendar month.
Unlike defaulted receivables, dilution, which includes reductions in
principal receivables as a result of returns, unauthorized charges, shortfalls
in insurance proceeds and reserves under the bank's debt cancellation and debt
deferral programs and the like, is not intended to be allocated to investors.
Instead, these reductions are applied to reduce the aggregate amount of
principal receivables used to calculate the transferor interest and to test
compliance with the Minimum Aggregate Principal Receivables test. To the extent
reductions for dilutions would reduce the transferor interest below the Minimum
Transferor's Interest, or reduce the Aggregate Principal Receivables below the
Minimum Aggregate Principal Receivables amount, we are required to deposit the
amount required to cure the greater of such deficits into the trust's excess
funding account. Collections allocable to the transferor interest can also be
used to fund such deposit. However, if the bank defaults on its obligation to
make a payment to cover dilution, and collections allocable to the transferor
interest do not cover the shortfall, then a portion of any resulting shortfall
in receivables will be allocated to your series as specified in the accompanying
prospectus supplement.
On each distribution date, if the sum of the defaulted receivables and
any uncovered dilution allocated to any series is greater than the finance
charge collections and other funds available to cover those amounts as described
in the related prospectus supplement, then the collateral amount for that series
will be reduced by the amount of the excess. Any reductions in the collateral
amount for any series on account of defaulted receivables and dilution will be
reinstated to the extent that finance charge collections and other amounts on
deposit in a segregated trust account established for the related series are
available for that purpose on any subsequent distribution date as described in
the related prospectus supplement.
Unless otherwise specified in the prospectus supplement relating to a
series, on the last day of each calendar month, the trust will automatically
convey to us all receivables in accounts that became defaulted accounts during
that month, together with any related interchange. Any related net recoveries
and insurance proceeds will not be so transferred.
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FINAL PAYMENT OF PRINCIPAL
If so specified in the prospectus supplement relating to a series, we
will, at the option of the servicer, purchase 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. The option to purchase the notes will
not be available to us if the repurchase price (net of any amounts on deposit in
the principal accumulation account and available for distribution to the
noteholders) exceeds the lesser of the estimated fair market value, or the par
value plus accrued interest, of a portion of the receivables in Eligible
Accounts then designated to the trust equal to the collateral amount. The
repurchase price will equal:
- the outstanding principal amount of the notes of that series, plus
- any accrued and unpaid interest (including interest on any overdue
interest as required in the related prospectus supplement for a series)
through the day preceding the distribution date on which the repurchase
occurs (or, if the repurchase does not occur on a distribution date,
through the next distribution date).
For any series of notes, the related prospectus supplement may specify
additional conditions to the purchase option.
Each prospectus supplement will specify the final maturity date for the
related series of notes, which will generally be a date falling substantially
later than the expected principal payment date. For any series, principal will
be due and payable on the final maturity date. The failure to pay principal in
full not later than the final maturity 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 the rights described under "The Indenture--Events of Default;
Rights upon Event of Default" in this prospectus.
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 collateral amount of the previously issued series results in a
corresponding increase in the collateral amount of the later issued 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 either has amortized or has
accumulated funds for a principal payment.
The later issued series will either be pre-funded with an initial deposit
to a pre-funding account in an amount up to the initial principal balance of the
previously issued series or will have a variable principal amount.
During an amortization period or accumulation period in which the amount
paid or accumulated is limited to the controlled distribution amount or
controlled accumulation amount, respectively, for any series that is paired with
a later issued series, as principal payments are made on that previously issued
series or deposits are made for purposes of principal payments:
(a) in the case of a pre-funded paired series, an equal amount
of funds on deposit in any pre-funding account for that
pre-funded paired series will be released, which funds
will be distributed to us;
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(b) in the case of a paired series having a variable principal
amount, an interest in that variable paired series in an
equal or lesser amount may be sold by the issuer, and the
proceeds from the issuance will be distributed to us; and
(c) in either case, the collateral amount of the later issued
series will increase by up to a corresponding amount.
If a pay out event occurs for the previously issued series or its paired
series when the previously issued series is amortizing, the allocation
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 allocation percentage. For a discussion of these factors, see
"Maturity Considerations" in the accompanying prospectus supplement.
PAY OUT EVENTS
The revolving period for your series of notes 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 issuer upon the occurrence of any of the following events:
(a) bankruptcy, insolvency, liquidation, conservatorship,
receivership or similar events relating to us or the bank;
(b) First Bankcard Master Credit Card Trust or the issuer
becomes subject to regulation as an "investment company"
within the meaning of the Investment Company Act of 1940,
as amended; and
(c) we are unable for any reason to transfer receivables to
the trust or the bank is unable for any reason to transfer
receivables to us when required.
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 declared or deemed to have
occurred, the rapid amortization period or, if so specified in the accompanying
prospectus supplement, the accumulation period will commence. If, because of the
occurrence of a pay out event, the rapid amortization period begins earlier than
the scheduled commencement of an amortization or accumulation 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
insolvency or similar proceedings under the Bankruptcy Code or similar laws
occur with respect to the bank or us, on the day of that event we will
immediately cease to transfer principal receivables to the trust and promptly
give notice to the trustee for First Bankcard Master Credit Card Trust, 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
43
charge receivables accrued at any time with respect to those principal
receivables, will continue to be part of the trust assets. Following the
occurrence of an event of this type, prior to the termination of First Bankcard
Master Credit Card Trust, unless securityholders representing more than 50% of
each class of each series of securities have disapproved of liquidation, the
trustee for First Bankcard Master Credit Card Trust will sell the receivables in
a commercially reasonable manner and on commercially reasonable terms. The
proceeds of that sale or liquidation will be applied to payments on the
outstanding series of securities as specified above in "--Application of
Collections" and in the accompanying prospectus supplement.
If the only pay out event to occur is our insolvency, the 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 First
National Bank of Omaha, or if we become 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 issuer. The servicing
fee for each series of notes for any distribution date will be equal to, with
respect to any monthly period, one twelfth of the product of (a) the servicing
fee percentage for that series and (b) the collateral amount for that series as
of the last day of the preceding monthly period. The prospectus supplement for
each series will describe the servicing fee percentage applicable to that
series.
The servicer will pay from its servicing compensation expenses of
servicing the receivables, including payment of the reasonable fees and
disbursements of the indenture trustee, the trustee for First Bankcard Master
Credit Card Trust, the owner trustee and independent certified public
accountants and other reasonable fees which are not expressly stated in the
transfer and servicing agreement, the indenture, any indenture supplement, the
pooling and servicing agreement or any supplement for First Bankcard Master
Credit Card Trust to be payable by us, the issuer or the securityholders, other
than liabilities, costs or expenses arising under any federal, state and local
income and franchise tax laws.
If so specified in a prospectus supplement, the servicer's recourse for a
portion of the servicing fee allocable to the related series may be limited to
interchange received by the trust and allocated to the noteholders of that
series.
Each series' servicing fee is payable each period from collections of
finance charge receivables allocated to the series. Neither the issuer nor the
noteholders are responsible for any servicing fee allocable to the transferor
interest.
MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The servicer may not resign from its obligations and duties, except upon
a determination that performance of its duties is no longer permissible under
applicable law, as evidenced by an opinion of counsel to that effect delivered
to the trustee and there is no reasonable action that the servicer could take to
make the performance of its duties permissible under applicable law.
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If the indenture trustee is unable to appoint a successor within 120 days
of the determination that the servicer is no longer permitted to act as
servicer, then 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's resignation will not become effective until the indenture
trustee or another successor has assumed the servicer's obligations and duties.
The indenture trustee will notify each rating agency upon the appointment of a
successor servicer.
The servicer may delegate any of its servicing duties to any of its
wholly-owned affiliates or any wholly-owned affiliates of its parent or to any
entity that agrees to conduct those duties in accordance with the bank's credit
card guidelines. However, the servicer's delegation of its duties will not
relieve it of its liability and responsibility with respect to the delegated
duties.
The bank will indemnify the indenture trustee and its officers,
directors, employees and agents for any losses, including legal fees, incurred
by the indenture trustee in connection with its performance of its duties under
the indenture, the transfer and servicing agreement and related documents except
for any losses or expenses incurred as a result of the indenture trustee's
fraud, willful misconduct or negligence.
The servicer will indemnify First Bankcard Master Credit Card Trust, the
issuer, the owner trustee, the trustee for First Bankcard Master Credit Card
Trust and the indenture trustee for any losses suffered as a result of acts or
omissions of the servicer with respect to the activities of First Bankcard
Master Credit Card Trust, the issuer, the indenture trustee, the owner trustee
or the trustee for First Bankcard Master Credit Card Trust under the pooling and
servicing agreement, the transfer and servicing agreement, the indenture and
related documents except for losses resulting from fraud, negligence, or willful
misconduct by the indemnified person. The servicer will not indemnify the issuer
or First Bankcard Master Credit Card Trust or any other person for:
- any liabilities, costs or expenses arising from any action taken by the
trustee for First Bankcard Master Credit Card Trust or the indenture
trustee at the direction of securityholders;
- any losses, claims or damages incurred by the indemnified party, as
owners of secured notes, for example, as a result of the performance of
the receivables, market fluctuations, a shortfall or failure to make
payment under any enhancement or other similar market or investment
risks associated with ownership of secured notes; and
- any liabilities, costs or expenses arising under any tax law, including
any federal, state, local or foreign income or franchise taxes or any
other tax imposed on or measured by income or any related penalties or
interest, required to be paid by the trust, the issuer or the
securityholders.
No indemnity payments by the servicer will be paid from the assets of the issuer
or First Bankcard Master Credit Card Trust. The servicer will be entitled to
participate in, and assume the defense of and negotiate the settlement of, any
action or proceeding that involves an indemnified party. If the servicer assumes
the defense of any action or proceeding involving an indemnified party, the
servicer under most circumstances will not be liable to the
45
indemnified party for any legal fees or disbursements subsequently incurred by
such party in connection with the defense thereof.
Except as provided in the preceding two paragraphs, neither the servicer
nor any of its directors, officers, employees, or agents will be liable to First
Bankcard Master Credit Card Trust, the issuer, the owner trustee, the indenture
trustee, the trustee for First Bankcard Master Credit Card Trust, the
securityholders or any other person for any action taken, or for refraining from
taking any action in good faith under, the pooling and servicing agreement, any
supplement thereto or the transfer and servicing agreement. However, none of the
directors, officers, employees, or agents of the servicer will be protected
against any liability resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of obligations and duties under the pooling and servicing agreement,
any supplement thereto or the transfer and servicing agreement. In addition, the
servicer is not under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its servicing responsibilities under the
pooling and servicing agreement, any supplement thereto and the transfer and
servicing agreement and which in its reasonable judgment may involve it in any
expense or liability. The servicer will not be liable for any settlement of any
claim or action effected without its prior written consent, which will not be
unreasonably withheld.
We may sell, assign, pledge or otherwise transfer our interest in all or
a portion of the transferor interest. Before we may transfer our interest in the
transferor interest, the following must occur:
(1) each rating agency confirms that the transfer will not impair its
rating of any outstanding series or class of securities; and
(2) we deliver an opinion of counsel to the effect that, for federal
income tax purposes:
(a) the transfer will not cause the issuer to be deemed to be an
association or publicly traded partnership taxable as a
corporation; and
(b) the transfer will not cause or constitute an event in which
gain or loss would be recognized by any noteholder.
However, the conditions set forth above do not apply to a transfer in
connection with a merger or sale of our business.
We or the servicer may consolidate with, merge into, or sell our or its
respective businesses to, another entity, in accordance with the pooling and
servicing agreement and the transfer and servicing agreement on the following
conditions:
(1) the entity, if other than us or the servicer, as applicable, formed
by the consolidation or merger or that acquires our property or
assets or the servicer's property or assets, as the case may be:
(a) with respect to us, is organized under the laws of the United
States or any one of its states and (x) is a business entity
that may not become a debtor in a proceeding under the
bankruptcy code or (y) is a special-purpose entity, the powers
and activities of which are limited to the performance of
46
our obligations under the pooling and servicing agreement,
transfer and servicing agreement and related documents;
(b) with respect to the servicer, is a national banking
association, state banking corporation or other entity
organized and existing under the laws of the United States or
any of its states that is not subject to the U.S. Bankruptcy
Code; and
(c) expressly assumes, by a supplemental agreement, to perform
every covenant and obligation of us or the servicer, as
applicable, under the pooling and servicing agreement, the
transfer and servicing agreement and related documents;
(2) delivery to the trustee for First Bankcard Master Credit Card Trust
and the indenture trustee of an officer's certificate stating that
the merger, consolidation or transfer and the related supplemental
agreement comply with the pooling and servicing agreement or the
transfer and servicing agreement, as applicable, and that all
conditions precedent relating to the applicable transaction have
been complied with and an opinion of counsel to the effect that the
related supplemental agreement is legal, valid and binding with
respect to us or the servicer, or our respective successors, as
applicable; and
(3) delivery of notice of the applicable transaction to each rating
agency and, with respect to an applicable transaction pertaining to
us, we receive written confirmation from each rating agency that
the applicable transaction will not impair its rating of any
outstanding series or class of securities.
SERVICER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
The servicer will make customary representations, warranties and
covenants to the trust. If certain of these representations, warranties and
covenants are breached and the trust's rights in, to or under the related
receivables in the relevant accounts or the proceeds of the receivables are
materially impaired or such proceeds are not available to the trust free and
clear of any lien, then after specified time periods, the affected receivables
and/or accounts will be assigned or reassigned to the servicer. The servicer
will effect the assignment by depositing funds into the collection account in an
amount equal to the amount of those receivables. The representations, warranties
and covenants of the servicer, the breach of which would cause an assignment of
receivables to the servicer include the following:
- the servicer must maintain in effect all qualifications required in
order to properly service, and materially comply with applicable laws
in connection with servicing, the receivables and related accounts
unless the failure to do so would not have a material adverse effect on
the interests of noteholders;
- the servicer may not permit any rescission or cancellation of a
receivable except as ordered by a court or other governmental authority
or in the ordinary course of business in accordance with the bank's
credit card guidelines;
- the servicer may not take any action which, nor omit to take any action
the omission of which, would materially impair the rights of
noteholders in any receivable or account, nor may it, except in the
ordinary course of its business and
47
in accordance with the bank's credit card guidelines, reschedule,
revise or defer collections due on the receivables, except as noted
above; and
- except in connection with its enforcement or collection of an account,
the servicer will take no action to cause any receivable to be
evidenced by any instrument, other than an instrument that, taken
together with one or more other writings, constitutes chattel paper
and, if any receivable is so evidenced it shall be reassigned or
assigned to the servicer as provided in the transfer and servicing
agreement or the pooling and servicing agreement, as applicable.
SERVICER DEFAULT
Each of the following events constitutes a servicer default:
(1) any failure by the servicer:
(a) to make any payment, transfer or deposit,
(b) to give instructions or notice to the applicable trustee
pursuant to certain provisions of the pooling and servicing
agreement or the indenture, as applicable and as supplemented,
or
(c) to instruct the applicable trustee to make any required
drawing, withdrawal or payment under any enhancement,
in each case on or before the later of the date occurring 10 business
days after the date that payment, transfer, deposit, withdrawal,
drawing, instruction or notice is required to be made or given and
the date three business days after written notice of that failure has
been given to the servicer;
(2) failure on the part of the servicer duly to observe or perform in
any respect any other agreements of the servicer contained in the
pooling and servicing agreement, as supplemented, or the transfer
and servicing agreement, as applicable, that:
(a) has a material adverse effect on the interests of the holders
of securities of any series, and
(b) continues unremedied for a period of 60 days after the date on
which written notice of that failure, requiring the same to be
remedied, has been given:
(1) to the servicer by the applicable trustee, or
(2) to the servicer and the applicable trustee or trustees by
holders of securities evidencing not less than 25% of the
outstanding principal balance of any series adversely
affected thereby,
and continues to materially adversely affect those holders for that
period; or the servicer shall delegate its duties under the pooling
and servicing agreement or the transfer and servicing agreement, as
applicable, except as permitted thereunder;
(3) any representation, warranty or certification made by the servicer
in the pooling and servicing agreement, as supplemented, or the
transfer and servicing
48
agreement, as applicable, or in any certificate delivered under either of the
foregoing that:
(a) proves to have been incorrect when made,
(b) causes a material adverse effect on the holders of securities
of any series, and
(c) continues to be incorrect in any material respect for a period
of 60 days after the date on which written notice of that
failure, requiring the same to be remedied, has been given:
(1) to the servicer by the applicable trustee, or
(2) to the servicer and the applicable trustee by the holders
of securities evidencing not less than 25% of the
outstanding principal balance of any series of securities
adversely affected thereby,
and continues to materially adversely affect those holders for that
period;
(4) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to the servicer; or
(5) any other event specified in the accompanying prospectus supplement
or in the related indenture supplement.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under:
(a) clause (1) above, for a period of 10 additional business days,
or
(b) clause (2) or (3) above, for a period of 60 additional days,
will not constitute a servicer default, until the expiration of the applicable
additional time period if the delay or failure could not be prevented by the
exercise of reasonable diligence by the servicer and that delay or failure was
caused by an act of God or other similar occurrence.
If a servicer default occurs, for so long as it has not been remedied or
waived, the applicable trustee or securityholders representing more than 50% of
the aggregate principal amount of all outstanding series of securities may give
notice to the servicer, and if notice is given by the securityholders, the
applicable trustee, terminating all of the rights and obligations of the
servicer under the pooling and servicing agreement and transfer and servicing
agreement.
If no successor has been appointed and has accepted the appointment by
the time the servicer ceases to act as servicer, the trustee will automatically
become the successor. If the trustee is legally unable to act as servicer, the
trustee will petition a court of competent jurisdiction to appoint an eligible
servicer.
Any default by the servicer or us in the performance of its or our
obligations under the transfer and servicing agreement, or pooling and servicing
agreement and related documents may be waived by securityholders holding not
less than 66 2/3% of the then-outstanding principal balance of the securities of
each series adversely affected by that default, unless that default relates to a
failure to make any required payments to be made to securityholders, in which
case such default may be waived only by all securityholders of the securities of
each
49
series adversely affected by that default. Waiver by the credit enhancement
providers for one or more series, or a specified percentage of one or more
classes of securities in one or more series, may also be required.
Our rights and obligations under the pooling and servicing agreement and
the transfer and servicing agreement will be unaffected by any change in
servicer.
If a conservator or receiver is appointed for the servicer, the
conservator or receiver may have the power to prevent either the trustee or the
securityholders from appointing a successor servicer.
REPORTS TO NOTEHOLDERS
Noteholders of each series issued by the issuer 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 contain any additional
information 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 of a series generally will include:
- the aggregate collections processed during the preceding monthly
period;
- the aggregate collections of principal receivables and finance charge
receivables processed during the preceding monthly period;
- collections of principal receivables and finance charge receivables
allocated to the series;
- for months during which the servicer is required to make deposits of
collections after the distribution date, the aggregate balance on
deposit in any account relating to the series;
- the aggregate amount, if any, of drawings on any enhancement, if any,
for the series;
- the aggregate amount of interchange to be allocated to the trust;
- the total amount of principal and interest to be distributed to the
noteholders of the series;
- the amount of that distribution allocable to principal on notes of the
series;
- the amount of that distribution allocable to interest on the notes of
the series;
- the aggregate defaults and uncovered dilution, if any, allocated to the
series;
- the aggregate amount of recoveries for the trust;
- the aggregate outstanding balance of accounts broken out by delinquency
status;
- the amount of reductions, if any, to the collateral amount due to
defaulted receivables and dilution allocated to the series and any
reimbursements of previous reductions to the collateral amount;
- the monthly servicing fee for the series;
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- the amount available under the credit enhancement, if any, for the
series or each class of the series;
- the base rate and portfolio yield, each as defined in the related
prospectus supplement for the series;
- if the series or a class of the series bears interest at a floating or
variable rate, information relating to that rate;
- for any distribution date during a funding period, the remaining
balance in the prefunding account; and
- for the first distribution date that is on or immediately following the
end of a funding period, the amount of any remaining balance in the
prefunding account that has not been used to fund the purchase of
receivables and is being paid as principal on the notes.
By January 31 of each calendar year, the indenture trustee 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
information required to be provided by an issuer of indebtedness under the
Internal Revenue Code.
EVIDENCE AS TO COMPLIANCE
The pooling and servicing agreement and transfer and servicing agreement
provide that, on or before March 31 of each calendar year, the servicer will
cause a firm of nationally recognized independent public accountants, who may
also render other services to the servicer or to us, to furnish to the indenture
trustee for the prior calendar year:
- a copy of the report required by 12 C.F.R. sec. 363.3(b) (or any
comparable successor regulation), to the effect that, in accordance
with attestation standards established by the American Institute of
Certified Public Accountants, such firm has examined the servicer's
assertion that it maintained effective internal accounting controls
during the preceding calendar year, and that such firm is of the
opinion that the servicer's assertion is fairly stated in all material
respects, based on the criteria established in "Internal
Control--Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Unless otherwise provided
with respect to any series in the related supplement, a copy of such
report may be obtained by any noteholder by a request in writing to the
indenture trustee at the address set forth in the indenture; and
- a report (or reports) prepared using attestation standards established
by the American Institute of Certified Public Accountants, to the
effect that they have examined the servicer's assertions for each
outstanding series made pursuant to the pooling and servicing agreement
or transfer and servicing agreement, as applicable, regarding the
monthly reports required to be delivered by the servicer and have
concluded that such assertions are fairly stated in all material
respects, except for such exceptions as shall be set forth in such
report. A copy of such report may be obtained by any noteholder by a
request in writing to the indenture trustee at the address set forth in
the indenture.
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The pooling and servicing agreement and transfer and servicing agreement
provide for delivery to the indenture trustee on or before March 31 of each
calendar year, of a statement signed by an officer of the servicer. That
statement will state that, to the best of that officer's knowledge, the servicer
has fully performed its obligations in all material respects under those
documents throughout the preceding calendar year or, if there has been a default
in the performance of any obligation, specifying the nature and status of that
default.
Copies of all of these statements, certificates and reports furnished to
the indenture trustee may be obtained by a request in writing delivered to the
indenture trustee.
AMENDMENTS
The transfer and servicing agreement may be amended by us, the servicer
and the issuer, without the consent of the indenture trustee or the noteholders
of any series to cure any ambiguity, to correct or supplement any provisions of
the agreement that are inconsistent with any other provisions of the agreement
or to add any other provisions concerning matters or questions raised under the
agreement that are not inconsistent with the provisions of the agreement, so
long as the amendment does not adversely affect in any material respect the
interests of any noteholder. In addition, the transfer and servicing agreement
may be amended by us, the servicer and the issuer, without the consent of the
indenture trustee or the noteholders of any series, on the following conditions:
(1) we deliver to the owner trustee and the indenture trustee a
certificate of an authorized officer stating that, in our
reasonable belief, the amendment will not:
(a) result in the occurrence of a pay out event or an event of
default; or
(b) materially and adversely affect the amount or timing of
distributions to be made to noteholders of any series or class;
and
(2) each rating agency confirms that the amendment will not impair its
rating of any outstanding series or class of notes.
The transfer and servicing agreement will also be amended by the servicer
and the issuer at our direction, without the consent of the indenture trustee,
the noteholders of any series or the credit enhancement providers for any series
to add, modify or eliminate any provisions necessary or advisable in order to
enable the issuer or any portion of the issuer to (1) qualify as, and to permit
an election to be made for the issuer to be treated as, a "financial asset
securitization investment trust" under the Internal Revenue Code and (2) avoid
the imposition of state or local income or franchise taxes on the issuer's
property or its income. However, we may not amend the transfer and servicing
agreement as described in this paragraph unless each rating agency confirms that
the amendment will not impair its rating of any outstanding series or class of
notes.
The amendments that we may make without the consent of the noteholders of
any series or the credit enhancement providers for any series may include the
addition or sale of receivables in the trust portfolio.
The transfer and servicing agreement may also be amended by us, the
servicer and the issuer with the consent of noteholders holding more than
66 2/3% of the then-outstanding principal balance of the notes of each series
affected by the amendment and the owner
52
trustee and/or indenture trustee, if it affects their respective rights, duties,
protections, indemnities, immunities or obligations under the indenture, must
consent to such amendment.
However, 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 or
deposits of amounts to be distributed; or
(b) the amount available under any credit enhancement,
(2) changes the definition of or manner of calculating the interest of
any noteholder; or
(3) reduces the percentage of the outstanding principal balance of the
notes required to consent to any amendment;
in each case, without the consent of each affected noteholder.
In no event may any amendment to the transfer and servicing agreement
adversely affect in any material respect the interests of any credit enhancement
provider without the consent of that credit enhancement provider.
THE INDENTURE
We have summarized the material terms of the indenture below and in the
description of the notes above. The summary is not complete and is qualified in
its entirety by reference to the indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
An event of default will occur under the indenture for any series of
notes upon the occurrence of any of the following events:
(1) the issuer fails to pay principal when it becomes due and payable
on the final maturity date for that series of notes;
(2) the issuer fails to pay interest on any notes on a distribution
date on which such interest is scheduled to be paid and the default
continues for a period of 35 days;
(3) bankruptcy, insolvency, conservatorship, receivership, liquidation
or similar events relating to the issuer;
(4) the issuer fails to observe or perform any covenant or agreement
made in the indenture in respect of the notes of that series, and:
(a) the failure continues, or is not cured, for 60 days after
notice to the issuer by the indenture trustee or to the issuer
and the indenture trustee by noteholders representing at least
25% of the then-outstanding principal amount of that series of
notes; and
(b) 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; or
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(5) any additional event specified in the indenture supplement related
to that series.
An event of default will not occur if the issuer fails to pay the full
principal amount of a note on its expected principal payment date.
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 referred to in clause (1), (2) or (4) above occurs
and is continuing with respect to any series of 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 all of the notes of that series to
be immediately due and payable. If an event of default referred to in clause (3)
above occurs and is continuing, the unpaid principal and interest due on all
outstanding notes will automatically become due and payable. Before a judgment
or decree for payment of the money due has been obtained by the indenture
trustee, noteholders holding more than 50% of the then-outstanding principal
balance of the notes of that series may rescind and annul the declaration of
acceleration and its consequences if:
(a) the issuer has paid or deposited with the indenture trustee a
sum sufficient to pay (i) all principal and interest due on the
notes, and all other amounts, that would then be due if the
event of default giving rise to the acceleration had not
occurred, plus (ii) all amounts then payable to the indenture
trustee; and
(b) all events of default (other than nonpayment of the principal
of the notes that has become due solely by such acceleration)
have been cured or waived.
If an event of default occurs, 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:
(1) the indenture trustee, after being advised by counsel, determines
that the action it is directed to take is in conflict with rule of
law or the indenture;
(2) the indenture trustee determines in good faith that the requested
actions would be illegal or involve the indenture trustee in
personal liability or be unjustly prejudicial to noteholders not
making the request or direction; or
(3) 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 the action so directed.
Subject to these limitations, noteholders representing more than 50% 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 with respect to such series if an
event of default has occurred and is continuing. Prior to the declaration of the
acceleration of the maturity of the notes of the affected series, the
noteholders representing not less than 66 2/3% of the then-outstanding principal
balance of each class of the notes of the affected series may also waive any
default with respect to the notes, except a default in the payment of principal
or interest of any note of such series or a default
54
relating to a covenant or provision of the indenture that cannot be modified or
amended without the waiver of each affected noteholder.
After acceleration of a series of notes, principal collections and
finance charge collections allocated to those notes will be applied first, to
pay any amounts due to the indenture trustee pursuant to the indenture, and
second, to make monthly principal and interest payments on the notes until the
earlier of the date the notes are paid in full or the final maturity date of the
notes. Funds in the collection account, the excess funding account and the other
trust accounts for an accelerated series of notes will be applied on the next
distribution date to pay principal of and interest on those notes.
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 or noteholders have previously given the indenture
trustee written notice of a continuing event of default;
- the noteholders representing not less than 25% of the then-outstanding
principal balance of each affected series have made a written request
of the indenture trustee to institute a proceeding as indenture
trustee;
- the noteholders offer to the indenture trustee indemnification
satisfactory to it 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
- during the 60-day period following receipt of the written request and
offer of indemnification, no direction inconsistent with the request
has been given by noteholders representing more than 25% of the
then-outstanding principal balance of the notes of each affected
series.
If the indenture trustee receives conflicting or inconsistent requests
and indemnity from two or more groups of noteholders of any affected series,
each representing no more than 50% of the then-outstanding principal balance of
that series, the indenture trustee in its sole discretion may determine what
action, if any, will be taken, notwithstanding any other provisions of the
indenture.
Each holder of a note will have an absolute and unconditional right to
receive payment of the principal of and interest in respect of that note as
principal and interest become due and payable, and to institute suit for the
enforcement of any payment of principal and interest then due and payable and
those rights may not be impaired without the consent of that noteholder.
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, but is not required to, elect to
maintain possession of the portion 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, if any series of notes has been accelerated following an
event of default, the indenture trustee may:
- institute proceedings in its own name and as trustee for the collection
of all amounts then payable on the notes of the affected series or
under the indenture with respect to such series; or
- 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 in the following sentence, the
indenture trustee also may cause the trust to sell principal receivables in an
amount equal to the collateral amount for the series of accelerated notes,
together with related finance charge receivables. Before exercising this remedy,
the indenture trustee must receive an opinion of counsel to the effect that
exercise of this remedy complies with applicable federal and state securities
laws and one of the following conditions must be satisfied:
- receipt by the indenture trustee of the consent of all noteholders of
the affected series;
- determination by the indenture trustee that any proceeds from
exercising the remedy will be sufficient to discharge in full all
principal and interest due on the accelerated notes, and the indenture
trustee obtains the consent of noteholders holding more than 50% of the
then-outstanding principal balance of the affected series; or
- determination by the indenture trustee that the assets may not continue
to provide sufficient funds for the payment of principal of 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.
The remedies described above are the exclusive remedies provided to
noteholders and each noteholder by accepting its interest in the notes of any
series expressly waives any other remedy that might have been available under
the Uniform Commercial Code or any other law.
The indenture trustee will covenant, and the noteholders are deemed to
have covenanted by accepting a note, that they will not at any time institute
against the issuer, us or First Bankcard Master Credit Card Trust any
reorganization or other proceeding under any federal or state law.
None of us, the administrator, the owner trustee, the indenture trustee,
the servicer, the bank or any of its affiliates, or First Bankcard Master Credit
Card Trust, nor any holder of an ownership interest in the issuer, 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 issuer contained in the indenture. The
notes will represent obligations solely of the issuer, and the notes will not be
insured or guaranteed by us, the servicer, the bank or any of its affiliates,
the administrator, the owner trustee, the indenture trustee, or any other person
or entity.
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COVENANTS
The indenture provides that the issuer may not consolidate with, merge
into or sell its business to, another entity, unless:
(1) the entity, if other than the issuer, formed by or surviving the
consolidation or merger or that acquires the issuer's business:
(a) is organized and existing under the laws of the United States
or any one of its states;
(b) is not subject to regulation as an "investment company" under
the Investment Company Act of 1940;
(c) expressly assumes, by supplemental indenture, the issuer's
obligation to make due and punctual payments of the principal
and interest upon all the notes and the performance of every
covenant of the issuer under the indenture;
(d) in the case of a sale of the issuer's business, expressly
agrees, by supplemental indenture that (A) all right, title and
interest so conveyed or transferred by the issuer will be
subject and subordinate to the rights of the noteholders and
(B) it will make all filings with the Securities and Exchange
Commission required by the Securities Exchange Act of 1934 in
connection with the notes; and
(e) in the case of a sale of the issuer's business, expressly
agrees to indemnify the issuer from any loss, liability or
expense arising under the indenture and the notes;
(2) no pay out event or event of default will have occurred and be
continuing immediately after the transaction;
(3) each rating agency confirms that the transaction will not impair
its rating of any outstanding series or class of notes;
(4) the issuer will have received an opinion of counsel to the effect
that for federal income tax purposes:
(a) the transaction 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, as confirmed by an opinion of counsel delivered at
that time;
(b) the transaction will not cause the issuer to be deemed to be an
association or publicly traded partnership taxable as a
corporation; and
(c) the transaction will not cause or constitute an event in which
gain or loss would be recognized by any noteholder;
(5) any action necessary to maintain the lien and security interest
created by the indenture will have been taken; and
(6) the issuer has delivered to the indenture trustee an opinion of
counsel and officer's certificate each stating that the transaction
satisfies all requirements
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under the indenture and that the supplemental indenture is duly
authorized, executed and delivered and is valid, binding and
enforceable.
As long as the notes are outstanding, the issuer will not, among other
things:
- except as expressly permitted by the indenture, the transfer and
servicing agreement or related documents, sell, transfer, exchange or
otherwise dispose of any part of the assets of the issuer that secure
the notes 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 Internal Revenue 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 assets of the issuer that secure
the notes;
- voluntarily dissolve or liquidate in whole or in part; or
- permit (A) the validity or effectiveness of the indenture or the lien
under the indenture to be impaired, 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 or other claim of a third party to be created with respect to
the assets of the issuer, or (C) the lien of the indenture not to
constitute a valid first priority perfected security interest in the
assets of the issuer that secure the notes.
The issuer may not engage in any activity other than as specified under
"Important Parties--The Issuer" in this prospectus. The issuer will not incur,
assume, guarantee or otherwise become liable for any indebtedness other than
indebtedness under the notes and the indenture.
AGREEMENTS BY NOTEHOLDERS
Issuer and each noteholder by accepting a note acknowledge and agree that
such note represents indebtedness of issuer and does not represent an interest
in any of our assets, other than the trust estate, including by virtue of any
deficiency claim in respect of obligations not paid or otherwise satisfied from
the trust estate and proceeds thereof. Each noteholder further acknowledges and
agrees that no adequate remedy at law exists for a breach of such agreement and
the terms of such agreement may be enforced by an action for specific
performance.
Each noteholder, by its acceptance of a note, agrees that it will treat
and take no action inconsistent with, and as required under the pooling and
servicing agreement and transfer and servicing agreement such noteholder will
cause any person acquiring an interest in a note through it to treat and take no
action inconsistent with, the treatment of the collateral certificate, the notes
or beneficial interests therein as our indebtedness for purposes of federal,
state, local and foreign income or franchise taxes and any other tax imposed on
or measured by income.
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MODIFICATION OF THE INDENTURE
The issuer and the indenture trustee may, without the consent of any
noteholders but with prior written notice to each rating agency, enter into one
or more supplemental indentures for any of the following purposes:
- to correct or amplify the description of any property at any time
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
issuer;
- to add to the covenants of the issuer, for the benefit of the
noteholders, or to surrender any right or power of the issuer;
- to convey, transfer, assign, mortgage 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 or to make any other provisions with respect to matters or
questions arising under the indenture or any supplemental indenture as
long as that action would not 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;
- to modify, eliminate or add to the provisions of the indenture as
necessary to qualify the indenture under the Trust Indenture Act of
1939, or any similar federal statute later enacted and to add to the
indenture such other provisions as may be expressly required by the
Trust Indenture Act of 1939; or
- to provide for the issuance of one or more new series of notes under
the indenture.
The issuer and the indenture trustee may also, without the consent of any
noteholders, enter into one or more supplemental indentures to amend the
indenture, upon:
(1) receipt of written confirmation from each rating agency that the
action will not impair its rating of any outstanding series or
class of notes; and
(2) our certification to the effect that all requirements contained in
the agreement have been met and, in the reasonable belief of the
certifying officer, the action will not (a) cause a pay out event
or an event of default or (b) materially and adversely affect the
amount or timing of payments to be made to the noteholders of any
series or class.
The issuer and the indenture trustee may also, without the consent of the
noteholders of any series or the credit enhancement providers 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 issuer or any portion
of the issuer (a) to qualify as, and to permit an election to be made for the
issuer to be treated as, a "financial asset securitization investment trust"
under the Internal Revenue Code and (b) to avoid the imposition of state or
local income or franchise taxes on the issuer's property or its income. Prior to
any amendment
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described in this paragraph, each rating agency must confirm that the amendment
will not impair its rating of any outstanding series or class of notes and the
owner trustee and/or indenture trustee, if it affects their respective rights,
duties, protections, indemnities, immunities or obligations under the indenture,
must consent to such amendment.
The issuer and the indenture trustee will not, without prior notice to
each rating agency and the consent of each noteholder affected, enter into any
supplemental indenture to:
- change the due date 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 coin or currency in which, any note or any interest
therein 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 certain
provisions of the indenture or of certain defaults under the indenture
and their consequences provided in the indenture;
- reduce the percentage of the aggregate outstanding amount of the notes
of any series 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 the notes
of such series;
- decrease the percentage of the aggregate principal amount of the notes
required to amend the sections of the indenture that specify the
applicable percentage of the aggregate principal amount of the notes of
a series necessary to amend the indenture or other related agreements;
- modify or alter provisions of the indenture prohibiting the voting of
notes held by the issuer, any other party obligated on the notes, us,
or any of their affiliates; or
- permit the creation of any lien prior to 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 issuer and the indenture trustee may otherwise, with receipt of
written confirmation from each rating agency that the action will not impair its
rating of any outstanding series or class and with the consent of noteholders
holding more than 66 2/3% 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 or 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 issuer will be required to present to the indenture trustee each year
a written statement as to the performance of its obligations under the
indenture.
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INDENTURE TRUSTEE'S ANNUAL REPORT
The indenture trustee will, if required by law, 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
Holders of not less than 10% of the outstanding principal balance of any
series of notes 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
The indenture will be discharged with respect to the notes upon (a) the
delivery to the indenture trustee for cancellation of all the notes or, with
specific limitations, deposit with the indenture trustee of funds sufficient for
the payment in full of all the notes, (b) payment of all other amounts payable
by the issuer under the indenture and (c) delivery by issuer to indenture
trustee of certain certificates and an opinion of counsel confirming compliance
with the indenture conditions for discharge.
THE INDENTURE TRUSTEE
The indenture trustee may resign at any time. Noteholders holding more
than 66 2/3% of the aggregate outstanding principal balance of all series may
remove the indenture trustee and may appoint a successor indenture trustee. In
addition, the issuer will remove the indenture trustee if (a) it ceases to be
eligible to continue as an indenture trustee under the indenture, (b) if the
indenture trustee becomes insolvent, (c) a receiver of the indenture trustee or
its properties shall be appointed, or any public officer takes charge of the
indenture trustee or its property or its affairs for the purpose of
rehabilitation, conservation or liquidation, or (d) otherwise becomes legally
unable to act as indenture trustee. If the indenture trustee resigns or is
removed, the issuer will then be obligated to appoint a successor indenture
trustee. If a successor indenture trustee does not assume the duties of
indenture trustee within 60 days after the retiring indenture trustee resigns or
is removed, the retiring indenture trustee, the issuer or noteholders
representing more than 25% of the aggregate outstanding principal balance of all
series may petition a court of competent jurisdiction to appoint a successor
indenture trustee. In addition, if the indenture trustee ceases to be eligible
to continue as indenture trustee, any noteholder may petition a court of
competent jurisdiction for the removal of the indenture trustee and the
appointment of a successor indenture trustee.
The indenture trustee, any paying agent or transfer agent and registrar
and any other agent of the issuer, each in its individual or any other capacity,
may become the owner or pledgee of notes and may otherwise deal with the issuer
including arranging for purchases of investments, with the same rights it would
have if it were not the indenture trustee, paying agent, transfer agent and
registrar or such other agent.
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If an event of default occurs under the indenture, the indenture trustee
will be required to use the same degree of care and skill in the exercise of its
rights and powers under the indenture as a prudent person would use under the
circumstances in the conduct of such person's own affairs.
If an event of default occurs under the indenture, under the Trust
Indenture Act of 1939, the indenture trustee may be deemed to have a conflict of
interest and be required to resign as indenture trustee for one or more classes
of each series 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 class or series of notes will not become effective until the
successor indenture trustee accepts its appointment.
The indenture trustee is not responsible for the accuracy, validity or
adequacy of any of the information contained in this prospectus.
MATTERS REGARDING THE ADMINISTRATOR
The administrator will, to the extent provided in the administration
agreement, provide the notices and perform on behalf of the issuer other
administrative obligations required by the indenture.
POOLING AND SERVICING AGREEMENT
We have summarized the terms of the pooling and servicing agreement that
are material to noteholders in this prospectus. The summary is not complete and
is qualified in its entirety by reference to the pooling and servicing
agreement.
NEW ISSUANCES OF INVESTOR CERTIFICATES
The pooling and servicing agreement provides that, in any one or more
series supplements to the pooling and servicing agreement, we may direct the
trustee for First Bankcard Master Credit Card Trust to issue one or more new
series of investor certificates and may define all principal terms of those
series. Until the First Bankcard Master Credit Card Trust has been terminated,
each issuance of notes will also be treated as an issuance of a new series of
investor certificates. A series supplement may only modify or amend the terms of
the pooling and servicing agreement as applied to the new series. There is no
limit to the number of new issuances we may cause under the pooling and
servicing agreement.
No new series of investor certificates may be issued unless we satisfy
various conditions, including that:
(1) each rating agency confirms that the issuance of the new series
will not impair its rating of any outstanding series or class of
investor certificates;
(2) we deliver to the trustee an officer's certificate stating that (a)
on that exchange date, after giving effect to that exchange, we
would not be required to add additional accounts under the pooling
and servicing agreement, and (b) after giving effect to that
exchange, our transferor interest would at least be equal to
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the Minimum Transferor's Interest and the Aggregate Principal Receivables would
at least be equal to the Minimum Aggregate Principal Receivables.
(3) we deliver to the trustee an opinion of counsel that states for
federal income tax purposes:
(a) that the newly issued series of investor certificates will be
treated as debt or as a partnership interest, in which case the
opinion will state that the trust will not be taxable as a
corporation or a publicly traded partnership,
(b) that the newly issued series of investor certificates will not
adversely affect the federal income tax characterization of the
holder of any outstanding series of investor certificates or
any beneficial owner of any book-entry investor certificates,
and
(4) we deliver to the trustee, each as required and set forth in the
pooling and servicing agreement, a series supplement, any
enhancement and any enhancement agreement, and the existing
exchangeable transferor certificate or applicable investor
certificates, as the case may be.
AMENDMENTS
The pooling and servicing agreement and any series supplement to the
pooling and servicing agreement may be amended by us, the servicer and the
trustee for First Bankcard Master Credit Card Trust, without the consent of
certificateholders of any series, if the following conditions are satisfied:
- we, the servicer and the trustee, have received written notification
from each rating agency confirming that the amendment will not result
in the reduction or withdrawal of its rating of any outstanding series
or class of investor certificates; and
- we deliver an opinion addressed to the trustee stating that the related
amendment will not adversely affect in any material respect the
interests of any holder of investor certificates.
The amendments that we may make without the consent of the
certificateholders of any series or the credit enhancement providers for any
series may include the addition or removal of receivables in the trust portfolio
and the issuance of new investor certificates, in each case in accordance with
the pooling and servicing agreement.
The pooling and servicing agreement may also be amended by us, the
servicer and the trustee for First Bankcard Master Credit Card Trust, with the
consent of certificateholders representing not less than 66 2/3% of the unpaid
invested amount of each outstanding series of investor certificates adversely
affected by the amendment. Even with the consent of the investor
certificateholders described in the preceding sentence, no amendment may occur
if it:
(1) reduces the amount of, or delays the timing of, any distributions
to be made to certificateholders of any series or the amount
available under any credit enhancement without the consent of each
certificateholder of the affected series;
(2) changes the definition of or manner of calculating the invested
amounts, investor percentages or allocation of defaulted
receivables for any series of investor certificates without the
consent of each certificateholder of the affected series; or
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(3) reduces the percentage of undivided interests the holders of which
are required to consent to any amendment, without the consent of
each certificateholder of all series of investor certificates
adversely affected.
CREDIT ENHANCEMENT
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 setting
the collateral amount for that series at an amount greater than the initial
principal amount of the notes in that series, 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. Any credit enhancement that constitutes a
guarantee of the applicable notes will be separately registered under the
Securities Act unless exempt from registration under the Securities Act.
In the prospectus supplement for each series, we will describe the amount
and the material terms of the related credit enhancement. Often, 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.
The accompanying prospectus supplement may also set forth additional
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.
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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 one or more pay out events with
respect to that series. In this event, the credit enhancement provider will have
an interest in the cash flows in respect of the receivables to the extent
described in that prospectus supplement.
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 that a specified type of
loss is 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
some losses in addition to or in lieu of other credit enhancement. The issuer of
the letter of credit, 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 the issuer of a letter of credit under its
letter of credit will generally be an amount equal to a percentage specified in
the accompanying prospectus supplement of the initial collateral 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.
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CASH COLLATERAL GUARANTY, CASH COLLATERAL ACCOUNT OR EXCESS COLLATERAL
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 following:
- a cash collateral guaranty, secured by the deposit of cash or permitted
investments in a cash collateral account, reserved for the
beneficiaries of the cash collateral guaranty;
- a cash collateral account; or
- a collateral amount in excess of the initial principal amount of the
notes for that series.
We refer to the undivided interest in the trust as a collateral interest.
The amounts on deposit in the cash collateral account or available under the
cash collateral guaranty may be increased under the circumstances described in
the accompanying prospectus supplement which may include:
- we may elect to apply collections of principal receivables allocable to
the excess collateral to decrease the excess collateral;
- collections of principal receivables allocable to the excess collateral
may be required to be deposited into the cash collateral account; and
- excess collections of finance charge receivables may be required to be
deposited into the cash collateral account.
The amount available from the cash collateral guaranty, the cash
collateral account and any excess collateral will be limited to 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. This insurance will guarantee, with respect to
one or more classes of the related series, distributions of interest or
principal in the manner and amount specified in the accompanying prospectus
supplement.
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.
If an insurance policy or a surety bond is provided for any series or
class, the provider of the insurance policy or surety bond will be permitted to
exercise the voting rights of the noteholders of the applicable series or class
to the extent described in the prospectus supplement for that series. For
example, if specified in the related prospectus supplement, the
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provider of the insurance policy or surety bond, rather than the noteholders of
that series, may have the sole right to:
- consent to amendments to the indenture, the pooling and servicing
agreement, the transfer and servicing agreement or any other document
applicable to that series;
- if an event of default occurs, accelerate the notes of that series or
direct the trustee to exercise any remedy available to the noteholders;
or
- waive any event of default for that series.
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 an initial cash
deposit and/or by the periodic deposit of all or a portion of available excess
cash flow from the trust assets into a 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 a 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 a portion of periodic distributions of cash flow from the trust
assets 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
RECEIVABLES PURCHASE AGREEMENT
The following is a summary of the material terms of the receivables
purchase agreement entered into by the bank and us. The summary is qualified in
its entirety by reference to the receivables purchase agreement. The receivables
purchase agreement is filed as an exhibit to the registration statement of which
this prospectus is a part.
SALE OF RECEIVABLES
The bank previously transferred some of the receivables in the accounts
currently designated to the trust directly to the trust under the pooling and
servicing agreement. Under the receivables purchase agreement, the bank sold or
contributed the remaining receivables in the accounts designated to the trust to
us and, in the future, may sell or contribute to us receivables in additional
accounts as of the related addition dates.
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REPRESENTATIONS AND WARRANTIES
In the receivables purchase agreement, the bank represents and warrants
to us as of the effective date of the receivables purchase agreement and the
date each additional account is designated for inclusion to the trust that,
among other things:
- each account is an Eligible Account as of the date it is designated to
the trust and each receivable is or will be an Eligible Receivable on
the date it is transferred to us;
- the account schedule and information contained therein is accurate and
complete in all material respects as of the date specified;
- each receivable has been conveyed to us free and clear of any liens,
other than liens permitted by the receivables purchase agreement, and
in compliance in all material respects with all applicable laws;
- it owns all right, title and interest in each such receivable and has
the right to transfer it to us; and
- all required governmental approvals in connection with the transfer of
each such receivable to us have been obtained.
In the event of a breach of any of these representations and warranties
which results in the requirement that we accept retransfer of an ineligible
receivable under the pooling and servicing agreement or the transfer and
servicing agreement, we can require the bank to repurchase that ineligible
receivable on the date of the retransfer. The purchase price for the ineligible
receivables will be the purchase price paid or, for receivables which were
transferred directly to the trust, the outstanding principal amount of those
receivables.
In the receivables purchase agreement, the bank will also make
representations and warranties to us as to:
- the bank's valid existence and good standing as a national banking
organization and its ability to perform its obligations under each
transaction document;
- the bank's qualification to do business and good standing as a foreign
entity and its possession of necessary licenses and approvals in each
jurisdiction necessary to conduct its business;
- the due authorization, execution, delivery and performance of the
receivables purchase agreement;
- the enforceability of the receivables purchase agreement against the
bank as a legal, valid and binding obligation; and
- the effectiveness of the receivables purchase agreement governing the
bank's transfer of the receivables to us as a valid sale, transfer and
assignment of its ownership interest in the receivables, other than
liens permitted by the receivables purchase agreement.
If, after any applicable cure period, the breach of any of the representations
or warranties described in this paragraph results in our obligation under the
pooling and servicing agreement or the transfer and servicing agreement to
accept retransfer of the receivables of a
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series, we can require the bank to repurchase the receivables retransferred to
us, for an amount of cash equal to the outstanding principal balance of such
series as of the last day of the monthly period preceding the reassignment, less
previously allocated or paid principal to such series, plus interest accrued but
unpaid.
COVENANTS
In the receivables purchase agreement, the bank covenants that it will
comply with and perform its obligations under the credit card agreements
relating to the accounts and under its policies and procedures and all
applicable rules and regulations of VISA USA, Inc. and MasterCard International
Incorporated relating to the accounts unless the failure to do so would not have
a material adverse effect on the rights and interests of the issuer or the
trustee or the rights of the securityholders. The bank may change the terms and
provisions of the credit card agreements or policies and procedures in any
respect, including the reduction of the required minimum monthly payment, the
calculation of the amount, or the timing of, charge-offs and finance charges and
other fees, but only if such change:
(a) would not, in our or the bank's reasonable belief, as applicable,
cause a pay out event to occur, and
(b) is made to a substantial portion of a comparable segment of the
bank's revolving credit card accounts which have characteristics
the same as, or substantially similar to, the accounts subject to
such change.
However, clause (b) shall be deemed to be satisfied at any time the transferor
interest exceeds 14% of principal receivables in the accounts designated to the
trust, and with respect to the bank's debt cancellation and debt deferral
programs, clause (b) shall be deemed to be satisfied at any time the opportunity
to make the change is made available to a substantial portion of a comparable
segment of the bank's revolving credit card accounts which have characteristics
the same as, or substantially similar to, the accounts designated to the trust
to which such opportunity is made available.
The bank also covenants that it will not reduce the finance charges and
other fees on the accounts, if as a result of the reduction, its reasonable
expectation of the portfolio yield for any series as of the time of the
reduction would be less than the base rate for that series, except as required
by law or as the bank deems necessary to maintain its credit card business based
on a good faith assessment of the nature of the competition in the credit card
business.
AMENDMENTS
The receivables purchase agreement may be amended without the consent of
the noteholders. However, no amendment may adversely affect in any material
respect the interests of any securityholders. The parties to the receivables
purchase agreement will not be permitted to amend the purchase price for
receivables or change any obligation of us or the bank under the receivables
purchase agreement unless each rating agency confirms that the amendment will
not impair its rating of any outstanding series or class of securities.
TERMINATION
The receivables purchase agreement will terminate immediately after both
First Bankcard Master Credit Card Trust and the issuer terminate. In addition,
if a receiver or
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conservator is appointed for the bank or we become a debtor in a bankruptcy case
or other specified liquidation, bankruptcy, insolvency or similar events occur
or the bank becomes unable for any reason to transfer receivables to us in
accordance with the receivables purchase agreement, we will immediately cease to
purchase receivables under the receivables purchase agreement.
The bank under the receivables purchase agreement will indemnify First
Bankcard Master Credit Card Trust, the issuer, the owner trustee, the trustee
for First Bankcard Master Credit Card Trust and the indenture trustee, for any
losses suffered as a result of actions or omissions or alleged acts or omissions
arising out of or based upon the arrangement created by the receivables purchase
agreement or any supplement or any other transaction document, including any
judgment, award, settlement, reasonable attorney's fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, except in each case, for losses resulting from
fraud, negligence, or willful misconduct by the indemnified person. The bank
will not indemnify the issuer or First Bankcard Master Credit Card Trust or any
other person for:
- any liabilities, costs or expenses arising from any action taken by the
trustee for First Bankcard Master Credit Card Trust or the indenture
trustee at the direction of securityholders;
- any losses, claims or damages incurred by the indemnified party, as
owners of secured notes, for example, as a result of the performance of
the receivables, market fluctuations, a shortfall or failure to make
payment under any enhancement or other similar market or investment
risks associated with ownership of secured notes; and
- for any liabilities, costs or expenses arising under any tax law,
including any federal, state, local or foreign income or franchise
taxes or any other tax imposed on or measured by income or any related
penalties or interest, required to be paid by the trust, the issuer or
the securityholders.
No indemnity payments by the bank will be paid from the assets of the
issuer or First Bankcard Master Credit Card Trust. The bank will be entitled to
participate in, and assume the defense of and negotiate the settlement of, any
action or proceeding that involves an indemnified party. If the bank assumes the
defense of any action or proceeding involving an indemnified party, the bank
under most circumstances will not be liable to the indemnified party for any
legal fees or disbursements subsequently incurred by such party in connection
with the defense thereof.
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 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.
We will request a rating of the notes offered by this prospectus and the
accompanying prospectus supplement from at least two rating agencies. Rating
agencies other than those requested could assign a rating to the notes and, if
so, that rating could be lower than any rating assigned by a rating agency
chosen by us. Except as otherwise expressly stated, any reference in this
prospectus or the accompanying prospectus supplement to a rating agency refers
only to a rating agency selected by us to rate the securities issued by the
issuer or First Bankcard Master Credit Card Trust.
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
In the receivables purchase agreement, the bank will represent and
warrant that its transfer of receivables constitutes a valid transfer and
assignment of all of its right, title and interest in and to the receivables. In
the pooling and servicing agreement and the transfer and servicing agreement, we
will represent and warrant that the transfer of receivables constitutes either
(1) a valid sale, transfer and assignment of all of our or the bank's, as the
case may be, right, title and interest in and to the receivables, except for:
- liens permitted thereunder,
- the transferor interest, and
- the servicer's right, if any, to interest accruing on, and investment
earnings, if any, as discussed above in "Description of the
Notes--Trust Accounts".
or (2) creates in favor of the trustee (x) a first-priority perfected security
interest in our or the bank's, as the case may be, 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, except for liens
permitted thereunder, and (y) a first-priority perfected security interest in
our rights in the receivables arising in accounts already designated for the
trust portfolio on and after their creation, except for liens permitted
thereunder, in each case until termination of the trust. For a discussion of the
issuer's rights arising from these representations and warranties not being
satisfied, see "Description of the Notes--Representations and Warranties" in
this prospectus.
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We will represent in the pooling and servicing agreement and the transfer
and servicing agreement and the bank will represent in the receivables purchase
agreement that the receivables are "accounts" for purposes of the UCC. 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. The bank, as servicer, will
file appropriate UCC financing statements to perfect the respective transferee's
security interest in the receivables.
There are limited circumstances in which prior or subsequent transferees
of receivables coming into existence after a series closing date could have an
interest in those receivables with priority over the trust's interest. Under the
receivables purchase agreement, however, the bank will represent and warrant, as
to itself and the receivables transferred by it, that it has transferred the
receivables to us free and clear of the lien of any third party other than the
trust and the indenture trustee and other than as permitted in the receivables
purchase agreement. In addition, except as provided in the receivables purchase
agreement, 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 us, the trust, or the indenture trustee. Similarly, under the
pooling and servicing agreement and the transfer and servicing agreement, we
will represent and warrant that the receivables have been transferred to the
trust free and clear of the lien of any third party other than the indenture
trustee, specified tax liens and liens solely on our transferor interest. In
addition, we will covenant that we will not sell, pledge, assign, transfer, or
grant any lien on any receivable or any interest in any receivable other than to
the trust, except as set forth in the preceding sentence. Nevertheless, a tax,
governmental or other nonconsensual lien on our property or the bank's property
arising prior to the time a receivable comes into existence may have priority
over the trust's interest in that receivable. Furthermore, if the FDIC were
appointed as the bank's receiver or conservator, administrative expenses of the
receiver or conservator may have priority over the trust's interest in the
receivables.
If the servicer has satisfied the conditions discussed in "Description of
the Notes--Application of Collections" in this prospectus, the servicer will be
permitted to make deposits of collections on a monthly or other periodic basis.
In that event, 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 of the servicer or the lapse of a twenty-day period
after receipt by the servicer of collections that have been commingled with
other funds, the trust may not have a first-priority perfected security interest
in those collections. In that 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.
CONSERVATORSHIP AND RECEIVERSHIP
The bank is chartered as a national banking association and is regulated
and supervised principally by the Office of the Comptroller of the Currency,
which is required to appoint the FDIC as conservator or receiver for the bank if
specified 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.
In its role as conservator or receiver, the FDIC would have broad powers
to repudiate contracts to which the bank was a party if the FDIC determined that
the contracts were
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burdensome and that repudiation would promote the orderly administration of the
bank's affairs.
Further, if the FDIC were acting as the bank's conservator or receiver,
the FDIC may have the power to extend its repudiation and avoidance powers to us
because we are a wholly-owned subsidiary of the bank.
The FDIC has adopted a rule stating that, if certain conditions are met,
the FDIC shall not use its repudiation power to reclaim, recover or
recharacterize as property of an FDIC-insured bank any financial assets
transferred by that bank in connection with a securitization transaction.
Although the FDIC has the power to repeal or amend its own rules, the
securitization rule states that any repeal or amendment of that rule will not
apply to any transfers of financial assets made in connection with a
securitization that was in effect before the repeal or modification.
We have structured the issuance of the notes with the intention that the
transfers of receivables by the bank would have the benefit of this rule.
Nevertheless, if the FDIC were to assert that the transfers do not have the
benefit of the rule or violate the banking laws, or were to require the
indenture trustee or any of the other transaction parties 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 any of those
parties to enforce the applicable agreement, delays in payments on outstanding
series of notes could occur. Furthermore, if the FDIC's assertions were
successful, possible reductions in the amount of those payments could occur.
If bankruptcy, insolvency or similar proceedings occur with respect to
the bank or us, we will promptly notify the indenture trustee and a pay out
event will occur with respect to each series. Under the pooling and servicing
agreement and the transfer and servicing agreement, newly created principal
receivables, and related interest receivables and interchange, will not be
transferred to the trust on and after any of these bankruptcy or insolvency
related events. In addition, regardless of the terms of the transaction
documents, the FDIC as conservator or receiver of the bank may have the power to
prevent the commencement of a rapid 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 and the trust,
moreover, the FDIC as conservator or receiver of 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.
In the event of conservatorship or receivership of the servicer, the
conservator or receiver may have the power to prevent either the indenture
trustee or the noteholders from appointing a successor servicer or to direct the
servicer to stop servicing the receivables. See "Description of the
Notes--Servicer Default" in this prospectus.
In the event of conservatorship or receivership of the bank, the
conservator or receiver may have the power to prevent the issuer from replacing
the bank as administrator for the trust or to direct the bank to stop providing
administrative services to the issuer.
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Our organizational documents and structure have been designed so that the
substantive consolidation of our assets and liabilities with those of the bank
is unlikely. We are a separate, limited purpose limited liability company, and
our operating agreement contains limitations on the nature of our business. In
addition, the indenture trustee will covenant in the indenture and the trustee
for First Bankcard Master Credit Card Trust has covenanted in the pooling and
servicing agreement that it will not at any time institute against us any
bankruptcy, insolvency or similar proceedings under the Bankruptcy Code or
similar laws. Nevertheless, if we were to become a debtor in a bankruptcy case
and if a bankruptcy trustee or one of our creditors or we as
debtor-in-possession were to take the position that the transfer of the
receivables by us to the trust should be characterized as a pledge of those
receivables then delays in payment on the notes and possible reductions in the
amount of those payments could result.
Because we are a wholly-owned subsidiary of the bank, certain banking
laws and regulations may apply to us, and if we were found to have violated any
of these laws or regulations, payments to you could be delayed or reduced. In
addition, if the bank entered conservatorship or receivership, the FDIC could
seek to exercise control over the receivables or our other assets on an interim
or a permanent basis. Although steps have been taken to minimize this risk, the
FDIC could argue that:
- our assets, including the receivables, constitute assets of the bank
available for liquidation and distribution by a conservator or receiver
for the bank;
- we and our assets, including the receivables, should be substantively
consolidated with the bank and its assets; or
- the FDIC's control over the receivables is necessary for the bank to
reorganize or to protect the public interest.
If these or similar arguments were made, whether successfully or not, payments
to you could be delayed or reduced. Furthermore, regardless of any decision made
by the FDIC or ruling made by a court, the fact that the bank has entered
conservatorship or receivership could have an adverse effect on the liquidity
and value of the notes.
Application of federal and state insolvency and debtor relief laws would
affect the interests of the noteholders if those laws result in any receivables
being charged-off as uncollectable. See "Description of the Notes--Defaulted
Receivables; Dilution; Investor Charge-Offs" 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 card accounts established or maintained 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 various
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
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may enact new laws and amendments to existing laws to regulate further the
consumer revolving credit industry. The trust may be liable for violations of
consumer protection laws that apply to the receivables, either as assignee from
us 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 those
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 consumer protection laws, if the
noncompliance has a material adverse effect on the noteholders' interest
therein, will be reassigned to us. The servicer has also agreed in the pooling
and servicing agreement and the transfer and servicing agreement to indemnify
the trust, among other things, for any liability arising from those types of
violations by reason of its acts or omissions as servicer. 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.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax consequences of the purchase, ownership and disposition of 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 Kutak Rock LLP as special tax counsel to the
issuer. The summary is based on the Internal Revenue Code of 1986, as amended as
of the date hereof, and 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 Internal Revenue 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, for example:
- banks and thrifts,
- insurance companies,
- regulated investment companies,
- dealers in securities,
- holders that will hold the offered notes as a position in a "straddle"
for tax purposes or as a part of a "synthetic security," "conversion
transaction" or other integrated investment comprised of the offered
notes, and one or more other investments,
- trusts and estates, and
- pass-through entities, the equity holders of which are any of the
foregoing.
Further, this discussion does not address alternative minimum tax
consequences or any tax consequences to holders of interests in a noteholder.
Special tax counsel to the issuer 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 to the issuer, however, is not binding on the
Internal Revenue Service or the courts, and no ruling on any of the issues
discussed
75
below will be sought from the Internal Revenue Service. In addition, no
transaction closely comparable to the purchase of the notes has been the subject
of any Treasury Regulation, revenue ruling or judicial decision. Accordingly, we
suggest that persons considering the purchase of notes 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 CLASSIFICATION OF THE ISSUER AND THE NOTES
Treatment of the Issuer as an Entity, Not Subject to Tax. Special tax
counsel to the issuer 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, neither First Bankcard Master
Credit Card Trust nor the issuer will be treated as an association or as a
publicly traded partnership taxable as a corporation for federal income tax
purposes. As a result, special tax counsel to the issuer is of the opinion that
the issuer will not be subject to federal income tax. However, as discussed
above, this opinion is not binding on the Internal Revenue Service and no
assurance can be given that this classification will prevail.
The precise tax classification of the issuer for federal income tax
purposes is not certain. It might be viewed as merely holding assets on our
behalf as collateral for notes issued by us. On the other hand, the issuer could
be viewed as a separate entity for tax purposes issuing its own notes. This
distinction may have a significant tax effect on particular noteholders as
stated below under "--Possible Alternative Classifications."
Treatment of the Notes as Debt. Special tax counsel to the issuer 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. However, opinions of counsel are not binding
on the Internal Revenue Service, and there can be no assurance that the Internal
Revenue Service could not successfully challenge this conclusion. The issuer
agrees by entering into the Indenture, and the noteholders agree by their
purchase and holding of notes, to treat the notes as debt for United States
federal, state and local income or franchise tax purposes. However, because
different criteria are used to determine the non-tax accounting characterization
of the transactions contemplated by the pooling and servicing agreement, we and
the bank expect to treat such transactions, for regulatory and financial
accounting purposes, as a sale of an ownership interest in the receivables and
not as a debt obligation.
In general, whether for United States federal income tax purposes a
transaction constitutes a sale of property or a loan, the repayment of which is
secured by the property, is a question of fact, the resolution of which is based
upon the economic substance of the transaction rather than its form or the
manner in which it is labeled. While the Internal Revenue Service and the courts
have set forth several factors to be taken into account in determining whether
the substance of a transaction is a sale of property or a secured indebtedness
for United States federal income tax purposes, the primary factor in making this
determination is whether the transferee has assumed the risk of loss or other
economic burdens relating to the property and has obtained the benefits of
ownership thereof. Special
76
tax counsel may analyze and rely on several factors in reaching its opinion that
the weight of the benefits and burdens of ownership of the receivables has not
been transferred to the noteholders.
In some instances courts have held that a taxpayer is bound by a
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. It is expected that special tax
counsel may advise that the rationale of those cases should not apply to the
transaction evidenced by the notes because the form of the transaction, as
reflected in the operative provisions of the documents, either is not
inconsistent with the characterization of the notes as debt for United States
federal income tax purposes or otherwise makes the rationale of those cases
inapplicable to this situation.
Possible Alternative Classifications. If, contrary to the opinion of
special tax counsel to the issuer, the Internal Revenue Service successfully
asserted that a series or class of notes did not represent debt for United
States federal income tax purposes, it could find that the arrangement created
by the pooling and servicing agreement and the related prospectus supplement
constitutes a partnership that could be treated as a "publicly traded
partnership" taxable as a corporation. We currently do not intend to comply with
the United States federal income tax reporting requirements that would apply if
any series or class of notes were treated as interests in a partnership or
corporation.
If the pooling and servicing agreement is treated as creating a
partnership between us and the noteholders, the partnership itself would not be
subject to United States federal income tax (unless it were to be characterized
as a publicly traded partnership taxable as a corporation); rather, the partners
of such partnership, including the noteholders, would be taxed individually on
their respective distributive shares of the partnership's income, gain, loss,
deductions and credits.
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
limitations on their ability to deduct their share of partnership expenses. The
result of the differences in tax treatment noted above might cause an individual
to be taxed on a greater amount of income than the stated rate on the notes.
If it were determined that a transaction created an entity classified as
a publicly traded partnership taxable as a corporation, the issuer would be
subject to United States federal income tax at corporate income tax rates on the
income it derives from the receivables and the issuer would not be able to
reduce its taxable income by deductions for interest expense on notes
recharacterized as equity. Such classification 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 issuer is also
able to issue other securities which may be treated as debt or as equity
interests in the issuer. The issuance of additional securities requires the
delivery of a new opinion of counsel generally to the effect that the new
issuance will not cause the issuer to become taxable as a separate entity for
federal income tax purposes; however, the new opinion would not bind the
Internal Revenue Service, and the issuer could become a taxable entity as a
result of the new issuance, potentially diminishing cash available to make
payments on the notes. We suggest that
77
prospective investors consult with their own tax advisors with regard to the
consequences of each of the possible alternative characterizations to them in
their particular circumstances. The following discussion assumes that the
classification 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 a noteholder's usual method of tax accounting. Interest received
on the notes may also constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense. It is not anticipated that any series or class of notes will be issued
with original issue discount within the meaning of Section 1273 of the Code. If
a class of notes is issued with original issue discount, the provisions of
Sections 1271 through 1273 and 1275 of the Code will apply to those notes. Under
those provisions, a holder of a note issued with original issue
discount--including a cash basis holder--generally would be required to include
the original issue discount on a note in income for federal income tax purposes
on a constant yield basis, resulting in the inclusion of original issue discount
in income in advance of the receipt of cash attributable to that income. In
general, a note will be treated as having original issue discount to the extent
that its "stated redemption price" exceeds its "issue price," if that 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 Internal Revenue Code, special provisions apply to debt
instruments on which payments may be accelerated due to prepayments of other
obligations securing those debt instruments. However, no regulations have been
issued interpreting those provisions, and the manner in which those provisions
would apply to the notes is unclear, but the application of Section 1272(a)(6)
could affect the rate of accrual of original issue discount and could have other
consequences to holders of the notes. Additionally, the Internal Revenue Service
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 the
interest payable on the note should be included in the note's stated redemption
price at maturity. If sustained, that treatment should not significantly affect
tax liabilities for most holders of the notes, but we suggest that prospective
noteholders consult their own tax advisors concerning the impact to them in
their particular circumstances. The issuer intends to take the position that
interest on the notes constitutes "qualified stated interest" and that the above
consequences do not apply.
Market Discount. Noteholders should be aware that the resale of offered
notes may be affected by the market discount provisions of the Code. The market
discount rules generally provide that, subject to a de minimis exception, if a
holder of a note acquires it at a market discount (i.e., at a price below its
stated redemption price at maturity or its "adjusted issue price" if it was
issued with original issue discount) and thereafter recognizes gain upon a
disposition of the note, the lesser of such gain or the portion of the market
discount that accrued while the note was held by such holder will be treated as
ordinary interest income realized at the time of the disposition. A taxpayer may
elect to include market discount currently in gross income in taxable years to
which it is attributable, computed using either a ratable accrual method or a
yield to maturity method. The market discount rules may also
78
cause the deferral of interest deductions on debt incurred to acquire market
discount obligations.
Market Premium. A subsequent holder who purchases a note at a premium
may elect to amortize and deduct this premium over the remaining term of the
note in accordance with rules set forth in Section 171 of the Code.
Disposition of the Notes. Upon the sale, exchange, retirement or other
taxable disposition of a note, the holder of the note generally will recognize
taxable gain or loss in an amount equal to the difference between (a) the amount
realized on the disposition, other than that part of the amount attributable to,
and taxable as, accrued interest and (b) the holder's adjusted tax basis in the
note. The holder's adjusted tax basis in the note generally will equal the cost
of the note to that holder, increased by any original issue discount or market
discount previously included in income by that holder with respect to the note,
and decreased by any deductions previously allowed for amortizable bond premium
and by the amount of any payments of principal or original issue discount
previously received by that holder with respect to its note. Subject to the
market discount rules discussed above, any related gain or loss generally will
be capital gain or loss, 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. The maximum ordinary
income rate for individuals, estates, and trusts exceeds the maximum long-term
capital gains rate for such taxpayers. In addition, any capital losses realized
generally may be used by a corporate taxpayer only to offset capital gains and
by an individual taxpayer only to the extent of capital gains plus $3,000 of
other income.
Foreign Holders. The following information describes the United States
federal income tax treatment if the notes are treated as debt to an investor
that is a nonresident alien individual or a foreign corporation (collectively, a
"foreign person"). Some foreign persons, including certain residents of certain
United States possessions or territories, may be subject to special rules not
discussed in this summary.
Interest, including original issue discount, if any, paid to a foreign
person on a note will not be subject to withholding of United States federal
income tax, provided that:
- the interest payments are effectively connected with the conduct of a
trade or business within the United States by the foreign person and
such foreign person submits a properly executed Internal Revenue
Service Form W-8ECI; or
- the foreign person is not, for United States federal income tax
purposes, actually or constructively a "10 percent shareholder" of us
or the issuer, a "controlled foreign corporation" with respect to which
we or the issuer is a "related person" within the meaning of the
Internal Revenue Code, or a bank extending credit under a loan
agreement entered into in the ordinary course of its trade or business,
and, under current Treasury Regulations, either (1) the beneficial owner
represents that it is a foreign person and provides its name and address to us
or our paying agent on a properly executed Internal Revenue Service Form W-8BEN,
or a suitable substitute form, signed under penalties of perjury; or (2) if a
note is held through a securities clearing organization or other financial
institution, as is expected to be the case unless definitive notes are issued,
the organization or financial institution certifies to us or our paying agent
under penalties of perjury that it has received Internal Revenue Service Form
W-8BEN or a suitable substitute
79
form from the foreign person or from another qualifying financial institution
intermediary, and provides a copy to us or our paying agent.
If these exceptions do not apply to a foreign person, interest, including
original issue discount, if any, paid to such foreign person generally will be
subject to withholding of United States federal income tax at a 30% rate. Such
foreign person may, however, be able to claim the benefit of a reduced
withholding tax rate under an applicable income tax treaty. The required
information for claiming treaty benefits is generally submitted, under current
Treasury Regulations, on Internal Revenue Service Form W-8BEN. Special rules
apply to partnerships, estates and trusts, and in certain circumstances
certifications as to foreign status and other matters may be required to be
provided by partners and beneficiaries thereof. Recently issued final Treasury
Regulations revised some of the procedures whereby a foreign person may
establish an exemption from withholding generally beginning January 1, 2001. We
suggest that foreign persons consult their tax advisors concerning the impact to
them, if any, of those 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 (1) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (2) in the case of an individual foreign
person, the individual is not present in the United States for 183 days or more
in the taxable year in which the sale, redemption, retirement or other taxable
disposition occurs.
If the interest or gain on the note is effectively connected with the
conduct of a trade or business within the United States, then although the
foreign person will be exempt from the withholding of tax previously discussed
if an appropriate statement is provided, such foreign person generally will be
subject to United States federal income tax on the interest, including original
issue discount, if any, or gain at applicable graduated federal income tax
rates. In addition, if a foreign person is a foreign corporation, such foreign
corporation may be subject to a branch profits tax equal to 30% of your
"effectively connected earnings and profits" within the meaning of the Code for
the taxable year, as adjusted for certain items, unless such foreign corporation
qualifies for a lower rate under an applicable tax treaty.
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 Internal Revenue
Code if a noteholder fails to furnish its taxpayer identification number, fails
to report interest, dividends or other "reportable payments" (as defined in the
Code) properly, or under certain circumstances fails to provide a certified
statement, under penalty of perjury, that it is not subject to backup
withholding. The backup withholding tax rate is 28% for payments made during the
years 2003 through 2010. For payments made after the taxable year of 2010, the
backup withholding rate will be increased to 31%. Any amounts deducted and
withheld would be allowed as a credit against the recipient's United States
federal income tax if appropriate proof is provided under rules established by
the Internal Revenue Service. Furthermore, penalties may be imposed by the
Internal Revenue Service on a recipient of payments that is required to supply
information but does not do so in the proper manner. Backup withholding will not
apply with respect to payments made to exempt recipients, such as corporations
and financial institutions. Holders of the notes are urged to consult their tax
advisors regarding
80
their qualification for exemption from backup withholding and the procedure for
obtaining an exemption. Information returns will be sent annually to the
Internal Revenue Service and to each noteholder setting forth the amount of
interest paid (and original issue discount accrued, if any) on the notes and the
amount of tax withheld thereon.
The United States federal income tax discussion set forth above 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. We suggest that prospective
purchasers 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. We suggest that each investor consult
its own tax advisor regarding state and local tax consequences.
ERISA CONSIDERATIONS
The prospectus supplement for each series of notes will specify whether
the notes offered by that prospectus supplement are eligible for purchase by
employee benefit plans.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, and Section 4975 of the Internal Revenue Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as an individual
retirement account, Keogh plan or other retirement arrangement (collectively,
"benefit plans"), from engaging in specified transactions with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Internal
Revenue Code with respect to these benefit plans. A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Internal Revenue Code for these persons.
Title I of ERISA also requires that fiduciaries of a benefit plan subject to
ERISA make investments that are prudent, diversified (unless clearly prudent not
to do so), and in accordance with governing plan documents.
Some transactions involving the purchase, holding or transfer of the
notes might be deemed to constitute or result in prohibited transactions under
ERISA and Section 4975 of the Internal Revenue Code if assets of the trust were
deemed to be assets of a benefit plan or "plan assets". In addition, certain
parties to the transaction documents may be deemed to be fiduciaries subject to
the fiduciary responsibility provisions of ERISA. Under a regulation issued by
the United States Department of Labor, the assets of the trust would be treated
as plan assets of a benefit plan for the purposes of ERISA and the Internal
Revenue Code only if the benefit plan acquires an "equity interest" in the trust
and none of the exceptions contained in the regulation is applicable. An equity
interest is defined under the regulation as an interest in an entity other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. Although there can be no assurances in
this regard, it appears that, at the time of their initial issuance, the notes
should be treated as debt without substantial equity features for purposes of
the regulation. The debt characterization of the notes could change after their
initial issuance if the trust incurs losses.
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This risk of recharacterization is enhanced for any classes of notes that are
subordinated to other classes of notes.
However, without regard to whether the notes are treated as an equity
interest for these purposes, the acquisition or holding of the notes by or on
behalf of benefit plans could be considered to give rise to a prohibited
transaction if we, the issuer, First Bankcard Master Credit Card Trust, the
owner trustee, the servicer, the administrator, the underwriters or the
indenture trustee, is or becomes a party in interest or a disqualified person
with respect to these benefit plans. In that case, various exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the benefit plan fiduciary making the decision to acquire a
note. Included among these exemptions are:
- Prohibited Transaction Class Exemption 96-23, regarding transactions
effected by "in-house asset managers";
- Prohibited Transaction Class Exemption 95-60, regarding transactions
effected by "insurance company general accounts";
- Prohibited Transaction Class Exemption 91-38, regarding investments by
bank collective investment funds;
- Prohibited Transaction Class Exemption 90-1, regarding investments by
insurance company pooled separate accounts; and
- Prohibited Transaction Class Exemption 84-14, regarding transactions
effected by "qualified professional asset managers."
By your acquisition of a note, you will be deemed to represent and
warrant that your purchase and holding of the note will not result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Internal
Revenue Code.
Employee benefit plans that are 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 ERISA requirements, but may be subject to state or other
federal law requirements which may impose restrictions similar to those under
ERISA and the Internal Revenue Code discussed above.
If you are a benefit plan fiduciary considering the purchase of any of
the notes, you should consult your tax and legal advisors regarding whether the
assets of the trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
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, we will cause
the notes to be sold by the issuer 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 issuer, the
principal amount of notes set forth in that underwriting agreement and in the
accompanying prospectus supplement.
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In the event of a default by any underwriter, the relevant underwriting
agreement may provide that, in specified circumstances, nondefaulting
underwriters may be permitted to increase the amount of notes purchased by them
or the underwriting agreement may be terminated.
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 dealers participating in the offering of
those notes. After the initial public offering, the public offering price and
those concessions may be changed.
Each underwriting agreement will provide that we and the bank will
indemnify the related underwriters against specified 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 issuer. 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
be filed under the name of First National Funding LLC and 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
83
future annual, monthly and special SEC reports and proxy materials filed by or
on behalf of us and First Bankcard Master Credit Card 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 care of: First National Bank of Omaha, 1620 Dodge Street, Omaha,
Nebraska 68102, Matthew Lawver, Telephone: (402) 341-0500.
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GLOSSARY OF TERMS FOR PROSPECTUS
"AGGREGATE PRINCIPAL RECEIVABLES" means, on any date the total amount of
principal receivables, other than discount option receivables and receivables in
defaulted accounts.
"ELIGIBLE ACCOUNT" means a credit card account owned by the bank, that as
of the cut-off date for each initial account, or as of the addition cut-off date
for an additional account:
(a) is payable in United States dollars,
(b) has not been classified on the bank's electronic records as
fraudulent, canceled, counterfeit, stolen or lost,
(c) was in existence, maintained or initially opened at least six
months prior to its selection for inclusion in the trust,
(d) the cardholder on which is not the U.S. Government or any state
or local governmental entity and who has provided, as his or
her most recent billing address, an address located in the
United States or its territories or possessions, except that up
to 1% (measured as of the end of the most recently ended
monthly period), or a greater number approved by the rating
agencies, of the Aggregate Principal Receivables may have
cardholders who have provided billing addresses outside of
these jurisdictions;
(e) which has either been originated by the bank or acquired by the
bank from third-party financial institutions,
(f) was originated in the ordinary course of business,
(g) the receivables of which the bank has not charged-off in its
customary and usual manner for charging-off receivables as of
the cut-off date or, with respect to an additional account, the
addition date,
(h) is not more than 30 days delinquent,
(i) is free and clear of all liens that are equal or prior to the
interest of the trust, and
(j) that is not subject to any agreement by the bank restricting
its ability to alter the terms of the account or granting to a
third party a right to acquire the account upon the occurrence
of specified events.
"ELIGIBLE RECEIVABLE" means a receivable:
(a) that has arisen under an Eligible Account;
(b) that was created in compliance in all material respects with
all requirements of law applicable to the person that
originated the receivable, and under a cardholder agreement
that complies in all material respects with all requirements of
law applicable to the originator of the receivable,
(c) for which all consents, licenses, approvals or authorizations
of, or registrations or declarations with, any governmental
authority required to be obtained, effected or given by the
person that originated the receivable in
85
connection with the creation of the receivable or the execution, delivery and
performance by such person of the related credit card agreement pursuant to
which such receivable was created have been duly obtained, effected or given and
are in full force and effect as of the date of the creation of
that receivable,
(d) as to which, upon the transfer of such receivables to the
trust, the trust will have good and marketable title free and
clear of all liens and security interests, other than any lien
for taxes if those taxes are not then due and payable or if we
are then contesting the validity of those taxes in good faith
by appropriate proceedings and we have set aside on our books
adequate reserves with respect to those taxes,
(e) that is the legal, valid and binding payment obligation of the
related cardholder, enforceable against that cardholder in
accordance with its terms, subject to bankruptcy and
equity-related exceptions,
(f) that constitutes an "account" under Article 9 of the Uniform
Commercial Code as in effect in the State of Nebraska,
(g) that, at the time of its transfer to the trust, has not been
waived or modified, except as permitted under the transaction
documents,
(h) that, at the time of its transfer to the trust, is not subject
to any right of rescission, set off, counterclaim or any other
defense of the cardholder, including usury, other than defenses
based on bankruptcy and equity-related exceptions and the
normal credit adjustment process,
(i) as to which, at the time of its transfer to the trust, we have
satisfied all obligations to be fulfilled at the time of its
transfer to the trust, and
(j) as to which, at the time of its transfer to the trust, we have
not taken any action which, or failed to take any action the
omission of which, would, at the time of its transfer to the
trust, impair the rights of the trust or of securityholders in
the receivable.
"MINIMUM AGGREGATE PRINCIPAL RECEIVABLES" means, as of any date of
determination, (1) so long as any investor certificate other than the collateral
certificate is outstanding, the greater of (a) an amount equal to the sum of the
initial investor interests for all outstanding series on such date, minus the
amount of any permanent reduction during any revolving period of any investor
interest of any series pursuant to the applicable supplement, minus the
aggregate amount of principal previously paid to investors during any
amortization period, or (b) the sum of the numerators used at such date to
calculate the allocation percentages with respect to principal receivables for
all series outstanding on such date (except for any series excluded pursuant to
the related indenture supplement), less the amount on deposit in the excess
funding account as of the date of determination and (2) when no investor
certificate other than the collateral certificate is outstanding, the amount
described in clause (1)(b).
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"MINIMUM TRANSFEROR'S INTEREST" will be
(a) Aggregate Principal Receivables
times
(b) 7%, or if less, the highest of the Required Retained Transferor
Percentages specified in the prospectus supplement for each
series.
"QUALIFIED INSTITUTION" means:
(a) any depository institution or trust company, which may include
the owner trustee, indenture trustee, the servicer or an
affiliate of the servicer:
(1) that is organized under the laws of the United States or
any state or the District of Columbia,
(2) that has either:
(A) a long-term unsecured debt rating of at least Aa3 by
Moody's or a certificate of deposit, short-term
deposits or commercial paper rating of at least P-1
by Moody's,
(B) a long-term unsecured debt rating of at least AA by
Standard & Poor's or a certificate of deposit,
short-term deposits or commercial paper rating of at
least A-l by Standard & Poor's, and
(3) that has deposit insurance provided by the Federal Deposit
Insurance Corporation administered Bank Insurance Fund or
Savings Association Insurance Fund, or
(b) any other depository institution that is acceptable to each
rating agency.
"REQUIRED RETAINED TRANSFEROR PERCENTAGE" means for any series, the
percentage specified in the prospectus supplement for that series, or if not
specified, 4%.
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered First
National Master Note Trust Asset Backed Notes (the "global securities") to be
issued in series from time to time 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, Clearstream 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 Clearstream and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice--i.e., seven calendar day settlement.
Secondary market trading between investors holding global securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream or Euroclear and DTC
participants holding notes will be effected on a delivery-against-payment basis
through the respective depositaries of Clearstream and Euroclear, in that
capacity, and as DTC participants.
Non-U.S. holders of global securities will be subject to U.S. withholding
taxes unless those holders meet certain requirements and deliver appropriate
U.S. tax documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All global securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the global securities
will be represented through financial institutions acting on their behalf as
direct and indirect participants in DTC. As a result, Clearstream and Euroclear
will hold positions on behalf of their participants through their respective
depositaries, which in turn will hold those positions in accounts as DTC
participants.
Investors electing to hold their global securities through DTC (other
than through accounts at Clearstream or Euroclear) will follow the settlement
practices applicable to U.S. corporate debt obligations. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their global securities through Clearstream or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds in registered form. Global securities will be credited to
the securities custody accounts on the settlement date against payment for value
on the settlement date.
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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
transferor's accounts are located to ensure that settlement can be made on the
desired value date.
Trading between DTC Participants. Secondary market trading between DTC
participants, other than the depositaries for Clearstream and Euroclear, will be
settled using the procedures applicable to U.S. corporate debt obligations in
same-day funds.
Trading between Clearstream customers and/or Euroclear
participants. Secondary market trading between Clearstream customers and/or
Euroclear participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Clearstream customer or Euroclear
purchaser. When global securities are to be transferred from the account of a
DTC participant--other than the depositaries for Clearstream and Euroclear--to
the account of a Clearstream customer or a Euroclear participant, the purchaser
must send instructions to Clearstream prior to 12:30 p.m. on the settlement
date. Clearstream or Euroclear, as the case may be, will instruct the respective
depositary to receive the global securities for payment. Payment will then be
made by the respective depositary, as the case may be, to the DTC participant's
account against delivery of the global securities. After settlement has been
completed, the global securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Clearstream customer's or Euroclear participant's account. Credit for the
global securities will appear the next day (European time) and 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 Clearstream or Euroclear cash debit will be valued instead
as of the actual settlement date.
Clearstream customers and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the global securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream customers or Euroclear participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Clearstream customers or Euroclear
participants purchasing global securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the global securities were
credited to their accounts. However, interest on the global securities would
accrue from the value date. Therefore, in many cases the investment income on
the global securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Clearstream customer's or Euroclear participant's particular cost of
funds.
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Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities to
the respective European depositary for the benefit of Clearstream customers or
Euroclear participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently from a trade between two DTC participants.
Trading between Clearstream or Euroclear seller and DTC purchaser. Due
to time zone differences in their favor, Clearstream customers and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through the respective European depositary, to another DTC participant. The
seller will send instructions to Clearstream before 12:30 p.m. on the settlement
date. In these cases, Clearstream or Euroclear will instruct the respective
European depositary, as appropriate, to credit the global securities to the DTC
participant's account against payment. The payment will then be reflected in the
account of the Clearstream customer or Euroclear participant the following day,
and receipt of the cash proceeds in the Clearstream customer's or Euroclear
participant's account would be back-valued to the value date, which would be the
preceding day, when settlement occurred in New York. If the Clearstream customer
or Euroclear participant has a line of credit with its respective clearing
system and elects to draw on such line of credit in anticipation of receipt of
the sale proceeds in its account, the back-valuation may substantially reduce or
offset any overdraft charges incurred over that one-day period. If settlement is
not completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Clearstream customer's or Euroclear participant's account
would instead be valued as of the actual settlement date.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of global securities holding securities through
Clearstream, 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 (1) 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 the beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (2) the beneficial owner provides the appropriate certification
for obtaining an exemption or reduced tax rate. See "Federal Income Tax
Consequences" in this prospectus.
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First National Master Note Trust
Issuer
First National Funding LLC
Transferor
First National Bank of Omaha
Servicer
Series 200_ - _
$
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, the Class B notes and 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 90 days after the date of this
prospectus supplement.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses in connection with the offering of the Securities
being registered herein are as follows:
<Table>
Registration Statement fee.................................. $80.90**
Legal fees and expenses..................................... $ *
------
Accounting fees and expenses................................ $ *
------
Rating agency fees.......................................... $ *
------
Trustee fees and expenses................................... $ *
------
Blue Sky expenses........................................... $ *
------
Printing and engraving...................................... $ *
------
Miscellaneous............................................... $ *
------
Total..................................................... $ *
------
</Table>
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* To be filed by amendment
** Actual
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nebraska Limited Liability Company Act (Section 21-2603(11)) gives
Nebraska limited liability companies broad powers to indemnify and hold harmless
any member or manager or former member or manager from and against any and all
claims and demands whatsoever. First National Funding LLC shall, to the fullest
extent permitted by the Act, indemnify and hold harmless, and advance expenses
to, each member, any manager and each officer and director of the managing
member against any losses, claims, damages or liabilities to which the
indemnified party may become subject in connection with any matter arising from,
related to, or in connection with, First National Funding LLC's business or
affairs. The directors and officers of First National Funding Corporation, the
managing member of First National Funding LLC, are covered by a directors and
officers insurance policy which insures against losses, claims, damages and
liabilities incurred by reason of certain wrongful acts committed by such
persons in their capacities as directors and officers.
Pursuant to agreements which First National Funding LLC may enter into
with underwriters or agents (forms of which will be included as exhibits to the
registration statement), officers and directors of First National Funding LLC,
and affiliates thereof, may be entitled to indemnification by such underwriters
or agents against certain liabilities, including liabilities under the
Securities Act of 1933, arising from information which has been or will be
furnished to the registrant by such underwriters or agents that appears in the
registration statement or any prospectus.
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ITEM 16. EXHIBITS.
<Table>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Organization for First National Funding LLC**
3.2 -- Operating Agreement for First National Funding LLC**
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 -- Form of Trust Agreement of First National Master Note
Trust**
4.5 -- Form of Administration Agreement**
4.6 -- Form of Amended and Restated Pooling and Servicing
Agreement**
4.7 -- Form of Collateral Series Supplement**
4.8 -- Form of Receivables Purchase Agreement**
5.1 -- Opinion of Kutak Rock LLP with respect to legality***
8.1 -- Opinion of Kutak Rock LLP with respect to tax matters***
23.1 -- Consent of Kutak Rock LLP (included in Exhibits 5.1 and
8.1)***
24.1 -- Power of Attorney (included on page II-5)*
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*
</Table>
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* Filed herewith.
** Incorporated by reference to registrants' registration statement nos.
333-86574-0 and 333-86574-01.
*** To be filed at a later date.
ITEM 17. UNDERTAKINGS
(a) As to Rule 415: The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, 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, as amended;
(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 hereof) 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 volume
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
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% 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;
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provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed with or
furnished to the Commission by the registrants pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, 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 thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are incorporated by
reference: The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrants' annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended, that is incorporated
by reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) As to indemnification: Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the registrants pursuant to the
provisions described in Item 15 herein, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement for the asset-backed securities being registered on
this form will be met by the time of the sale and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Omaha, Nebraska, on the date of July 1, 2003.
FIRST NATIONAL FUNDING LLC
as Co-Registrant
By: First National Funding Corporation,
Managing Member
By: /s/ JEAN L. KOENCK
-----------------------------------
Jean L. Koenck, Senior Vice
President and Assistant Secretary
FIRST BANKCARD MASTER CREDIT
CARD TRUST,
as Co-Registrant
By: FIRST NATIONAL BANK OF OMAHA,
as Servicer of First Bankcard Master
Credit Card Trust
By: /s/ MATTHEW W. LAWVER
-----------------------------------
Matthew W. Lawver, Senior Vice
President
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Matthew W. Lawver and Jean L. Koenck and either
of them such person's true and lawful attorney-in-fact and agent, with full
power of substitution and revocation, for such person in such person's name,
place and stead, in any and all capacities to sign any and all amendments
(including post-effective amendments to this Registration Statement) and any
registration statement filed pursuant to Rule 462(b) and to file the same with
all exhibits thereto, and the other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as such
person might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
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Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on July 1, 2003 by the following persons
in the capacities indicated on behalf of First National Funding LLC.
FIRST NATIONAL FUNDING LLC
By: First National Funding Corporation,
Managing Member
By: /s/ MATTHEW W. LAWVER
---------------------------------------
Matthew W. Lawver, Director and
President
(Principal Executive Officer)
By: /s/ TIMOTHY D. HART
---------------------------------------
Timothy D. Hart, Director
By: /s/ JEAN L. KOENCK
---------------------------------------
Jean L. Koenck, Director
By: /s/ KARLYN M. KNIERIEM
---------------------------------------
Karlyn M. Knieriem, Treasurer
(Principal Financial and Accounting
Officer)
By:
---------------------------------------
Andrew L. Stidd, Independent Director
By:
---------------------------------------
Bernard J. Angelo, Independent
Director
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EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Organization for First National Funding LLC**
3.2 -- Operating Agreement for First National Funding LLC**
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 -- Form of Trust Agreement of First National Master Note
Trust**
4.5 -- Form of Administration Agreement**
4.6 -- Form of Amended and Restated Pooling and Servicing
Agreement**
4.7 -- Form of Collateral Series Supplement**
4.8 -- Form of Receivables Purchase Agreement**
5.1 -- Opinion of Kutak Rock LLP with respect to legality***
8.1 -- Opinion of Kutak Rock LLP with respect to tax matters***
23.1 -- Consent of Kutak Rock LLP (included in Exhibits 5.1 and
8.1)***
24.1 -- Power of Attorney (included on page II-5)*
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*
</Table>
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* Filed herewith.
** Incorporated by reference to registrants' registration statement nos.
333-86574-0 and 333-86574-01.
*** To be filed at a later date.
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