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Exhibit 10.22
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PRIME II RECEIVABLES CORPORATION
Transferor
FDS NATIONAL BANK
Servicer
and
THE CHASE MANHATTAN BANK
Trustee
on behalf of the Certificateholders
of the Prime Credit Card Master Trust II
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POOLING AND SERVICING AGREEMENT
Dated as of January 22, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS....................................................................................... 1
Section 1.1 Definitions................................................................. 1
Section 1.2 Other Definitional Provisions............................................... 29
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES.......................................................................... 30
Section 2.1 Conveyance of Receivables................................................... 30
Section 2.2 Acceptance by Trustee....................................................... 32
Section 2.3 Representations and Warranties of
the Transferor ................................................................. 33
Section 2.4 Representations and Warranties of
the Transferor Relating to the Agreement
and the Receivables............................................................. 38
Section 2.5 Covenants of the Transferor................................................. 45
Section 2.6 Addition of Accounts........................................................ 49
Section 2.7 Removal of Accounts......................................................... 53
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES.................................................................................... 56
Section 3.1 Acceptance of Appointment and Other
Matters Relating to the Servicer ............................................... 56
Section 3.2 Servicing Compensation...................................................... 59
Section 3.3 Representations and Warranties of the Servicer.............................. 60
Section 3.4 Reports and Records for the Trustee......................................... 63
Section 3.5 Annual Servicer's Certificate............................................... 65
Section 3.6 Annual Independent Accountants' Servicing Report............................ 66
Section 3.7 Tax Treatment............................................................... 67
Section 3.8 Adjustments................................................................. 68
Section 3.9 Notices to FDSNB............................................................ 69
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ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS.................................................................... 69
Section 4.1 Rights of Certificateholders................................................ 69
Section 4.2 Establishment of Accounts................................................... 70
Section 4.3 Collections and Allocations................................................. 74
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL BE
SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES)................................................ 80
ARTICLE VI
THE CERTIFICATES.................................................................................. 81
Section 6.1 The Certificates............................................................ 81
Section 6.2 Authentication of Certificates.............................................. 82
Section 6.3 Registration of Transfer and Exchange of Certificates....................... 82
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates........................... 86
Section 6.5 Persons Deemed Owners....................................................... 87
Section 6.6 Appointment of Paying Agent................................................. 88
Section 6.7 Access to List of Certificateholders' Names and Addresses................... 89
Section 6.8 Authenticating Agent........................................................ 90
Section 6.9 Tender of Exchangeable Transferor Certificate............................... 92
Section 6.10 Book-Entry Certificates.................................................... 97
Section 6.11 Notices to Clearing Agency................................................. 98
Section 6.12 Definitive Certificates.................................................... 98
Section 6.13 Global Certificate; EuroCertificate Exchange Date.......................... 99
Section 6.14 Meetings of Certificateholders............................................. 99
Section 6.15 Uncertificated Classes .................................................... 99
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR......................................................... 100
Section 7.1 Liability of the Transferor................................................ 100
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of, the
Transferor..................................................................... 100
Section 7.3 Limitation on Liability.................................................... 102
Section 7.4 Liabilities................................................................ 102
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Section 7.5 Transferor's Records....................................................... 104
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER...................................................................................104
Section 8.1 Liability of the Servicer...................................................104
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer........................................................................104
Section 8.3 Limitation on Liability of the Servicer and others..........................105
Section 8.4 Servicer Indemnification of the Transferor, the Trust and the Trustee.......106
Section 8.5 The Servicer Not to Resign..................................................108
Section 8.6 Access to Certain Documentation and Information Regarding the
Receivables.....................................................................108
Section 8.7 Delegation of Duties........................................................109
ARTICLE IX
PAY OUT EVENTS....................................................................................109
Section 9.1 Pay Out Events..............................................................109
Section 9.2 Additional Rights Upon the Occurrence of Certain Events.....................110
ARTICLE X
SERVICER DEFAULTS.................................................................................113
Section 10.1 Servicer Defaults..........................................................113
Section 10.2 Trustee to Act; Appointment of Successor...................................117
Section 10.3 Notification to Certificateholders.........................................119
Section 10.4 Waiver of Past Defaults....................................................120
ARTICLE XI
THE TRUSTEE.......................................................................................120
Section 11.1 Duties of Trustee..........................................................120
Section 11.2 Certain Matters Affecting the Trustee......................................123
Section 11.3 Trustee Not Liable for Recitals in Certificates............................125
Section 11.4 The Servicer to Pay Trustee's Fees and Expenses............................126
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Section 11.5 Eligibility Requirements for Trustee.......................................126
Section 11.6 Resignation or Removal of Trustee..........................................127
Section 11.7 Successor Trustee..........................................................128
Section 11.8 Merger or Consolidation of Trustee.........................................129
Section 11.9 Appointment of Co-Trustee or Separate Trustee..............................129
Section 11.10 Tax Returns................................................................131
Section 11.11 Trustee May Enforce Claims Without Possession of Certificates..............131
Section 11.12 Suits for Enforcement......................................................132
Section 11.13 Rights of Certificateholders to Direct Trustee.............................132
Section 11.14 Representations and Warranties of Trustee..................................133
Section 11.15 Maintenance of Office or Agency............................................134
ARTICLE XII
TERMINATION.......................................................................................134
Section 12.1 Termination of Trust........................................................134
Section 12.2 Optional Termination........................................................136
Section 12.3 Final Payment with Respect to any Series....................................137
Section 12.4 Termination Rights of Holder of Exchangeable Transferor Certificate.........138
ARTICLE XIII
MISCELLANEOUS PROVISIONS..........................................................................139
Section 13.1 Amendment..................................................................139
Section 13.2 Protection of Right, Title and Interest to Trust...........................142
Section 13.3 Limitation on Rights of Certificateholders.................................143
Section 13.4 Governing Law..............................................................145
Section 13.5 Notices....................................................................145
Section 13.6 Severability of Provisions.................................................146
Section 13.7 Assignment.................................................................146
Section 13.8 Certificates Non-Assessable and Fully Paid.................................146
Section 13.9 Further Assurances.........................................................146
Section 13.10 No Waiver; Cumulative Remedies.............................................147
Section 13.11 Counterparts...............................................................147
Section 13.12 Third-Party Beneficiaries..................................................147
Section 13.13 Actions by Certificateholders..............................................147
Section 13.14 Rule 144A Information......................................................148
Section 13.15 Merger and Integration.....................................................149
Section 13.16 Heading....................................................................149
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POOLING AND SERVICING AGREEMENT, dated as of January 22, 1997
by and among PRIME II RECEIVABLES CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, as Transferor, FDS NATIONAL
BANK, a national banking association, as Servicer, and THE CHASE MANHATTAN BANK,
a banking corporation organized and existing under the laws of the state of New
York, as Trustee.
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and the
Certificateholders:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Whenever used in this Agreement,
the following words and phrases shall have the following meanings:
"ACCOUNT INFORMATION" shall have the meaning specified in
subsection 2.2(b).
"ACCOUNT" shall mean (a) each VISA(R) or MasterCard(R) credit
card account established pursuant to a Charge Account Agreement between an
Originator and any Person, the Receivables from which are designated for sale by
an Originator to the Transferor pursuant to the Receivables Purchase Agreement,
which is identified by (i) an account number, (ii) the amount of Receivables
outstanding in such Account as of its Cut-Off Date and (iii) the amount of
Principal Receivables in such Account as of its Cut-Off Date, in each case in
the computer file or microfiche list delivered to the Trustee or the bailee of
the Trustee by the Transferor pursuant to this Agreement, (b) each Automatic
Additional Account, and (c) each Supplemental Account identified in each file or
list delivered to the Trustee or the bailee of the Trustee by the Transferor
pursuant to subsection 2.6(e) of this Agreement. The definition of Account shall
include each Transferred Account but shall not include any Purged Accounts. The
term "Account" shall be deemed to refer to a Supplemental Account only from and
after the Addition Date with respect thereto, and the term "Account" shall be
deemed to refer to any Removed Account only prior to the Removal Date with
respect thereto.
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"ADDITION CUT-OFF DATE" shall mean each date as of which
Supplemental Accounts shall be selected to be included as Accounts pursuant to
subsection 2.6(c) and (d).
"ADDITION DATE" shall mean each date as of which Receivables
under Supplemental Accounts are designated for inclusion in the Trust as
Accounts pursuant to subsection 2.6(c).
"ADJUSTED INVESTED AMOUNT" shall mean, with respect to any
Series or any Class, when used with respect to any Business Day, the Invested
Amount of such Series or Class, as applicable, MINUS any amounts then on deposit
in any principal funding account for such Series or Class, as applicable.
"ADJUSTMENT PAYMENT" shall have the meaning specified in
subsection 3.8(a).
"AFFILIATE" shall mean, with respect to a particular Person,
(a) any Person that, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person, or (b) any Person who is a
director or officer or general partner (i) of such Person, (ii) of any
subsidiary of such Person, or (iii) of any Person described in clause (a) above.
For purposes of this definition, control of a Person shall mean the power,
direct or indirect, (i) to vote 5% or more of the securities having ordinary
voting power to elect the directors of such Person, or (ii) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.
"AGGREGATE INVESTOR DEFAULT AMOUNT" shall have, with respect
to any Series of Certificates, the meaning stated in the related Supplement.
"AGGREGATE INVESTED AMOUNT" shall mean, as of any date of
determination, the sum of the Invested Amounts of all Series of Certificates
issued and outstanding on such date of determination.
"AGGREGATE INVESTOR PERCENTAGE" with respect to Principal
Collections, Finance Charge Collections and Receivables in Defaulted Accounts,
as the case may be,
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shall mean, as of any date of determination, the sum of such Investor
Percentages of all Series of Certificates issued and outstanding on such date of
determination; PROVIDED, HOWEVER, that the Aggregate Investor Percentage shall
not exceed 100%.
"AGGREGATE PRINCIPAL RECEIVABLES" shall mean, for any day in
any Monthly Period, the aggregate amount of Principal Receivables at the end of
such day.
"AGREEMENT" shall mean this Pooling and Servicing Agreement
and all amendments hereof and supplements hereto, including any Supplement.
"AMORTIZATION PERIOD" shall mean, with respect to any Series,
the period following the related Revolving Period, which shall be the
Accumulation Period, the Early Amortization Period, or other amortization or
accumulation period, in each case as defined with respect to such Series in the
related Supplement.
"AMORTIZATION PERIOD COMMENCEMENT DATE" shall mean, with
respect to any Series, the date on which the Amortization Period with respect
thereto commences.
"APPLICABLE TAX STATE" shall mean, as of any date of
determination, each state as to which any of the following is then applicable:
(a) the state in which the Trustee maintains its principal corporate trust
office, (b) the state in which the Transferor maintains its principal executive
offices, and (c) a state in which the Servicer regularly conducts servicing and
collection operations which are not limited to ministerial activities and which
relate to a material portion of the Receivables.
"APPLICANTS" shall have the meaning specified in Section 6.7.
"APPOINTMENT DAY" shall have the meaning specified in
subsection 9.2(a).
"ASSIGNMENT" shall have the meaning specified in subsection
2.6(e)(ii).
"AUTHENTICATING AGENT" shall have the meaning specified in
subsection 6.8(a).
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"AUTHORIZED NEWSPAPER" shall mean a newspaper of general
circulation in the Borough of Manhattan, The City of New York printed in the
English language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"AUTOMATIC ADDITIONAL ACCOUNT" shall mean those consumer
revolving credit card accounts coming into existence after the applicable
Cut-Off Date which meet the following criteria:
(a) a VISA or MasterCard credit card account (or any successor
credit card account designations used by the Transferor):
(i) which is originated by an Originator during the
normal operation of such Originator's credit card business and is not
acquired by the Transferor or such Originator from another credit card
issuer;
(ii) which was in existence and owned by such
Originator and the Receivables of which had been transferred to the
Transferor pursuant to the Receivables Purchase Agreement on the date
on which Receivables generated in such account are to be added to the
Trust and is in existence at the close of business on the date of its
designation for inclusion in the Trust;
(iii) which is payable in Dollars; and
(iv) the Receivables in which have not been charged
off prior to the date of their designation for inclusion in the Trust;
or
(b) any other consumer revolving credit card account,
Receivables from which each Rating Agency permits to be added automatically to
the Trust; PROVIDED, HOWEVER, that the Transferor shall have received notice
from each Rating Agency that the inclusion of such accounts as Automatic
Additional Accounts pursuant to this paragraph (b) will not result in the
reduction or withdrawal of its then existing rating of any Class of Investor
Certificates then issued and outstanding and shall have delivered such notice to
the Trustee.
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"BEARER CERTIFICATES" shall have the meaning specified in
Section 6.1.
"BEARER RULES" shall mean the provisions of the Internal
Revenue Code, in effect from time to time, governing the treatment of bearer
obligations, including sections 163(f), 871, 881, 1441, 1442 and 4701, and any
regulations thereunder including, to the extent applicable to any Series,
proposed or temporary regulations of the Internal Revenue Service.
"BILLED FINANCE CHARGES" shall mean with respect to any
Monthly Period the amount of finance charges, late fees and other fees and
charges billed to Obligors on the Receivables.
"BOOK-ENTRY CERTIFICATES" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.10; PROVIDED, HOWEVER, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer authorized and
Definitive Certificates are to be issued to the Certificate Owners, such
certificates shall no longer be "Book-Entry Certificates."
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in New York, New York (or, with
respect to any Series, any additional city specified in the related Supplement)
are authorized or obligated by law or executive order to be closed, and such
other days in any year as may be designated by the Servicer in writing to the
Trustee by the first day of December in the preceding year.
"CASH EQUIVALENTS" shall mean, unless otherwise provided in
the Supplement with respect to any Series, (a) negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence (i) obligations of or fully guaranteed by the United States of America;
(ii) time deposits, promissory notes, or certificates of deposit of any
depositary institution or trust company; PROVIDED, HOWEVER, that at the time
of the Trust's investment or contractual commitment to invest therein, the
certificates of deposit or short-term deposits of such depositary institution
or
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trust company shall have a credit rating from Moody's and Standard &
Poor's of P-1 and A-1+, respectively; (iii) commercial paper having, at the
time of the Trust's investment or contractual commitment to invest therein, a
rating from Moody's and Standard & Poor's of P-1 and A-1+, respectively; (iv)
bankers acceptances issued by any depositary institution or trust company
described in clause (a)(ii) above; and (v) investments in money market funds
rated AAA-m or AAA-mg by Standard & Poor's and P-1 by Moody's or otherwise
approved in writing by each Rating Agency; (b) time deposits and demand
deposits in the name of the Trust or the Trustee in any depositary institution
or trust company referred to in clause (a) (ii) above; (c) securities not
represented by an instrument that are registered in the name of the Trustee or
its nominee upon books maintained for that purpose by or on behalf of the
issuer thereof and identified on books maintained for that purpose by the
Trustee as held for the benefit of the Trust or the Certificateholders, and
consisting of (x) shares of an open end diversified investment company which is
registered under the Investment Company Act which (i) invests its assets
exclusively in obligations of or guaranteed by the United States of America or
any instrumentality or agency thereof having in each instance a final maturity
date of less than one year from their date of purchase or other Cash
Equivalents, (ii) seeks to maintain a constant net asset value per share, (iii)
has aggregate net assets of not less than $100,000,000 on the date of purchase
of such shares and (iv) which each Rating Agency designates in writing will not
result in a withdrawal or downgrading of its then current rating of any Series
rated by it or (y) Eurodollar time deposits of a depository institution or
trust company that have been rated P-1 by Moody's and A-1+ by Standard &
Poor's; PROVIDED, HOWEVER, that at the time of the Trust's investment or
contractual commitment to invest therein, the Eurodollar deposits of such
depositary institution or trust company shall have a credit rating from Moody's
and Standard & Poor's of P-1 and A-1+, respectively; (d) a guaranteed
investment contract (guaranteed as to timely payment) which each Rating Agency
designates in writing will not result in a withdrawal or downgrading of its
then current rating of any Series rated by it; (e) repurchase agreements
transacted with either (i) an entity subject to the United States federal
bankruptcy code; PROVIDED, HOWEVER, that (A) the term of the repurchase
agreement is consistent with the
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requirements with regard to the maturity of Cash Equivalents specified herein or
in the applicable Supplement for the applicable account or is due on demand, (B)
the Trustee or a third party (with a rating from Moody's and Standard & Poor's
of P-1 and A-1+, respectively) acting solely as agent for the Trustee has
possession of the collateral, (C) the Trustee on behalf of the Trust has a
perfected first priority security interest in the collateral, (D) the market
value of the collateral is maintained at the requisite collateral percentage of
the obligation in accordance with standards of the Rating Agencies, (E) the
failure to maintain the requisite collateral level will obligate the Trustee to
liquidate the collateral as promptly as practicable upon instructions from the
Servicer, (F) the securities subject to the repurchase agreement are either
obligations of, or fully guaranteed as to principal and interest by, the United
States of America or any agency or any instrumentality or agency thereof,
certificates of deposit or bankers acceptances and (G) the securities subject to
the repurchase agreement are free and clear of any third party lien or claim, or
(ii) a financial institution insured by the FDIC, or any broker-dealer with
"retail-customers" that is under the jurisdiction of the Securities Investors
Protection Corp. ("SIPC"); PROVIDED, HOWEVER, that (A) the market value of the
collateral is maintained at the requisite collateral percentage of the
obligation in accordance with the standards of the Rating Agencies, (B) the
Trustee or a third party (with a rating from Moody's and Standard & Poor's of
P-1 and A-1+, respectively) acting solely as agent for the Trustee has
possession of the collateral, (C) the collateral is free and clear of third
party liens and, in the case of an SIPC broker, was not acquired pursuant to a
repurchase or reverse repurchase agreement and (D) the failure to maintain the
requisite collateral percentage will obligate the Trustee to liquidate the
collateral upon instructions from the Servicer; PROVIDED, HOWEVER, that at the
time of the Trust's or the Trustee's investment or contractual commitment to
invest in any repurchase agreement, the short-term deposits or commercial paper
rating of such entity or institution in subsections (i) and (ii) above shall
have a credit rating of P-1 or A-1+ or their equivalent from each Rating Agency;
and (f) any other investment that converts to cash within a finite time period
if each Rating Agency confirms in writing that such invest-
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ment will not adversely affect its then current rating of the Investor
Certificates.
"CEDEL" shall mean Cedel Bank, societe anonyme.
"CERTIFICATE" shall mean any one of the Investor Certificates
of any Series or the Exchangeable Transferor Certificate.
"CERTIFICATEHOLDER" or "HOLDER" shall mean the Person in whose
name a Certificate is registered in the Certificate Register and, if applicable,
the holder of any Bearer Certificate or Coupon, as the case may be.
"CERTIFICATE INTEREST" shall mean interest payable in respect
of the Investor Certificates of any Series pursuant to Article IV of this
Agreement as supplemented by the Supplement for such Series.
"CERTIFICATE OWNER" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as may be reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly or
as an indirect participant, in accordance with the rules of such Clearing
Agency).
"CERTIFICATE PRINCIPAL" shall mean principal payable in
respect of the Investor Certificates of any Series pursuant to Article IV of
this Agreement.
"CERTIFICATE RATE" shall mean, with respect to any Series of
Certificates (or, for any Series with more than one Class, for each Class of
such Series), the percentage (or formula on the basis of which such rate shall
be determined) stated in the related Supplement.
"CERTIFICATE REGISTER" shall mean the register maintained
pursuant to Section 6.3, providing for the registration of the Certificates and
transfers and exchanges thereof.
"CHARGE ACCOUNT AGREEMENT" shall mean an agreement, which
shall comply with the Federal Truth In Lending Act, for Visa or MasterCard
credit card accounts between any Obligor and an Originator as such agreements
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may be amended, modified or otherwise changed from time to time.
"CLASS" shall mean, with respect to any Series, any one of the
classes of Certificates of that Series as specified in the related Supplement.
"CLEARING AGENCY" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency or Foreign Clearing Agency effects book-entry transfers and
pledges of securities deposited with the Clearing Agency or Foreign Clearing
Agency.
"CLOSING DATE" shall mean, with respect to any Series, the
date of issuance of such Series of Certificates, as specified in the related
Supplement.
"COLLECTION ACCOUNT" shall have the meaning specified in
subsection 4.2(a).
"COLLECTIONS" shall mean all payments received by the Servicer
in respect of the Receivables in the form of cash, checks or any other form of
payment in accordance with the Charge Account Agreement in effect from time to
time on any Receivables.
"CORPORATE TRUST OFFICE" shall mean the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Agreement is
located at 450 West 33rd Street, New York, New York 10001, Attention: Structured
Products Group.
"COUPON" shall have the meaning specified in Section 6.1.
"CREDIT AND COLLECTION POLICY" shall mean the credit,
collection, customer relations and service policies that apply to Eligible
Accounts, as such policies currently exist and as such policies may be amended,
modified or supplemented from time to time subject to Section 5.01(c) of the
Receivables Purchase Agreement.
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"CUT-OFF DATE" shall mean, for Receivables in Accounts owned
by each Originator, the date on which the last cycle of such Originator, was
billed in the November 1996 fiscal month.
"DAILY REPORT" shall mean a report showing the date and
setting forth the computations reflected in the form thereof attached as Exhibit
C hereto.
"DATE OF DETERMINATION" shall mean with respect to the Yield
Factor or the Finance Charge Receivable Factor, respectively, the date on which
such factor is determined which shall in no event be later than the tenth
Business Day from the end of the preceding Monthly Period.
"DATE OF PROCESSING" shall mean, with respect to any
transaction, the date on which such transaction is first recorded on the
Servicer's computer master file of consumer revolving credit card accounts
(without regard to the effective date of such recordation).
"DEFAULT AMOUNT" shall mean, on any Business Day, the product
of (i) the aggregate Outstanding Balances of Receivables in Accounts which
became Defaulted Accounts on such Business Day MINUS the Ineligible Default
Amount and (ii) one MINUS the Finance Charge Receivable Factor.
"DEFAULTED ACCOUNT" shall mean each Account with respect to
which, in accordance with the Credit and Collection Policy or the Servicer's
customary and usual servicing procedures, the Servicer has charged off the
Receivables in such Account as uncollectible; an Account shall become a
Defaulted Account on the day on which such Receivables are recorded as charged
off as uncollectible on the Servicer's computer master file of consumer credit
card revolving accounts. Notwithstanding any other provision hereof, any
Receivables in a Defaulted Account that are Ineligible Receivables shall be
treated as Ineligible Receivables rather than Receivables in Defaulted Accounts.
"DEFEASANCE ACCOUNT" shall have the meaning specified in the
applicable Supplement.
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"DEFINITIVE CERTIFICATE" shall have the meaning specified in
Section 6.10.
"DELINQUENCY PERCENTAGE" shall mean with respect to any
Business Day the percentage equivalent of an amount determined on the preceding
Date of Determination (or on such Business Day with respect to each Date of
Determination) equal to (x) the product of (i) 0.1 and (ii) the aggregate
Outstanding Balance of all Receivables Retail Age 2 or greater (Receivables with
respect to which the related Obligor has failed to make two or more required
payments) divided by (y) the aggregate Outstanding Balance of all Receivables on
such Date of Determination.
"DEPOSITARY" shall have the meaning specified in Section 6.10.
"DEPOSITARY AGREEMENT" shall mean, with respect to each
Series, the agreement among the Transferor, the Trustee and the Clearing Agency,
or as otherwise provided in the related Supplement.
"DETERMINATION DATE" shall mean the second Business Day prior
to the earliest Distribution Date in each month for any Series then outstanding.
"DISTRIBUTION ACCOUNT" shall have the meaning specified in
subsection 4.2(c).
"DISTRIBUTION DATE" shall mean, with respect to any Series,
the date specified in the related Supplement.
"DOLLARS", "$" or "U.S. $" shall mean United States dollars.
"ELIGIBLE ACCOUNT" shall mean, as of the Initial Closing Date
(or, with respect to Supplemental Accounts as of each Addition Date and with
respect to Automatic Additional Accounts, as of the date the Receivables arising
in such Accounts are designated for inclusion in the Trust), each Account owned
by an originator:
(a) which is payable in Dollars;
(b) which has not been identified by such Originator in its
computer files as an account as to
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which such Originator or the Servicer has any confirmed record of any
fraud-related activity by the Obligor;
(c) which has not been sold or pledged to any other party and
which does not have Receivables which have been sold or pledged to any other
party;
(d) which was created in accordance with the Credit and
Collection Policy of such Originator at the time of creation of such account or
the Receivables of which each Rating Agency permits to be added automatically to
the Trust; and
(e) the Receivables in which such Originator has not charged
off in its customary and usual manner for charging off Receivables in such
Accounts as of the Initial Closing Date (or, with respect to Supplemental
Accounts as of the Addition Date and with respect to Automatic Additional
Accounts, as of the date the Receivables of such Accounts are designated for
inclusion in the Trust) unless such Account is subsequently reinstated.
"ELIGIBLE RECEIVABLE" shall mean each Receivable that
satisfies each of the following criteria:
(a) it arises under an Eligible Account;
(b) except as permitted herein, it is not sold or pledged to
any other party;
(c) it constitutes an "account" or a "general intangible" as
each is defined in Article 9 of the UCC as then in effect in each Relevant UCC
State;
(d) it is the legal, valid and binding obligation of a Person
who (i) is living, (ii) is not a minor under the laws of his/her state of
residence and (iii) is competent to enter into a contract and incur debt;
(e) it and the underlying Charge Account Agreement do not
contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, rules and regulations relating to truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) that could reasonably
be expected to have an adverse impact on the amount of Collections
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thereunder, and the Originator under the underlying Charge Account Agreement is
not in violation of any such laws, rules or regulations in any respect material
to such Charge Account Agreement;
(f) all material consents, licenses, or authorizations of, or
registrations with, any governmental authority required to be obtained or given
in connection with the creation of such Receivable or the execution, delivery,
creation and performance of the underlying Charge Account Agreement have been
duly obtained or given and are in full force and effect as of the date of the
creation of such Receivables;
(g) at the time of its transfer to the Trust, the Transferor
or the Trust will have good and marketable title free and clear of all Liens and
security interests arising under or through the Transferor (other than Permitted
Liens);
(h) it is not, at the time of its transfer to the Trust, a
Receivable in a Defaulted Account; and
(i) it arises under a Charge Account Agreement that has been
duly authorized and which, together with such Receivable, is in full force and
effect and constitutes the legal, valid and binding obligation of the Obligor of
such Receivable enforceable against such Obligor in accordance with its terms
and is not subject to any dispute, offset, counterclaim or defense whatsoever
(except the discharge in bankruptcy of such Obligor).
"ENHANCEMENT" shall mean, with respect to any Series, any cash
collateral account, reserve account, cash collateral guaranty, collateral
invested amount, letter of credit, guaranteed rate agreement, maturity guaranty
facility, tax protection agreement, interest rate cap, interest rate swap or any
other contract or agreement for the benefit of the Certificateholders of such
Series (or Certificateholders of a Class within such Series) as designated in
the applicable Supplement.
"ENHANCEMENT PROVIDER" shall mean, with respect to any Series,
the Person, if any, designated as such in the related Supplement.
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"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"EUROCLEAR OPERATOR" shall mean Morgan Guaranty Trust Company
of New York, Brussels, Belgium office, as operator of the Euroclear System.
"EXCESS FUNDING ACCOUNT" shall have the meaning specified in
subsection 4.2(d).
"EXCESS FUNDING ACCOUNT PERCENTAGE" shall mean, with respect
to any Series on any Business Day, the percentage equivalent of a fraction, the
numerator of which is equal to the Adjusted Invested Amount of such Series and
the denominator of which is equal to the sum of the Adjusted Invested Amounts of
all Series in Amortization Periods.
"EXCHANGE" shall mean either of the procedures described in
Section 6.9(b).
"EXCHANGEABLE TRANSFEROR CERTIFICATE" shall mean the
certificate executed by the Transferor and authenticated by the Trustee,
substantially in the form of Exhibit A and exchangeable as provided in Section
6.9; PROVIDED, HOWEVER, that at any time there shall be only one Exchangeable
Transferor Certificate.
"EXCHANGE DATE" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(b).
"EXCHANGE NOTICE" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(b).
"EXTENDED TRUST TERMINATION DATE" shall have the meaning
specified in subsection 12.1(a).
"FASIT" shall mean a "financial asset securitization
investment trust" as defined in Section 860L of the Code.
"FCHC" shall mean Federated Credit Holdings Corporation, or
any successor thereto, as owner of all of the outstanding common stock of the
Transferor.
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"FDIC" shall mean the Federal Deposit Insurance Corporation,
or any successor thereto.
"FDSNB" shall mean FDS National Bank, a national banking
association, or any successor thereto.
"FEDERATED" shall mean Federated Department Stores, Inc., or
any successor thereto.
"FINANCE CHARGE COLLECTIONS" shall mean with respect to any
Business Day (a) the product of (i) Collections received with respect to the
Receivables MINUS Recoveries and (ii) the Yield Factor PLUS (b) any investment
earnings on amounts on deposit in the Excess Funding Account PLUS (c) Recoveries
PLUS (d) Interchange PLUS (e) amounts paid by the Transferor with respect to
Uncovered Dilution Amounts pursuant to Section 3.8 in accordance with the
proviso to the last sentence of such Section; PROVIDED, HOWEVER, that pursuant
to any Supplement such amount may be adjusted for purposes of allocations to the
related series pursuant to such Supplement.
"FINANCE CHARGE RECEIVABLE FACTOR" shall mean with respect to
any Date of Determination, the aggregate amount of finance charges, late fees
and other fees and charges outstanding on the last day of the preceding Monthly
Period DIVIDED by the aggregate Outstanding Balance of the Receivables on the
last day of such preceding Monthly Period.
"FINANCE CHARGE RECEIVABLES" shall mean for any Business Day,
the product of the Finance Charge Receivable Factor determined on the preceding
Date of Determination (or on such Business Day with respect to each Date of
Determination) and the aggregate Outstanding Balances of Eligible Receivables as
of such Business Day, determined in accordance with subsection 2.4(c).
"FINANCE CHARGE DEFAULT AMOUNT" shall mean with respect to any
Monthly Period the aggregate amount of Receivables arising from finance charges,
late fees and other fees and charges billed to Obligors which the Servicer
charged off as uncollectible on its computer master file of consumer credit card
revolving accounts pursuant to the applicable Credit and Collection Policy.
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"FOREIGN CLEARING AGENCY" shall mean Cedel and the Euroclear
Operator.
"GLOBAL CERTIFICATE" shall have the meaning specified in
Section 6.13.
"GROUP" shall mean, with respect to any Series, the group of
Series in which the related Supplement specifies such Series is to be included.
"GOVERNMENTAL AUTHORITY" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HOLDER" or "CERTIFICATEHOLDER" shall mean the Person in whose
name a Certificate is registered in the Certificate Register, and if applicable,
the holder of any Bearer Certificate or Coupon, as the case may be.
"INELIGIBLE DEFAULT AMOUNT" shall mean, as of any Business
Day, the aggregate Outstanding Balance of Receivables in Accounts which are
identified on the Servicer's computer records as not being Eligible Accounts and
which are reported in the Servicer's computer records on such Business Day as
becoming Defaulted Accounts.
"INELIGIBLE RECEIVABLE" shall have the meaning specified in
subsection 2.4(c).
"INITIAL CLOSING DATE" shall mean January 23, 1997.
"INITIAL INVESTED AMOUNT" shall mean, with respect to any
Series of Certificates, the amount stated in the related Supplement.
"INSOLVENCY EVENT" shall have the meaning specified in
subsection 9.2(a).
"IN-STORE PAYMENTS" shall mean any payment made by an Obligor
with respect to a Receivable by delivery of cash, check, money order or any
other form of payment to a cashier or other employee of any Federated retail
operating subsidiary.
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"INTERCHANGE" shall mean interchange fees payable to an
Originator in its capacity as credit card issuer through VISA U.S.A., Inc. or
MasterCard International Incorporated and paid by such Originator to the
Transferor pursuant to the Receivables Purchase Agreement.
"INTEREST FUNDING ACCOUNT" shall have the meaning specified in
subsection 4.2(b).
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"INVESTED AMOUNT" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act
of 1940, as amended from time to time.
"INVESTOR ACCOUNT" shall mean each of the Interest Funding
Account, the Principal Account, the Excess Funding Account, the Distribution
Account and any Series Account.
"INVESTOR CERTIFICATE" shall mean any one of the certificates
(including, without limitation, the Bearer Certificates or the Registered
Certificates) executed by the Transferor and authenticated by the Trustee
substantially in the form (or forms in the case of a Series with multiple
classes) of the investor certificate or variable funding certificate attached to
the related Supplement.
"INVESTOR CERTIFICATEHOLDER" shall mean the Holder of an
Investor Certificate.
"INVESTOR CHARGE-OFF" shall have, with respect to each Series,
the meaning specified in the applicable Supplement.
"INVESTOR DEFAULT AMOUNT" shall have, with respect to any
Series of Certificates, the meaning stated in the related Supplement.
"INVESTOR EXCHANGE" shall have the meaning specified in
subsection 6.9(b).
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"INVESTOR PERCENTAGE" shall mean, with respect to Principal
Collections, Finance Charge Collections and Receivables in Defaulted Accounts,
and with respect to any Series of Certificates, the percentages specified in the
applicable Supplement.
"LATE FEES" shall have, with respect to any Account, the
meaning specified in the Charge Account Agreement applicable to such Account for
late fees or similar charges.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing; PROVIDED, HOWEVER, that any assignment pursuant to Section 7.2 shall
not be deemed to constitute a Lien.
"LOCK-BOX ACCOUNT" shall mean an account in the name of the
Trustee with a Lock-Box Bank.
"LOCK-BOX AGREEMENT" shall mean each agreement between the
Servicer, the Trustee and the respective Lock-Box Bank, pursuant to which such
Lock-Box Bank receives Collections from time to time as provided therein.
"LOCK-BOX BANK" shall mean any bank that holds one or more
Lock-Box Accounts for receiving Collections, pursuant to a Lock-Box Agreement.
"MINIMUM AGGREGATE PRINCIPAL RECEIVABLES" shall mean, as of
any date of determination, the sum of the numerators used in the calculation of
the Investor Percentages for Principal Collections for all outstanding Series on
such date of determination, less the amount on deposit in the Excess Funding
Account as of such date of determination.
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"MINIMUM TRANSFEROR AMOUNT" shall mean, as of any date of
determination, the product of (i) the sum of (a) the aggregate Principal
Receivables and (b) the amounts on deposit in the Excess Funding Account and
(ii) the Minimum Transferor Percentage.
"MINIMUM TRANSFEROR PERCENTAGE" shall mean 2%.
"MONTHLY INVESTOR SERVICING FEE" shall mean the Servicing Fee
payable to the Servicer with respect to a Monthly Period.
"MONTHLY PERIOD" shall mean, unless otherwise defined with
respect to a Series in the related Supplement, the period from and including the
first day of each fiscal month of the Transferor to and including the last day
of such fiscal month.
"MOODY'S" shall mean Moody's Investors Service, Inc. or its
successors.
"NOTICE DATE" shall have the meaning specified in subsection
2.6(e)(i).
"OBLIGOR" shall mean a Person obligated to make payments with
respect to a Receivable arising under an Account pursuant to a Charge Account
Agreement.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by any
Vice President, Treasurer or more senior officer of the Transferor or Servicer
and delivered to the Trustee.
"OPINION OF COUNSEL" shall mean a written opinion of counsel,
who may be counsel for or an employee of the Person providing the opinion, and
who shall be reasonably acceptable to the Trustee.
"ORIGINATOR" shall mean FDSNB and its successors or assigns
under the Receivables Purchase Agreement and any other originator of accounts
which enters into the Receivables Purchase Agreement in accordance with the
provisions of this Agreement.
"OUTSTANDING BALANCE" shall mean, with respect to a Receivable
on any day, the aggregate amount owed by
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the Obligor thereunder as of the close of business on the prior Business Day
(net of returns and adjustments).
"PAIRED SERIES" shall mean each Series which has been paired
with a prefunded Series, and such prefunded Series.
"PAYING AGENT" shall mean any paying agent appointed pursuant
to Section 6.6 and shall initially be the Trustee.
"PAY OUT COMMENCEMENT DATE" shall mean, with respect to each
Series, the date on which (a) a Trust Pay Out Event is deemed to occur pursuant
to Section 9.1 or (b) a Series Pay Out Event is deemed to occur pursuant to the
Supplement for such Series.
"PAY OUT EVENT" shall mean, with respect to each Series, a
Trust Pay Out Event or a Series Pay Out Event.
"PERIODIC FINANCE CHARGES" shall have, with respect to any
Account, the meaning specified in the Charge Account Agreement applicable to
such Account for finance charges (due to periodic rate) or any similar term.
"PERMITTED LIEN" shall mean with respect to the Receivables:
(i) Liens in favor of the Transferor created pursuant to the Receivables
Purchase Agreement assigned to the Trustee pursuant to this Agreement; (ii)
Liens in favor of the Trustee pursuant to this Agreement; and (iii) Liens which
secure the payment of taxes, assessments and governmental charges or levies, if
such taxes are either (a) not delinquent or (b) being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves in accordance with generally accepted accounting principles shall have
been established.
"PERSON" shall mean any legal person, including any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental entity or other entity
of similar nature.
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"POOL FACTOR" shall mean, as of any Record Date, a number
carried out to seven decimals representing the ratio of the applicable Invested
Amount as of such Record Date (determined after taking into account any
reduction in the Invested Amount which will occur on the following Distribution
Date) to the applicable Initial Invested Amount unless otherwise specified with
respect to a Series in the related Supplement.
"PRINCIPAL ACCOUNT" shall have the meaning specified in
subsection 4.2(b).
"PRINCIPAL COLLECTIONS" shall mean with respect to any
Business Day the product of (i) Collections received with respect to each
Receivable MINUS Recoveries and (ii) one MINUS the Yield Factor; PROVIDED,
HOWEVER, that pursuant to any Supplement such amount may be adjusted for
purposes of allocations to the related Series pursuant to such Supplement.
"PRINCIPAL RECEIVABLES" shall mean for any Business Day for
the purposes of this Agreement, the aggregate Outstanding Balance of Eligible
Receivables, determined in accordance with Subsection 2.4(c), as of such
Business Day MINUS the amount of Finance Charge Receivables on such Business Day
as shown on the Transferor's books and records.
"PRINCIPAL SHORTFALLS" shall mean, with respect to any
Business Day and any outstanding Series, the amount which the related Supplement
specifies as the "Principal Shortfall" for such Business Day.
"PRINCIPAL TERMS" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(c).
"PROSPECTIVE PAY OUT EVENT" shall have the meaning specified
in subsection 2.3(l).
"PUBLICATION DATE" shall have the meaning specified in
subsection 9.2(a).
"PURGED ACCOUNT" shall mean an Account that has an Outstanding
Balance of zero and has been terminated pursuant to the applicable Credit and
Collection Policy due to an extended period of inactivity.
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"QUALIFIED INSTITUTION" shall mean:
(i) the corporate trust department of a depositary institution
or trust company (which may include the Trustee) organized under the
laws of the United States of America or any one of the states thereof
or the District of Columbia which has a long-term unsecured debt rating
of at least Aa3 from Moody's and AA- from Standard & Poor's whose
deposits are insured to the limits provided by law by the FDIC and
which has corporate trust powers and acts as trustee for funds
deposited therein; or
(ii) a depositary institution, which may include the Trustee,
which is acceptable to the Rating Agency.
"RATING AGENCY" shall mean, with respect to each Series, the
rating agency or agencies, if any, specified in the related Supplement.
"REASSIGNMENT" shall have the meaning specified in subsection
2.7(b)(i).
"REASSIGNMENT DATE" shall have the meaning specified in
subsection 2.4(d).
"RECEIVABLE" shall mean any amount owing by any Obligor to an
Originator under an Account, including, without limitation, amounts owing for
the payment of goods and services, annual membership fees, Periodic Finance
Charges, Late Fees, cash advances, access checks, cash advance fees and Special
Fees, if any, including any credit insurance premiums.
"RECEIVABLES PURCHASE AGREEMENT" shall mean the receivables
purchase agreement dated as of January 22, 1997 among the Originators, as
sellers, and the Transferor, as purchaser, as amended or otherwise modified from
time to time.
"RECORD DATE" shall mean, with respect to any Distribution
Date, unless otherwise specified in the applicable Supplement, the Business Day
preceding such Distribution Date, except that, with respect to any Definitive
Certificates, Record Date shall mean the fifteenth day preceding the applicable
Distribution Date.
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"RECOVERIES" shall mean any amounts received by the Servicer
with respect to Receivables in Accounts that previously became Defaulted
Accounts.
"REGISTERED CERTIFICATES" shall have the meaning specified in
Section 6.1.
"RELATED PERSON" shall mean a Person that is an Investor
Certificateholder, an Enhancement Provider, an Affiliate of FDSNB, or a Person
whose status would violate the conditions for a trustee contained in Section
(4)(i) of Rule 3a-7 under the Investment Company Act of 1940, as amended.
"RELEVANT UCC STATE" shall mean each jurisdictions in which
the filing of a UCC financing statement is necessary to perfect the ownership
interest and security interest of the Transferor pursuant to the Receivables
Purchase Agreement or the ownership or security interest of the Trustee
established under this Agreement.
"REMOVAL DATE" shall have the meaning specified in subsection
2.7(b).
"REMOVAL NOTICE DATE" shall mean the day, no later than the
fifth Business Day prior to a Removal Date, on which the Transferor gives notice
to the Trustee pursuant to Section 2.7(a) of its intention to remove Accounts
from the Trust.
"REMOVED ACCOUNTS" shall have the meaning specified in
subsection 2.7(a).
"REQUIREMENTS OF LAW" for any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or to which such Person is
subject, whether federal, state or local (including, without limitation, usury
laws, the federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).
"RESPONSIBLE OFFICER" shall mean any officer within the
Corporate Trust Office (or any successor group
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of the Trustee) who shall have direct responsibility for the administration of
this Agreement, including any Vice President or any other officer of the Trustee
customarily performing functions similar to those performed by any person who at
the time shall be an above-designated officer.
"RETAINED INTEREST" shall mean, on any date of determination,
the sum of the Transferor Amount and the Invested Amount represented by any
Transferor Retained Certificate.
"RETAINED PERCENTAGE" shall mean, on any date of
determination, the percentage equivalent of a fraction the numerator of which is
the Retained Interest and the denominator of which is the aggregate amount of
Principal Receivables PLUS all amounts on deposit in the Excess Funding Account
(but not including investment earnings on such amounts) at the end of the day
immediately prior to such date of determination.
"REVOLVING PERIOD" shall have, with respect to each Series,
the meaning specified in the related Supplement.
"SECURED OBLIGATIONS" shall have the meaning specified in
Section 2.1.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time.
"SERIES" shall mean any series of Investor Certificates, which
may include within any such Series a Class or Classes of Investor Certificates
subordinate to another such Class or Classes of Investor Certificates.
"SERIES ACCOUNT" shall mean any account or accounts
established pursuant to a Supplement for the benefit of the related Series.
"SERIES PAY OUT EVENT" shall have, with respect to any Series,
the meaning specified in the related Supplement.
"SERIES SERVICING FEE PERCENTAGE" shall mean, with respect to
any Series, the amount specified as such in the related Supplement.
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"SERIES TERMINATION DATE" shall mean, with respect to any
Series of Certificates, the date stated as such in the related Supplement.
"SERVICE TRANSACTION FEES" shall have, with respect to any
Account, the meaning specified in the Charge Account Agreement applicable to
such Account for any service transaction fees or similar terms.
"SERVICER" shall mean initially FDSNB and thereafter any
Person appointed as successor as herein provided to service the Receivables.
"SERVICER DEFAULT" shall have the meaning specified in Section
10.1.
"SERVICING FEE" shall have the meaning specified in Section
3.2.
"SETTLEMENT STATEMENT" shall mean a report showing the date
(which shall be a Determination Date) and setting forth the computations
reflected in the form thereof attached as Exhibit D hereto.
"SHARED PRINCIPAL COLLECTIONS" shall mean, with respect to any
Business Day, the aggregate amount of Principal Collections for all outstanding
Series that the related Supplements specify are to be treated as "Shared
Principal Collections" available to be allocated to other Series for such
Business Day.
"SPECIAL FEES" shall mean any fees which are not now but from
time to time may be assessed on the Accounts. On or after the date on which any
of such Special Fees begin to be assessed on the Accounts, the Transferor may
designate in an Officer's Certificate whether such Special Fees shall be treated
as Principal Receivables or Finance Charge Receivables.
"STANDARD & POOR'S" shall mean Standard & Poor's Ratings
Services or its successors.
"SUCCESSOR SERVICER" shall have the meaning specified in
subsection 10.2(a).
"SUPPLEMENT" shall mean, with respect to any Series, a
supplement to this Agreement complying with the
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terms of Section 6.9 of this Agreement, executed in conjunction with any
issuance of Certificates of such Series (or, in the case of the issuance of
Certificates on the Initial Closing Date, the supplement executed in connection
with the issuance of such Certificates).
"SUPPLEMENTAL ACCOUNTS" shall have the meaning specified in
subsection 2.6(c).
"SUPPLEMENTAL CERTIFICATE" shall have the meaning specified in
Section 6.9(d).
"TERMINATION NOTICE" shall have, with respect to any Series,
the meaning specified in Section 10.1.
"TRANSFER AGENT AND REGISTRAR" shall have the meaning
specified in Section 6.3 and shall initially be the Trustee.
"TRANSFER DATE" shall mean, with respect to any Series, the
Business Day immediately prior to each Distribution Date.
"TRANSFEROR" shall mean Prime II Receivables Corporation, a
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto.
"TRANSFEROR AMOUNT" shall mean, on any date of determination,
the aggregate amount of Principal Receivables at the end of the day immediately
prior to such date of determination PLUS all amounts on deposit in the Excess
Funding Account (but not including investment earnings on such amounts) at the
end of such immediately preceding day, MINUS the Aggregate Invested Amount at
the end of such immediately preceding day.
"TRANSFEROR EXCHANGE" shall have the meaning specified in
subsection 6.9(b).
"TRANSFEROR FISCAL YEAR" shall mean the approximately twelve
month period ending on the last day of the January Monthly Period.
"TRANSFEROR INTEREST" shall have the meaning specified in
Section 4.1.
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"TRANSFEROR PERCENTAGE" shall mean, on any date of
determination, when used with respect to Principal Collections, Finance Charge
Collections and Receivables in Defaulted Accounts, a percentage equal to 100%
MINUS the Aggregate Investor Percentage with respect to such categories of
Receivables.
"TRANSFEROR RETAINED CERTIFICATES" shall mean Investor
Certificates of any Series retained by the Transferor.
"TRANSFEROR RETAINED CLASS" shall mean any Class of Investor
Certificates of any Series retained by the Transferor, which Class is designated
as a Retained Class pursuant to the related Supplement.
"TRANSFERRED ACCOUNT" shall mean an Account with respect to
which a new credit account number has been issued by the Servicer or the
Transferor under circumstances resulting from a lost or stolen credit card and
not requiring standard application and credit evaluation procedures under the
Credit and Collection Policy, and which can be traced or identified by reference
to or by way of the computer files or microfiche lists delivered to the Trustee
or the bailee of the Trustee pursuant to Section 2.1 or 2.6 as an account into
which an Account has been transferred.
"TRIGGER EVENT" shall have the meaning specified in subsection
9.2(a).
"TRUST" shall mean the trust created by this Agreement, the
corpus of which shall consist of the Trust Property.
"TRUST EXTENSION" shall have the meaning specified in
subsection 12.1(a).
"TRUST PAY OUT EVENT" shall have, with respect to each Series,
the meaning specified in Section 9.1.
"TRUST PROPERTY" shall have the meaning assigned in Section
2.1.
"TRUST TERMINATION DATE" shall mean the earliest to occur of
(i) unless a Trust Extension shall have occurred, the day after the Distribution
Date with re-
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spect to any Series following the date on which funds shall have been deposited
in the Distribution Account or the applicable Series Account for the payment of
Investor Certificateholders of each Series then issued and outstanding
sufficient to pay in full the Aggregate Invested Amount PLUS interest accrued at
the applicable Certificate Rate through the end of the day prior to the
Distribution Date with respect to each such Series and certain other amounts as
may be specified in any Series Supplement, (ii) if a Trust Extension shall have
occurred, the Extended Trust Termination Date, and (iii) the date specified in
Section 12.1.
"TRUSTEE" shall mean The Chase Manhattan Bank and its
successors and any Person resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor trustee
appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in the applicable jurisdiction.
"UNCOVERED DILUTION AMOUNT" shall mean, for any Business Day,
the amount by which the Transferor Amount would have been reduced below zero as
a result of adjustments to the Aggregate Principal Receivables pursuant to
Section 3.8, with respect to which the Transferor was obligated but failed to
make a deposit into the Excess Funding Account by the close of business on the
preceding Business Day.
"UNDIVIDED INTEREST" shall mean the undivided interest in the
Trust evidenced by an Investor Certificate.
"UNFUNDED CERTIFICATE" shall have the meaning specified in
Section 6.9(b).
"VARIABLE FUNDING CERTIFICATES" shall mean a Series of
Investor Certificates, in one or more Classes, issued pursuant to Section 6.9
and a Variable Funding Supplement hereto.
"VARIABLE FUNDING SUPPLEMENT" shall mean a Supplement executed
in connection with the issuance of Variable Funding Certificates.
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"YIELD FACTOR" shall mean with respect to any Business Day the
percentage equivalent of a fraction, determined on the preceding Date of
Determination (or on such Business Day with respect to each Date of
Determination), the numerator of which is (x) the product of the Billed Finance
Charges for the Monthly Period preceding such Date of Determination and one
MINUS the Delinquency Percentage for the preceding Date of Determination (or on
such Business Day with respect to each Date of Determination) PLUS (y)
Recoveries for the Monthly Period preceding such Date of Determination, and the
denominator of which is the aggregate amount of Collections for the Monthly
Period preceding such Date of Determination.
Section 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in any Supplement or this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
Section 1.1, and accounting terms partially defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of accounting
terms herein are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained herein shall control.
(c) The agreements, representations and warranties of FDSNB in
this Agreement and in any Supplement in its capacity as Servicer and of Prime II
Receivables Corporation in its capacity as Transferor shall be deemed to be the
agreements, representations and warranties of FDSNB and Prime II Receivables
Corporation solely in each such capacity for so long as either of them acts in
each such capacity under this Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or this
Agreement as a whole and not to any particular provision of this Agreement or
any Supplement; and Section, subsection, Schedule and Exhibit references
contained in this Agree-
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ment or any Supplement are references to Sections, subsections, Schedules and
Exhibits in or to this Agreement or any Supplement unless otherwise specified.
The Daily Report and Settlement Statement, the forms of which are attached as
Exhibits C and D to this Agreement, shall be in substantially the forms of
Exhibits C and D, with such changes as the Servicer may determine to be
necessary or desirable; PROVIDED, HOWEVER, that no such change shall serve to
exclude information required by this Agreement or any Supplement and each such
change shall be reasonably acceptable to the Trustee. The Servicer shall, upon
making such determination and receiving the consent of the Trustee to such
change, deliver to the Trustee and each Rating Agency an Officer's Certificate
to which shall be annexed the form of the related Exhibit, as so changed. Upon
the delivery of such Officer's Certificate to the Trustee, the related Exhibit,
as so changed, shall for all purposes of this Agreement constitute such Exhibit.
The Trustee may conclusively rely upon such Officer's Certificate in determining
whether the related Exhibit, as changed, conforms to the requirements of this
Agreement.
[End of Article I]
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 CONVEYANCE OF RECEIVABLES. The Transferor does
hereby transfer, assign, set-over, and otherwise convey to the Trust for the
benefit of the Certificateholders, without recourse, all of its right, title and
interest in, to and under (i) the Receivables now existing and hereafter created
and arising in connection with the Accounts, including, without limitation, any
Automatic Additional Accounts and all accounts, general intangibles, contract
rights, and other obligations of any Obligor with respect to the Receivables,
now or hereafter existing, (ii) all monies and investments due or to become due
with respect thereto (including, without limitation, the right to any Finance
Charge Receivables, including any Recoveries), (iii) all proceeds of such
Receivables, and (iv) the Receivables Purchase Agreement. Such property,
together with all monies and investments on deposit, from time to time, in the
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Collection Account, the Excess Funding Account, the Series Accounts maintained
for the benefit of the Certificateholders of any Series of Certificates, any
Enhancement and all monies available under any Enhancement, to be provided for
any Series for payment to the Certificateholders of such Series, shall
constitute the assets of the Trust (collectively, the "Trust Property"). The
foregoing transfer, assignment, set-over and conveyance does not constitute and
is not intended to result in a creation or an assumption by the Trust, the
Trustee or any Investor Certificateholder of any obligation of the Transferor,
the Servicer, the applicable Originator or any other Person in connection with
the Receivables or any agreement or instrument relating thereto, including,
without limitation, any obligation to any Obligors, merchant banks, merchant
clearance systems, VISA U.S.A., Inc., MasterCard International Incorporated or
insurers, or in connection with the Receivables Purchase Agreement.
In connection with such transfer, assignment, set-over and
conveyance, the Transferor agrees to record and file, at its own expense, one or
more financing statements (including any continuation statements with respect to
such financing statements when applicable) with respect to the Receivables now
existing and hereafter created for the transfer of accounts or general
intangibles (each as defined in Section 9-106 of the UCC as in effect in the
Relevant UCC State) meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the assignment of
the Receivables to the Trust, and to deliver file-stamped copies of such
financing statements or continuation statements or other evidence of such filing
(which may, for purposes of this Section 2.1, consist of facsimile confirmation
of such filing) to the Trustee on or prior to the date of issuance of the
Certificates, and in the case of any continuation statements filed pursuant to
this Section 2.1, as soon as practicable after receipt thereof by the
Transferor. The foregoing transfer, assignment, set-over and conveyance to the
Trust shall be made to the Trustee, on behalf of the Trust, and each reference
in this Agreement to such transfer, assignment, set-over and conveyance shall be
construed accordingly.
In connection with such transfer, the Transferor agrees, at
its own expense, on or prior to the Initial Closing Date (i) to annotate and
indicate in its computer
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files that Receivables created in connection with the Accounts have been
transferred to the Trust pursuant to this Agreement for the benefit of the
Certificateholders and (ii) to deliver to the Trustee or the bailee of the
Trustee a computer file or microfiche list containing a true and complete list
of all such Accounts, identified by account number and setting forth the
Outstanding Balance of each Receivable as of the Cut-Off Date. Such file or list
shall be marked as Schedule 1 to this Agreement, delivered to the Trustee or the
bailee of the Trustee as confidential and proprietary, and is hereby
incorporated into and made a part of this Agreement. The Transferor further
agrees not to alter the file designation referenced in clause (i) of this
paragraph with respect to any Account during the term of this Agreement unless
and until such Account becomes a Removed Account.
To the extent that the transfer of the Receivables from the
Transferor to the Trust hereunder may be characterized as a pledge rather than
as a sale, the Transferor hereby grants and transfers to the Trustee for the
benefit of the Certificateholders a first priority perfected security interest
in all of the Transferor's right, title and interest in, to and under the Trust
Property to secure a loan in an amount equal to the unpaid principal amount of
the Investor Certificates issued hereunder or to be issued pursuant to this
Agreement and the interest accrued thereon at the related Certificate Rate and
to secure all of the Transferor's and Servicer's obligations hereunder,
including, without limitation, the Transferor's obligation to transfer
Receivables hereafter created or acquired to the Trust (the "Secured
Obligations"), and agrees that this Agreement shall constitute a security
agreement under applicable law.
Section 2.2 ACCEPTANCE BY TRUSTEE.
(a) The Trustee hereby acknowledges its acceptance, on behalf
of the Trust, of all right, title and interest previously held by the Transferor
in, to and under the Trust Property and declares that it shall maintain such
right, title and interest, upon the Trust herein set forth, for the benefit of
all Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this
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Agreement, the Transferor delivered to the Trustee or the bailee of the Trustee
the computer file or microfiche list that was represented as being the computer
file or microfiche list described in the third paragraph of Section 2.1.
(b) The Trustee hereby agrees not to disclose to any Person
any of the account numbers or other information contained in the computer files
or microfiche lists delivered to the Trustee or the bailee of the Trustee by the
Transferor pursuant to Sections 2.1, 2.6 and 2.7 ("Account Information") except
as is required in connection with the performance of its duties hereunder or in
enforcing the rights of the Certificateholders or to a Successor Servicer
appointed pursuant to Section 10.2, any successor trustee appointed pursuant to
Section 11.7, any co-trustee or separate trustee appointed pursuant to Section
11.9 or any other Person in connection with a UCC search or as mandated pursuant
to any Requirement of Law applicable to the Trustee. The Trustee agrees to take
such measures as shall be reasonably requested by the Transferor to protect and
maintain the security and confidentiality of such information, and, in
connection therewith, shall allow the Transferor to inspect the Trustee's or the
bailee of the Trustee's security and confidentiality arrangements from time to
time during normal business hours. In the event that the Trustee is required by
law to disclose any Account Information, the Trustee shall provide the
Transferor with prompt written notice, unless such notice is prohibited by law,
of any such request or requirement so that the Transferor may request a
protective order or other appropriate remedy. The Trustee shall use its best
efforts to provide the Transferor with written notice no later than five days
prior to any disclosure pursuant to this subsection 2.2(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 REPRESENTATIONS AND WARRANTIES OF THE
TRANSFEROR. The Transferor hereby represents and warrants to the Trustee, on
behalf of the Trust, as of the Initial Closing Date and, with respect to any
Series
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of Certificates, as of the date of the related Supplement and the related
Closing Date:
(a) ORGANIZATION AND GOOD STANDING. The Transferor is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware and has full corporate power, authority and legal right
to own its properties and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement, any Supplement, the Receivables
Purchase Agreement and to execute and deliver to the Trustee the Certificates
pursuant hereto.
(b) DUE QUALIFICATION. The Transferor is duly qualified to do
business and is in good standing (or is exempt from such requirement) in any
state required in order to conduct business, and has obtained all necessary
licenses and approvals with respect to the Transferor required under federal and
Delaware law; PROVIDED, HOWEVER, that 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.
(c) DUE AUTHORIZATION. The execution and delivery of this
Agreement, any Supplement and the Receivables Purchase Agreement and the
execution and delivery to the Trustee of the Certificates by the Transferor and
the consummation of the transactions provided for in this Agreement, any
Supplement and the Receivables Purchase Agreement have been duly authorized by
the Transferor by all necessary corporate action on its part and this Agreement
will remain, from the time of its execution, an official record of the
Transferor.
(d) BINDING OBLIGATION. Each of this Agreement, any Supplement
and the Receivables Purchase Agreement, and the consummation of the transactions
provided for herein and therein, constitutes a legal, valid, and binding
obligation of the Transferor, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect,
affecting the enforcement of creditors'
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rights in general and as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity).
(e) NO CONFLICTS. The execution, delivery and performance of
this Agreement, the Receivables Purchase Agreement, any Supplement and the
Certificates and the performance of the transactions contemplated by this
Agreement, the Receivables Purchase Agreement and any Supplement and the
fulfillment of the terms hereof by the Transferor, do not (i) contravene its
charter or By-Laws, (ii) violate any provision of, or require any filing (except
for the filings under the UCC required by this Agreement, each of which has been
duly made and is in full force and effect), registration, consent or approval
under, any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the
Transferor, except for such filings, registrations, consents or approvals as
have already been obtained and are in full force and effect, (iii) result in a
breach of or constitute a default or require any consent under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
the Transferor is a party or by which it or its properties may be bound or
affected except those as to which a consent or waiver has been obtained and is
in full force and effect and an executed copy of which has been delivered to the
Trustee, or (iv) result in, or require, the creation or imposition of any lien
upon or with respect to any of the properties now owned or hereafter acquired by
the Transferor other than as specifically contemplated by this Agreement.
(f) TAXES. The Transferor has filed all tax returns (federal,
state and local) required to be filed and has paid or made adequate provision
for the payment of all taxes, assessments and other governmental charges due
from the Transferor or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings. The
Transferor knows of no basis for any material additional tax assessment for any
fiscal year for which adequate reserves have not been established.
(g) NO VIOLATION. The execution and delivery of this
Agreement, any Supplement, the Receivables Purchase Agreement and the
Certificates, the performance of
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the transactions contemplated by this Agreement and the fulfillment of the terms
hereof will not conflict with or violate any Requirements of Law applicable to
the Transferor.
(h) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of the Transferor, threatened against the
Transferor before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Agreement, any Supplement, the Receivables Purchase Agreement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this Agreement, any
Supplement, the Receivables Purchase Agreement or the Certificates, (iii)
seeking any determination or ruling that, in the reasonable judgment of the
Transferor, would materially and adversely affect the performance by the
Transferor of its obligations under this Agreement, any Supplement or the
Receivables Purchase Agreement, (iv) seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of this
Agreement, any Supplement, the Receivables Purchase Agreement or the
Certificates or (v) seeking to affect adversely the income tax attributes of the
Trust.
(i) ALL CONSENTS REQUIRED. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Agreement, any Supplement, the Receivables Purchase Agreement and the
Certificates, the performance of the transactions contemplated by this
Agreement, any Supplement, the Receivables Purchase Agreement and the
fulfillment of the terms hereof, have been obtained.
(j) BONA FIDE RECEIVABLES. Each Receivable is or will be an
account receivable arising out of an Originator's performance in accordance with
the terms of the Charge Account Agreement giving rise to such Receivable. The
Transferor has no knowledge of any fact which should have led it to expect at
the time of the initial creation of an interest in any Eligible Receivable
hereunder that such Eligible Receivable would not be paid in full when due. Each
Receivable classified as an "Eligible Receivable" by the Transferor in any
document or report deliv-
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ered hereunder satisfies the requirements of eligibility contained in the
definition of Eligible Receivable.
(k) PLACE OF BUSINESS. The principal place of business of the
Transferor is in Mason, Ohio, and the offices where the Transferor keeps its
records concerning the Receivables and related contracts are in Mason, Ohio.
(l) USE OF PROCEEDS. No proceeds of the issuance of any
Certificate will be used by the Transferor to purchase or carry any margin
security.
(m) PAY OUT EVENT. As of the Initial Closing Date, no Pay Out
Event and no condition that with the giving of notice and/or the passage of time
would constitute a Pay Out Event (a "Prospective Pay Out Event"), has occurred
and is continuing.
(n) NOT AN INVESTMENT COMPANY. The Transferor is not an
"investment company" within the meaning of the Investment Company Act, or is
exempt from all provisions of such Act.
(o) SOLVENCY. The Transferor is not insolvent and will not be
rendered insolvent upon the transfer of the Receivables to the Trust.
For the purposes of the representations and warranties
contained in this Section 2.3 and made by the Transferor on the Initial Closing
Date, "Certificates" shall mean the Certificates issued on the Initial Closing
Date. The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the respective Receivables to the Trust,
and termination of the rights and obligations of the Servicer pursuant to
Section 10.1. The Transferor hereby represents and warrants to the Trust, with
respect to any Series of Certificates, as of its Closing Date, unless otherwise
stated in the related Supplement, that the representations and warranties of the
Transferor set forth in Section 2.3, are true and correct as of such date (for
the purposes of such representations and warranties, "Certificates" shall mean
the Certificates issued on the related Closing Date). Upon discovery by the
Transferor, the Servicer or a Responsible Officer of the Trustee of a breach of
any of the foregoing representa-
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tions and warranties, the party discovering such breach shall give prompt
written notice to the others.
Section 2.4 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
RELATING TO THE AGREEMENT AND THE RECEIVABLES.
(a) BINDING OBLIGATION; VALID TRANSFER AND ASSIGNMENT. The
Transferor hereby represents and warrants to the Trustee, on behalf of the
Trust, that, as of the Initial Closing Date and with respect to any Series of
Certificates, as of the date of its related Supplement and Closing Date, and,
with respect to any Series and matters involving (X) Supplemental Accounts, as
of the applicable Addition Date and (Y) Automatic Additional Accounts, as of the
date the Receivables of such Accounts are designated for inclusion in the Trust:
(i) The Receivables Purchase Agreement, this
Agreement and any Supplement each constitutes the legal, valid and
binding obligation of the Transferor, enforceable against the
Transferor in accordance with its terms, except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general, and
(B) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(ii) This Agreement constitutes either (A) a valid
transfer, assignment, set-over and conveyance to the Trust of all
right, title and interest of the Transferor in and to the Trust
Property, and such Trust Property will be held by the Trust free and
clear of any Lien of any Person claiming through or under the
Transferor or any of its Affiliates except for (x) Permitted Liens, (y)
the interest of the Transferor as Holder of the Exchangeable Transferor
Certificate and any other Class of Certificates held by the Transferor
from time to time and (z) the Transferor's right, if any, to interest
accruing on, and investment earnings, if any, in respect of the
Interest Funding Account, the Principal Account, the Excess Funding
Account, or any Series Account, as provided in this Agreement or the
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related Supplement, or (B) a grant of a security interest (as defined
in the UCC as in effect in the Relevant UCC State) in, to and under the
Trust Property, which grant is enforceable with respect to the existing
Receivables and any Receivables in Automatic Additional Accounts
designated for inclusion in the Trust (other than Receivables in
Supplemental Accounts) and the proceeds thereof upon execution and
delivery of this Agreement, and which will be enforceable with respect
to such Receivables hereafter created and the proceeds thereof, upon
such creation. If this Agreement constitutes the grant of a security
interest to the Trust in such property, upon the filing of the
financing statement described in Section 2.1 and in the case of the
Receivables hereafter created and proceeds thereof, upon such creation,
the Trust shall have a first priority perfected security interest in
such property, except for Permitted Liens. Except as contemplated in
this Agreement or any Supplement, neither the Transferor nor any Person
claiming through or under the Transferor shall have any claim to or
interest in the Collection Account, the Principal Account, the Interest
Funding Account, the Distribution Account, the Excess Funding Account,
the principal funding account for any Series or any other Series
Account, except for the Transferor's rights to receive interest
accruing on, and investment earnings in respect of, any such account as
provided in this Agreement (or, if applicable, any Series Account as
provided in any Supplement) and, if this Agreement constitutes the
grant of a security interest in such property, except for the interest
of the Transferor in such property as a debtor for purposes of the UCC
as in effect in the Relevant UCC State. The Receivables Purchase
Agreement constitutes a transfer, assignment, set-over and conveyance
to the Transferor of all rights, titles and interests of the
Originators in and to the Receivables purported to be sold thereunder,
whether then existing or thereafter created in the applicable Accounts
and the proceeds thereof.
(iii) The Transferor is not insolvent.
(iv) The Transferor is the legal and beneficial owner
of all right, title and interest in
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and to each Receivable and each Receivable has been or will be
transferred to the Trust free and clear of any Lien other than
Permitted Liens.
(v) All consents, licenses, approvals or
authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by
the Transferor in connection with the transfer of Trust Property to the
Trust have been duly obtained, effected or given and are in full force
and effect.
(vi) The Transferor has clearly and unambiguously
marked all its computer records and all its microfiche storage files
regarding the Receivables as the property of the Trust and shall
maintain such records in a manner such that the Trust shall have a
perfected interest in such Receivables.
(vii) As of the Initial Closing Date, on the Business
Day following the date the Servicer receives a Termination Notice
pursuant to Section 10.1 and on the Business Day following any
Amortization Period Commencement Date, Schedule 1 to this Agreement is
and will be an accurate and complete listing of all Accounts in all
material respects as of such day and the information contained therein
with respect to the identity of each Account and the aggregate unpaid
balance of the Receivables existing thereunder is and will be true and
correct in all material respects as of such day.
(viii) Each Account classified as an "Eligible
Account" by the Transferor in any document or report delivered
hereunder will satisfy the requirements contained in the definition of
Eligible Account and each Receivable classified as an "Eligible
Receivable" by the Transferor in any document or report delivered
hereunder will satisfy the requirements contained in the definition of
Eligible Receivable.
(ix) All material information with respect to the
Accounts and the Receivables provided to the Trustee by the Transferor
was true and correct as of the Closing Date, or with respect to
Supplemental Accounts as of each Addition Date and
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with respect to Automatic Additional Accounts, as of the day
Receivables arising under each such Account are designated for
inclusion in the Trust, as the case may be.
(x) Each Receivable then existing has been conveyed
to the Trust free and clear of any Lien of any Person claiming through
or under the Transferor or any of its Affiliates (other than Permitted
Liens) and in compliance, in all material respects, with all
Requirements of Law applicable to the Transferor.
(xi) With respect to each Receivable then existing,
all consents, licenses, approvals or authorizations of or registrations
or declarations with any Governmental Authority required to be
obtained, effected or given by the Transferor in connection with the
conveyance of such Receivable to the Trust have been duly obtained,
effected or given and are in full force and effect.
(xii) On each day on which any new Receivable is
purchased by the Transferor, the Transferor shall be deemed to
represent and warrant to the Trust that (A) each Receivable purchased
by the Transferor on such day has been conveyed to the Trust in
compliance, in all material respects, with all Requirements of Law
applicable to the Transferor and free and clear of any Lien of any
Person claiming through or under the Transferor or any of its
Affiliates (other than Permitted Liens) and (B) with respect to each
such Receivable, all consents, licenses, approvals or authorizations of
or registrations or declarations with, any Governmental Authority
required to be obtained, effected or given by the Transferor in
connection with the conveyance of such Receivable to the Trust have
been duly obtained, effected or given and are in full force and effect.
(b) NOTICE OF BREACH. The representations and warranties set
forth in this Section 2.4 shall survive the transfer and assignment of the
respective Receivables to the Trust. Upon discovery by the Transferor, the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
representations and warranties set
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forth in this Section 2.4, the party discovering such breach shall give prompt
written notice to the other parties mentioned above. The Transferor agrees to
cooperate with the Servicer and the Trustee in attempting to cure any such
breach.
(c) DESIGNATION OF INELIGIBLE RECEIVABLES. In the event of a
breach with respect to a Receivable of any representations and warranties set
forth in subsection 2.3(i) or subsections 2.4(a)(ii) through (xii), or in the
event that a Receivable is not an Eligible Receivable as a result of the failure
to satisfy the conditions set forth in the definition of Eligible Receivable,
such Receivable shall be designated an "Ineligible Receivable" and shall be
assigned a principal balance of zero for the purpose of determining the
aggregate amount of Principal Receivables on any day; PROVIDED, HOWEVER, that if
such representations and warranties with respect to such Receivable shall
subsequently be true and correct in all material respects as if such Receivable
had been created on such day or such Receivable shall subsequently satisfy the
conditions set forth in the definition of Eligible Receivable, such Receivable
shall be designated an Eligible Receivable, and the principal amount of such
Receivable (determined in accordance with the procedures set forth in the
definition of Principal Receivable) shall be included in determining the
aggregate amount of Principal Receivables on such day and the amount of such
Receivable remaining after subtracting the principal amount of such Receivable
shall be designated a Finance Charge Receivable, and shall be included in
determining the aggregate amount of Finance Charge Receivables for such day.
When the provisions of this subsection 2.4(c) require designation of a
Receivable as an Ineligible Receivable, the Servicer shall deduct the product of
the unpaid balance of such Ineligible Receivable and one MINUS the Finance
Charge Receivable Factor from the Principal Receivables in the Trust and
decrease the Transferor Amount by such amount. On and after the date of such
designation, each Ineligible Receivable shall not be given credit in determining
the aggregate amount of Principal Receivables used in the calculation of any
Investor Percentage, the Transferor Percentage or the Transferor Amount. In the
event that on any Business Day the exclusion of an Ineligible Receivable from
the calculation of the Transferor Amount would cause the Transferor Amount to be
reduced below the Minimum Transferor Amount, the Transferor shall make a
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48
deposit in the Excess Funding Account (for allocation as a Principal Receivable)
in immediately available funds prior to the next succeeding Business Day in an
amount equal to the amount by which the Transferor Amount would be reduced below
the Minimum Transferor Amount as a result of the exclusion of such Ineligible
Receivable. The portion of such deposit allocated to the Investor Certificates
of each Series shall be distributed to the Investor Certificateholders of each
Series in the manner specified in Article IV.
(d) REASSIGNMENT OF TRUST PORTFOLIO. In the event of a breach
of any of the representations and warranties set forth in subsections 2.3(a),
(b) or (c) or subsections 2.4(a)(i) or (ii) with respect to any Series, either
the Trustee or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Invested Amount of such
Series, by notice then given in writing to the Transferor (and to the Trustee
and the Servicer, if given by the Investor Certificateholders), may direct the
Transferor to accept reassignment of an amount of Principal Receivables equal to
the face amount of the Invested Amount to be repurchased (as specified below)
within 60 days of such notice (or within such longer period as may be specified
in such notice), and the Transferor shall be obligated to accept reassignment of
such Principal Receivables on a Distribution Date specified by the Transferor
(such Distribution Date, the "Reassignment Date") occurring within such
applicable period on the terms and conditions set forth below; PROVIDED,
HOWEVER, that no such reassignment shall be required to be made if at any time
during such applicable period, the representations and warranties contained in
subsections 2.3(a), (b) or (c) or subsections 2.4(a)(i) or (ii) shall then be
true and correct in all material respects. The Transferor shall, on the Transfer
Date (in next day funds) preceding the Reassignment Date, deposit an amount
equal to the reassignment deposit amount for such Series in the Distribution
Account or Series Account, as provided in the related Supplement, for
distribution to the Investor Certificateholders pursuant to Article XII. The
reassignment deposit amount with respect to any Series, unless otherwise stated
in the related Supplement, shall be equal to (i) the Invested Amount of such
Series at the end of the day on the last day of the Monthly Period preceding the
Reassignment Date; PROVIDED, HOWEVER, that with respect to any Series
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49
issued pursuant to a Variable Funding Supplement such amount shall be the
Invested Amount of such Series as of the Reassignment Date, less the amount, if
any, previously allocated for payment of principal to such Certificateholders on
the related Reassignment Date in the Monthly Period in which the Reassignment
Date occurs, PLUS (ii) an amount equal to all interest accrued but unpaid on the
Investor Certificates of such Series at the applicable Certificate Rate through
such last day, less the amount, if any, previously allocated for payment of
interest to the Certificateholders of such Series on the related Distribution
Date in the Monthly Period in which the Reassignment Date occurs PLUS any other
amounts accrued and owing as specified in the applicable Supplement. Payment of
the reassignment deposit amount with respect to any Series, and all other
amounts in the Distribution Account or the applicable Series Account in respect
of the preceding Monthly Period, shall be considered a prepayment in full of the
Receivables represented by the Investor Certificates of such Series. On the
Distribution Date following the Transfer Date on which such amount has been
deposited in full into the Distribution Account or the applicable Series
Account, the Receivables and all monies due or to become due with respect
thereto and all proceeds of the Receivables shall be released to the Transferor
after payment of all amounts otherwise due hereunder on or prior to such dates
and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as shall
be prepared by and as are reasonably requested by the Transferor to vest in the
Transferor, or its designee or assignee, all right, title and interest of the
Trust in and to such Receivables, all monies due or to become due with respect
thereto and all proceeds of such Receivables allocated to such Receivables
pursuant to the related Supplement. If the Trustee or the Investor
Certificateholders of any Series give notice directing the Transferor to accept
reassignment as provided above, the obligation of the Transferor to accept
reassignment of the applicable Receivables and pay the reassignment deposit
amount pursuant to this subsection 2.4(d) shall constitute the sole remedy
respecting a breach of the representations and warranties contained in
subsections 2.3(a), (b) and (c) and subsections 2.4(a)(i) and (ii) available to
the Investor Certificateholders of such Series or the Trustee on behalf of the
Investor Certificateholders of
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such Series. The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable by the Transferor pursuant to this Agreement or any Supplement or
the eligibility of any Receivable for purposes of this Agreement or any
Supplement.
Section 2.5 COVENANTS OF THE TRANSFEROR. The Transferor
hereby covenants that:
(a) RECEIVABLES TO BE ACCOUNTS OR GENERAL INTANGIBLES. The
Transferor will take no action to cause any Receivable to be evidenced by any
instrument (as defined in the UCC as in effect in the Relevant UCC State). The
Transferor will take no action to cause any Receivable to be anything other than
an "account" or a "general intangible" (each as defined in the UCC as in effect
in the Relevant UCC State).
(b) SECURITY INTERESTS. Except for the conveyances hereunder,
the Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter created, or any interest therein; the
Transferor will immediately notify the Trustee of the existence of any Lien on
any Receivable; and the Transferor shall defend the right, title and interest of
the Trust in, to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Transferor; PROVIDED, HOWEVER, that nothing in this subsection 2.5(b) shall
prevent or be deemed to prohibit the Transferor from suffering to exist upon any
of the Receivables any Permitted Lien.
(c) CHARGE ACCOUNT AGREEMENTS AND CREDIT AND COLLECTION
POLICIES. The Transferor shall comply with and perform its obligations and shall
cause the Originators to comply with and perform their obligations under the
Charge Account Agreements relating to the Accounts and the Credit and Collection
Policy except insofar as any failure to comply or perform would not materially
and adversely affect the rights of the Trust or the Certificateholders hereunder
or under the Certificates. The Transferor may change the terms and provisions of
the Charge Account Agreements or the Credit and Collection Policy in any respect
(including, without limitation, the
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reduction of the required minimum monthly payment, the calculation of the
amount, or the timing, of charge-offs and the periodic finance charges and other
fees to be assessed thereon) only if such change (i) would not, in the
reasonable belief of the Transferor, cause, immediately or with the passage of
time, a Pay Out Event to occur and (ii) (A) if it owns a comparable segment of
charge card accounts, such change is made applicable to the comparable segment
of the revolving credit card accounts owned by the Transferor, if any, which
have characteristics the same as, or substantially similar to, the Accounts that
are the subject of such change and (B) if it does not own such a comparable
segment, it will not make any such change with the intent to materially benefit
the Transferor over the Investor Certificateholders, except as otherwise
restricted by an endorsement, sponsorship, or other agreement between the
Transferor and an unrelated third party or by the terms of the Charge Account
Agreements.
(d) ACCOUNT ALLOCATIONS. In the event that the Transferor is
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement (including, without limitation, by reason of
the application of the provisions of Section 9.2 or an order by any Governmental
Authority or any court of competent jurisdiction that the Transferor not
transfer any additional Receivables to the Trust) then, in any such event, (A)
the Transferor agrees to allocate and pay to the Trust, after the date of such
inability, all Collections with respect to Receivables, and all amounts which
would have constituted Collections with respect to Receivables but for the
Transferor's inability to transfer such Receivables; (B) the Transferor agrees
to have such amounts applied as Collections in accordance with Article IV; and
(C) for only so long as all Collections and all amounts which would have
constituted Collections are allocated and applied in accordance with clauses (A)
and (B) above, Receivables (and all amounts which would have constituted
Receivables but for the Transferor's inability to transfer Receivables to the
Trust) that are written off as uncollectible in accordance with the applicable
Credit and Collection Policy shall continue to be allocated in accordance with
Article IV, and all amounts that would have constituted Receivables but for the
Transferor's inability to transfer Receivables to the Trust shall be deemed to
be Receiv-
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ables for the purpose of calculating (i) the applicable Investor Percentage with
respect to any Series and (ii) the Aggregate Investor Percentage thereunder and
(iii) Principal Receivables and Finance Charge Receivables. If the Transferor is
unable pursuant to any Requirement of Law to allocate Collections as described
above, the Transferor agrees that it shall in any such event allocate, after the
occurrence of such event, payments on each Account with respect to the principal
balance of such Account first to the oldest principal balance of such Account
and to have such payments applied as Collections in accordance with Article IV.
(e) DELIVERY OF COLLECTIONS. In the event that the Transferor
receives Collections, the Transferor agrees to pay to the Servicer all payments
received by the Transferor in respect of the Receivables as soon as practicable
after receipt thereof by the Transferor.
(f) CONVEYANCE OF ACCOUNTS. The Transferor covenants and
agrees that it will not permit the Originators to convey, assign, exchange or
otherwise transfer any Account to any Person prior to the termination of this
Agreement pursuant to Article XII; PROVIDED, HOWEVER, that the Transferor shall
not be prohibited hereby from permitting an Originator to convey, assign,
exchange or otherwise transfer an Account of such Originator in connection with
a transaction in which such Originator and its successor agree to comply with
provisions substantially similar to those of either Section 2.7 or Section 7.2.
(g) NOTICE OF LIENS. The Transferor shall notify the Trustee
promptly after becoming aware of any Lien on any Receivable other than Permitted
Liens.
(h) ENFORCEMENT OF RECEIVABLES PURCHASE AGREEMENT. The
Transferor agrees to take all action necessary and appropriate to enforce its
rights and claims under the Receivables Purchase Agreement.
(i) SEPARATE BUSINESS. Other than with respect to In-Store
Payments, the Transferor will not permit its assets to be commingled with those
of FDSNB or FCHC, the Transferor shall maintain separate corporate records and
books of account from those of FDSNB and FCHC and the Transferor shall conduct
its business from an
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independent office. The Transferor will conduct its business solely in its own
name and will cause FDSNB and FCHC to conduct their business solely in their own
names so as not to mislead others as to the identity of the entity with which
those others are concerned. The Transferor will provide for its own operating
expenses and liabilities from its own funds, except that the organizational
expenses of the Transferor may be paid by FDSNB or FCHC. The Transferor will not
hold itself out, or permit itself to be held out, as having agreed to pay, or as
being liable for, the debts of FDSNB or FCHC. The Transferor shall cause FDSNB
and FCHC not to hold themselves out, or permit themselves to be held out, as
having agreed to pay, or as being liable for, the debts of the Transferor. The
Transferor will maintain an arm's length relationship with FDSNB and FCHC and
any of their respective Affiliates with respect to any transactions between the
Transferor, on the one hand, and FDSNB or FCHC or any of their respective
Affiliates on the other.
(j) ORIGINATORS. Transferor shall not acquire Receivables from
any Person other than an Originator which has agreed to comply with all
applicable terms of the Receivables Purchase Agreement or another agreement
containing terms identical in all material respects to the terms contained in
the Receivables Purchase Agreement.
(k) RECEIVABLES PURCHASE AGREEMENT NOTICES. The Transferor
shall promptly give the Trustee copies of any notices, reports or certificates
given or delivered to the Transferor under the Receivables Purchase Agreement.
(l) CAPITALIZATION. The Transferor shall maintain Equity in an
amount adequate to meet its obligations as such may arise from time to time. As
used herein, "Equity" means, at any date, without duplication, the sum of (i)
the Transferor's net worth (determined in accordance with generally accepted
accounting principles) and (ii) the outstanding principal amount of, and all
accrued and unpaid interest on, the Subordinated Promissory Note dated January
23, 1997 from the Transferor to FCHC, as such note may be amended, waived, or
otherwise modified from time to time in accordance with the terms thereof.
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(m) NOTICE OF CHANGE IN MONTHLY PERIOD. The Transferor shall
provide written notice to the Trustee at least 15 Business Days in advance of
any change in its fiscal month.
Section 2.6 ADDITION OF ACCOUNTS.
(a) Except as otherwise provided in this subsection 2.6(a),
all consumer revolving credit card accounts which meet the definition of
Automatic Additional Accounts shall be included as Accounts from and after the
date upon which such Automatic Additional Accounts come into existence and all
Receivables in such Automatic Additional Accounts, whether such Receivables are
then existing or thereafter created, shall be transferred automatically to the
Trust upon purchase by the Transferor. The Transferor, at its option, may at any
time, by providing written notice to the Trustee, the Servicer and each Rating
Agency, specify a date (the "Suspension Date") as of which the inclusion of
Automatic Additional Accounts as Accounts shall be terminated or suspended.
Within five Business Days following any Suspension Date, the Transferor shall
provide to the Trustee or the bailee of the Trustee a list of all Accounts as of
the Suspension Date (which list may be in the form of a microfiche or computer
file and which shall be incorporated by reference into this Agreement). In the
event that following any Suspension Date the Transferor desires to resume
including Automatic Additional Accounts as Accounts, it will provide at least
five Business Days' prior written notice to the Trustee, the Servicer and each
Rating Agency of the date (the "Resumption Date") upon which such resumption
will occur. Within five Business Days following the Resumption Date, the
Transferor will provide to the Trustee or the bailee of the Trustee a computer
file or microfiche list containing a true and complete list of all consumer
revolving credit card accounts which (i) came into existence on or after the
applicable Suspension Date, (ii) meet the definition of Automatic Additional
Accounts, (iii) have not been included as Accounts on or prior to such
Resumption Date pursuant to subsections 2.6(b) or 2.6(c) and (iv) the Transferor
does not wish to include as Accounts from and after such Resumption Date. All
Automatic Additional Accounts coming into existence on and after the Resumption
Date shall be included as Accounts and all Receivables in such Automatic
Additional Accounts, whether such Receiv-
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ables are then existing or thereafter created, shall be transferred
automatically to the Trust upon purchase by the Transferor. Within five Business
Days after the Resumption Date, the Transferor agrees to amend all financing
statements relating to the Receivables to reflect such resumption. For all
purposes of this Agreement, all receivables of such Automatic Additional
Accounts shall be treated as Receivables upon their creation and shall be
subject to the eligibility criteria specified in the definitions of "Eligible
Receivable" and "Eligible Account."
(b) On any day on which the Receivables in Automatic
Additional Accounts are to be transferred to the Trust, such Accounts shall be
included as Eligible Accounts if such Accounts satisfy the requirements of
clauses (a) through (e) of the definition of Eligible Accounts.
(c) If the Transferor has elected to terminate or suspend the
inclusion of Automatic Additional Accounts and (i) on any Record Date, the
Transferor Amount (excluding any portion thereof represented by a Supplemental
Certificate) for the related Monthly Period is less than the Minimum Transferor
Amount, the Transferor shall designate additional credit card accounts or any
successor credit card account designation accounts ("Supplemental Accounts") to
be included as Accounts in a sufficient amount such that the Transferor Amount
as a percentage of the Aggregate Principal Receivables for such Monthly Period
after giving effect to such addition is at least equal to the Minimum Transferor
Amount, or (ii) on any Record Date, the aggregate amount of Principal
Receivables is less than the Minimum Aggregate Principal Receivables, the
Transferor shall designate Supplemental Accounts to be included as Accounts in a
sufficient amount such that the aggregate amount of Principal Receivables will
be equal to or greater than the Minimum Aggregate Principal Receivables.
Receivables from such Supplemental Accounts shall be transferred to the Trust on
or before the tenth Business Day following such Record Date.
(d) In addition to its obligation under subsection 2.6(c), if
and for so long as the Transferor has elected to terminate or suspend the
inclusion of Automatic Additional Accounts, the Transferor may upon ten
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Business Days' notice to the Trustee and each Rating Agency, but shall not be
obligated to, designate from time to time Supplemental Accounts of the
Transferor to be included as Accounts.
(e) The Transferor agrees that any such transfer of
Receivables from Supplemental Accounts, under subsection 2.6(c) or (d), shall
satisfy the following conditions (to the extent provided below):
(i) on or before the fifth Business Day prior to the
Addition Date with respect to additions pursuant to subsection 2.6(c)
and on or before the tenth Business Day prior to the Addition Date with
respect to additions pursuant to subsection 2.6(d) (as applicable, the
"Notice Date"), the Transferor shall give the Trustee, each Rating
Agency and the Servicer written notice that such Supplemental Accounts
will be included, which notice shall specify the approximate aggregate
amount of the Receivables to be transferred;
(ii) on or before the applicable Addition Date, the
Transferor shall have delivered to the Trustee a written assignment
(including an acceptance by the Trustee on behalf of the Trust for the
benefit of the Investor Certificateholders) in substantially the form
of Exhibit B (the "Assignment") and the Transferor shall have indicated
in its computer files that the Receivables created in connection with
the Supplemental Accounts have been transferred to the Trust and,
within five Business Days thereafter, the Transferor shall have
delivered to the Trustee or the bailee of the Trustee a computer file
or microfiche list containing a true and complete list of all
Supplemental Accounts, identified by account number and the Outstanding
Balance of the Receivables in such Supplemental Accounts, as of the
Addition Cut-Off Date, which computer file or microfiche list shall be
as of the date of such Assignment incorporated into and made a part of
such Assignment and this Agreement;
(iii) the Transferor shall represent and warrant that
(x) each such Supplemental Account is an Eligible Account and each
Receivable in such Supplemental Account is an Eligible Receivable, (y)
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no selection procedures believed by the Transferor to be materially
adverse to the interests of the Investor Certificateholders were
utilized in selecting the Supplemental Accounts, provided, that, the
selection of newly originated Accounts is deemed not to be materially
adverse to the interests of the Investor Certificateholders, and (z) as
of the applicable Addition Date, the Transferor is not insolvent and
will not be rendered insolvent upon the transfer of Receivables to the
Trust;
(iv) the Transferor shall represent and
warrant that, as of the Addition Date, the Assignment
constitutes either (x) a valid transfer and assignment to the Trust
of all right, title and interest of the Transferor in and to (i) the
Receivables then existing and thereafter created and arising in
connection with the Supplemental Accounts, including, without
limitation, all accounts, general intangibles, contract rights, and
other obligations of any Obligor with respect to the Receivables,
then or thereafter existing, (ii) all monies and investments due or
to become due with respect thereto (including, without limitation,
the right to any payment of interest and Finance Charge Receivables,
including any Recoveries) and (iii) all proceeds (as defined in the
UCC as in effect in the Relevant UCC State) with respect to such
Receivables, and such Receivables and all proceeds thereof will be
held by the Trust free and clear of any Lien of any Person claiming
through or under the Transferor or any of its Affiliates except for
(I) Permitted Liens, (II) the interest of the Transferor as Holder of
the Exchangeable Transferor Certificate and any other Class or Series
of Certificates and (III) the Transferor's right, if any, to receive
interest accruing on, and investment earnings, if any, in respect of,
any Interest Funding Account, any Principal Account, the Excess
Funding Account or any Series Account as provided in the Pooling and
Servicing Agreement and any Supplement; or (y) a grant of a security
interest (as defined in the UCC as in effect in the Relevant
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UCC State) thereof upon such creation. In addition, the Transferor
shall represent and warrant that, if the Assignment constitutes the
grant of a security interest to the Trust in such property pursuant
to clause (y) above, upon filing of a financing statement described
in the Assignment with respect to the Supplemental Accounts designated
thereby and in the case of the Receivables of such Supplemental
Accounts thereafter created and the proceeds (as defined in the UCC as
in effect in the Relevant UCC State) thereof, upon such creation, the
Trust shall have a first priority perfected security interest in such
property, except for Permitted Liens.
(v) the Transferor shall deliver to the Trustee an
Officer's Certificate substantially in the form of Schedule 2 to
Exhibit B confirming the items set forth in paragraph (ii) above;
(vi) the Transferor shall deliver to the Trustee an
Opinion of Counsel with respect to the Receivables in the Supplemental
Accounts (with a copy to the Rating Agencies) substantially in the form
of Exhibit F; and
(vii) the Transferor shall have received written
notice from each Rating Agency that the inclusion of such accounts as
Supplemental Accounts pursuant to subsection 2.6(c) or (d), as the case
may be, will not result in the reduction or withdrawal of its then
existing rating of any Series of Investor Certificates then issued and
outstanding and shall have delivered such notice to the Trustee.
Section 2.7 REMOVAL OF ACCOUNTS.
(a) On each Determination Date that the Transferor Amount for
the related Monthly Period exceeds the Minimum Transferor Amount, the Trustee
shall be deemed to have offered to the Transferor automatically and without any
notice to or action by or on behalf of the Trustee, as of such Determination
Date, the right to remove from the Trust all of the Trust's right, title and
interest in, to and under the Receivables now existing and hereafter created,
all monies due or to become due and all amounts received with respect thereto
and all proceeds thereof in or with respect to those Accounts designated
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by the Transferor (the "Removed Accounts") in an aggregate amount not greater
than (i) at any time the excess of the Transferor Amount over the Minimum
Transferor Amount, and (ii) if any Amortization Period has commenced with
respect to any Series, the lesser of (x) the excess of the Transferor Amount
over the Minimum Transferor Amount and (y) the excess of Aggregate Principal
Receivables PLUS any amount on deposit in any Principal Account for the benefit
of the Holders of Investor Certificates of such Series over the Minimum
Aggregate Principal Receivables. To accept such offer, the Transferor is
required to furnish to the Trustee and each Rating Agency written notice by the
fifth Business Day after the Determination Date specifying the approximate
aggregate amount of Principal Receivables covered by the offer that the
Transferor intends to accept.
(b) In addition to the satisfaction of the conditions set
forth in subsection 2.7(a), the Transferor shall be permitted to accept
reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
(i) On each date specified by the Transferor for
removal of the Removed Accounts (a "Removal Date"), the Transferor
shall prepare and the Trustee shall execute and deliver to the
Transferor a written reassignment in substantially the form of Exhibit
H (the "Reassignment") and the Transferor shall deliver to the Trustee
or the bailee of the Trustee a computer file or microfiche list
containing a true and complete schedule identifying all Accounts the
Receivables of which remain in the Trust specifying for each such
Account, as of the Removal Notice Date, its account number and the
Outstanding Balance of such Account. Such computer file or microfiche
list shall be incorporated into and made part of this Agreement as of
the date of such Reassignment.
(ii) The Transferor shall represent and warrant as of
each Removal Notice Date that (a) the list of the Accounts not removed
from the Trust, as of the Removal Notice Date, complies in all material
respects with the requirements of paragraph (i) above and (b) either
(1) no selection procedure used by the Transferor which is materially
adverse to the
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interests of the Investor Certificateholders was utilized in selecting
the Removed Accounts or (2) a random selection procedure was used by
the Transferor in selecting the Removed Accounts.
(iii) The Transferor shall represent and warrant that
the removal of any Receivables in any Removed Accounts on any Removal
Date shall not, in the reasonable belief of the Transferor, cause a Pay
Out Event to occur.
(iv) The Transferor shall have delivered at least ten
days' (or such lesser number as any Rating Agency may agree) prior
written notice (which may be given prior to the Removal Date in
expectation that the Trustee will make the offer described in
subsection 2.7(a)) of such removal to each Rating Agency which has
rated any outstanding Series and the Trustee shall have received
written confirmation from each such Rating Agency that such Rating
Agency will not reduce or withdraw its rating on any outstanding Series
as a result of such removal.
(v) The Transferor shall have delivered to the
Trustee a certificate of a Vice President or more senior officer
confirming the Transferor's compliance with the items set forth in
paragraphs (i) through (iv) above. The Trustee may conclusively rely on
such certificate, shall have no duty to make inquiries with regard to
the matters set forth therein and shall incur no liability in so
relying.
(c) Upon satisfaction of the conditions set forth in
subsections 2.7(a) and (b), the Trustee shall execute and deliver the
Reassignment to the Transferor, and the Receivables from the Removed Accounts
shall no longer constitute a part of the Trust.
(d) Notwithstanding any other provisions of this Section 2.7,
the Transferor will be permitted to designate Removed Accounts and to remove
from the Trust all of the Trust's right, title and interest in, to and under the
Receivables then existing in such Removed Accounts together with all monies due
or to become due and all amounts received with respect thereto and all proceeds
thereof or with respect to such Removed Accounts in connection with the sale by
Federated or any Affiliate of
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Federated of all or substantially all of the capital stock or assets of any
Federated retail operating subsidiary if the conditions in clauses (i), (iii)
and (iv) of subsection 2.7(b) have been satisfied and the Transferor shall have
delivered to the Trustee an Officer's Certificate confirming the compliance with
such conditions; PROVIDED, HOWEVER, that the Transferor will have the option
under such circumstances, if it provides the Trustee with an Opinion of Counsel
to the effect that the Trust will continue to have a first priority perfected
security interest in all Receivables remaining in the Trust subsequent to such
Reassignment, to leave in the Trust all of the Trust's right, title and interest
in, to and under the Receivables then existing, together with all monies due or
to become due and all amounts received with respect thereto and all proceeds
thereof in or with respect to the Removed Accounts and cease, from and after the
applicable Removal Date, to transfer, assign, setover or otherwise convey to the
Trust the Receivables thereafter created and arising in connection with the
Removed Accounts, all monies due or to become due and all amounts received with
respect thereto and all proceeds thereof in or with respect to the Removed
Accounts, in which case the Reassignment shall be modified accordingly.
[End of Article II]
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 ACCEPTANCE OF APPOINTMENT AND OTHER MATTERS
RELATING TO THE SERVICER.
(a) FDSNB agrees to act as the Servicer under this Agreement.
The Investor Certificateholders of each Series by their acceptance of the
related Certificates consent to FDSNB acting as Servicer. Notwithstanding the
foregoing or any other provisions of this Agreement or any Supplement, the
Investor Certificateholders consent to an Affiliate of FDSNB acting as Servicer
hereunder, in full substitution thereof; PROVIDED, HOWEVER, that such Affiliate
shall expressly assume, by an agreement supplemental hereto, executed and
delivered to the Trustee, the
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performance of every covenant and obligation of the Servicer, as applicable
hereunder, and shall in all respects be designated the Servicer under this
Agreement; PROVIDED, FURTHER, that FDSNB will remain jointly and severally
liable with such Affiliate.
(b) The Servicer shall service and administer the Receivables
and shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures and the Credit and Collection Policies
and shall have full power and authority, acting alone or through any party
properly designated by it hereunder, to do any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing and subject to Section 10.1,
the Servicer is hereby authorized and empowered (i) to make withdrawals from the
Collection Account as set forth in this Agreement, (ii) unless such power and
authority is revoked by the Trustee on account of the occurrence of a Servicer
Default pursuant to Section 10.1, to instruct the Trustee to make withdrawals
and payments, from the Interest Funding Account, the Excess Funding Account, the
Principal Account and any Series Account, in accordance with such instructions
as set forth in this Agreement, (iii) unless such power and authority is revoked
by the Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct the Trustee in writing to take any action permitted or
required under any Enhancement at such time as set forth in this Agreement and
any Supplement, (iv) to execute and deliver, on behalf of the Trust for the
benefit of the Certificateholders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables, (v) to make any filings, reports,
notices, applications, registrations with, and to seek any consents or
authorizations from, the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or advisable to
comply with any federal or state securities or reporting requirements and (vi)
to delegate certain of its service, collection, enforcement and administrative
duties hereunder with respect to the
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Accounts and the Receivables to any Person who agrees to conduct such duties in
accordance with the Credit and Collection Policies; PROVIDED, HOWEVER, that the
Servicer shall notify the Trustee in writing of any material delegation. The
Trustee agrees that it shall promptly follow the instructions of the Servicer to
withdraw funds from the Principal Account, the Interest Funding Account, the
Excess Funding Account, or any Series Account and to take any action required
under any Enhancement at such time as required under this Agreement. The Trustee
shall execute at the Servicer's written request such documents prepared by the
Transferor and acceptable to the Trustee as the Servicer certifies are necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(c) In the event that the Transferor is unable for any reason
to transfer Receivables to the Trust in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 9.2 or the order of any court of competent jurisdiction
that the Transferor not transfer any additional Principal Receivables to the
Trust) then, in any such event, (A) the Servicer agrees to allocate, after such
date, all Collections with respect to Principal Receivables, and all amounts
which would have constituted Collections with respect to Principal Receivables
but for the Transferor's inability to transfer such Receivables in accordance
with subsection 2.5(d); (B) the Servicer agrees to apply such amounts as
Collections in accordance with Article IV and (C) for only so long as all
Collections and all amounts which would have constituted Collections are
allocated and applied in accordance with clauses (A) and (B) above, Principal
Receivables and all amounts which would have constituted Principal Receivables
but for the Transferor's inability to transfer Receivables to the Trust that are
written off as uncollectible in accordance with this Agreement shall continue to
be allocated in accordance with Article IV and all amounts which would have
constituted Principal Receivables but for the Transferor's inability to transfer
Receivables to the Trust shall be deemed to be Principal Receivables for the
purpose of calculating the applicable Investor Percentage thereunder. If the
Servicer is unable pursuant to any Requirement of Law to allocate payments on
the Accounts as described above, the Servicer agrees that it shall in any such
event allocate,
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after the occurrence of such event, payments on each Account with respect to the
principal balance of such Account first to the oldest principal balance of such
Account and to have such payments applied as Collections in accordance with
Article IV.
(d) The Servicer shall not be obligated to use separate
servicing procedures, offices or employees for servicing the Receivables from
the procedures, offices and employees used by the Servicer in connection with
servicing other credit card receivables.
Section 3.2 SERVICING COMPENSATION. As compensation for
its servicing activities hereunder and reimbursement for its expenses as set
forth in the immediately following paragraph, the Servicer shall be entitled to
receive a servicing fee in respect of each day prior to the termination of the
Trust pursuant to Section 12.1 (the "SERVICING FEE"), payable in arrears on each
date and in the manner specified in the applicable Supplement, equal to the
product of (i) a fraction, the numerator of which is the actual number of days
in the measuring period specified in the applicable Supplement and the
denominator of which is the actual number of days in the year, (ii) the weighted
average Series Servicing Fee Percentage for all outstanding Series (based upon
the Series Servicing Fee Percentage for each Series and the Invested Amount of
such Series) and (iii) the daily average aggregate balance of all Principal
Receivables over the term of such measuring period. The share of the Servicing
Fee allocable to each Series with respect to any date of payment shall be equal
to the product of (i) a fraction, the numerator of which is the actual number of
days in the measuring period specified in the applicable Supplement and the
denominator of which is the actual number of days in the year, (ii) the
applicable Series Servicing Fee Percentage for such Series and (iii) the
Adjusted Invested Amount of such Series, as appropriate, as of the date of
determination for such payment as specified in the applicable Supplement. The
remainder of the Servicing Fee shall be paid by the Transferor, or retained by
the Servicer as provided in Article IV, and in no event shall the Trust, the
Trustee, any Enhancement Provider, or the Investor Certificateholders be liable
for the share of the Servicing Fee to be paid by the Transferor.
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The Servicer shall be responsible for its own expenses, which
shall include the amounts due to the Trustee pursuant to Section 11.4 and the
reasonable fees and disbursements of independent public accountants and all
other expenses incurred by the Servicer in connection with its activities
hereunder; PROVIDED, that the Servicer shall not be liable for any liabilities,
costs or expenses of the Trust, the Investor Certificateholders or the
Certificate Owners arising under any tax law, including without limitation any
federal, state or local income or franchise taxes or any other tax imposed on or
measured by income (or any interest, penalties or additions with respect thereto
or arising from a failure to comply therewith). In the event that the Servicer
fails to pay any amounts due to the Trustee pursuant to Section 11.4, the
Trustee shall be entitled to deduct and receive such amounts from the Servicing
Fee prior to the payment thereof to the Servicer and the obligations of the
Trust to pay any such amounts shall thereby be fully satisfied. The Servicer
shall be required to pay such expenses for its own account and shall not be
entitled to any payment therefor other than the Servicing Fee.
Section 3.3 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
FDSNB, as initial Servicer, hereby makes, and any Successor Servicer by its
appointment hereunder shall make, the following representations and warranties
on which the Trustee has relied in accepting the Receivables in trust and in
authenticating the Certificates issued on the Initial Closing Date:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is either (i)
a national banking association duly organized, validly existing and in good
standing under the laws of the United States or (ii) a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has the corporate power, authority and legal right to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement and any Supplement.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do
business and is in good standing (or is exempt from such requirements) as a
foreign corporation in any state where such qualification is necessary in
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order to service the Receivables as required by this Agreement and any
Supplement and has obtained all necessary licenses and approvals as required
under federal and state law in order to service the Receivables as required by
this Agreement, and if the Servicer shall be required by any Requirement of Law
to so qualify or register or obtain such license or approval, then it shall do
so except where the failure to obtain such license or approval does not
materially affect the Servicer's ability to perform its obligations hereunder or
the enforceability of the Receivables.
(c) DUE AUTHORIZATION. The execution, delivery, and
performance of this Agreement and any Supplement have been duly authorized by
the Servicer by all necessary corporate action on the part of the Servicer and
this Agreement and any Supplement will remain, from the time of its execution,
an official record of the Servicer.
(d) BINDING OBLIGATION. This Agreement and any Supplement
constitutes a legal, valid and binding obligation of the Servicer, enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, affecting the enforcement of creditors' rights
in general and as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity).
(e) NO VIOLATION. The execution and delivery of this Agreement
and any Supplement by the Servicer, and the performance of the transactions
contemplated by this Agreement and any Supplement and the fulfillment of the
terms hereof applicable to the Servicer, will not conflict with, violate, result
in any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
Requirement of Law applicable to the Servicer or any indenture, contract,
agreement, mortgage, deed of trust or other instrument to which the Servicer is
a party or by which it is bound.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of the Servicer, threatened against the Servicer
before any
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court, regulatory body, administrative agency or other tribunal or governmental
instrumentality seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this Agreement, seeking
any determination or ruling that, in the reasonable judgment of the Servicer,
would materially and adversely affect the performance by the Servicer of its
obligations under this Agreement or any Supplement, or seeking any determination
or ruling that would materially and adversely affect the validity or
enforceability of this Agreement or any Supplement.
(g) COMPLIANCE WITH REQUIREMENTS OF LAW. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in connection
with each Receivable and the related Account, will maintain in effect all
qualifications required under Requirements of Law in order to service properly
each Receivable and the related Account and will comply in all material respects
with all other Requirements of Law in connection with servicing each Receivable
and the related Account the failure to comply with which would have a material
adverse effect on the Certificateholders or any Enhancement Provider.
(h) PROTECTION OF CERTIFICATEHOLDERS' RIGHTS. The Servicer
shall take no action which, nor omit to take any action the omission of which,
would impair the rights of Certificateholders in any Receivable or the related
Account or the rights of any Enhancement Provider, nor shall it reschedule,
revise or defer payments due on any Receivable except in accordance with the
Credit and Collection Policies.
(i) ALL CONSENTS. All authorizations, consents, order or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Servicer in connection with
the execution and delivery of this Agreement by the Servicer and the performance
of the transactions contemplated by this Agreement by the Servicer, have been
duly obtained, effected or given and are in full force and effect; PROVIDED,
HOWEVER, that the Servicer makes no representation or warranty regarding State
securities or "Blue Sky" laws in connection with the distribution of the
Certificates.
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(j) RESCISSION OR CANCELLATION. The Servicer shall not permit
any rescission or cancellation of any Receivable except as ordered by a court of
competent jurisdiction or other Governmental Authority or in accordance with the
normal operating procedures of the Servicer.
(k) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES.
Except in connection with its enforcement or collection of an Account (in which
case any such promissory note would be made in the name of the Trust on behalf
of the Certificateholders), the Servicer will take no action to cause any
Receivable to be evidenced by an instrument (as defined in the UCC as in effect
in the Relevant UCC State).
(l) PRINCIPAL PLACE OF BUSINESS. The Servicer shall at all
times maintain its principal executive offices within the United States.
Section 3.4 REPORTS AND RECORDS FOR THE TRUSTEE.
(a) DAILY RECORDS. Upon reasonable prior notice by the
Trustee, the Servicer shall make available at an office of the Servicer (or
other location designated by the Servicer if such records are not accessible by
the Servicer at an office of the Servicer) selected by the Servicer for
inspection by the Trustee or its agent (reasonably acceptable to the Servicer)
on a Business Day during the Servicer's normal business hours a record setting
forth (i) the Collections on each Receivable and (ii) the amount of Receivables
for the Business Day preceding the date of the inspection. The Servicer shall,
at all times, maintain its computer files with respect to the Receivables in
such a manner so that the Receivables may be specifically identified and, upon
reasonable prior request of the Trustee, shall make available to the Trustee, at
an office of the Servicer (or other location designated by the Servicer if such
computer files are not located at an office of the Servicer) selected by the
Servicer, on any Business Day of the Servicer during the Servicer's normal
business hours any computer programs necessary to make such identification.
(b) DAILY REPORT.
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(i) On each Business Day the Servicer shall prepare a
completed Daily Report.
(ii) The Servicer shall deliver to the Trustee (with
copies to the Depositary and the Collateral Agent if either of such
Persons is not also the Trustee) the Daily Report by 2:30 p.m. (New
York City time) on each Business Day with respect to activity in the
Receivables for such Business Day (or, in the case of a Daily Report
delivered on the Business Day following a Saturday, Sunday or other
non-Business Day, the aggregate activity for such Business Day and such
preceding non-Business Days).
(iii) Upon discovery of any error or receipt of
notice of any error in any Daily Report, the Servicer, the Transferor
and the Trustee shall arrange to confer and shall agree upon any
adjustments necessary to correct any such errors. If any such error is
materially adverse to the interests of the Certificateholders or the
Certificate Owners, the Servicer or the Trustee, as the case may be,
shall retain all Collections which would otherwise be paid from the
Trust (or such lesser amount as the Trustee and the Servicer shall
agree to be necessary to cover any such error) in the Collection
Account until such material error is corrected. Unless the Trustee has
received written notice of any error or discrepancy, the Trustee may
rely on each Daily Report delivered to it for all purposes hereunder.
(c) SETTLEMENT STATEMENT. On each Determination Date, the
Servicer shall, prior to 3:00 p.m. (New York City time) on such day, deliver to
the Trustee the Settlement Statement for the related Monthly Period
substantially in the form of Exhibit D hereto, including the following
information (which, in the case of clauses (iii), (iv) and (v) below, will be
stated on the basis of an original principal amount of $1,000 per Certificate):
(i) the aggregate amount of Collections received in the Collection Account for
the Monthly Period preceding such Determination Date and the aggregate amount of
Finance Charge Collections and the aggregate amount of Principal Collections
processed during such Monthly Period; (ii) the aggregate amount of the
applicable Investor Percentage of Collections of Principal Receivables on the
last day of the preceding Monthly Period of each Series of
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Certificates and the aggregate amount of the applicable Investor Percentage of
Collections on the last day of the preceding Monthly Period of each Series of
Certificates with respect to Finance Charge Collections and Receivables in
Defaulted Accounts; (iii) for each Series and for each Class within any such
Series, the total amount to be distributed to Investor Certificateholders for
the Monthly Period immediately preceding such Determination Date; (iv) for each
Series and for each Class within any such Series, the amount of such
distribution allocable to principal; (v) for each Series and for each Class
within any such Series, the amount of such distribution allocable to interest;
(vi) for each Series and each Class within a Series, the Investor Default Amount
for the immediately preceding Monthly Period; (vii) for each Series and each
Class within a Series, the amount of the Investor Charge-Offs and the amount of
the reimbursements of Investor Charge-Offs for the Monthly Period immediately
preceding such Determination Date; (viii) for each Series, the Servicing Fee for
the Monthly Period immediately preceding such Determination Date; (ix) for each
Series, the existing deficit controlled amortization amount, if applicable; (x)
the aggregate amount of Receivables in the Trust at the close of business on the
last day of the Monthly Period preceding such Determination Date; (xi) for each
Series, the Invested Amount at the close of business on the last day of the
Monthly Period immediately preceding such Determination Date; (xii) the
available amount of any Enhancement for each Class of each Series, if any;
(xiii) for each Series and each Class within a Series, the Pool Factor as of the
end of the related Monthly Period; (xiv) the Yield Factor and Finance Charge
Receivable Factor applicable with respect to the related Monthly Period and (xv)
whether a Pay Out Event with respect to any Series shall have occurred during or
with respect to the related Monthly Period.
(d) The Trustee shall be under no duty to recalculate, verify
or recompute the information supplied to it under this Section 3.4 or such other
matters as are set forth in any Daily Report or Settlement Statement.
Section 3.5 ANNUAL SERVICER'S CERTIFICATE. The Servicer
will deliver, as provided in Section 13.5, to the Trustee, any Enhancement
Provider and each Rating Agency on or before sixty days following the end of the
Transferor Fiscal Year, beginning with March 31, 1998, an
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Officer's Certificate substantially in the form of Exhibit E stating that (a) a
review of the activities of the Servicer during the twelve-month period (which
shall be the period from the first day of the preceding Transferor Fiscal Year
to and including the last day of such Transferor Fiscal Year) and of its
performance under this Agreement was made under the supervision of the officer
signing such certificate and (b) to such officer's knowledge, based on such
review, the Servicer has fully performed all its obligations under this
Agreement throughout such period, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.6 ANNUAL INDEPENDENT ACCOUNTANTS' SERVICING
REPORT.
(a) On or before the 120th day following the end of the second
quarter of the Transferor Fiscal Year, beginning with November 28, 1997, the
Servicer shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer or the
Transferor) to furnish a report to the Trustee, any Enhancement Provider and
each Rating Agency, to the effect that such firm has made a study and evaluation
in accordance with generally accepted auditing standards of the Servicer's
assertion regarding the effectiveness of the internal control structure relative
to the servicing of Accounts under this Agreement, and that, on the basis of
such examination, such firm is of the opinion (assuming the accuracy of any
reports generated by the Servicer's third party agents) that the Servicer's
assertion regarding the effectiveness of the internal control structure in
effect on the last day of the second quarter of the Transferor Fiscal Year
relating to servicing procedures performed by the Servicer, is fairly stated. A
copy of such report will be sent to each Investor Certificateholder by the
Servicer.
(b) On or before the 90th day following the end of the
Transferor Fiscal Year of each calendar year, beginning with May 1, 1998, the
Servicer shall cause a firm of nationally recognized independent certified
public accountants (who may also render other services to
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the Servicer or the Transferor) to furnish a report to the Trustee, any
Enhancement Provider and each Rating Agency to the effect that they have
performed the procedures enumerated below, which were agreed to by the Servicer,
solely to assist the Servicer in evaluating the accuracy of the monthly
certificates forwarded by the Servicer pursuant to subsection 3.4(c) during the
period covered by such report (which shall be the prior Transferor Fiscal Year,
or for the initial period, from the Closing Date until January 31, 1998). These
procedures, the sufficiency of which is solely the responsibility of the
Servicer, shall include recalculating the mathematical calculations set forth in
four of the monthly certificates and agreeing the amounts used in the
mathematical calculations with the Transferor's computer reports which were the
source of such amounts. Any findings and exceptions noted, except for such
exceptions believed to be immaterial, as a result of the performance of these
procedures shall be set forth in such report. A copy of such report may be
obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.7 TAX TREATMENT. The Transferor has structured this
Agreement and the Investor Certificates with the intention that the Investor
Certificates will qualify under applicable federal, state, local and foreign tax
law as indebtedness. Except to the extent expressly specified to the contrary in
any Supplement, the Transferor, the Servicer, the Holder of the Exchangeable
Transferor Certificate, each Investor Certificateholder, Holder of a Variable
Funding Certificate, and each Certificate Owner agree to treat and to take no
action inconsistent with the treatment of the Investor Certificates (or
beneficial interest therein) as indebtedness for purposes of federal, state,
local and foreign income or franchise taxes and any other tax imposed on or
measured by income. Each Investor Certificateholder, each Holder of a Variable
Funding Certificate and the Holder of the Exchangeable Transferor Certificate,
by acceptance of its Certificate and each Certificate Owner, by acquisition of a
beneficial interest in a Certificate, agree to be bound by the provisions of
this Section 3.7. Each Certificateholder agrees that it will cause any
Certificate Owner acquiring an interest in a Certificate through it to comply
with this Agreement as to treatment as indebtedness under applicable tax law, as
described in
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this Section 3.7. Furthermore, subject to Section 11.10, the Trustee shall treat
the Trust as a security device only, and shall not file tax returns or obtain an
employer identification number on behalf of the Trust.
Section 3.8 ADJUSTMENTS. (a) If the Servicer adjusts downward
the amount of any Receivable because of a rebate, refund, unauthorized charge or
billing error to an Obligor, because such Receivable was created in respect of
merchandise which was refused or returned by an Obligor, or if the Servicer
otherwise adjusts downward the amount of any Receivable without receiving
Collections therefor or without charging off such amount as uncollectible, then,
in any such case, the aggregate amount of the Principal Receivables will be
reduced by the product of one MINUS the Finance Charge Receivable Factor and the
amount of such adjustment. Similarly, the aggregate amount of the Principal
Receivables used to calculate the Transferor Amount and the applicable Investor
Percentages applicable to any Series will be reduced by the product of one MINUS
the Finance Charge Receivable Factor and the amount of any Receivable which was
discovered as having been created through a fraudulent or counterfeit charge or
with respect to which the covenant contained in subsection 2.5(b) was breached.
Any adjustment required pursuant to either of the two preceding sentences shall
be made as promptly as practicable but in no event later than the end of the
Monthly Period in which such adjustment obligation arises. In the event that,
following any such adjustment, the Transferor Amount (less the portion thereof
represented by any Supplemental Certificate) would be less than the Minimum
Transferor Amount, within two Business Days of the date on which such adjustment
obligation arises, the Transferor shall pay to the Servicer, for deposit into
the Excess Funding Account, in immediately available funds an amount equal to
the amount by which the Transferor Amount would be reduced below the Minimum
Transferor Amount as a result of such adjustment. Any amount deposited into the
Excess Funding Account in connection with the adjustment of a Receivable (an
"Adjustment Payment") shall be considered Principal Collections and shall be
applied in accordance with Article IV and the terms of each Supplement;
PROVIDED, HOWEVER, that any amounts paid by the Transferor pursuant to the
preceding sentence after the time period specified therein, to the extent of any
related Uncovered Dilution Amount, shall not be deposited
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into the Excess Funding Account, but shall be considered Finance Charge
Collections and shall be applied in accordance with Article IV and the terms of
each Supplement.
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such deposit was in the
form of a check which is not honored for any reason or (ii) the Servicer makes a
mistake with respect to the amount of any Collection and deposits an amount that
is less than or more than the actual amount of such Collection, the Servicer
shall appropriately adjust the amount subsequently deposited into the Collection
Account (or shall be entitled to receive a refund from the Collection Account in
the case of an excess deposit) to reflect such dishonored check or mistake. Any
Receivable in respect of which a dishonored check is received shall be deemed
not to have been paid. Notwithstanding the first two sentences of this
paragraph, any adjustments made pursuant to this paragraph will be reflected in
a current report but will not change any amount of Collections previously
reported pursuant to subsection 3.4(b).
Section 3.9 NOTICES TO FDSNB. In the event that FDSNB or any
Affiliate thereof is no longer acting as Servicer, any Successor Servicer
appointed pursuant to Section 10.2 shall deliver or make available to FDSNB each
certificate and report required to be prepared, forwarded or delivered
thereafter pursuant to Sections 3.4, 3.5 and 3.6.
[End of Article III]
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 RIGHTS OF CERTIFICATEHOLDERS. Each Series of
Investor Certificates shall represent Undivided Interests in the Trust,
including the benefits of any Enhancement issued with respect to such Series and
the right to receive the Collections and other amounts at the times and in the
amounts specified in this Article IV and the related Supplement to be deposited
in the Investor Accounts or to be paid to the Investor Certificate-
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holders of such Series; PROVIDED, HOWEVER, that the aggregate interest
represented by such Certificates at any time in the Principal Receivables shall
not exceed an amount equal to the Invested Amount of such Certificates. The
Exchangeable Transferor Certificate shall represent the remaining undivided
interest in the Trust (the "Transferor Interest"), including the right to
receive the Collections and other amounts with respect to each series at the
times and in the amounts specified in this Article IV, as amended by each
Supplement, to be paid to the Holder of the Exchangeable Transferor Certificate;
PROVIDED, HOWEVER, that the aggregate interest represented by such Certificate
at any time in the Principal Receivables shall not exceed the Transferor Amount
at such time and such Certificate shall not represent any interest in the
Investor Accounts, except as provided in this Agreement and the Supplements, or
the benefits of any Enhancement issued with respect to any Series.
Section 4.2 ESTABLISHMENT OF ACCOUNTS.
(a) THE COLLECTION ACCOUNT. The Servicer, for the benefit of
the Certificateholders, shall establish in the name of the Trustee, on behalf of
the Trust, a non-interest-bearing segregated account (the "Collection Account")
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Certificateholders, and shall cause such
Collection Account to be established and maintained with a Qualified
Institution; PROVIDED, HOWEVER, that such account need not be maintained as a
segregated trust account with a Qualified Institution if at all times the
certificates of deposit, short-term deposits or commercial paper or the
long-term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of the depositary institution or trust company maintaining such
account shall have a credit rating from Moody's and Standard & Poor's of at
least P-1 and A-1, respectively, in the case of the certificates of deposit,
short-term deposits or commercial paper, or a rating from Moody's and Standard &
Poor's of Aa3 and AA, respectively, in the case of the long-term unsecured debt
obligations. If, at any time, the institution holding the Collection Account
ceases to be a Qualified Institution, the Transferor shall direct the Servicer
to establish within ten Business Days a new Col-
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lection Account with a Qualified Institution, transfer any cash and/or any
investments to such new Collection Account and from the date such new Collection
Account is established, it shall be the "Collection Account." The Servicer shall
give written notice to the Trustee of the location and account number of the
Collection Account and shall notify the Trustee in writing prior to any
subsequent change thereof. Pursuant to authority granted to it pursuant to
subsection 3.1(b), the Servicer shall have the revocable power to withdraw funds
from the Collection Account for the purposes of carrying out its duties
hereunder.
The Collection Account shall be under the sole dominion and
control of the Trustee and the Trustee shall possess all right, title and
interest in all funds from time to time on deposit in such account.
(b) THE INTEREST FUNDING AND PRINCIPAL ACCOUNTS. The Trustee,
for the benefit of the Investor Certificateholders, shall establish and maintain
with a Qualified Institution in the name of the Trust two segregated trust
accounts for each Series (an "Interest Funding Account" and a "Principal
Account," respectively), each bearing a designation clearly indicating that the
funds therein are held for the benefit of the Investor Certificateholders of
such Series. Except as provided in subsection 4.2(e), each Interest Funding
Account and each Principal Account shall be under the sole dominion and control
of the Trustee for the benefit of the Investor Certificateholders. Pursuant to
authority granted to it hereunder, the Servicer shall have the revocable power
to instruct the Trustee to withdraw funds from the Interest Funding Account and
any Principal Account for any purpose of carrying out the Servicer's or the
Trustee's duties hereunder. The Trustee at all times shall maintain accurate
records reflecting each transaction in each Principal Account and each Interest
Funding Account and that funds held therein shall at all times be held in trust
for the benefit of the Investor Certificateholders of such Series. If, at any
time, the institution holding the Interest Funding Account ceases to be a
Qualified Institution, the Servicer shall direct the Trustee to establish within
ten Business Days a new Interest Funding Account meeting the conditions
specified above with a Qualified Institution, transfer any cash and/or any
investments to such new Interest Funding Account and from
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the date such new Interest Funding Account is established, it shall be the
"Interest Funding Account." Similarly, if, at any time, the institution holding
any Principal Account ceases to be a Qualified Institution, the Servicer shall
direct the Trustee to establish within ten Business Days a new Principal Account
meeting the conditions specified above with a Qualified Institution, transfer
any cash and/or any investments to such new Principal Account and from the date
such new Principal Account is established, it shall be a "Principal Account."
(c) DISTRIBUTION ACCOUNTS. The Trustee, for the benefit of the
Investor Certificateholders of each Series, shall cause to be established and
maintained in the name of the Trust, with an office or branch of a Qualified
Institution a non-interest-bearing segregated demand deposit account for each
Series (a "Distribution Account") bearing a designation clearly indicating that
the funds deposited therein are held in trust for the benefit of the Investor
Certificateholders of such Series. Each Distribution Account shall be under the
sole dominion and control of the Trustee for the benefit of the Investor
Certificateholders of the related Series. Pursuant to the authority granted to
the Paying Agent herein, the Paying Agent shall have the power, revocable by the
Trustee, to make withdrawals and payments from the Distribution Account for the
purpose of carrying out the Paying Agent's duties hereunder. If, at any time,
the institution holding a Distribution Account ceases to be a Qualified
Institution, the Servicer shall direct the Trustee to establish within ten
Business Days a new Distribution Account meeting the conditions specified above
with a Qualified Institution, transfer any cash and/or any investments to such
new Distribution Account and from the date such new Distribution Account is
established, it shall be a "Distribution Account."
(d) THE EXCESS FUNDING ACCOUNT. The Trustee, for the benefit
of the Certificateholders, shall cause to be established in the name of the
Trustee, on behalf of the Certificateholders, with a Qualified Institution, a
segregated trust account (the "Excess Funding Account") bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders. Except as provided in subsection 4.3(f), the Excess
Funding Account shall, except as otherwise
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provided herein, be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. Pursuant to the authority granted to the
Servicer herein, the Servicer shall have the power, revocable by the Trustee, to
make withdrawals and payments from the Excess Funding Account for the purpose of
carrying out the Servicer's or Trustee's duties hereunder. If, at any time, the
institution holding the Excess Funding Account ceases to be a Qualified
Institution, the Servicer shall direct the Trustee to establish within ten
Business Days a new Excess Funding Account meeting the conditions specified
above with a Qualified Institution, transfer any cash and/or any investments to
such new Excess Funding Account and from the date such new Excess Funding
Account is established, it shall be the "Excess Funding Account."
(e) ADMINISTRATION OF THE PRINCIPAL ACCOUNTS AND THE INTEREST
FUNDING ACCOUNTS. Funds on deposit in each Principal Account and each Interest
Funding Account shall at all times be invested by the Servicer (or, at the
written direction of the Transferor, by the Trustee) on behalf of the Transferor
in Cash Equivalents. Any such investment shall mature and such funds shall be
available for withdrawal on or before the Transfer Date following the Monthly
Period in which such funds were processed for collection. The Trustee shall
maintain for the benefit of the Investor Certificateholders possession of the
negotiable instruments or securities evidencing the Cash Equivalents described
in clause (a) of the definition thereof from the time of purchase thereof until
the time of sale or maturity. No such investments shall be liquidated prior to
maturity. At the end of each month, all interest and earnings (net of losses and
investment expenses) on funds on deposit in each Principal Account and each
Interest Funding Account (unless otherwise specified in the applicable
Supplement) shall be deposited by the Trustee, at the written direction of the
Servicer, in a separate deposit account with a Qualified Institution in the name
of the Servicer, or a Person designated in writing by the Servicer, which shall
not constitute a part of the Trust, or shall otherwise be turned over by the
Trustee to the Servicer, in accordance with instructions from the Servicer to
the Trustee, not less frequently than monthly. Subject to the restrictions set
forth above, the Servicer, or a Person designated in writing by the Servicer, of
which the Trustee
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shall have received written notification, shall have the authority to instruct
the Trustee with respect to the investment of funds on deposit in any Principal
Account and any Interest Funding Account. Any investment instructions to the
Trustee shall be in writing and shall include a certification that the proposed
investment is a Cash Equivalent that matures at or prior to the time required by
this Agreement. For purposes of determining the availability of funds or the
balances in any Interest Funding Account and any Principal Account for any
reason under this Agreement, all investment earnings on such funds shall be
deemed not to be available or on deposit.
(f) ADDITIONAL PROCEDURES RELATING TO ESTABLISHMENT OF
ACCOUNTS. Each Series Account and the Excess Funding Account shall be
established at a Qualified Institution which agrees in writing as follows: (i)
all money, securities, instruments and other property credited to any such
account shall be treated as "financial assets" within the meaning of Section
8-102(a)(9) of the 1994 Official Text of the Uniform Commercial Code and (ii)
such Qualified Institution will comply with "entitlement orders" (within the
meaning of Section 8-102(a)(8) of the 1994 Official Text of the Uniform
Commercial Code) issued by the Trustee and relating to such account without
further consent by the Transferor or any other Person.
Section 4.3 COLLECTIONS AND ALLOCATIONS.
(a) COLLECTIONS. Obligors shall make payments on the
Receivables (i) to Lock-Box Accounts maintained by Lock-Box Banks pursuant to
Lock-Box Agreements or (ii) to the Servicer who shall deposit all such payments
in such Lock-Box Accounts no later than the second Business Day following
receipt or (iii) as In-Store Payments. All Collections on Receivables of amounts
due and owing to the Trustee represented by the Receivables deposited in the
Lock-Box Accounts will, pending remittance to the Collection Account, be held
for the benefit of the Trust and shall be deposited into the Collection Account
as promptly as possible after the Date of Processing of such Collections.
In-Store Payments shall be deposited in the Collection Account as promptly as
possible after the Date of Processing of such Collections, but in no event later
than the second Business Day following such Date of Processing.
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The Servicer shall allocate such amounts to each Series of
Investor Certificates and to the Holder of the Exchangeable Transferor
Certificate in accordance with this Article IV and the related Supplement and
shall cause the Trustee to withdraw the required amounts from the Collection
Account or pay such amounts to the Holder of the Exchangeable Transferor
Certificate in accordance with this Article IV and the related Supplement. The
Servicer shall make such deposits or payments on the date indicated herein by
wire transfer or as otherwise provided in the Supplement for any Series of
Certificates with respect to such Series.
Notwithstanding anything in this Agreement to the contrary,
but subject to the terms of any Supplement, for so long as, and only so long as,
FDSNB shall remain the Servicer hereunder, and (a) (i) FDSNB or an Affiliate of
FDSNB provides to the Trustee a letter of credit or other form of Enhancement
rated at least A-1 by Standard & Poor's and P-1 by Moody's (as certified to the
Trustee by the Servicer), and (ii) after notifying each Rating Agency of the
proposed use of such letter of credit or other form of Enhancement, the
Transferor shall have received a notice from each Rating Agency that making
payments monthly rather than daily would not result in a downgrading or
withdrawal of any of such Rating Agency's then-existing ratings of the Investor
Certificates, or (b) Federated shall have and maintain a short-term credit
rating of at least A-1 by Standard & Poor's and P-1 by Moody's (as certified to
the Trustee by the Servicer), the Servicer need not deposit Collections from the
Collection Account into the Principal Account or the Interest Funding Account or
any Series Account, or make payments to the Holder of the Exchangeable
Transferor Certificate, prior to the close of business on the day any
Collections are deposited in the Collection Account as otherwise provided in
this Article IV and the related Supplement, but may instead make such deposits,
payments and withdrawals on each Transfer Date in an amount equal to the net
amount of such deposits, payments and withdrawals which would have been made but
for the provisions of this paragraph.
(b) ALLOCATIONS FOR THE EXCHANGEABLE TRANSFEROR CERTIFICATE.
Throughout the existence of the Trust, unless otherwise stated in any
Supplement, on each Business Day the Servicer shall allocate to the Holder of
the
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Exchangeable Transferor Certificate an amount equal to the product of (A) the
Transferor Percentage and (B) the aggregate amount of Principal Collections and
Finance Charge Collections in the Collection Account. Except as otherwise
provided in any Supplement, the Servicer shall pay such amount to the Holder of
the Exchangeable Transferor Certificate on each Business Day; PROVIDED,
HOWEVER, that amounts payable to the Holder of the Exchangeable Transferor
Certificate pursuant to this clause (b) shall instead be deposited in the
Excess Funding Account to the extent necessary to prevent the Transferor Amount
from being less than the Minimum Transferor Amount.
(c) ALLOCATIONS OF COLLECTIONS BETWEEN FINANCE CHARGE
COLLECTIONS AND PRINCIPAL COLLECTIONS. On each Business Day for all purposes of
this Agreement and each Supplement, the Servicer shall allocate all Collections
received for any period between Finance Charge Collections and Principal
Collections. Such Collections shall be allocated such that the sum of (i) the
product of (x) such Collections received with respect to such Business Day MINUS
the sum of Recoveries and Interchange on such Business Day and (y) the Yield
Factor in effect with respect to such Business Day and (ii) any investment
earnings with respect to amounts on deposit in the Excess Funding Account on
such Business Day and (iii) the sum of Recoveries and Interchange on such
Business Day shall be considered Finance Charge Collections and the remainder of
such Collections shall be considered Principal Collections.
(d) ALLOCATION FOR SERIES. On each Business Day, (i) the
amount of Finance Charge Collections available in the Collection Account
allocable to each Series shall be determined by multiplying the aggregate amount
of such Finance Charge Collections by the applicable Investor Percentage for
Finance Charge Collections for such Series, (ii) the amount of Principal
Collections available in the Collection Account allocable to each Series shall
be determined by multiplying the aggregate amount of such Principal Collections
by the applicable Investor Percentage for Principal Collections for such Series
and (iii) the Receivables in Defaulted Accounts allocable to each Series shall
be determined by multiplying the aggregate amount of such Receivables in
Defaulted Accounts by the applicable Investor Percentage for Receivables in
Defaulted Accounts for such Series. The
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Servicer shall, prior to the close of business on the day any Collections are
deposited in the Collection Account, withdraw the required amounts from the
Collection Account and deposit such amounts into the applicable Principal
Account, the applicable Interest Funding Account, the Excess Funding Account, or
any Series Account or pay such amounts to the Holder of the Exchangeable
Transferor Certificate in accordance with the provisions of this Article IV and
the Supplements.
(e) UNALLOCATED PRINCIPAL COLLECTIONS; EXCESS FUNDING ACCOUNT.
On each Business Day, Shared Principal Collections shall be allocated to each
outstanding Series PRO RATA based on the Principal Shortfall, if any, for each
such Series, and then, at the option of the Transferor, any remainder may be
applied as principal with respect to the Variable Funding Certificates. The
Servicer shall pay any remaining Shared Principal Collections on such Business
Day to the Transferor; PROVIDED, that if the Transferor Amount as determined on
such Business Day does not exceed the Minimum Transferor Amount, then such
remaining Shared Principal Collections shall be deposited in the Excess Funding
Account to the extent necessary to cause the Transferor Amount to be at least
equal to the Minimum Transferor Amount; PROVIDED, FURTHER, that if an
Amortization Period has commenced and is continuing with respect to more than
one outstanding Series, such remaining Shared Principal Collections shall be
allocated to such Series pro rata based on the Investor Percentage for Principal
Receivables applicable for such Series.
(f) EXCESS FUNDING ACCOUNT. Amounts on deposit in the Excess
Funding Account on any Business Day will be invested by the Servicer (or, at the
direction of the Transferor, by the Trustee) on behalf of the Transferor in Cash
Equivalents which shall mature and be available on or before the next Business
Day on which amounts may be released from the Excess Funding Account. Earnings
from such investments received shall be deposited in the Collection Account and
treated as Finance Charge Collections. Any investment instructions to the
Trustee shall be in writing and shall include a certification that the proposed
investment is a Cash Equivalent that matures on or prior to the date required by
this Agreement. If on any Business Day the Transferor Amount is greater than the
Minimum Transferor Amount, amounts on deposit in the Excess Funding Account may,
at the option of the Trans-
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feror, be released to the Holder of the Exchangeable Transferor Certificate.
On the first Business Day of the Amortization Period for any
Series, funds on deposit in the Excess Funding Account will be deposited by the
Servicer, or by the Trustee at the written direction of the Servicer, in the
Principal Account for the benefit of such Series to the extent of the lesser of
(x) the Invested Amount of such Series and (y) the product of (i) the product of
(A) 100% minus the Transferor Percentage and (B) the amount on deposit in the
Excess Funding Account at the beginning of such Amortization Period and (ii) the
Excess Funding Account Percentage for such Series. Any funds in the Excess
Funding Account on any subsequent day will be allocated to Investor Certificates
of each Series in an Amortization Period to the extent that Default Amounts
allocated to the Transferor Interest or adjustments as described in Section 3.8
would cause the Transferor Amount to be less than the Minimum Transferor Amount
and, with respect to any credit adjustment, the Transferor has not made an
Adjustment Payment to the Excess Funding Account, in an amount equal to the
least of (i) the product of (A) such reduction below the Minimum Transferor
Amount and (B) the Excess Funding Account Percentage for such Series, (ii) the
product of (A) the amount of funds available in the Excess Funding Account and
(B) the Excess Funding Account Percentage and (iii) the Adjusted Invested Amount
of such Series.
(g) EXCESS FINANCE CHARGE COLLECTIONS. On each Business Day,
(i) for each Group, the Servicer shall apply the aggregate amount for all
outstanding Series in such Group of the amounts which the related Supplements
specify are to be treated as "Excess Finance Charge Collections" for such
Business Day to each Series in such Group, pro rata, in proportion to the
aggregate amount for all outstanding Series which the related Supplements
specify are "Finance Charge Shortfalls," if any, with respect to each such
Series, and (ii) the Servicer shall withdraw (or shall instruct the Trustee to
withdraw) from the Collection Account and pay to the Holder of the Exchangeable
Transferor Certificate an amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series in a Group of the amounts which the
related Supplements specify are to be treated as "Excess Finance Charge
Collections" for such Distribution Date
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over (y) the aggregate amount for all outstanding Series in such Group which the
related Supplements specify are "Finance Charge Shortfalls" for such
Distribution Date; PROVIDED, HOWEVER, that the sharing of Excess Finance Charge
Collections among Series in a Group will continue only until such time, if any,
at which the Transferor shall deliver to the Trustee an Officer's Certificate to
the effect that, in the reasonable belief of the Transferor, the continued
sharing of Excess Finance Charge Collections among Series in any Group would
have adverse regulatory implications with respect to the Transferor. Following
the delivery by the Transferor of such an Officer's Certificate to the Trustee,
there will not be any further sharing of Excess Finance Charge Collections among
Series in any Group.
[THE REMAINDER OF ARTICLE IV IS RE-
SERVED AND SHALL BE SPECIFIED IN ANY
SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article IV]
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ARTICLE V
[ARTICLE V IS RESERVED AND SHALL BE
SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES]
[End of Article V]
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ARTICLE VI
THE CERTIFICATES
Section 6.1 THE CERTIFICATES . Subject to Sections 6.10 and
6.13, the Investor Certificates of each Series and any Class thereof may be
issued in bearer form (the "Bearer Certificates") with attached interest coupons
and a special coupon (collectively, the "Coupons") or in fully registered form
(the "Registered Certificates"), and shall be substantially in the form of the
exhibits with respect thereto attached to the related Supplement. The
Exchangeable Transferor Certificate shall be substantially in the form of
Exhibit A. The Investor Certificates and the Exchangeable Transferor Certificate
shall, upon issue pursuant hereto or to Section 6.9 or Section 6.10, be executed
and delivered by the Transferor to the Trustee for authentication and redelivery
as provided in Sections 2.1 and 6.2. Unless otherwise specified in any
Supplement, any Investor Certificate shall be issuable in a minimum denomination
of $1,000 Undivided Interest and integral multiples thereof and shall be issued
upon original issuance in an original aggregate principal amount equal to the
Initial Invested Amount. The Exchangeable Transferor Certificate shall be issued
as a single certificate. Each Certificate shall be executed by manual or
facsimile signature on behalf of the Transferor by its President or any Vice
President. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Transferor or the Trustee shall not be rendered invalid,
notwithstanding that such individual has ceased to be so authorized prior to the
authentication and delivery of such Certificates or does not hold such office at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by or on behalf of the Trustee by the manual signature of a
duly authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been
validly issued and duly authenticated and delivered hereunder. All Certificates
shall be dated the date of their authentication except Bearer
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Certificates which shall be dated the applicable Issuance Date as provided in
the related Supplement.
Section 6.2 AUTHENTICATION OF CERTIFICATES. Contemporaneously
with the initial assignment and transfer of the Receivables, whether now
existing or hereafter created (other than Receivables in Additional Accounts)
and the other components to the Trust, the Trustee shall authenticate and
deliver the initial Series of Investor Certificates (or applicable Classes
thereof), upon the written order of the Transferor. Upon the issuance of such
Investor Certificates, such Investor Certificates shall be validly issued, fully
paid and non-assessable. The Trustee shall authenticate and deliver the
Exchangeable Transferor Certificate to the Transferor simultaneously with its
delivery of the initial Series of Investor Certificates. Upon an Exchange as
provided in Section 6.9 and the satisfaction of certain other conditions
specified therein, the Trustee shall authenticate and deliver the Investor
Certificates of additional Series (with the designation provided in the related
Supplement), upon the written order of the Transferor. Upon the written order of
the Transferor, the Certificates of any Series shall be duly authenticated by or
on behalf of the Trustee, in authorized denominations equal to (in the
aggregate) the Initial Invested Amount of such Series of Investor Certificates.
If specified in the related Supplement for any Series, the Trustee shall
authenticate and deliver outside the United States the Global Certificate that
is issued upon original issuance thereof, upon the written order of the
Transferor, to the Depositary. If specified in the related Supplement for any
Series, the Trustee shall authenticate Book-Entry Certificates that are issued
upon original issuance thereof, upon the written order of the Transferor, to a
Clearing Agency or its nominee as provided in Section 6.10.
Section 6.3 REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.
(a) The Trustee shall cause to be kept at the office or agency
to be maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar") in accordance with the provisions of Section 11.15, a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Transfer Agent and Registrar shall provide for the
registration of
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the Investor Certificates of each Series (unless otherwise provided in the
related Supplement) and of transfers and exchanges of the Investor Certificates
as herein provided. Whenever reference is made in this Agreement to the transfer
or exchange of the Certificates by the Trustee, such reference shall be deemed
to include the transfer or exchange on behalf of the Trustee by a Transfer Agent
and Registrar. The Trustee is hereby initially appointed Transfer Agent and
Registrar for the purposes of registering the Investor Certificates and
transfers and exchanges of the Investor Certificates as herein provided. If any
form of Investor Certificate is issued as a Global Certificate, the Trustee may,
or if and so long as any Series of Investor Certificates are listed on a stock
exchange and such exchange shall so require, the Trustee shall appoint a
co-transfer agent and registrar, which will also be a co-paying agent, in such
city as the Transferor may specify. Any reference in this Agreement to the
Transfer Agent and Registrar shall include any co-transfer agent and registrar
unless the context otherwise requires. The Trustee shall be permitted to resign
as Transfer Agent and Registrar upon 30 days' written notice to the Servicer. In
the event that the Trustee shall no longer be the Transfer Agent and Registrar,
the Transferor shall appoint a successor Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Certificate
at any office or agency of the Transfer Agent and Registrar maintained for such
purposes, the Transferor shall execute, subject to the provisions of subsection
6.3(c), and the Trustee shall authenticate and, unless the Transfer Agent and
Registrar is different than the Trustee, in which case the Transfer Agent and
Registrar shall, deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of like
aggregate Undivided Interests; PROVIDED, HOWEVER, that the provisions of this
paragraph shall not apply to Bearer Certificates.
At the option of any Holder of Registered Certificates,
Registered Certificates may be exchanged for other Registered Certificates of
the same Series in authorized denominations of like aggregate Undivided
Interests in the Trust, upon surrender of the Registered Certificates to be
exchanged at any office or agency of the Transfer Agent and Registrar maintained
for such
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purpose. At the option of a Bearer Certificateholder, subject to applicable laws
and regulations (including, without limitation, the Bearer Rules), Bearer
Certificates may be exchanged for other Bearer Certificates or Registered
Certificates of the same Series in authorized denominations of like aggregate
Undivided Interests in the Trust, in the manner specified in the Supplement for
such Series, upon surrender of the Bearer Certificates to be exchanged at an
office or agency of the Transfer Agent and Registrar located outside the United
States. Each Bearer Certificate surrendered pursuant to this Section 6.3 shall
have attached thereto (or be accompanied by) all unmatured Coupons, provided
that any Bearer Certificate so surrendered after the close of business on the
Record Date preceding the relevant Distribution Date after the related Series
Termination Date need not have attached the Coupons relating to such
Distribution Date.
Whenever any Investor Certificates of any Series are so
surrendered for exchange, the Transferor shall execute, and the Trustee shall
authenticate and (unless the Transfer Agent and Registrar is different than the
Trustee, in which case the Transfer Agent and Registrar shall) deliver, the
Investor Certificates of such Series which the Certificateholder making the
exchange is entitled to receive. Every Investor Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder thereof or
his attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding,
the Trustee or the Transfer Agent and Registrar, as the case may be, shall not
be required to register the transfer of or exchange any Investor Certificate of
any Series for a period of 15 days preceding the due date for any payment with
respect to the Investor Certificates of such Series.
Unless otherwise provided in the related Supplement, no
service charge shall be made for any registration of transfer or exchange of
Certificates, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that
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may be imposed in connection with any transfer or exchange of Certificates.
All Investor Certificates (together with any Coupons attached
to Bearer Certificates) surrendered for registration of transfer or exchange
shall be canceled by the Transfer Agent and Registrar and disposed of in a
manner satisfactory to the Trustee. The Trustee shall cancel and dispose of any
Global Certificates upon their exchange in full for Definitive Certificates.
Such certificate shall also state that a certificate or certificates of each
Foreign Clearing Agency to the effect referred to in Section 6.13 was received
with respect to each portion of the Global Certificate exchanged for Definitive
Certificates.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.
(b) Except as provided in Section 6.9 or 7.2 or in any
Supplement, in no event shall the Exchangeable Transferor Certificate or any
interest therein be transferred, sold, exchanged, pledged, participated or
otherwise assigned hereunder, in whole or in part, unless the Transferor shall
have consented in writing to such transfer and unless the Trustee shall have
received (1) confirmation in writing from each Rating Agency that such transfer
will not result in a lowering or withdrawal of its then-existing rating of any
Series of Investor Certificates, and (2) an Opinion of Counsel that such
transfer does not (i) adversely affect the conclusions reached in any of the
federal income tax opinions issued in connection with the original issuance of
any Series of Investor Certificates or (ii) result in a taxable event to the
holders of any such Series.
(c) Unless otherwise provided in the related Supplement,
registration of transfer of Registered Certificates containing a legend relating
to the restrictions on transfer of such Registered Certificates (which legend
shall be set forth in the Supplement relating to such Investor Certificates)
shall be effected only if the
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conditions set forth in such related Supplement are satisfied.
Whenever a Registered Certificate containing the legend set
forth in the related Supplement is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar shall promptly
seek instructions from the Servicer regarding such transfer. The Transfer Agent
and Registrar and the Trustee shall be entitled to receive written instructions
signed by an officer of the Servicer prior to registering any such transfer or
authenticating new Registered Certificates, as the case may be. The Servicer
hereby agrees to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense incurred
without gross negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by them in reliance on any such written
instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, the City of New York, an office or offices
or an agency or agencies where Investor Certificates of such Series may be
surrendered for registration of transfer or exchange.
(e) Prior to the registration of transfer of any portion of a
Transferor Retained Class, the Trustee shall have received an Opinion of Counsel
to the effect that such proposed Transfer will not adversely affect the federal
or Applicable Tax State income tax characterization of any outstanding Series of
Investor Certificates or the taxability (or tax characterization) of the Trust
under federal or Applicable Tax State income tax laws.
Section 6.4 MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES. If (a) any mutilated Certificate (together, in the case of
Bearer Certificates, with all unmatured Coupons, if any, appertaining thereto)
is surrendered to the Transfer Agent and Registrar, or the Transfer Agent and
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be required by them
to hold each of them harmless, then, in the absence of notice to the Trustee
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that such Certificate has been acquired by a bona fide purchaser, the Transferor
shall execute and the Trustee shall authenticate and (unless the Transfer Agent
and Registrar is different from the Trustee, in which case the Transfer Agent
and Registrar shall) deliver (in compliance with applicable law), in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like tenor and aggregate Undivided Interest. In connection
with the issuance of any new Certificate under this Section 6.4, the Trustee or
the Transfer Agent and Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 6.4 shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.5 PERSONS DEEMED OWNERS. Prior to due presentation
of a Certificate for registration of transfer, the Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article V (as
described in any Supplement) and Article XII and for all other purposes
whatsoever, and neither the Trustee, the Paying Agent, the Transfer Agent and
Registrar nor any agent of any of them shall be affected by any notice to the
contrary; PROVIDED, HOWEVER, that in determining whether the holders of Investor
Certificates evidencing the requisite Undivided Interests have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Investor Certificates owned by the Transferor, the Servicer or any Affiliate
thereof shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Investor Certificates which a Responsible Officer in the Corporate Trust Office
of the Trustee knows to be so owned shall be so disregarded. Investor
Certificates so owned that have been pledged in good faith shall not be
disregarded as outstanding if the pledgee establishes to the
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satisfaction of the Trustee the pledgee's right so to act with respect to such
Investor, Certificates and that the pledgee is not the Transferor, the Servicer
or an Affiliate thereof. In addition, for purposes of determining whether the
requisite percentage of Investor Certificateholders shall have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
the outstanding amount of any Series of Variable Funding Certificates (unless
otherwise provided in the Supplement relating to such Series) shall be based on
the related commitments of the holders of the Variable Funding Certificates (in
such amounts as the Servicer shall advise the Trustee in writing) rather than
the amount then outstanding.
In the case of a Bearer Certificate, the Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of them may treat
the holder of a Bearer Certificate or Coupon as the owner of such Bearer
Certificate or Coupon for the purpose of receiving distributions pursuant to
Article V (as described in any Supplement) and Article XII and for all other
purposes whatsoever, and neither the Trustee, the Paying Agent, the Transfer
Agent and Registrar nor any agent of any of them shall be affected by any notice
to the contrary. Certificates so owned which have been pledged in good faith
shall not be disregarded and may be regarded as outstanding, if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Investor Certificates and that the pledgee is not the
Transferor, the Servicer or an Affiliate thereof.
Section 6.6 APPOINTMENT OF PAYING AGENT.
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the appropriate account or accounts maintained for the
benefit of Certificateholders as specified in this Agreement or the related
Supplement for any Series pursuant to Articles IV and V hereof. Any Paying Agent
shall have the revocable power to withdraw funds from such appropriate account
or accounts for the purpose of making distributions referred to above. The
Trustee (or the Servicer if the Trustee is the Paying Agent) may revoke such
power and remove the Paying Agent if the Trustee (or the Servicer if the Trustee
is the Paying Agent) determines in its sole dis-
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cretion that the Paying Agent shall have failed to perform its obligations under
this Agreement in any material respect or for other good cause. The Paying
Agent, unless the Supplement with respect to any Series states otherwise, shall
initially be the Trustee. The Trustee shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Servicer. Upon the resignation of the
Paying Agent, if the Paying Agent was not the Trustee, the Trustee shall be the
successor Paying Agent unless and until another successor has been appointed as
Paying Agent. In the event that the Trustee shall no longer be the Paying Agent,
the Transferor shall appoint a successor to act as Paying Agent (which shall be
a bank or trust company). The provisions of Sections 11.1, 11.2 and 11.3 shall
apply to the Trustee also in its role as Paying Agent, for so long as the
Trustee shall act as Paying Agent. Any reference in this Agreement to the Paying
Agent shall include any co-paying agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long
as the Investor Certificates of such Series are outstanding and the Paying Agent
is not located in New York City, the Transferor shall maintain a co-paying agent
in New York City (for Registered Certificates only) or any other city designated
in such Supplement.
(b) The Transferor shall cause each Paying Agent (other than
the Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto and waive all rights of
set-off the Paying Agent may have against any sums held by it until such sums
shall be paid to such Certificateholders and shall agree, and if the Trustee is
the Paying Agent it hereby agrees, that it shall comply with all requirements of
the Internal Revenue Code regarding the withholding by the Trustee of payments
in respect of federal income taxes due from Certificate Owners.
Section 6.7 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent, within five
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Business Days after receipt by the Trustee of a request therefor from the
Servicer or the Paying Agent, respectively, in writing, a list in such form as
the Servicer or the Paying Agent may reasonably require, of the names and
addresses of the Investor Certificateholders as of the most recent Record Date
for payment of distributions to Investor Certificateholders. Unless otherwise
provided in the related Supplement, holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 10% of the Invested Amount of the
Investor Certificates of any Series (the "Applicants") may apply in writing to
the Trustee, and if such application states that the Applicants desire to
communicate with other Investor Certificateholders of any Series with respect to
their rights under this Agreement or under the Investor Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Certificateholders held by the Trustee and
shall give the Servicer notice that such request has been made, within five
Business Days after the receipt of such application. Such list shall be as of a
date no more than 45 days prior to the date of receipt of such Applicants'
request. Every Certificateholder, by receiving and holding a Certificate, agrees
with the Trustee that neither the Trustee, the Transfer Agent and Registrar, nor
any of their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was obtained.
Section 6.8 AUTHENTICATING AGENT.
(a) The Trustee may appoint one or more authenticating agents
(each, an "Authenticating Agent") with respect to the Certificates which shall
be authorized to act on behalf of the Trustee in authenticating the Certificates
in connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. The Trustee may appoint any Transfer Agent and
Registrar to be an Authentication Agent. Whenever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
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certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be acceptable to the
Transferor.
(b) Any institution succeeding to the corporate agency
business of an Authenticating Agent shall continue to be an Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or such Authenticating Agent.
(c) An Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving notice
of termination to such Authenticating Agent and to the Transferor. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time an Authenticating Agent shall cease to be acceptable to the Trustee or
the Transferor, the Trustee promptly may appoint a successor Authenticating
Agent. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Trustee and the Transferor.
(d) The Servicer agrees to pay each Authenticating Agent from
time to time reasonable compensation for its services under this Section 6.8.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.8,
the Certificates may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in substantially
the following form:
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Trustee's Certificate of Authentication
This is one of the certificates described in the Pooling and
Servicing Agreement.
------------------------
as Authenticating Agent
for the Trustee,
By:
---------------------
Authorized Signatory
Section 6.9 TENDER OF EXCHANGEABLE TRANSFEROR CERTIFICATE.
(a) Upon any Exchange, the Transferor shall deliver to the
Trustee for authentication under Section 6.2, one or more new Series of Investor
Certificates. Any such Series of Investor Certificates shall be substantially in
the form specified in the related Supplement and shall bear, upon its face, the
designation for such Series to which it belongs, as selected by the Transferor.
Except as specified in any Supplement for a related Series, all Investor
Certificates of any Series shall rank PARI PASSU and be equally and ratably
entitled as provided herein to the benefits hereof (except that the Enhancement
provided for any Series shall not be available for any other Series) without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Agreement.
(b) The Holder of the Exchangeable Transferor Certificate may
(i) tender the Exchangeable Transferor Certificate to the Trustee in exchange
for (A) one or more newly issued Series of Investor Certificates or, with
respect to any pre-funded Series, interests therein and (B) a reissued
Exchangeable Transferor Certificate, (ii) request the Trustee to issue to it one
or more Classes of any newly issued Series of Investor Certificates which upon
payment by the purchaser thereof of the Initial Invested Amount of such
Certificates to a Defeasance Account, will represent an interest in the Trust
equal to such Initial Invested Amount (an "Unfunded Certificate") or (iii) take
a combination of the actions
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specified in clauses (i) and (ii); provided that the sum of the amount of
Transferor Amount which is tendered under clause (i) and the amount to be paid
to the Defeasance Account under clause (ii) equals the Initial Invested Amount
of the Investor Certificates delivered to the Holder of the Exchangeable
Transferor Certificate (any such event under clauses (i), (ii) or (iii), a
"Transferor Exchange"). In addition, to the extent permitted for any Series of
Investor Certificates as specified in the related Supplement, the Investor
Certificateholders of such Series may tender their Investor Certificates and the
Holder of the Exchangeable Transferor Certificate may tender the Exchangeable
Transferor Certificate to the Trustee pursuant to the terms and conditions set
forth in such Supplement in exchange for (i) one or more newly issued Series of
Investor Certificates and (ii) a reissued Exchangeable Transferor Certificate
(an "Investor Exchange"). Unless otherwise specified in any Supplement, the
Transferor shall not be permitted to deposit money into any Defeasance Account.
The Transferor Exchange and Investor Exchange are referred to collectively
herein as an "Exchange." The Holder of the Exchangeable Transferor Certificate
may perform an Exchange by notifying the Trustee, in writing, at least five
Business Days in advance (an "Exchange Notice") of the date upon which the
Exchange is to occur (an "Exchange Date"). Any Exchange Notice shall state the
designation of any Series to be issued on the Exchange Date and, with respect to
each such Class or Series: (a) its Initial Invested Amount (or the method for
calculating such Initial Invested Amount), which at any time may not be greater
than the current principal amount of the Exchangeable Transferor Certificate at
such time (or in the case of an Investor Exchange, the sum of the Invested
Amount of any Class or Series of Investor Certificates to be exchanged PLUS the
current principal amount of the Exchangeable Transferor Certificate) taking into
account any Receivables transferred to the Trust simultaneous with such
Exchange, (b) its Certificate Rate (or the method for allocating interest
payments or other cash flows to such Series), if any, and (c) the Enhancement
Provider, if any, with respect to such Series. On the Exchange Date, the Trustee
shall authenticate and deliver any such Class or Classes of such Series of
Investor Certificates only upon delivery to it of the following: (a) a
Supplement satisfying the criteria set forth in subsection 6.9(c) and in form
reasonably satis-
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factory to the Trustee executed by the Transferor and the Servicer and
specifying the Principal Terms of such Series, (b) the applicable Enhancement,
if any, (c) the agreement, if any, pursuant to which the Enhancement Provider
agrees to provide the Enhancement, if any, (d) an Opinion of Counsel to the
effect that (i) any Class of the newly issued Series of Investor Certificates
sold to third parties will be characterized as either indebtedness or
partnership interests for Federal and Applicable Tax State income tax purposes
or (ii) that the issuance of the newly issued Series of Investor Certificates
will not adversely affect the Federal or Applicable Tax State income tax
characterization of any outstanding Series of Investor Certificates or the
taxability of the Trust under Federal or Applicable Tax State income tax laws,
(e) written confirmation from each Rating Agency that the Exchange will not
result in such Rating Agency's reducing or withdrawing its rating on any then
outstanding Class of any Series as to which it is a Rating Agency, (f) an
Officer's Certificate of the Transferor, that on the Exchange Date after giving
effect to such exchange (i) the Transferor Amount would be at least equal to the
Minimum Transferor Amount and (ii) the Retained Interest would be at least equal
to the Minimum Retained Interest, (g) the existing Exchangeable Transferor
Certificate or applicable Investor Certificates, as the case may be and (h) such
other documents, certificates and Opinions of Counsel as may be required by the
applicable Supplement. Upon satisfaction of such conditions, the Trustee shall
cancel the existing Exchangeable Transferor Certificate or applicable Investor
Certificates, as the case may be, and issue, as provided above, such Series of
Investor Certificates and a new Exchangeable Transferor Certificate, dated the
Exchange Date. There is no limit to the number of Exchanges that may be
performed under this Agreement.
(c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect to any
newly issued Series of Investor Certificates, which may include without
limitation: (i) its name or designation, (ii) the Initial Invested Amount or the
method of calculating the Initial Invested Amount, (iii) the Certificate Rate
(or formula for the determination thereof), (iv) the Closing Date, (v) the
rating agency or agencies rating such Series, (vi) the name of the Clearing
Agency, if any, (vii)
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the rights of the Holder of the Exchangeable Transferor Certificate that have
been transferred to the Holders of such Series pursuant to such Exchange
(including any rights to allocations of Collections of Finance Charge
Receivables and Principal Receivables), (viii) the interest payment date or
dates and the date or dates from which interest shall accrue, (ix) the method of
allocating Collections with respect to Principal Receivables for such Series
and, if applicable, with respect to other Series and the method by which the
principal amount of Investor Certificates of such Series shall amortize or
accrete and the method for allocating Collections with respect to Finance Charge
Receivables and Receivables in Defaulted Accounts, (x) the names of any accounts
to be used by such Series and the terms governing the operation of any such
account, (xi) the Series Servicing Fee Percentage, (xii) the Minimum Transferor
Amount, (xiii) the Series Termination Date, (xiv) the terms of any Enhancement
with respect to such Series, (xv) the Enhancement Provider, if applicable, (xvi)
the base rate applicable to such Series, (xvii) the terms on which the
Certificates of such Series may be repurchased or remarketed to other investors,
(xviii) any deposit into any account provided for such Series, (xix) the number
of Classes of such Series, and if more than one Class, the rights and priorities
of each such Class, (xx) whether any fees will be included in the funds
available to be paid for such Series, (xxi) the priority of any Series with
respect to any other Series, (xxii) the rights, if any, of the holders of the
Exchangeable Transferor Certificates that have been transferred to the holders
of such Series, (xxiii) the Pool Factor, (xxiv) the Minimum Aggregate Principal
Receivables, (xxv) whether such Series will be a part of a group or subject to
being paired with any other Series, (xxvi) whether such Series will be prefunded
or paired with any other Series, and (xxvii) any other relevant terms of such
Series (including whether or not such Series will be pledged as collateral for
an issuance of any other securities, including commercial paper) (all such
terms, the "Principal Terms" of such Series). The terms of such Supplement may
modify or amend the terms of this Agreement solely as applied to such new
Series. If on the date of the issuance of such Series there is issued and
outstanding one or more Series of Investor Certificates and no Series of
Investor Certificates is currently rated by a Rating Agency, then as a condition
to such Exchange a nationally recognized investment banking firm
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or commercial bank shall also deliver to the Trustee an officer's certificate
stating, in substance, that the Exchange will not have an adverse effect on the
timing or distribution of payments to such other Series of Investor Certificates
then issued and outstanding.
(d) The Transferor may surrender the Exchangeable Transferor
Certificate to the Trustee in exchange for a newly issued Exchangeable
Transferor Certificate and one or more additional certificates (each a
"Supplemental Certificate"), the terms of which shall be defined in a Supplement
(which Supplement shall be subject to Section 13.1(a) to the extent that it
amends any of the terms of this Agreement), to be delivered to or upon the order
of the Transferor (or the Holder of a Supplemental Certificate, in the case of
the transfer or exchange thereof, as provided below), upon satisfaction of the
following conditions:
(i) the Transferor Amount (excluding the interest
represented by any Supplemental Certificate) shall not be less than the
Minimum Transferor Amount, as of the date of, and after giving effect
to, such exchange;
(ii) each Rating Agency shall have confirmed in
writing such exchange (or transfer or exchange as provided below) will
not cause a reduction or withdrawal of the ratings, if any, on the
Certificates; and
(iii) the Transferor shall have delivered to the
Trustee and each Rating Agency an Opinion of Counsel that such exchange
shall not cause the Trust to be characterized for U.S. federal income
tax purposes as an association taxable as a corporation or otherwise
have any material adverse impact on the U.S. federal income taxation of
any outstanding Class or Series of Investor Certificates or any
Certificateholder or Certificate Owner, which Opinion of Counsel shall
be dated the date of such exchange (or transfer or exchange as provided
below).
Any Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clauses (ii) and (iii) above.
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Section 6.10 BOOK-ENTRY CERTIFICATES. Unless otherwise
provided in any related Supplement, the Investor Certificates, upon original
issuance, shall be issued in the form of typewritten Certificates representing
the Book-Entry Certificates, to be delivered to the depositary specified in such
Supplement (the "Depositary") which shall be the Clearing Agency or Foreign
Clearing Agency, by or on behalf of such Series. The Investor Certificates of
each Series shall, unless otherwise provided in the related Supplement,
initially be registered on the Certificate Register in the name of the nominee
of the Clearing Agency or Foreign Clearing Agency. No Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the related Series of Investor Certificates, except as provided in Section
6.12. Unless and until definitive, fully registered Investor Certificates of any
Series ("Definitive Certificates") have been issued to Certificate Owners
pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in
full force and effect with respect to each such Series;
(ii) the Transferor, the Servicer, the Paying Agent,
the Transfer Agent and Registrar and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Investor Certificates of
each such Series) as the authorized representatives of the Certificate
Owners;
(iii) to the extent that the provisions of this
Section 6.10 conflict with any other provisions of this Agreement, the
provisions of this Section 6.10 shall control with respect to each such
Series; and
(iv) the rights of Certificate Owners of Investor
Certificates of each such Series shall be exercised only through the
Clearing Agency or Foreign Clearing Agency and the applicable Clearing
Agency Participants and shall be limited to those established by law
and agreements between such Certificate Owners and the Clearing Agency
or Foreign Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depositary Agreement appli-
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cable to a Series, unless and until Definitive Certificates of such
Series are issued pursuant to Section 6.12, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal and interest on the
Investor Certificates to such Clearing Agency Participants.
Section 6.11 NOTICES TO CLEARING AGENCY. Whenever notice or
other communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency or Foreign Clearing Agency.
Section 6.12 DEFINITIVE CERTIFICATES. If (i) (A) the
Transferor advises the Trustee in writing that the Clearing Agency or Foreign
Clearing Agency is no longer willing or able to discharge properly its
responsibilities under the applicable Depositary Agreement, and (B) the
Transferor is unable to locate a qualified successor, (ii) the Transferor, at
its option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or Foreign Clearing Agency with
respect to any Series of Certificates or (iii) after the occurrence of a
Servicer Default, Certificate Owners of a Series representing beneficial
interests aggregating not less than 50% of the Invested Amount of such Series
advise the Trustee and the applicable Clearing Agency or Foreign Clearing Agency
through the applicable Clearing Agency Participants in writing that the
continuation of a book-entry system through the applicable Clearing Agency or
Foreign Clearing Agency is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners of such Series, through
the applicable Clearing Agency Participants, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners of such
Series requesting the same. Upon surrender to the Trustee of the Investor
Certificates of such Series by the applicable Clearing Agency or Foreign
Clearing Agency for registration of transfer, accompanied by registration
instructions from the applicable Clearing Agency or Foreign Clearing Agency, the
Trustee shall issue the Definitive Certificates of such
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Series. Neither the Transferor nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates of such Series, all references herein to obligations imposed upon
or to be performed by the applicable Clearing Agency or Foreign Clearing Agency
shall be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates, and the Trustee shall
recognize the Holders of the Definitive Certificates of such Series as
Certificateholders of such Series hereunder.
Section 6.13 GLOBAL CERTIFICATE; EURO-CERTIFICATE EXCHANGE
DATE. If specified in the related Supplement for any Series, the Investor
Certificates may be initially issued in the form of a single temporary Global
Certificate (the "Global Certificate") in bearer form, without interest coupons,
in the denomination of the Initial Invested Amount of such Series and
substantially in the form attached to the related Supplement. Unless otherwise
specified in the related Supplement, the provisions of this Section 6.13 shall
apply to such Global Certificate. The Global Certificate will be authenticated
by the Trustee upon the same conditions, in substantially the same manner and
with the same effect as the Definitive Certificates. The Global Certificate may
be exchanged in the manner described in the related Supplement for Registered or
Bearer Certificates in definitive form.
Section 6.14 MEETINGS OF CERTIFICATEHOLDERS.
To the extent provided by the Supplement for any Series issued
in whole or in part in Bearer Certificates, the Servicer or the Trustee may at
any time call a meeting of the Certificateholders of such Series, to be held at
such time and at such place as the Servicer or the Trustee, as the case may be,
shall determine, for the purpose of approving a modification of or amendment to,
or obtaining a waiver of, any covenant or condition set forth in this Agreement
with respect to such Series or in the Certificates of such Series, subject to
Section 13.1 of this Agreement.
Section 6.15 UNCERTIFICATED CLASSES. Notwithstanding anything
to the contrary contained in this
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Article VI or in Article XII, unless otherwise specified in any Supplement, any
provisions contained in this Article VI and in Article XII relating to the
registration, form, execution, authentication, delivery, presentation,
cancellation and surrender of Certificates shall not be applicable to any
uncertificated Certificates.
[End of Article VI]
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
Section 7.1 LIABILITY OF THE TRANSFEROR. The Transferor
shall be liable in accordance herewith solely to the extent of the obligations
specifically undertaken by the Transferor.
Section 7.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE OBLIGATIONS OF, THE TRANSFEROR.
(a) The Transferor shall not consolidate with or merge into
any other Person or convey or transfer its properties and assets substantially
as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into
which the Transferor is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Transferor
substantially as an entirety shall be, if the Transferor is not the
surviving Person (x) a corporation organized and existing under the
laws of the United States of America or any State or the District of
Columbia or (y) a state or national banking association that is not
subject to the United States Bankruptcy Code of 1978, as amended from
time to time, or to any successor statute, and shall expressly assume,
by an agreement supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the performance of every
covenant and obligation of the Transferor, as applicable hereunder and
shall benefit from all the rights granted to the Transferor, as
applicable hereunder. To the extent that any right, covenant or
obligation of the Transferor, as applicable hereunder, is inapplicable
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to the successor Person, such successor Person shall be subject to such
covenant or obligation, or benefit from such right, as would apply, to
the extent practicable, to such successor Person. In furtherance
hereof, in applying this Section 7.2 to a successor Person, Section 9.2
hereof shall be applied by reference to events of involuntary
liquidation, receivership or conservatorship applicable to such
successor Person as shall be set forth in the officer's certificate
described in subsection 7.2(a)(ii);
(ii) the Transferor shall have delivered to the
Trustee an Officer's Certificate signed by a Vice President (or any
more senior officer) of the Transferor stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 7.2 and that all conditions precedent herein provided
for relating to such transaction have been complied with and an Opinion
of Counsel that such supplemental agreement is legal, valid and binding
and that the Person surviving such consolidation, conveyance or
transfer is organized and existing under the laws of the United States
of America or any State or the District of Columbia and, subject to
customary limitations and qualifications, such Person should not be
substantively consolidated with any Originator or the Servicer;
(iii) the Transferor shall have delivered notice to
each Rating Agency of such consolidation, merger, conveyance or
transfer and each Rating Agency shall have provided written
confirmation that such consolidation, merger, conveyance or transfer
will not result in such Rating Agency reducing or withdrawing its
rating on any then outstanding Class or Series as to which it is a
Rating Agency; and
(iv) if the Transferor is not the surviving Person,
the surviving Person shall file new UCC-1 financing statements with
respect to the interest of the Trust in the Receivables.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferor
hereunder ex-
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cept for mergers, consolidations, assumptions or transfers in accordance with
the provisions of the foregoing paragraph.
Section 7.3 LIMITATION ON LIABILITY. The directors, officers,
employees or agents of the Transferor shall not be under any liability to the
Trust, the Trustee, the Certificateholders, any Enhancement Provider or any
other Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
any Supplement and the issuance of the Certificates; PROVIDED, HOWEVER, that
this provision shall not protect the officers, directors, employees, or agents
of the Transferor against any liability which would otherwise be imposed upon
them by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. Except as provided in Sections 7.1 and 7.4 with respect to the
Trust and the Trustee and its officers, directors, employees and agents, the
Transferor shall not be under any liability to the Trust, the Trustee, its
officers, directors, employees and agents, the Certificateholders, any
Enhancement Provider or any other Person for any action taken or for refraining
from the taking of any action in its capacity as Transferor pursuant to this
Agreement or any Supplement whether arising from express or implied duties under
this Agreement or any Supplement or otherwise; PROVIDED, HOWEVER, that this
provision shall not protect the Transferor against any liability which would
otherwise be imposed upon it by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Transferor and any director, officer,
employee or agent may rely in good faith on any document of any kind PRIMA FACIE
properly executed and submitted by any Person respecting any matters arising
hereunder.
Section 7.4 LIABILITIES. (a) Notwithstanding Section 7.3
(and notwithstanding Sections 8.3 and 8.4), the Transferor by entering into this
Agreement, and any Holder of any interest in the Exchangeable Transferor
Certificate (excluding, unless otherwise provided in any Supplement, any
Supplemental Certificate) by its accep-
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tance thereof, agree to be liable, directly to the injured party, for the entire
amount of any losses, claims, damages or liabilities (other than those taken at
the direction of Investor Certificateholders or that would be incurred by an
Investor Certificateholder if the Investor Certificates were notes secured by
the Receivables, including 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 the Investor Certificates) arising out of or based on the
arrangement created by this Agreement or the actions of the Servicer taken
pursuant hereto (to the extent that, if the Trust Property at the time the claim
is made were used to pay in full all outstanding Certificates of all Series, the
Trust Property that would remain after the Investor Certificateholders and
Enhancement Providers, if any, were paid in full would be insufficient to pay
any such losses, claims, damages or liabilities) as though this Agreement
created a partnership under the New York Revised Limited Partnership Act in
which the Transferor and such Holder of the Exchangeable Transferor Certificate
were general partners. To the extent provided in Section 8.4, the Servicer will
(from its own assets and not from the assets of the Trust) indemnify and hold
harmless the Trustee, the Transferor and each Holder of the Exchangeable
Transferor Certificate against and from certain losses, claims, damages and
liabilities of the Transferor or such Holder as described in this Section
arising from the actions or omissions of the Servicer.
(b) The Transferor shall indemnify and hold harmless the
Trustee and its officers, directors, employees and agents, from and against any
loss, liability, expense, damage or injury (collectively, a "Loss") suffered or
sustained by reason of the acceptance by the Trustee of the trust pursuant to
this Agreement, including any judgment, award, settlement, reasonable attorneys'
fees and other costs or expenses incurred in connection with the defense of any
action, proceeding or claim; PROVIDED, HOWEVER, that the Transferor's duty to
indemnify under this subsection 7.4(b) shall not extend to any Losses that are
caused by or result from the fraud, negligence, or willful misconduct of, the
Trustee, its employees or its agents; PROVIDED, FURTHER, that in no event will
the Transferor be liable, directly or indi-
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rectly, for or in respect of any indebtedness evidenced or created by any
Certificate, recourse as to which shall be limited solely to the assets of the
Trust allocated for the payment thereof as provided in this Agreement and any
applicable Supplement. This indemnification shall survive the termination of the
Agreement or the resignation or removal of the Trustee.
Section 7.5 TRANSFEROR'S RECORDS. The Transferor shall
clearly and unambiguously mark its accounting records evidencing the Receivables
being purchased pursuant to the Receivables Purchase Agreement with a legend
stating that such Receivables have been conveyed to the Trust pursuant to this
Agreement.
[End of Article VII]
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 LIABILITY OF THE SERVICER. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
Section 8.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER. Subject to subsection 3.1(a), the Servicer shall
not consolidate with or merge into any other Person or convey or transfer its
properties and assets substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into
which the Servicer is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Servicer substantially as
an entirety shall be (x) a corporation organized and existing under the
laws of the United States of America or any State or the District of
Columbia or (y) a state or national banking association that is not
subject to the United States Bankruptcy Code of 1978, as amended from
time to time, or to any successor statute and, if the Servicer is not
the surviving Person, shall expressly assume, by an
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agreement supplemental hereto, executed and delivered to the Trustee in
form satisfactory to the Trustee, the performance of every covenant and
obligation of the Servicer hereunder (to the extent that any right,
covenant or obligation of the Servicer, as applicable hereunder, is
inapplicable to the successor Person, such successor Person shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor Person);
(ii) the Servicer shall have delivered to the Trustee
an Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.2
and that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that such
supplemental agreement is legal, valid and binding with respect to the
Servicer and that the Person surviving such consolidation, conveyance
or transfer is organized and existing under the laws of the United
States of America or any State or the District of Columbia; and
(iii) the Servicer shall have delivered notice to
each Rating Agency of such consolidation, merger, conveyance or
transfer.
Section 8.3 LIMITATION ON LIABILITY OF THE SERVICER AND
OTHERS. The directors, officers, employees or agents of the Servicer shall not
be under any liability to the Trust, the Trustee, the Certificateholders, any
Enhancement Provider or any other Person hereunder or pursuant to any document
delivered hereunder, it being expressly understood that all such liability is
expressly waived and released as a condition of, and as consideration for, the
execution of this Agreement and any Supplement and the issuance of the
Certificates; PROVIDED, HOWEVER, that this provision shall not protect the
directors, officers, employees and agents of the Servicer against any liability
which would otherwise be imposed upon them by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Except as provided in Sections
8.1 and 8.4 with respect to the Trustee, its officers, directors, employ-
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ees and agents, the Servicer shall not be under any liability to the Trust, the
Trustee, its officers, directors, employees and agents, the Certificateholders,
any Enhancement Provider or any other Person for any action taken or for
refraining from the taking of any action in its capacity as Servicer pursuant to
this Agreement or any Supplement; PROVIDED, HOWEVER, that this provision shall
not protect the Servicer against any liability which would otherwise be imposed
upon it by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of its reckless disregard of its obligations
and duties hereunder or under any Supplement. The Servicer may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its duties to service the Receivables in accordance with this
Agreement which in its reasonable opinion may involve it in any expense or
liability.
Section 8.4 SERVICER INDEMNIFICATION OF THE TRANSFEROR,
THE TRUST AND THE TRUSTEE. Subject to the limitations on liability set forth in
Section 8.3, the Servicer shall indemnify and hold harmless the Transferor, the
Trustee and the Trust (each, an "Indemnified Party") from and against any loss,
liability, reasonable expense, damage or injury, including, but not limited to,
any judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, suffered or sustained by reason of any acts or
omissions or alleged acts or omissions of the Servicer with respect to
activities of the Trust or the Trustee for which the Servicer is responsible
pursuant to this Agreement; PROVIDED, HOWEVER, that the Servicer shall not
indemnify or hold harmless an Indemnified Party if such acts, omissions or
alleged acts or omissions constitute or are caused by fraud, negligence or
willful misconduct by such Indemnified Party (or any of such Indemnified Party's
officers, directors, employees or agents) or the Investor Certificateholders;
PROVIDED, FURTHER, that the Servicer shall not indemnify or hold harmless the
Trust, the Investor Certificateholders or the Certificate Owners for any losses,
liabilities,
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expenses, damages or injuries suffered or sustained by any of them with respect
to any action taken by the Trustee at the request of the Investor
Certificateholders; PROVIDED, FURTHER, that the Servicer shall not indemnify or
hold harmless the Trust, the Investor Certificateholders or the Certificate
Owners as to any losses, liabilities, expenses, damages or injuries suffered or
sustained by any of them in their capacities as investors, including without
limitation losses incurred as a result of Defaulted Accounts or Receivables
which are written off as uncollectible; PROVIDED, FURTHER, that the Servicer
shall not indemnify or hold harmless the Transferor, the Trust, the Investor
Certificateholders or the Certificate Owners for any losses, liabilities,
expenses, damages or injuries suffered or sustained by the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation, any federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the Trust, the Investor Certificateholders or
the Certificate Owners in connection herewith to any taxing authority; and,
PROVIDED, FURTHER, that in no event will the Servicer be liable, directly or
indirectly, for or in respect of any indebtedness evidenced or created by any
Certificate, recourse as to which shall be limited solely to the assets of the
Trust allocated for the payment thereof as provided in this Agreement and any
applicable Supplement. Any such indemnification shall not be payable from the
assets of the Trust, but the Servicer shall be subrogated to the rights of the
Trust with respect to the foregoing matters if and to the extent that the
Servicer shall have indemnified the Trust with respect thereto. The Servicer
shall indemnify and hold harmless the Trustee and its officers, directors,
employees or agents from and against any loss, liability, reasonable expense,
damage or injury suffered or sustained by reason of the acceptance of this Trust
by the Trustee, the issuance by the Trust of the Certificates or any of the
other matters contemplated herein or in any Supplement; PROVIDED, HOWEVER, that
the Servicer shall not indemnify the Trustee or its officers, directors,
employees or agents for any loss, liability, expense, damage or injury caused by
the fraud, negligence or willful misconduct of any of them. The provisions of
this indemnity shall run directly to and be enforceable by an
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injured party subject to the limitations hereof and shall survive the
resignation or removal of the Servicer, the resignation or removal of the
Trustee and/or the termination of the Trust and shall survive the termination of
this Agreement.
Section 8.5 THE SERVICER NOT TO RESIGN. Subject to
subsection 3.1(a), the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that (i) the performance of its
duties hereunder is no longer permissible under applicable law and (ii) there is
no reasonable action which the Servicer could take to make the performance of
its duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause (i)
above by an Opinion of Counsel to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a Successor Servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 10.2 hereof. If the Trustee is unable within 120 days of
the date of delivery to it of such Opinion of Counsel to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer hereunder (but shall
have continued authority to appoint another Person as Successor Servicer).
Section 8.6 ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING THE RECEIVABLES. The Servicer shall provide to the
Trustee and its agents (who shall be reasonably acceptable to the Servicer)
access to the documentation regarding the Accounts and the Receivables in such
cases where the Trustee is required in connection with the enforcement of the
rights of the Investor Certificateholders, or by applicable statutes or
regulations, to review such documentation, such access being afforded without
charge but only (i) upon reasonable request, (ii) during normal business hours,
(iii) subject to the Servicer's normal security and confidentiality procedures
and (iv) at offices designated by the Servicer. Nothing in this Section 8.6
shall derogate from the obligation of the Transferor, the Trustee or the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access as
provided in this Section 8.6 as a result of such obligations shall not
constitute a breach of this Section 8.6.
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Section 8.7 DELEGATION OF DUTIES. It is understood and
agreed by the parties hereto that the Servicer may delegate certain of its
duties hereunder to FACS Group, Inc., a subsidiary of Federated, located in
Mason, Ohio, Tampa, Florida and Phoenix, Arizona and to First Data Resources,
Inc., a Delaware corporation. In the ordinary course of business, the Servicer
may at any time delegate any duties hereunder to any Person who agrees to
conduct such duties in accordance with the Credit and Collection Policies. Any
such delegations shall not relieve the Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of Section 8.5 hereof and the Servicer will
remain jointly and severally liable with such Person for any amounts which would
otherwise be payable pursuant to this Article VIII as if the Servicer had
performed such duty; PROVIDED, HOWEVER, that in the case of any significant
delegation to a Person other than an Affiliate of FDSNB (i) written notice shall
be given to the Trustee and to each Rating Agency of such delegation and (ii) no
Rating Agency shall have notified the Transferor or the Trustee in writing that
such delegation will result in the lowering or withdrawal of its then existing
rating of any Series or Class of Investor Certificates.
[End of Article VIII]
ARTICLE IX
PAY OUT EVENTS
Section 9.1 PAY OUT EVENTS. If any one of the following
events (each, a "Trust Pay Out Event") shall occur:
(a) the Transferor, any Holder of the Exchangeable Transferor
Certificate (other than a Holder of a Supplemental Certificate) or FCHC shall
consent to the appointment of a bankruptcy trustee or receiver or liquidator in
any bankruptcy proceeding or any other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
all or substantially all of its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or receiver or liquidator in any bank-
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ruptcy proceeding or any other insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Transferor, any
Holder of the Exchangeable Transferor Certificate (other than a Holder of a
Supplemental Certificate) or FCHC; or the Transferor, any Holder of the
Exchangeable Transferor Certificate (other than a Holder of a Supplemental
Certificate) or FCHC shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute including the U.S. bankruptcy
code, make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or the Transferor shall become unable for any reason
to transfer Receivables to the Trust in accordance with the provisions of this
Agreement;
(b) the Trust shall become subject to regulation by the
Securities and Exchange Commission as an "investment company" within the meaning
of the Investment Company Act; or
(c) the Transferor shall become unable for any reason to
transfer Receivables to the Trust pursuant to this Agreement;
then a Pay Out Event with respect to all Series of Certificates shall occur
without any notice or other action on the part of the Trustee or the Investor
Certificateholders immediately upon the occurrence of such event.
Section 9.2 ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS.
(a) If (x) the Transferor shall consent to the appointment of
a bankruptcy trustee or receiver or liquidator for the winding-up or liquidation
of its affairs, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
bankruptcy trustee or receiver or liquidator for the winding-up or liquidation
of its affairs shall have been entered against the Transferor (an "Insolvency
Event"), the Transferor shall on the day of such Insolvency Event (the
"Appointment Day") or (y) the Retained Percentage shall at any time be equal to
or
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less than 2% (a "Trigger Event"), the following actions shall be taken and
processes begun:
(i) If an Insolvency Event shall have occurred, the Transferor
shall immediately cease to transfer Principal Receivables to the Trust and shall
promptly give written notice to the Trustee of such Insolvency Event.
Notwithstanding any cessation of the transfer to the Trust of additional
Principal Receivables, receivables accrued in respect of periodic finance
charges, late fees and similar fees and charges, whenever created, accrued in
respect of Receivables which have been transferred to the Trust, shall continue
to be a part of the Trust, and Collections with respect thereto shall continue
to be allocated and paid in accordance with Article IV.
(ii) If an Insolvency Event or a Trigger Event shall have
occurred, this Agreement and the Trust shall be deemed to have terminated,
subject to the liquidation, winding-up and dissolution procedures described
below; PROVIDED, HOWEVER, that within 15 days of the date of written notice to
the Trustee, the Trustee shall (A) publish a notice in an Authorized Newspaper
that an Insolvency Event or a Trigger Event has occurred, that the Trust has
terminated, and that the Trustee intends to sell, dispose of or otherwise
liquidate the Receivables pursuant to this Agreement in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids (a "Disposition") and (B) send written notice
to the Investor Certificateholders describing the provisions of this Section 9.2
and requesting each Investor Certificateholder to advise the Trustee in writing
that it elects one of the following options: (1) the Investor Certificateholder
wishes the Trustee to instruct the Servicer not to effectuate a Disposition, (2)
the Investor Certificateholder refuses to advise the Trustee as to the specific
action the Trustee shall instruct the Servicer to take or (3) the Investor
Certificateholder wishes the Servicer to effect a Disposition. If after 75 days
from the day notice pursuant to clause (A) above is first published (the
"Publication Date"), the Trustee shall not have received the written instruction
described in clause (B) above from Holders of Investor Certificates representing
Undivided Interests aggregating in excess of 50% of the related Invested Amount
of each Series (or, in the case
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of a Series having more than one Class, each Class of such Series) and the
holders of any Supplemental Certificates or any other interest in the
Exchangeable Transferor Certificate other than the Transferor as provided in
Section 6.3(b) (for each Series, a "Holders' Majority"), the Trustee shall
instruct the Servicer to effectuate a Disposition, and the Servicer shall
proceed to consummate a Disposition. If, however, with respect to the portion of
the Receivables allocable to any outstanding Series, a Holders' Majority
instruct the Trustee not to effectuate a Disposition of the portion of the
Receivables allocable to such Series, the Trust shall be reconstituted and
continue with respect to such Series pursuant to the terms of this Agreement and
the applicable Supplement (as amended in connection with such reconstitution);
PROVIDED, HOWEVER, that in the event of an Insolvency Event, the Trust shall not
be reconstituted unless the Trustee shall have first received an Opinion of
Counsel to the effect that the Trust, as reconstituted, shall not be subject to
Federal or any Applicable Tax State income tax on its income. The portion of the
Receivables allocable to any Series shall be equal to the sum of (1) the product
of (A) the Transferor Percentage, (B) the aggregate outstanding Principal
Receivables and (C) a fraction the numerator of which is the related Investor
Percentage of Collections of Finance Charge Receivables and the denominator of
which is the sum of all Investor Percentages with respect to Collections of
Finance Charge Receivables for all Series outstanding and (2) the Invested
Amount of such Series. The Transferor or any of its Affiliates shall be
permitted to bid for the Receivables. In addition, the Transferor or any of its
Affiliates shall have the right to match any bid by a third person and be
granted the right to purchase the Receivables at such matched bid price. The
Trustee may obtain a prior determination from any such bankruptcy trustee,
receiver or liquidator that the terms and manner of any proposed Disposition are
commercially reasonable. The provisions of Sections 9.1 and 9.2 shall not be
deemed to be mutually exclusive.
(b) The proceeds from the Disposition pursuant to subsection
(a) above shall be treated as Collections on the Receivables and shall be
allocated and deposited in accordance with the provisions of Article IV;
PROVIDED, HOWEVER that the proceeds from a Disposition with respect to a Series
shall be applied solely to make pay-
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ments to such Series; PROVIDED, FURTHER, that the Trustee shall determine
conclusively in its sole discretion the amount of such proceeds which are
allocable to Finance Charge Collections and the amount of such proceeds which
are allocable to Collections of Principal Receivables. Unless the Trustee
receives written instructions from Investor Certificateholders of one or more
Series to continue the Trust with respect to such Series as provided in
subsection 9.2(a) above, on the day following the last Distribution Date in the
Monthly Period during which such proceeds are distributed to the Investor
Certificateholders of each Series, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with
its responsibilities pursuant to this Article IX with respect to competitive
bids.
[End of Article IX]
ARTICLE X
SERVICER DEFAULTS
Section 10.1 SERVICER DEFAULTS. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee pursuant to Article
IV or to instruct the Trustee to make any required drawing, withdrawal, or
payment under any Enhancement on or before the date occurring five Business Days
after the date such payment, transfer, deposit, withdrawal or drawing or such
instruction or notice is required to be made or given, as the case may be, under
the terms of this Agreement; PROVIDED, HOWEVER, that any such failure caused by
a non- willful act of the Servicer shall not constitute a Servicer Default if
the Servicer promptly remedies such failure within five Business Days after
receiving notice of such failure or otherwise becoming aware of such failure;
(b) failure on the part of the Servicer duly to observe or
perform in any respect any other covenants or agreements of the Servicer set
forth in this Agree-
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ment, which has a material adverse effect on the Investor Certificateholders of
any Series and which continues unremedied for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee, or to the Servicer and the
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Invested Amount of any Series materially
adversely affected thereby and continues to materially adversely affect such
Investor Certificateholders for such period; or the Servicer shall delegate its
duties under this Agreement, except as permitted by Section 8.7;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Investor Certificateholders of any Series and which
continues to be incorrect in any material respect for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 50% of the Invested Amount of any
Series materially adversely affected thereby and continues to materially
adversely affect such Investor Certificateholders for such period; or
(d) the Servicer shall consent to the appointment of a
bankruptcy trustee or receiver or liquidator in any bankruptcy proceeding or any
other insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a bankruptcy trustee or receiver or liquidator in any bankruptcy proceeding or
any other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer, and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or the Servicer shall admit in writing its inability to pay its debts generally
as they
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become due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make any assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Invested Amount, by notice then given
in writing to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all of the rights
and obligations of the Servicer as Servicer under this Agreement. The Servicer
agrees that promptly after it receives such Termination Notice, the Servicer
will at its own expense deliver to the Trustee or to the bailee of the Trustee a
computer file or microfiche list containing a true and complete list of all
Accounts, identified by account number and setting forth the Outstanding Balance
of each Receivable as of the date of receipt of such Termination Notice. After
receipt by the Servicer of such Termination Notice, and on the date that a
Successor Servicer shall have been appointed by the Trustee pursuant to Section
10.2, all authority and power of the Servicer under this Agreement shall pass to
and be vested in a Successor Servicer; and, without limitation, the Trustee is
hereby authorized and empowered (upon the failure of the Servicer to cooperate)
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other instruments upon the failure of the Servicer
to execute or deliver such documents or instruments, and to do and accomplish
all other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights and obligations. The Servicer agrees to cooperate
with the Trustee and such Successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables provided for under this
Agreement, including, without limitation, all authority over all Collections
which shall on the date of transfer be held by the Servicer for deposit, or
which have been deposited by the Servicer, in the Collection Account, the Excess
Funding Account, the Interest Funding Account or the Principal Account, and any
Series Account, or which shall thereafter be
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received with respect to the Receivables. The Servicer shall promptly transfer
its electronic records or electronic copies thereof relating to the Receivables
to the Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance with this
Section 10.1 shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer reasonably deems to be confidential,
the Successor Servicer shall be required to enter into such customary licensing
and confidentiality agreements as the Servicer shall deem necessary to protect
its interests. The Servicer shall, on the date of any servicing transfer,
transfer all of its rights and obligations under the Enhancement with respect to
any Series to the Successor Servicer. In connection with any service transfer,
all reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the records, correspondence and other documents
with respect to the Receivables and the other Trust Property to the Successor
Servicer and amending this Agreement to reflect such succession as Successor
Servicer pursuant to this Section 10.1 and Section 10.2 shall be paid by the
Servicer (unless the Trustee is acting as the Servicer on a temporary basis, in
which case the original Servicer shall be responsible therefor) upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in subsection 10.1(a) for a period of five Business Days
or under subsection 10.1(b) or (c) for a period of 60 Business Days, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion, riot or sabotage, epidemics, landslides,
lightning, fire, hurricanes, tornadoes, earthquakes, nuclear disasters or
meltdowns, floods, power outages, bank closings, communications outages,
computer failure or similar causes. The preceding sentence shall not relieve the
Servicer from using its best efforts to perform its obligations in a
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timely manner in accordance with the terms of this Agreement and the Servicer
shall provide the Trustee, any Enhancement Provider, the Transferor and the
Holders of Investor Certificates with an Officer's Certificate giving prompt
notice of such failure or delay by it, together with a description of the cause
of such failure or delay and its efforts so to perform its obligations.
Section 10.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.1, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or as otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice, or otherwise specified by the
Trustee, until a date mutually agreed upon by the Servicer and Trustee. The
Trustee shall notify each Rating Agency of such removal of the Servicer. The
Trustee shall, as promptly as possible after the giving of a Termination Notice,
appoint a successor servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee. If such Successor Servicer is unable to accept such
appointment, the Trustee may obtain bids from any potential successor servicer
(which may be in excess of the Servicing Fee specified in any Supplement). If
the Trustee is unable to obtain any bids from any potential successor servicer
and the Servicer delivers an Officer's Certificate to the effect that it cannot
in good faith cure the Servicer Default which gave rise to a transfer of
servicing, and if the Trustee is legally unable to act as Successor Servicer,
then the Trustee shall notify each Enhancement Provider of the proposed sale of
the Receivables and shall provide each such Enhancement Provider an opportunity
to bid on the Receivables and shall offer the Transferor the right of first
refusal to purchase the Receivables on terms equivalent to the best purchase
offer as determined by the Trustee, but in no event less than an amount equal to
the Aggregate Invested Amount on the date of such purchase PLUS all interest
accrued but unpaid on all of the outstanding Investor Certificates at the
applicable Certificate Rate through the date of such purchase; PROVIDED,
HOWEVER, that no such purchase by the Transferor shall occur un-
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less the Transferor shall deliver an Opinion of Counsel reasonably acceptable to
the Trustee that such purchase would not constitute a fraudulent conveyance of
the Transferor. The proceeds of such sale shall be deposited in the Distribution
Account or any Series Account, as provided in the related Supplement, for
distribution to the Investor Certificateholders of each outstanding Series
pursuant to Section 12.3 of the Agreement. In the event that a Successor
Servicer has not been appointed and has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Trustee without further action
shall automatically be appointed the Successor Servicer (but shall have
continued authority, to appoint another Person as Successor Servicer). The
Trustee may delegate any of its servicing obligations to an affiliate or agent
of the Trustee in accordance with Article III hereof. Any such delegations shall
not relieve the Trustee of its liability and responsibility with respect to such
duties. Notwithstanding the above, the Trustee shall, if it is legally unable to
act, petition a court of competent jurisdiction to appoint any established
financial institution having, in the case of a Person that is subject to
risk-based capital adequacy requirements, risk-based capital of at least
$50,000,000 or, in the case of a Person that is not subject to risk-based
capital requirements, having a net worth of not less than $50,000,000 and whose
regular business includes the servicing of credit card receivables as the
Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer. Any Successor Servicer, by its
acceptance of its appointment, will automatically agree to be bound by the terms
and provisions of each Enhancement.
(c) In connection with such appointment and assumption, the
Trustee shall be entitled to such compensation, or may make such arrangements
for the compensation of the Successor Servicer out of Collections, as it and
such Successor Servicer shall agree; PROVIDED, HOWEV-
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ER, that no such compensation shall be in excess of the Servicing Fee permitted
to the Servicer pursuant to Section 3.2. The Transferor agrees that if the
Servicer is terminated hereunder, it will agree to deposit a portion of the
Collections in respect of Finance Charge Receivables that it is entitled to
receive pursuant to Article IV to pay its ratable share of the compensation of
the Successor Servicer.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.1 and shall pass to and be vested in the
Transferor and, without limitation, the Transferor is hereby authorized and
empowered to execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Successor Servicer agrees to
cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing on
the Receivables. The Successor Servicer shall transfer its electronic records
relating to the Receivables to the Transferor in such electronic form as the
Transferor may reasonably request and shall transfer all other records,
correspondence and documents to the Transferor in the manner and at such times
as the Transferor shall reasonably request. To the extent that compliance with
this Section 10.2 shall require the Successor Servicer to disclose to the
Transferor information of any kind which the Successor Servicer deems to be
confidential, the Transferor shall be required to enter into such customary
licensing and confidentiality agreements as the Successor Servicer shall deem
necessary to protect its interests.
Section 10.3 NOTIFICATION TO CERTIFICATEHOLDERS. Within two
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give prompt written notice thereof to the Trustee and any
Enhancement Provider and, upon receipt of such written notice, the Trustee shall
give notice to the Investor Certificateholders at their respective addresses
appearing in the Certificate Register. Upon any termination or appointment of a
Successor Servicer pursuant to this Article X, the Trustee shall give prompt
written notice
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thereof to Investor Certificateholders at their respective addresses appearing
in the Certificate Register.
Section 10.4 WAIVER OF PAST DEFAULTS. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3% of
the Invested Amount of each Series materially adversely affected by any default
by the Servicer or Transferor may, on behalf of all Certificateholders of such
Series, waive any default by the Servicer or Transferor in the performance of
their respective obligations hereunder and its consequences, except a default in
the failure to make any required deposits or payments of interest or principal
relating to such Series pursuant to Article IV, which default does not result
from the failure of the Paying Agent to perform its obligations to make any
required deposits or payments of interest and principal in accordance with
Article IV. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
[End of Article X]
ARTICLE XI
THE TRUSTEE
Section 11.1 DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of any Servicer
Default of which a Responsible Officer of the Trustee has knowledge and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or duties shall be read into this Agreement
against the Trustee. If a Responsible Officer has received written notice that a
Servicer Default has occurred (and such Servicer Default has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in its exercise, as
a prudent person
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would exercise or use under the circumstances in the conduct of such person's
own affairs; PROVIDED, HOWEVER, that if the Trustee shall assume the duties of
the Servicer pursuant to Section 8.5 or 10.2, the Trustee in performing such
duties shall use the degree of skill and attention customarily exercised by a
servicer with respect to comparable receivables that it services for itself or
others.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they substantially conform to the requirements of this
Agreement. The Trustee shall retain all such items for at least one year after
receipt and shall make such items available for inspection by any Investor
Certificateholder at the Corporate Trust Office, such inspection to be made
during regular business hours and upon reasonable prior notice to the Trustee.
(c) Subject to subsection 11.1(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own misconduct;
PROVIDED, HOWEVER, that:
(i) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50%
of the Invested Amount of any Series relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee with respect to such Series, or exercising any trust or power
conferred upon the Trustee with respect to such Series, under this
Agreement; and
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(iii) the Trustee shall not be charged with knowledge
of any failure by the Servicer referred to in clauses (a) and (b) of
Section 10.1 or of any breach by the Servicer contemplated by clause
(c) of Section 10.1 or any Pay Out Event unless a Responsible Officer
of the Trustee obtains actual knowledge of such failure, breach or Pay
Out Event or the Trustee receives written notice of such failure,
breach or Pay Out Event from the Servicer or any Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than
10% of the Invested Amount of any Series adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Servicer in accordance with
the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement,
the Trustee shall take no action reasonably likely to impair the interests of
the Trust in any Receivable now existing or hereafter created or to impair the
value of any Receivable now existing or hereafter created.
(f) Except as provided in this Agreement, the Trustee shall
have no power to vary the corpus of the Trust.
(g) If to the knowledge of a Responsible Officer of the
Trustee, the Paying Agent or the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day required
to be performed by the Paying Agent or the Transfer Agent and Registrar, as the
case may be, under this Agreement,
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the Trustee shall be obligated promptly upon its obtaining knowledge thereof by
a Responsible Officer of the Trustee to perform such obligation, duty or
agreement in the manner so required.
(h) If the Transferor has agreed to transfer any of its credit
card receivables (other than the Receivables) to another Person, upon the
written request of the Transferor, the Trustee on behalf of the Trust will enter
into such intercreditor agreements with the transferee of such receivables as
are customary and necessary to identify separately the rights, if any, of the
Trust and such other Person in the Transferor's credit card receivables;
PROVIDED, HOWEVER, that the Trust shall not be required to enter into any
intercreditor agreement which could adversely affect the interests of the
Certificateholders or the Trustee and, upon the request of the Trustee, the
Transferor will deliver an Opinion of Counsel on any matters relating to such
intercreditor agreement, reasonably requested by the Trustee.
Section 11.2 CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 11.1:
(a) the Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accordance with, any assignment of
Receivables in Supplemental Accounts, the initial report, the Daily Report, the
Settlement Statement, the annual Servicer's certificate, the monthly payment
instructions and notification to the Trustee, the monthly Certificateholder's
statement, any resolution, Officer's Certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented to it pursuant to this Agreement by
the proper party or parties;
(b) the Trustee may consult with counsel, and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by
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this Agreement or any Enhancement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders or any Enhancement Provider, pursuant to the
provisions of this Agreement, unless such Certificateholders or Enhancement
Provider shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of any Servicer Default (which has not been
cured or waived) of which a Responsible Officer of the Trustee has knowledge, to
exercise such of the rights and powers vested in it by this Agreement and any
Enhancement, and to use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs;
(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated in, or to verify the accuracy of, any
assignment of Receivables in Supplemental Accounts, the initial report, the
Daily Report, the Settlement Statement, the annual Servicer's certificate, the
monthly payment instructions and notification to the Trustee, the monthly
Certificateholders statement, any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by Holders of
Investor Certificates evidencing Undivided Interests aggregating more than 50%
of the Invested Amount of any Series which could be adversely affected if the
Trustee does not perform such acts;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;
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(g) except as may be required by subsection 11.1(a), the
Trustee shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the
Transferor with its representations and warranties or for any other purpose;
(h) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate; and
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement or any Supplement shall not be construed as a duty,
and the Trustee shall not be answerable for performance of any such act.
Section 11.3 TRUSTEE NOT LIABLE FOR RECITALS IN CERTIFICATES.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.14, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Receivables or
deposited in or withdrawn from the Collection Account, the Excess Funding
Account, the Principal Account or the Interest Funding Account, or any Series
Account or other accounts now or hereafter established to effectuate the
transactions contemplated herein and in accordance with the terms hereof. The
Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or Lien granted to it hereunder (unless
the Trustee shall have become the Successor Servicer) or to prepare or file any
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Securities and Exchange Commission filing for the Trust or to record this
Agreement or any Supplement.
Section 11.4 THE SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee from time to time, and
the Trustee shall be entitled to receive, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by the Trustee in the
execution of the trust hereby created and in the exercise and performance of any
of the powers and duties hereunder of the Trustee, and, subject to Section 8.4,
the Servicer will pay or reimburse the Trustee (without reimbursement from any
Investor Account, any Series Account or otherwise) upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable fees and expenses of its agents and counsel) except any such expense,
disbursement or advance as may arise from its own negligence or bad faith and
except as provided in the following sentence. If the Trustee is appointed
Successor Servicer pursuant to Section 10.2, the provisions of this Section 11.4
shall not apply to expenses, disbursements and advances made or incurred by the
Trustee in its capacity as Successor Servicer (which shall be covered out of the
Servicing Fee).
The obligations of the Servicer under this Section 11.4 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.5 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The
Trustee hereunder shall at all times be (a) a corporation organized and doing
business under the laws of the United States of America or any state thereof
authorized under such laws to exercise corporate trust powers, having a
long-term unsecured debt rating of at least Baa3 by Moody's and BBB- by Standard
& Poor's having, in the case of a Person that is subject to risk-based capital
adequacy requirements, risk-based capital of at least $50,000,000 or, in the
case of a Person that is not subject to risk-based capital adequacy
requirements, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority and (b) not
be a Related
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Person. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 11.5, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.5, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.6.
Section 11.6 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign and be discharged from
the Trust hereby created by giving written notice thereof to the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted such appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.5 hereof and shall fail to resign
after written request therefor by the Transferor, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Transferor may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) If (i) the Trustee shall fail to perform any of its
obligations hereunder, (ii) a Certificateholder shall have delivered written
notice of such failure to
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the Trustee, and (iii) the Trustee shall not have corrected such failure for 60
days thereafter, then the Holders of Investor Certificates representing more
than 50% of the Invested Amount shall have the right to remove the Trustee and
(with the consent of the Transferor, which shall not be unreasonably withheld)
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 11.6
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.7 hereof and any liability of the Trustee
arising hereunder shall survive such appointment of a successor trustee. Notice
of any resignation or removal of the Trustee and appointment of a successor
trustee shall be provided promptly to each Rating Agency by the Servicer.
Section 11.7 SUCCESSOR TRUSTEE.
(a) Any successor trustee appointed as provided in Section
11.6 hereof shall execute, acknowledge and deliver to the Transferor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents and statements held by it hereunder, and the Transferor
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided
in this Section 11.7 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.5 hereof.
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(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.7, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register.
Section 11.8 MERGER OR CONSOLIDATION OF TRUSTEE. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 11.5 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 11.9 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 11.9, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 11.5 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 11.7 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
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(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any laws
of any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not
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prohibited by law, to do any lawful act under or in respect to this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.10 TAX RETURNS. Consistent with Section 3.7, the
Trustee shall not file any Federal tax returns on behalf of the Trust; PROVIDED,
HOWEVER, that if a Class of Certificates is issued that would be characterized
as an equity interest in a partnership for U.S. federal income tax purposes,
partnership information returns shall be prepared and signed by the Transferor,
as general partner. In the event the Trust shall be required to file tax
returns, the Servicer shall at its expense prepare or cause to be prepared any
tax returns required to be filed by the Trust and, to the extent possible, shall
remit such returns to the Trustee for signature at least five days before such
returns are due to be filed. The Trustee is hereby authorized to sign any such
return on behalf of the Trust. The Servicer shall prepare or shall cause to be
prepared all tax information required by law to be distributed to
Certificateholders and shall deliver such information to the Trustee at least
five days prior to the date it is required by law to be distributed to
Certificateholders. The Trustee, upon request, will furnish the Servicer with
all such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust and shall, upon
request, execute such return. In no event shall the Trustee or the Servicer be
liable for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation federal, state, local or foreign income or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply therewith).
Section 11.11 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF CERTIFICATES. All rights of action end claims under this Agreement or any
Series of Certificates may be prosecuted and enforced by the Trustee without the
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possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of any Series of Certificateholders in respect of which such
judgment has been obtained.
Section 11.12 SUITS FOR ENFORCEMENT. If a Servicer Default of
which a Responsible Officer of the Trustee has knowledge shall occur and be
continuing, the Trustee, in its discretion may, subject to the provisions of
Section 10.1, proceed to protect and enforce its rights and the rights of any
Series of Certificateholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or any Series of Certificateholders.
Section 11.13 RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Invested Amount (or, with respect to any remedy, trust
or power that does not relate to all Series, 50% of the aggregate Invested
Amount of the Investor Certificates of all Series to which such remedy, trust or
power relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; PROVIDED, HOWEVER, that Holders of
Investor Certificates aggregating more than 50% of the aggregate Invested Amount
of any Class may direct the Trustee to exercise its rights under Section 8.6;
PROVIDED, FURTHER, that, subject to Section 11.1, the Trustee shall have the
right to decline to follow any such direction if the Trustee being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would
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be illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and PROVIDED,
FURTHER that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction of such Holders of Investor Certificates.
Section 11.14 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The
Trustee represents and warrants that:
(i) the Trustee is a New York banking corporation
organized, existing and authorized to engage in the business of banking
under the laws of the State of New York;
(ii) the Trustee is a Person that satisfies the
eligibility requirements of Section 11.5;
(iii) the Trustee has full power, authority and right
to execute, deliver and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement; and
(iv) this Agreement has been duly executed and
delivered by the Trustee and constitutes a legal, valid and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement
of creditors' rights in general and except as such enforceability may
be limited by general principles of equity (whether considered in a
suit at law or in equity).
Section 11.15 MAINTENANCE OF OFFICE OR AGENCY. The Trustee
will maintain at its expense an office or offices, or agency or agencies, where
notices and demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served. The Trustee initially appoints its Corporate Trust
Office as its office for such purposes. The Trustee will give prompt written
notice to the Servicer and to Certificateholders (or in the case of Holders of
Bearer Certificates, in the manner
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provided for in the related Supplement) of any change in the location of the
Certificate Register or any such office or agency.
Section 11.16 TRUSTEE MAY OWN CERTIFICATES. The Trustee in
its individual or any other capacity may become the owner or pledgee of Investor
Certificates and may deal with the Transferor, the Servicer or any Enhancement
Provider with the same rights as it would have if it were not the Trustee. The
Trustee in its capacity as Trustee shall exercise its duties and
responsibilities hereunder independent of and without reference to its
investment, if any, in Investor Certificates.
[End of Article XI]
ARTICLE XII
TERMINATION
Section 12.1 TERMINATION OF TRUST.
(a) The respective obligations and responsibilities of the
Transferor, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificate holders as hereafter
set forth) shall terminate, except with respect to the duties described in
Section 8.4 and 11.5 and subsection 2.4(c) and 12.3(b), on the Trust Termination
Date; PROVIDED, HOWEVER, that the Trust shall not terminate on the date
specified in clause (i) of the definition of "Trust Termination Date" if each of
the Servicer and the Holder of the Exchangeable Transferor Certificate notify
the Trustee in writing, not later than five Business Days preceding such date,
that they desire that the Trust not terminate on such date, which notice (such
notice, a "Trust Extension") shall specify the date on which the Trust shall
terminate (such date, the "Extended Trust Termination Date"); PROVIDED, HOWEVER,
that the Extended Trust Termination Date shall be not later than the expiration
of 21 years from the death of the last survivor of the descendants of Ronald W.
Tysoe, living on the date of this Agreement. The Servicer and the Holder of the
Exchangeable Transferor Certificate may, on any date following the Trust
Extension, so long as no Series of Cert-
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ificates is outstanding, deliver a notice in writing to the Trustee changing the
Extended Trust Termination Date.
(b) In the event that (i) the Trust has not terminated by the
last Distribution Date occurring in the second month preceding the Trust
Termination Date, and (ii) the Invested Amount of any Series, exclusive of any
Transferor Retained Class (after giving effect to all transfers, withdrawals,
deposits and drawings to occur on such date and the payment of principal on any
Series of Certificates to be made on the related Distribution Date during such
month pursuant to Article IV) would be greater than zero, the Servicer shall
sell within 30 days after such Transfer Date an amount of Receivables up to the
remaining Invested Amount if it can do so in a commercially reasonable manner.
The Servicer shall notify each Enhancement Provider of the proposed sale of the
Receivables and shall provide each Enhancement Provider an opportunity to bid on
the Receivables. The Transferor shall have the right of first refusal to
purchase the Receivables on terms equivalent to the best purchase offer. The
proceeds of any such sale shall be treated as Collections on the Receivables and
shall be allocated and deposited in accordance with Article IV; PROVIDED,
HOWEVER, that the Servicer shall determine conclusively in its sole discretion
the amount of such proceeds which are allocable to Finance Charge Collections
and the amount of such proceeds which are allocable to Collections of Principal
Receivables. During such thirty-day period, the Servicer shall continue to
collect payments on the Receivables and allocate and deposit such payments in
accordance with the provisions of Article IV.
(c) In the event that the Invested Amount with respect to any
Series is greater than zero on its Series Termination Date or such earlier date
as is specified in the related Supplement (after giving effect to deposits and
distributions otherwise to be made on such date), the Trustee will request the
Servicer to sell, and the Servicer will sell or cause to be sold on such Series
Termination Date, in accordance with the procedures and subject to the
conditions described in such Supplement, Principal Receivables and the related
Finance Charge Receivables (or, if an Opinion of Counsel that such sale will not
have a material adverse effect on the characterization of the Certificates for
U.S. federal income tax purposes is obtained, interests therein) in an amount up
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to 110% of the Invested Amount with respect to such Series on such date (after
giving effect to such deposits and distributions; PROVIDED, HOWEVER, that in no
event shall such amount exceed an amount of Principal Receivables (and all
associated Finance Charge Receivables) equal to the sum of (i) the product of
(A) the Transferor's Percentage, (B) the aggregate outstanding Principal
Receivables, and (C) a fraction the numerator of which is the related Investor
Percentage of Collections of Finance Charge Receivables and the denominator of
which is the sum of all Investor Percentages with respect to Collections of
Finance Charge Receivables of all Series outstanding and (ii) the Invested
Amount of such Series). The proceeds from any such sale shall be allocated and
distributed in accordance with the terms of the applicable Supplement.
Section 12.2 OPTIONAL TERMINATION. (a) If so provided in any
Supplement, the Transferor may, but shall not be obligated to, cause a final
distribution to be made in respect of the related Series of Certificates on a
Distribution Date specified in such Supplement by depositing into the
Distribution Account or the applicable Series Account, not later than the
Transfer Date preceding such Distribution Date, for application in accordance
with Section 12.3, the amount specified in such Supplement.
(b) The amount deposited pursuant to subsection 12.2(a) shall
be paid to the Investor Certificateholders of the related Series pursuant to
Section 12.3 on the related Distribution Date following the date of such
deposit. All Certificates of a Series with respect to which a final distribution
has been made pursuant to subsection 12.2(a) shall be delivered by the Holder
to, and be canceled by, the Transfer Agent and Registrar and be disposed of in a
manner satisfactory to the Trustee and the Transferor. The Invested Amount of
each Series with respect to which a final distribution has been made pursuant to
subsection 12.2(a) shall, for the purposes of the definition of "Transferor
Amount," be deemed to be equal to zero on the Distribution Date following the
making of the deposit, and the Transferor Amount shall thereupon be deemed to
have been increased by the Invested Amount of such Series.
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Section 12.3 FINAL PAYMENT WITH RESPECT TO ANY SERIES.
(a) Written notice of any termination, specifying the
Distribution Date upon which the Investor Certificateholders of any Series may
surrender their Certificates for payment of the final distribution with respect
to such Series and cancellation, shall be given (subject to at least four
Business Days' prior notice from the Servicer to the Trustee) by the Trustee to
Investor Certificateholders of such Series mailed not later than the fifth day
of the month of such final distribution (or in the manner provided by the
Supplement relating to such Series) specifying (i) the Distribution Date (which
shall be the Distribution Date in the month (x) in which the deposit is made
pursuant to subsection 2.4(d), 9.2(a), 10.2(a), or 12.2(a) of the Agreement or
such other section as may be specified in the related Supplement, or (y) in
which the related Series Termination Date occurs) upon which final payment of
such Investor Certificates will be made upon presentation and surrender of such
Investor Certificates at the office or offices therein designated (which, in the
case of Bearer Certificates, shall be outside the United States), (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Investor Certificates at the office or
offices therein specified. The Servicer's notice to the Trustee in accordance
with the preceding sentence shall be accompanied by an Officers' Certificate
setting forth the information specified in Article V of this Agreement covering
the period during the then current calendar year through the date of such notice
and setting forth the date of such final distribution. The Trustee shall give
such notice to the Transfer Agent and Registrar and the Paying Agent at the time
such notice is given to such Investor Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with respect
to any Series, all funds then on deposit in the Excess Funding Account, the
Interest Funding Account, the Principal Account, the Distribution Account or any
Series Account applicable to the related Series shall continue to be held in
trust for the benefit of the Certificateholders of the related
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Series and the Paying Agent or the Trustee shall pay such funds to the
Certificateholders of the related Series upon surrender of their Certificates
(which surrenders and payments, in the case of Bearer Certificates, shall be
made only outside the United States). In the event that all of the Investor
Certificateholders of any Series shall not surrender their Certificates for
cancellation within six months after the date specified in the above-mentioned
written notice, the Trustee shall give a second written notice (or, in the case
of Bearer Certificates, publication notice) to the remaining Investor
Certificateholders of such Series upon receipt of the appropriate records from
the Transfer Agent and Registrar to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one and one half years after the second notice with respect to a Series, all the
Investor Certificates of such Series shall not have been surrendered for
cancellation, the Trustee may take appropriate steps or may appoint an agent to
take appropriate steps, to contact the remaining Investor Certificateholders of
such Series concerning surrender of their Certificates, and the cost thereof
shall be paid out of the funds in the Distribution Account or any Series Account
held for the benefit of such Investor Certificateholders. The Trustee and the
Paying Agent shall pay to the Transferor upon request any monies held by them
for the payment of principal or interest which remains unclaimed for two years.
After payment to the Transferor, Investor Certificateholders entitled to the
money must look to the Transferor for payment as general creditors unless an
applicable abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
Section 12.4 TERMINATION RIGHTS OF HOLDER OF EXCHANGEABLE
TRANSFEROR CERTIFICATE. Upon the termination of the Trust pursuant to Section
12.1, and after payment of all amounts due hereunder on or prior to such
termination and the surrender of the Exchangeable Transferor Certificate, the
Trustee shall execute a written reconveyance substantially in the form of
Exhibit H pursuant to which it shall reconvey to the Holder of the
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Exchangeable Transferor Certificate (without recourse, representation or
warranty) all right, title and interest of the Trust in the Receivables, whether
then existing or thereafter created, all moneys due or to become due with
respect thereto (including all accrued interest theretofore posted as Finance
Charge Receivables) allocable to the Trust pursuant to any Supplement, except
for amounts held by the Trustee pursuant to subsection 12.3(b). The Trustee
shall execute and deliver such instruments of transfer and assignment, in each
case prepared by the Transferor and without recourse, representation or warranty
(other than a warranty that such property is conveyed free and clear of any Lien
of any Person claiming by or through the Trustee), as shall be reasonably
requested by the Holder of the Exchangeable Transferor Certificate to vest in
such Holder all right, title and interest which the Trust had in the Receivables
and other Trust Property.
[End of Article XII]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 AMENDMENT.
(a) This Agreement (including any Supplement) may be amended
from time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Certificateholders, (i) to cure any ambiguity, to revise
any exhibits or Schedules (other than Schedule 1), to correct or supplement any
provisions herein or thereon which may be inconsistent with any other provisions
herein or thereon or (ii) to add any other provisions with respect to matters or
questions raised under this Agreement which shall not be inconsistent with the
provisions of this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any of the Investor Certificateholders. Additionally, this
Agreement may be amended from time to time by the Servicer, the Transferor and
the Trustee, without the consent of any of the Certificateholders, to add to or
change any of the provisions of this Agreement (i) to provide that Bearer
Certificates may be registrable as to
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principal, to change or eliminate any restrictions on the payment of principal
of (or premium, if any) or any interest on Bearer Certificates to comply with
the Bearer Rules, to permit Bearer Certificates to be issued in exchange for
Registered Certificates (if then permitted by the Bearer Rules), to permit
Bearer Certificates to be issued in exchange for Bearer Certificates of other
authorized denominations or to permit the issuance of Certificates in
uncertificated form or (ii) to restrict or eliminate in any way the Transferor's
right to designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables in such
Removed Accounts pursuant to Section 2.7.
This Agreement (including any Supplement), and any schedule or
exhibit thereto may also be amended from time to time by the Servicer, the
Transferor and the Trustee, without the consent of any of the
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates; provided that
(i) the Servicer shall have provided an Officer's Certificate to the Trustee to
the effect that such amendment will not materially and adversely affect the
interests of the Certificateholders, (ii) such amendment shall not, as evidenced
by an Opinion of Counsel, cause the Trust to be characterized for U.S. federal
income tax purposes as an association taxable as a corporation or otherwise have
any material adverse impact on the U.S. federal income taxation of any
outstanding Series of Investor Certificates or any Certificate Owner and (iii)
the Servicer shall have provided at least ten Business Days prior written notice
to each Rating Agency of such amendment and shall have received written
confirmation from each Rating Agency to the effect that the then current rating
of any Series or any class of any Series will not be reduced or withdrawn as a
result of such amendment; PROVIDED, FURTHER, that such amendment shall not
reduce in any manner the amount of, or delay the timing of, distributions which
are required to be made on any Investor Certificate of such Series without the
consent of the related Investor Certificateholder, change the definition of or
the manner of calculating the interest of any Investor Certificateholder of such
Series without the consent of the related Investor Certificateholder or
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reduce the percentage pursuant to clause (b) required to consent to any such
amendment, in each case without the consent of all such Investor
Certificateholders; PROVIDED, FURTHER, that for the purposes of the Officer's
Certificate referred to in subclause (i) above, any action taken in order to
enable the Trust or a portion thereof to elect to qualify as a FASIT (or
comparable tax entity for the securitization of financial assets) in accordance
with the Code shall be deemed not to materially and adversely affect the
interests of the Certificateholders.
(b) This Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee with the consent of
the Holders of Investor Certificates evidencing Undivided Interests aggregating
not less than 66-2/3% of the Invested Amount of each and every Series adversely
affected, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Investor Certificateholders of any Series then issued
and outstanding; PROVIDED, HOWEVER, that no such amendment under this subsection
shall (i) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any Investor Certificate of such
Series without the consent of all of the related Investor Certificateholders;
(ii) change the definition of or the manner of calculating the interest of any
Investor Certificateholder of such Series without the consent of the related
Investor Certificateholder or (iii) reduce the aforesaid percentage required to
consent to any such amendment, in each case without the consent of all such
Investor Certificateholders.
(c) Notwithstanding anything in this Section 13.1 to the
contrary, the Supplement with respect to any Series may be amended on the items
and in accordance with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment (other
than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Certificateholder of each Series adversely affected and ten Business Days prior
to the proposed effective date for such amendment the Servicer shall furnish
notification of the sub-
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stance of such amendment to each Rating Agency providing a rating for such
Series.
(e) It shall not be necessary to obtain the consent of
Investor Certificateholders under this Section 13.1 to approve the particular
form of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(f) Any Supplement executed and delivered pursuant to Section
6.9 and any amendments regarding the addition or removal of Receivables to or
from the Trust as provided in Sections 2.6 or 2.7, executed in accordance with
the provisions hereof, shall not be considered amendments to this Agreement for
the purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, the Trustee may request
an Opinion of Counsel from the Transferor or Servicer to the effect that the
amendment complies with all requirements of this Agreement. The Trustee may, but
shall not be obligated to, enter into any amendment which affects the Trustee's
rights, duties or immunities under this Agreement or otherwise.
Section 13.2 PROTECTION OF RIGHT, TITLE AND INTEREST TO TRUST.
(a) The Servicer shall cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and any other
necessary documents covering the Certificateholders and the Trustee's right,
title and interest to the Trust to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Certificateholders or the Trustee, as the case
may be, hereunder to all property comprising the Trust. The Servicer shall
deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferor shall
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cooperate fully with the Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this subsection 13.2(a).
(b) Within 30 days after the Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a) above
materially misleading within the meaning of Section 9-402(7) of the UCC as in
effect in the Relevant UCC State, the Transferor shall give the Trustee written
notice of any such change and shall file such financing statements or amendments
as may be necessary to continue the perfection of the Trust's security interest
in the Receivables and the proceeds thereof.
(c) Each of the Transferor and the Servicer will give the
Trustee prompt written notice of any relocation of any office from which it
services Receivables or keeps records concerning the Receivables or of its
principal executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. Each of the Transferor and the Servicer
will at all times maintain each office from which it services Receivables and
its principal executive office within the United States of America.
(d) The Servicer will deliver to the Trustee: (i) upon each
date that any Supplemental Accounts are to be included in the Accounts pursuant
to subsection 2.6(c), an Opinion of Counsel substantially in the form of Exhibit
F; and (ii) on or before March 31 of each year, beginning with March 31, 1998,
an Opinion of Counsel, substantially in the form of Exhibit G.
Section 13.3 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Investor Certificateholder
shall not operate to terminate this Agreement or the Trust, nor shall such death
or incapac-
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ity entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote
(except with respect to the Investor Certificateholders as provided in Section
13.1 hereof) or in any manner otherwise control the operation and management of
the Trust, or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as members of an
association; nor shall any Investor Certificateholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given written notice to the Trustee, and
unless the Holders of Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series which may be adversely
affected but for the institution of such suit, action or proceeding, shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Certificateholders shall have the right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Certificateholders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Certificateholder,
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or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 13.3, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 13.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 13.5 NOTICES. All demands, notices, instructions,
directions and communications hereunder shall be in writing and shall be deemed
to have been duly given if personally delivered or if sent by facsimile, courier
or registered mail, return receipt requested, at the following addresses: (a) in
the case of the Transferor, 9111 Duke Boulevard, Mason, Ohio 45040, Attention:
President, with a copy to Federated at 7 West Seventh Street, Cincinnati, Ohio
45202, Attention: General Counsel and a copy to the Servicer at the address
provided below, (b) in the case of the Servicer, 9111 Duke Boulevard, Mason,
Ohio 45040, Attention: Chief Financial Officer with a copy to Federated at 7
West Seventh Street, Cincinnati, Ohio 45202, Attention: General Counsel, (c) in
the case of the Trustee, the Corporate Trust Office, (d) in the case of the
Enhancement Provider for a particular Series, the address, if any, specified in
the Supplement relating to such Series and (e) in the case of the Rating Agency
for a particular Series, the address, if any, specified in the Supplement
relating to such Series; or, as to each party, such other address as shall be
designated by such party in a written notice to each other party. Unless
otherwise provided with respect to any Series in the related Supplement any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Certificateholder
as shown in the Certificate Register, or with respect to any notice required or
permitted to be made to the Holders of Bearer Certificates, by publication in
the manner provided in the related Supplement. If and so long as any Series or
Class is listed on the Luxembourg Stock Exchange and such
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Exchange shall so require, any Notice to Investor Certificateholders shall be
published in an authorized newspaper of general circulation in Luxembourg within
the time period prescribed in this Agreement. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
Section 13.6 SEVERABILITY OF PROVISIONS. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement or of the
Certificates or rights of the Certificateholders thereof.
Section 13.7 ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Section 8.2, this Agreement may
not be assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66 2/3% of
the Invested Amount of each Series on a Series by Series basis.
Section 13.8 CERTIFICATES NON-ASSESSABLE AND FULLY PAID.
Except to the extent otherwise expressly provided in Section 7.4 with respect to
the Transferor, it is the intention of the parties to this Agreement that the
Certificateholders shall not be personally liable for obligations of the Trust,
that the Undivided Interests represented by the Certificates shall be
non-assessable for any losses or expenses of the Trust or for any reason
whatsoever, and that Certificates upon authentication thereof by the Trustee
pursuant to Sections 2.1 and 6.2 are and shall be deemed fully paid.
Section 13.9 FURTHER ASSURANCES. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation statements
relating to the Receivables and the other Trust Property
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for filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.10 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Trustee, any Enhancement
Provider or the Investor Certificateholders, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
Section 13.11 COUNTERPARTS. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
Section 13.12 THIRD-PARTY BENEFICIARIES. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Certificateholders and, to the extent provided in the related Supplement, to the
Enhancement Provider named therein, and their respective successors and
permitted assigns. Except as otherwise provided in this Article XIII, no other
Person will have any right or obligation hereunder.
Section 13.13 ACTIONS BY CERTIFICATEHOLDERS.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a notice, demand or instruction given by Investor
Certificateholders, such action, notice or instruction may be taken or given by
any Investor Certificateholder, unless such provision requires a specific
percentage of Investor Certificateholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted
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to be done by the Trustee or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement or any Supplement to
be given or taken by Certificateholders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Certificateholders in person or by agent duly appointed in writing; and except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, when required,
to the Transferor or the Servicer. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement or any Supplement and conclusive in favor of the Trustee, the
Transferor and the Servicer, if made in the manner provided in this Section.
(d) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
Section 13.14 RULE 144A INFORMATION. For so long as any of
the Investor Certificates of any Series or any Class are "restricted securities"
within the meaning of Rule 144A(a)(3) under the Securities Act, each of the
Transferor, the Servicer, the Trustee and the Enhancement Provider for such
Series agree to cooperate with each other to provide to any Investor
Certificateholders of such Series or Class and to any prospective purchaser of
Certificates designated by such an Investor Certificateholder upon the request
of such Investor Certificateholder or prospective purchaser, any information
required to be provided to such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act.
Section 13.15 MERGER AND INTEGRATION. Except as
specifically stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agree-
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ment. This Agreement may not be modified, amended, waived or supplemented except
as provided herein.
Section 13.16 HEADINGS. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
[End of Article XIII]
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IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed by
their respective officers as of the day and year first above written.
PRIME II RECEIVABLES CORPORATION,
Transferor
By: /S/ Karen M. Hoguet
-----------------------------------
Name: Karen M. Hoguet
Title: Chairman of the Board
FDS NATIONAL BANK,
Servicer
By: /S/ Susan R. Robinson
-----------------------------------
Name: Susan R. Robinson
Title: Treasurer
THE CHASE MANHATTAN BANK,
Trustee
By: /S/ Dennis Kildea
-----------------------------------
Name: Dennis Kildea
Title: Trust Officer
156
EXHIBIT A
---------
FORM OF EXCHANGEABLE TRANSFEROR CERTIFICATE
-------------------------------------------
No. 1 One Unit
PRIME CREDIT CARD MASTER TRUST II
ASSET BACKED CERTIFICATE
THIS CERTIFICATE WAS ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY BE SOLD ONLY PURSUANT TO
A REGISTRATION STATEMENT EFFECTIVE UNDER THE ACT OR AN EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE ACT. IN ADDITION, THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. A COPY OF THE POOLING AND SERVICING AGREEMENT WILL
BE FURNISHED TO THE HOLDER OF THIS CERTIFICATE BY THE TRUSTEE UPON WRITTEN
REQUEST.
THIS CERTIFICATE REPRESENTS AN
------------------------------
UNDIVIDED INTEREST IN THE
-------------------------
PRIME CREDIT CARD MASTER TRUST II
---------------------------------
Evidencing an undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business from
a portfolio of consumer revolving credit card accounts generated or to be
generated by FDS National Bank ("FDSNB" or the "Servicer") and other assets and
interests constituting the Trust under the Pooling and Servicing Agreement
described below.
(Not an interest in or a recourse obligation of Prime II Receivables
Corporation, Federated Department Stores, Inc., FDS National Bank or any
Affiliate of either of them.)
This certifies that Prime II Receivables Corporation (the
"Holder" or the "Transferor," as the context requires) is the registered owner
of a fractional undivided interest in the Prime Credit Card Master Trust II (the
"Trust") issued pursuant to the Pooling and Servicing Agreement, dated as of
January 22, 1997 (the "Pooling and Servicing Agreement"; such term to include
any amendment or Supplement thereto) by and among Prime II Receiv-
A-1
157
ables Corporation, as Transferor, FDS National Bank, as the Servicer, and The
Chase Manhattan Bank as Trustee (the "Trustee"), as supplemented by each
supplement thereto existing from time to time. The corpus of the Trust consists
of all of the Transferor's right, title and interest in, to and under the Trust
Property.
To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Pooling and Servicing Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Holder by virtue of the
acceptance hereof assents and by which the Holder is bound.
This Certificate has not been registered or qualified under
the Act or any state securities law. No sale, transfer or other disposition of
this Certificate shall be permitted other than in accordance with the provisions
of Section 6.3, 6.9 or 7.2 of the Pooling and Servicing Agreement.
This Certificate is the Exchangeable Transferor Certificate
(the "Certificate"), which represents an undivided interest in the Trust,
including the right to receive the Collections and other amounts at the times
and in the amounts specified in the Pooling and Servicing Agreement to be paid
to the Holder of the Exchangeable Transferor Certificate. The aggregate interest
represented by this Certificate at any time in the Principal Receivables in the
Trust shall not exceed the Transferor Amount at such time. In addition to this
Certificate, Series of Investor Certificates will be issued to investors
pursuant to the Pooling and Servicing Agreement, each of which will represent an
Undivided Interest in the Trust. This Certificate shall not represent any
interest in the Investor Accounts or any Enhancement, except to the extent
provided in the Pooling and Servicing Agreement. The Transferor Amount on any
date of determination will be an amount equal to the aggregate amount of
Principal Receivables at the end of the day immediately prior to such date of
determination PLUS amounts on deposit in the Excess Funding Account (but not
including any investment earnings thereon) MINUS the Aggregate Invested Amount
at the end of such day.
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The Servicer shall deposit all Collections in the Collection
Account as promptly as possible after the Date of Processing of such
Collections. Unless otherwise stated in any Supplement, throughout the existence
of the Trust, the Servicer shall allocate to the Holder of the Certificate an
amount equal to the product of (A) the Transferor Percentage and (B) the
aggregate amount of such Collections allocated to Principal Receivables and
Finance Charge Receivables, respectively, in respect of each Monthly Period.
Notwithstanding the first sentence of this paragraph, the Servicer need not
deposit this amount or any other amounts so allocated to the Certificate
pursuant to the Pooling and Servicing Agreement into the Collection Account and
shall pay, or be deemed to pay, such amounts as collected to the Holder of the
Certificate.
FDS National Bank, or any permitted successor or assignee, as
Servicer, is entitled to receive as servicing compensation a monthly servicing
fee. The portion of the servicing fee which will be allocable to the Holder of
the Certificate pursuant to the Pooling and Servicing Agreement will be payable
by the Holder of the Certificate and neither the Trust nor the Trustee or the
Investor Certificateholders will have any obligation to pay such portion of the
servicing fee.
This Certificate does not represent a recourse obligation of,
or any interest in, the Transferor or the Servicer. This Certificate is limited
in right of payment to certain Collections respecting the Receivables, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
Upon the termination of the Trust pursuant to Section 12.1 of
the Pooling and Servicing Agreement, the Trustee shall assign and convey to the
Holder of the Certificate (without recourse, representation or warranty) all
right, title and interest of the Trust in the Receivables, whether then existing
or thereafter created, and all proceeds relating thereto. The Trustee shall
execute and deliver such instruments of transfer and assignment, in each case
without recourse, as shall be reasonably requested by the Holder of the
Certificate to vest in such Holder all right, title and interest which the
Trustee had in the Receivables.
A-3
159
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Pooling and Servicing Agreement,
or be valid for any purpose.
A-4
160
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed.
PRIME II RECEIVABLES CORPORATION
By:__________________________
Name:
Title:
Date:
CERTIFICATE OF AUTHENTICATION
This is the Exchangeable Transferor Certificate referred to in
the within-mentioned Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:_____________________________
Authorized Officer
A-5
161
EXHIBIT B
---------
FORM OF ASSIGNMENT OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS
----------------------------------------------------------
(As required by Subsection 2.6(e)(ii) of the Pooling
and Servicing Agreement)
ASSIGNMENT NO. ___ OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS,
dated as of __________ __, ____, by and between PRIME II RECEIVABLES
CORPORATION, a corporation organized under the laws of the State of Delaware
(the "Transferor"), to THE CHASE MANHATTAN BANK, a banking corporation organized
and existing under the laws of the State of New York as Trustee (in such
capacity, the "Trustee") pursuant to the Pooling and Servicing Agreement
referred to below.
W I T N E S S E T H:
--------------------
WHEREAS, the Transferor and the Trustee are parties to the
Pooling and Servicing Agreement, dated as of January 22, 1997 (hereinafter as
such agreement may have been, or may from time to time be, amended, supplemented
or otherwise modified, the "Pooling and Servicing Agreement") among the
Transferor, FDS National Bank, as Servicer and the Trustee;
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to designate Supplemental Accounts to be included as Accounts
and to convey the Receivables of such Supplemental Accounts, whether now
existing or hereafter created, to the Trust as part of the corpus of the Trust
(as each such term is defined in the Pooling and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
B-1
162
(1) DEFINED TERMS. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.
"ADDITION DATE" shall mean, with respect to the Supplemental
Accounts designated hereby, ____________, ____.
"NOTICE DATE" shall mean, with respect to the Supplemental
Accounts designated hereby, ____________, ____ (which shall be a date on or
prior to the fifth Business Day prior to the Addition Date with respect to
additions pursuant to subsection 2.6(c) of the Pooling and Servicing Agreement
and the tenth Business Day prior to the Addition Date with respect to additions
pursuant to subsection 2.6(d) of the Pooling and Servicing Agreement).
(2) DESIGNATION OF ADDITIONAL ACCOUNTS. The Transferor shall
deliver to the Trustee not later than five Business Days after the Addition
Date, a computer file or microfiche list containing a true and complete list of
each consumer revolving credit card account which as of the Addition Date shall
be deemed to be a Supplemental Account, such accounts being identified by
account number and by the Outstanding Balance of the Receivables in such
Supplemental Accounts as of the Addition Cut-Off Date. Such file or list shall
be marked as Schedule 1 to this Assignment and, as of the Addition Date, shall
be incorporated into and made a part of this Assignment.
(3) CONVEYANCE OF RECEIVABLES.
(a) The Transferor does hereby transfer, assign,
set-over and otherwise convey to the Trust for the benefit of the
Certificateholders, without recourse on and after the Addition Date,
all right, title and interest of the Transferor in and to the
Receivables now existing and hereafter created in the Supplemental
Accounts designated hereby, all monies due or to become due with
respect thereto (including all Finance Charge Receivables) and all
proceeds of such Receivables.
(b) In connection with such transfer, the Transferor
agrees to record and file, at its own ex-
B-2
163
ense, a financing statement with respect to the Receivables now
existing and hereafter created in the Supplemental Accounts designated
hereby (which may be a single financing statement with respect to all
such Receivables) for the transfer of such Receivables meeting the
requirements of applicable state law in such manner and such
jurisdictions as are necessary to perfect the assignment of such
Receivables to the Trust, and to deliver a file-stamped copy of such
financing statement or other evidence of such filing (which may, for
purposes of this Section 3, consist of telephone confirmation of such
filing) to the Trustee on or prior to the date of this Assignment.
(c) In connection with such transfer, the Transferor
further agrees, at its own expense, on or prior to the date of this
Assignment to indicate in its computer files that Receivables created
in connection with the Supplemental Accounts designated hereby have
been transferred to the Trust pursuant to this Assignment for the
benefit of the Certificateholders.
(d) The Transferor hereby grants and transfers to the
Trustee, for the benefit of the Certificateholders, a first priority
perfected security interest in all of the Transferor's right, title and
interest in, to and under the Receivables now existing and hereafter
created and arising in connection with the Supplemental Accounts
designated hereby, all monies due or to become due with respect thereto
(including all Finance Charge Receivables) and all proceeds of such
Receivables, to secure the Secured Obligations and agrees that this
Assignment shall constitute a security agreement under applicable law.
(4) ACCEPTANCE BY TRUSTEE. The Trustee hereby acknowledges its
acceptance on behalf of the Trust for the benefit of the Certificateholders of
all right, title and interest previously held by the Transferor in and to the
Receivables now existing and hereafter created, in the Supplemental Accounts
designated hereby and declares that it shall maintain such right, title and
interest, upon the trust herein set forth, for the benefit of all
Certificateholders.
B-3
164
(5) REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR. The
Transferor hereby represents and warrants to the Trust as of the Addition Date:
(a) LEGAL VALID AND BINDING OBLIGATION. This
Assignment constitutes a legal, valid and binding obligation of the
Transferor enforceable against the Transferor in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).
(b) ELIGIBILITY OF ACCOUNTS AND RECEIVABLES. Each
Supplemental Account designated hereby is an Eligible Account and each
Receivable in such Supplemental Account is an Eligible Receivable. No
selection procedures believed by the Transferor to be materially
adverse to the interests of the Investor Certificateholders were
utilized in selecting the Supplemental Accounts from the available
Eligible Accounts, provided, that, the selection of newly originated
Accounts is deemed not to be materially adverse to the interests of the
Investor Certificateholders.
(c) INSOLVENCY. The Transferor is not insolvent and,
after giving effect to the conveyance set forth in Section 3 of this
Assignment, will not be insolvent.
(d) SECURITY INTEREST. This Assignment constitutes
either (i) a valid transfer and assignment to the Trust of all right,
title and interest of the Transferor in and to (a) the Receivables now
existing and hereafter created in and arising in connection with the
Supplemental Accounts, including, without limitation, all accounts,
general intangibles, contract rights, and other obligations of any
Obligor with respect to the Receivables, now or hereafter existing, (b)
all monies and investments due or to become due with respect thereto
(including, without limitation, the right to any payment of interest
and Finance Charge Receivables), including
B-4
165
any and all proceeds (as defined in the UCC as in effect in the
Relevant UCC State) with respect to such Receivables, and such
Receivables and all proceeds thereof will be held by the Trust free and
clear of any Lien of any Person claiming through or under the
Transferor or any of its Affiliates, except for (x) Permitted Liens,
(y) the interest of the Transferor as Holder of the Exchangeable
Transferor Certificate and any other Class or Series of Certificates
and (z) the Transferor's right, if any, to receive interest accruing
on, and investment earnings, if any, in respect of, any Interest
Funding Account, any Principal Account, the Excess Funding Account or
any Series Account as provided in the Pooling and Servicing Agreement
and any Supplement; or (ii) a grant of a security interest (as defined
in the UCC as in effect in the Relevant UCC State) in such property to
the Trust, which is enforceable with respect to the existing
Receivables of the Supplemental Accounts designated hereby and the
proceeds (as defined in the UCC as in effect in the Relevant UCC State)
thereof upon the conveyance of such Receivables to the Trust, and which
will be enforceable with respect to the Receivables thereafter created
in respect of Supplemental Accounts designated hereby and the proceeds
(as defined in the UCC as in effect in the Relevant UCC State) thereof
upon such creation. If this Assignment constitutes the grant of a
security interest to the Trust in such property pursuant to clause (ii)
above, upon the filing of a financing statement described in Paragraph
3 of this Assignment with respect to the Supplemental Accounts
designated hereby and in the case of the Receivables of such
Supplemental Accounts thereafter created and the proceeds (as defined
in the UCC as in effect in the Relevant UCC State) thereof, upon such
creation, the Trust shall have a first priority perfected security
interest in such property, except for Permitted Liens.
(a) CONDITIONS PRECEDENT. The acceptance by the
Trustee set forth in Section 4 and the amendment of the Pooling and
Servicing Agreement set forth in Section 7 are subject to the
satisfaction, on or prior to the Addition Date, of the following
conditions precedent:
B-5
166
(a) OFFICER'S CERTIFICATE. The Transferor
shall have delivered to the Trustee a certificate of a Vice
President or more senior officer substantially in the form of
Schedule 2 hereto, certifying that (i) all requirements set
forth in Section 2.6 of the Pooling and Servicing Agreement
for designating Supplemental Accounts and conveying the
Receivables arising in such Accounts, whether now existing or
hereafter created, have been satisfied and (ii) each of the
representations and warranties made by the Transferor in
Section 5 is true and correct as of the Addition Date.
(b) OPINION OF COUNSEL. The Transferor shall
have delivered to the Trustee an Opinion of Counsel with
respect to the Supplemental Accounts designated hereby
substantially in the form of Exhibit F to the Pooling and
Servicing Agreement.
(c) ADDITIONAL INFORMATION. The Transferor
shall have delivered to the Trustee such information as was
reasonably requested by the Trustee to satisfy itself as to
the accuracy of the representation and warranty regarding the
insolvency of the Transferor set forth in subsection 5(c) to
this Agreement.
(f) AMENDMENT OF THE POOLING AND SERVICING AGREEMENT.
The Pooling and Servicing Agreement is hereby amended to provide that
all references therein to the "Pooling and Servicing Agreement," to
"this Agreement" and "herein" shall be deemed from and after the
Addition Date to be a dual reference to the Pooling and Servicing
Agreement as supplemented by this Assignment. Except as expressly
amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full
force and effect in accordance with its terms and except as expressly
provided herein shall not constitute or be deemed to constitute a
waiver of compliance with or a consent to noncompliance with any term
or provision of the Pooling and Servicing Agreement.
B-6
167
(c) COUNTERPARTS. This Assignment may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
(d) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS.
B-7
168
IN WITNESS WHEREOF, the undersigned have caused this
Assignment of Receivables in Supplemental Accounts to be duly executed and
delivered by their respective duly authorized officers on the day and year first
above written.
PRIME II RECEIVABLES CORPORATION
By:____________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
Trustee
By:____________________________
Name:
Title:
B-8
169
Schedule 1
to Assignment of
Receivables in
Supplemental Accounts
---------------------
SUPPLEMENTAL ACCOUNTS
---------------------
B-9
170
Schedule 2
to Assignment of
Receivables in
Supplemental Accounts
---------------------
Prime II Receivables Corporation
Prime Credit Card Master Trust II
Officer's Certificate
_____________________, a duly authorized officer of Prime II
Receivables Corporation, a corporation organized and existing under the laws of
the State of Delaware (the "Transferor"), hereby certifies and acknowledges on
behalf of the Transferor that to the best of his knowledge the following
statements are true on ____________, ____, (the "Addition Date"), and further
acknowledges on behalf of the Transferor that this Officer's Certificate will be
relied upon by The Chase Manhattan Bank as Trustee (the "Trustee") of the Prime
Credit Card Master Trust II in connection with the Trustee entering into
Assignment No. __ of Receivables in Supplemental Accounts, dated as of the
Addition Date (the "Assignment"), by and between the Transferor and the Trustee,
in connection with the Pooling and Servicing Agreement, dated as of January 22,
1997, as heretofore supplemented and amended (the "Pooling and Servicing
Agreement") among the Transferor, FDS National Bank, as Servicer, and the
Trustee. The undersigned hereby certifies and acknowledges on behalf of the
Transferor that:
(a) On or prior to the Addition Date, the Transferor has
delivered to the Trustee the Assignment (including an acceptance by the Trustee
on behalf of the Trust for the benefit of the Investor Certificateholders) and
the Transferor has indicated in its computer files that the Receivables created
in connection with the Supplemental Accounts have been transferred to the Trust
and within five Business Days after the Addition Date the Transferor shall
deliver to the Trustee or the bailee of the Trustee a computer file or
microfiche list containing a true and complete list of all Supplemental Accounts
identified by account number and the Outstanding Balance of the Receivables in
such Supplemental Accounts as of the Addition Date, which computer file or
microfiche list shall be, as of the date of such Assignment, incorporated
B-10
171
into and made a part of such Assignment and the Pooling and Servicing Agreement.
(b) Each of the representations and warranties made by the
Seller in the Assignment with respect to the Receivables is true and correct in
all material respects as of the Addition Date with respect to the Receivables of
the Supplemental Accounts designated thereby.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this
____________ day of
PRIME II RECEIVABLES CORPORATION
By:___________________________
Name:
Title:
B-11
172
EXHIBIT "C"
Daily Cash Allocation - Revolving Period
----------------------------------------
Receivables in Interest Income Interest Income -
Collections Defaulted AC's Recoveries Excess Fund. AC Excess Purch. AC
----------- -------------- ---------- --------------- -----------------
Data : 0 0.00 0.00
Master Trust Allocations MONTH 1
------------------------
Yield Factor December 13, 1996 0.00%
Finance Charge Collections 0.00
Principal Collections 0.00
Excess Excess Principal Rec
Floating Allocation %: Total AR FC Receivables Funding Purchase + Exc Funding Principal
(based on prior day) Factor A/C Balance A/C Balance Receivables
0 0.46% 0 0 0 0
1997-1 1997-2 1998-1 1999-1 2000-1
------ ------ ------ ------ -------
Invested Amount A 0 0 0 0 0.00
Invested Amount B 0 0 0 0 0.00
Invested Amount C 0 0 0 0
Total 0 0 0 0 0
Floating Alloc. Percentage 0.0% 0.0% 0.0% 0.0% 0.0%
Daily Allocation: FC Collections 0 0 0 0 0.00
Daily Allocation: Write offs 0 0 0 0 0
Daily Allocation: Principal Collections 0 0 0 0 0
Minimum Transferor's Interest
Required Amount
Payment to Series
Discount Amount
Payment to Series
Paydown VFC
Net Principal payment to Transferor
PreFunding Account - Amount Available for Release
Collection Detail
----------------- 22-Jan-97
Interchange 0.00
Data : STAR 0
Master Trust Allocations
------------------------
Yield Factor
Finance Charge Collections
Principal Collections
Total 0.00
Floating Allocation %: Finance Charge
(based on prior day) Receivables
0
Transferor Total
---------- -----
Invested Amount A
Invested Amount B
Invested Amount C
Total 0 0
Floating Alloc. Percentage 0.0% 0.0%
Daily Allocation: FC Collections 0 0
Daily Allocation: Write offs 0 0
Daily Allocation: Principal Collections 0 0
Minimum Transferor's Interest 0.00%
Required Amount 0
Payment to Series 0
Discount Amount 0
Payment to Series 0
Paydown VFC 0
Net Principal payment to Transferor 0
PreFunding Account - Amount Available for 0
173
Series Allocations
-------------------
SERIES 1997-1
-------------
27-Jan-97 Allocation of Finance Charge Collections
12:12 PM ----------------------------------------------------------
Class Class FDSNB Investor
Date FC Coll. Write-offs A Yield B Yield Servicing Default Amount
---------- -------------- --------------- ------------ ---------- ------------- ----------------
01-Jan-97 0.00 0.00 0.00 0.00 0.00 0.00
02-Jan-97
03-Jan-97
04-Jan-97
05-Jan-97
06-Jan-97
07-Jan-97
08-Jan-97
09-Jan-97
10-Jan-97
11-Jan-97
12-Jan-97
13-Jan-97
14-Jan-97
15-Jan-97
16-Jan-97
17-Jan-97
18-Jan-97
19-Jan-97
20-Jan-97
21-Jan-97
22-Jan-97
23-Jan-97
24-Jan-97
25-Jan-97
26-Jan-97
27-Jan-97
28-Jan-97
29-Jan-97
30-Jan-97
31-Jan-97
01-Feb-97
02-Feb-97
03-Feb-97
04-Feb-97
-------------- --------------- ------------- ---------- ------------- -----------------
Total Allocated 0.00 0.00 0.00 0.00 0.00 0.00
Monthly Target 0.00 - - 0.00 0.00
BOM Invested Amount daily amount - -
Servicing % days since last capture 1 1
0.00%
27-Jan-97
06:07 PM -------------------------------------
Reimbursement Reimbursement
Date of Class A ICO of Class B ICO
---------- -------------------------------------
01-Jan-97 0.00 0.00
02-Jan-97
03-Jan-97
04-Jan-97
05-Jan-97
06-Jan-97
07-Jan-97
08-Jan-97
09-Jan-97
10-Jan-97
11-Jan-97
12-Jan-97
13-Jan-97
14-Jan-97
15-Jan-97
16-Jan-97
17-Jan-97
18-Jan-97
19-Jan-97
20-Jan-97
21-Jan-97
22-Jan-97
23-Jan-97
24-Jan-97
25-Jan-97
26-Jan-97
27-Jan-97
28-Jan-97
29-Jan-97
30-Jan-97
31-Jan-97
01-Feb-97
02-Feb-97
03-Feb-97
04-Feb-97
-------------------------------------------
Total Allocated 0 0.00 0.00
Monthly Target 0 0.00 0
BOM Invested Amount daily amount
Servicing % days since last capture
174
---------
---------------- ---------------- Reimb. Class A Class B ---------- ------------
Class A Class B of Class Class Required Supp'l. Supp'l. To Allocated
Addit'l. Paymnts Addit'l. Paymnts C ICO C Yield Reserve Paymnts Paymnts Servicing Transferor To Group 1
---------------- ---------------- -------- ------- --------- -------- -------- --------- ---------- -----------
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------------- ---------------- -------- ------- --------- -------- -------- --------- ---------- -----------
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0 0 0.00 0.00 0 0 0.00
-
0
0.00%
175
Total Allocations - Finance Charge Collections + Principal Collections
======================================================================
|------------------------ Series 1997-1 ---------------------------
Date Class A Int. Class B Int. Class C Int. Servicer Funding Transferor proof
- ---- ------------ ------------ ------------ -------- ------- ---------- -----
01-Jan-97 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02-Jan-97
03-Jan-97
04-Jan-97
05-Jan-97
06-Jan-97
07-Jan-97
08-Jan-97
09-Jan-97
10-Jan-97
11-Jan-97
12-Jan-97
13-Jan-97
14-Jan-97
15-Jan-97
16-Jan-97
17-Jan-97
18-Jan-97
19-Jan-97
20-Jan-97
21-Jan-97
22-Jan-97
23-Jan-97
24-Jan-97
25-Jan-97
26-Jan-97
27-Jan-97
28-Jan-97
29-Jan-97
30-Jan-97
31-Jan-97
01-Feb-97
02-Feb-97
03-Feb-97
04-Feb-97
----------- --------- -------- ----- ------ ------- -----
AC Balance 0.00 0.00 0.00 0.00 0.00 0.00 0.00
MEMO TOTALS 0.00
176
27-Jan-97
Transferor's Instructions
==========================
Total Allocation 0.00
To Buy AR/Pay servicing:
From Collection AC To Operating AC 0.00
To Paydown :
From Collection AC to Principal AC (Current Day) 0.00
From Collection AC to Principal AC (Subsequent Day) 0.00
Paydown CP (Current Day):
From Interest AC to Principal AC 0.00
From Collection Account To Principal AC 0.00
From Operating AC To Principal AC 0.00
Issue CP:
From Principal AC to Collection AC 0.00
From Collection AC to Operating AC 0.00
To Increase Transferor's Interest:
From Collection AC to Excess Purchase AC 0.00
From Collection AC to Excess Funding AC 0.00
From Incoming Wire Acct SF/ABS to Principal AC
To Decrease Transferor's Interest:
From Excess Purchase AC to Operating AC 0.00
From Excess Funding AC To Operating AC 0.00
From Operating AC To First Data Resources 0.00
From Collection AC To Operating AC 0.00
--------------------------------
Prime II Receivables Corporation
27-Jan-97
Servicer's Instructions
=======================
To Pay Servicing Fee:
From Collection AC to PRIME II Operating AC 0.00
To Fund Interest Funding Accounts:
From Collection AC to Interest Fund AC 0.00
Change in Amount Invested:
From Interest Funding AC - Series 1997-1 0.00
From Reserve AC 0.00
From Excess Funding AC 0.00
From Excess Purchase AC 0.00
To Pay Fees:
From Collection AC to Trustee 0.00
From Interest Funding AC To Principal AC 0.00
To transfer interest income to OPERATING ACCOUNT
From Interest Funding AC - Series 1997-1 To operating AC 0.00
From Reserve AC To Operating AC 0.00
From Excess Funding AC To Operating AC 0.00
From Excess Purchase AC To Operating AC 0.00
To Pay Class C Coupon:
From Collection AC to Operating AC 0.00
-----------------------------------
FDS National Bank, Inc. as Servicer
177
Exhibit D
PRIME CREDIT CARD
MASTER TRUST II
SETTLEMENT STATEMENT
Distribution Date: 15-Jan-97
Monthly Period: December 1996
1-Dec-96
4-Jan-97
(i) Collections 0.00
Finance Charge 0.00
Interchange 0.00
Principal 0.00
(ii) Investor Percentage - Principal Collections
Series 1997-1 0.00%
A 0.00%
B 0.00%
C 0.00%
Investor Percentage - Finance Charge Collections
and Receivables in Defaulted Accounts
Series 1997-1 0.00%
A 0.00%
B 0.00%
C 0.00%
(iii) Distribution Amount per $1,000
Series 1997-1
A 0.00
B 0.00
C 0.00
Total $'s Distributed
Series 1997-1 0.00
(Iv) Allocation to Principal per $1,000
Series 1997-1
A 0.00
B 0.00
C 0.00
Total $'s Distributed
Series 1997-1 0.00
(v) Allocation to Interest per $1,000
Series 1997-1
A 0.00
B 0.00
C 0.00
178
PRIME CREDIT CARD
MASTER TRUST II
SETTLEMENT STATEMENT
Total $'s Distributed
Series 1997-1 0.00
(vi) Investor Default Amount
Series 1997-1 0.00
A 0.00
B 0.00
C 0.00
(vii) Investor Charge Offs and Reinbursements
Series 1997-1 Charge Offs 0.00
A 0.00
B 0.00
C 0.00
Series 1997-1 Reimbusements 0.00
A 0.00
B 0.00
C 0.00
(viii) Servicing Fees
Series 1997-1 0.00
A 0.00
B 0.00
C 0.00
(ix) Deficit Controlled Amortization Amount
Series 1997-1 0.00
A 0.00
B 0.00
C 0.00
(x) Receivables in Trust 0.00
(xi) Invested Amount
Series 1997-1 0.00
A 0.00
B 0.00
C 0.00
(xii) Enhancement 0.00
(xiii) Pool Factor 0.00
(xiv) Yield Factor 0.00
Finance Charge Receivables Factor 0.00
(xv) Payout Event NO
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