AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Chase Manhattan Bank USA, National Association
(Originator of the Trusts described herein)
(Exact name of registrant as specified in its charter)
DELAWARE 22-2382028
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
802 Delaware Avenue
Wilmington, Delaware 19801
(302) 575-5000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Andrew T. Semmelman
Vice President
Chase Manhattan Bank USA,
National Association
c/o 802 Delaware Avenue
Wilmington, Delaware 19801
(302) 575-5000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
David M. Eisenberg, Esq. Martin R. Joyce, Esq. Andrew M. Faulkner, Esq.
Simpson Thacher & Bartlett The Chase Manhattan Bank Skadden, Arps, Slate, Meagher
425 Lexington Avenue 270 Park Avenue & Flom Llp
New York, New York 10017 New York, New York 10017 919 Third Avenue
(212) 455-2000 (212) 270-5918 New York, NY 10022
(212) 735-2853
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable on or after the effective date of the Registration
Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
============================================================================================
TITLE OF EACH
CLASS PROPOSED MAXIMUM
OF SECURITIES TO PROPOSED MAXIMUM AGGREGATE AMOUNT OF
BE AMOUNT TO BE OFFERING PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED(1)(2) UNIT OR SHARE (2)(3) PRICE (3)(4) FEE
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Asset Backed
Certificates and
Asset Backed
Notes............. - - $1,000,000 $278
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(1) If any registered securities are issued at an original issue discount,
then such greater principal amount as shall result in an aggregate initial
offering price of $1,000,000. In no event will the aggregate initial
offering price of securities registered hereunder exceed $1,000,000 or the
equivalent thereof in one or more foreign currencies or composite
currencies, including the euro.
(2) Not specified as to each class of securities to be registered pursuant
to General Instruction II.D of Form S-3 under the Securities Act.
(3) The proposed maximum offering price per unit or share will be
determined from time to time by the registrant in connection with, and at
the time of, the issuance by the registrant of the securiteis registered
hereunder.
(4) Estimate solely for the purposes of computing the registration fee
pursuant to Rule 457(o) of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
EXPLANATORY NOTE
This Form S-3 Registration Statement (file no. 333-_____) includes, on
behalf of Chase Manhattan Bank USA, National Association (the "Bank"), as
originator of the trusts described herein, a base prospectus and two model
prospectus supplements. One model prospectus supplement describes an
offering by Chase Credit Card Master Trust of asset backed certificates.
The other model prospectus supplement describes an offering by Chase Credit
Card Owner Trust 1999-__ of asset backed notes. The prospectus and each
prospectus supplement have been prepared to comply with the "Plain English"
Rules (Release No. 33-7497), including Rule 421(b) and Rule 421(d) under
the Securities Act of 1933, as amended, and related revisions to Regulation
S-K and Form S-3 adopted by the Securities and Exchange Commission.
[FLAG UPPER RIGHT HAND CORNER]
A security is not a deposit and neither the securities nor the underlying
accounts or receivables or series certificates or notes are insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
[FLAG UPPER RIGHT HAND CORNER]
A certificate will represent an interest in the master trust only. A note
will be an obligation of an owner trust only. Neither certificates nor
notes will represent interests in or recourse obligations of Chase USA, the
servicer or any of their affiliates.
[FLAG UPPER RIGHT HAND CORNER]
This prospectus may be used to offer and sell any series of securities only
if accompanied by the prospectus supplement for that series.
[FLAG]
The information in this prospectus is not complete and may be changed. We
cannot sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED ____________, 1999
Prospectus
CHASE CREDIT CARD MASTER TRUST
CHASE CREDIT CARD OWNER TRUSTS
Issuers
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
Transferor and Administrator of Owner Trusts
THE CHASE MANHATTAN BANK
Servicer of Master Trust
ASSET BACKED SECURITIES
THE MASTER TRUST-
o may periodically issue asset backed certificates in one or more
series, including series of asset backed certificates that will be
sold to owner trusts and pledged to secure notes; and
o will own receivables in a portfolio of consumer revolving credit card
accounts and; other property described in this prospectus and in the
prospectus supplement.
THE SECURITIES-
o with respect to the certificates, will represent interests in the
master trust and will be paid only from the assets of the master
trust;
o with respect to the notes, will be obligations of an owner trust and
will be secured by the assets of that owner trust, including one or
more certificates;
o offered by this prospectus will be rated in one of the four highest
rating categories by at least one nationally recognized statistical
rating organization;
o may have one or more forms of credit enhancement; and
o will be issued as part of a designated series which may include one
or more classes of securities.
The certificateholders will receive interest and principal payments from a
varying percentage of credit card account collections.
The noteholders will receive interest and principal as described in the
prospectus supplement. Each series of notes will be secured by a series
certificate issued by the master trust and purchased by the owner trust
that will issue the notes and any other assets described in such prospectus
supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_______, 1999
TABLE OF CONTENTS
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT....................................1
THE MASTER TRUST....................................................2
THE OWNER TRUSTS....................................................2
CHASE USA'S CREDIT CARD ACTIVITIES..................................3
General ............................................................3
Acquisition and Use of Credit Card
Accounts ........................................................4
Billing and Payments................................................6
Collection of Delinquent Accounts...................................8
Description of FDR..................................................9
Interchange.........................................................9
Recoveries..........................................................9
Year 2000 Compliance................................................9
THE RECEIVABLES....................................................11
MATURITY CONSIDERATIONS............................................13
Series of Certificates.............................................13
Series of Notes....................................................14
CHASE USA..........................................................14
USE OF PROCEEDS....................................................15
DESCRIPTION OF THE SECURITIES......................................15
General............................................................15
Book-Entry Registration............................................17
Definitive Securities..............................................22
DESCRIPTION OF THE CERTIFICATES....................................23
General............................................................23
Interest Allocations...............................................25
Principal Allocations..............................................26
Revolving Period...................................................27
Controlled Amortization Period.....................................28
Principal Amortization Period......................................28
Accumulation Period................................................29
Rapid Accumulation Period..........................................29
Rapid Amortization Period..........................................30
Transfer and Assignment of Receivables.............................31
Exchanges..........................................................31
Representations and Warranties.....................................33
Addition of Trust Assets...........................................37
Removal of Accounts................................................39
Collection and Other Servicing Procedures..........................39
Discount Option....................................................40
Trust Accounts.....................................................40
Funding Period.....................................................41
Companion Series...................................................43
Investor Percentage and Transferor
Percentage......................................................43
Application of Collections.........................................44
Shared Excess Finance Charge Collections...........................46
Shared Principal Collections.......................................47
Defaulted Receivables; Rebates and
Fraudulent Charges; Investor Charge-
Offs.........................................................47
Defeasance.........................................................48
Final Payment of Principal; Termination............................48
Pay Out Events.....................................................49
Servicing Compensation and Payment of
Expenses........................................................50
Certain Matters Regarding the Transferor
and the Servicer ............................................51
Servicer Default...................................................53
Reports to Certificateholders......................................54
Evidence as to Compliance..........................................55
Amendments.........................................................56
List of Certificateholders.........................................57
The Master Trust Trustees..........................................57
DESCRIPTION OF THE NOTES...........................................58
General............................................................58
Principal and Interest on the Notes................................58
The Indentures.....................................................59
Certain Covenants..................................................63
The Indenture Trustee..............................................64
Transfer and Assignment of the Series
Certificate.....................................................65
Reports to Noteholders.............................................65
Certain Matters Regarding the Admini-
strator.........................................................66
Amendment..........................................................66
Termination........................................................66
CREDIT ENHANCEMENT.................................................67
General............................................................67
Subordination......................................................68
Letter of Credit...................................................68
Cash Collateral Guaranty or Account ...............................68
Collateral Interest................................................69
Surety Bond or Insurance Policy....................................69
Spread Account.....................................................70
Reserve Account....................................................70
SECURITY RATINGS...................................................70
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES...........................71
Transfer of Receivables ...........................................71
Certain Matters Relating to Receivership...........................72
Consumer Protection Laws...........................................74
Industry Litigation................................................75
TAX MATTERS........................................................75
General............................................................75
Tax Characterization of the Master Trust...........................77
Tax Considerations Relating to Certificate
Owners.......................................................77
Tax Considerations Relating to Note
Owners .........................................................80
Non-U.S. Security Owners...........................................82
Information Reporting and Backup
Withholding..................................................85
State and Local Taxation...........................................86
EMPLOYEE BENEFIT PLAN CONSIDERATIONS...............................86
General............................................................86
Certain ERISA Considerations With
Respect to Notes.............................................86
Certain ERISA Considerations With
Respect to Certificates......................................88
PLAN OF DISTRIBUTION...............................................90
LEGAL MATTERS......................................................91
REPORTS TO SECURITYHOLDERS.........................................92
WHERE YOU CAN FIND MORE INFORMATION................................92
INDEX OF TERMS FOR PROSPECTUS......................................94
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that progressively provide more detail: (a) this prospectus,
which provides general information, some of which may not apply to a
particular series of securities, including your series, and (b) the
prospectus supplement, which will describe the specific terms of your
series of securities, including:
o the type of securities offered;
o the timing and amount of interest and principal payments;
o information about the receivables;
o information about credit enhancement for each class;
o credit ratings; and
o the method for selling the securities.
We have included a description of some of the basic terms and
characteristics of the securities that may be offered by this prospectus.
We have also included a description of any certificate offered by this
prospectus or sold to an owner trust to be pledged to secure notes. In
addition, we have included a description summarizing the terms and
provisions that would apply to all notes offered by this prospectus.
If you are purchasing notes, you should review carefully the
descriptions of the certificates in this prospectus and the prospectus
supplement. The most significant asset of each owner trust will be a
certificate issued by the master trust and pledged to secure the notes of
the owner trust. The terms and provisions of that certificate will be
reflected in the terms and provisions of the notes secured by that
certificate.
You should rely only on the information provided in this prospectus
and the prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information.
We include cross-references in this prospectus and in the prospectus
supplement to captions in these materials where you can find further
related discussions. The preceding table of contents and the table of
contents included in the prospectus supplement provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms are
defined under the caption "Index of Terms for Prospectus" beginning on page
94 in this prospectus.
THE MASTER TRUST
The Chase Credit Card Master Trust (the "MASTER TRUST") was formed
pursuant to a pooling and servicing agreement in accordance with the laws
of the State of New York (each such agreement, a "POOLING AND SERVICING
AGREEMENT") among Chase Manhattan Bank USA, National Association ("CHASE
USA" or the "BANK"), CMB, as Servicer of the Receivables, and The Bank of
New York, as trustee (the "MASTER TRUST TRUSTEE"). The Master Trust will
issue certificates, as specified in the related Prospectus Supplement
(collectively, the "CERTIFICATES") of one or more series (each, a "SERIES")
representing interests in such Master Trust in amounts, at prices and on
terms to be determined at the time of sale and to be set forth in a
supplement to this Prospectus (a "PROSPECTUS SUPPLEMENT"). The Master Trust
will not engage in any business activity other than acquiring and holding
Receivables, issuing Series of Certificates and the related certificate
that evidences the Transferor Interest (the "TRANSFEROR CERTIFICATE"),
making payments thereon and engaging in related activities (including, with
respect to any Series, obtaining any Enhancement and entering into an
Enhancement agreement relating thereto). As a consequence, the Master Trust
is not expected to have any need for additional capital resources other
than the assets of the Master Trust.
THE OWNER TRUSTS
Each Chase Credit Card Owner Trust (each, an "OWNER TRUST") will be
formed as a statutory business trust under the laws of the State of
Delaware pursuant to a separate trust agreement (each such agreement, a
"TRUST AGREEMENT") for the purpose of issuing a Series of Asset Backed
Notes (collectively, the "NOTES") and conducting the activities described
herein and in the related Prospectus Supplement. On or before the relevant
Closing Date, the Transferor will deposit a Certificate issued by a Master
Trust (a "SERIES CERTIFICATE") in the Owner Trust, pursuant to a deposit
and administration agreement between the Bank and the Owner Trust (each
such agreement, a "DEPOSIT AND ADMINISTRATION AGREEMENT" ) as specified in
the related Prospectus Supplement. Each Series Certificate deposited in an
Owner Trust will be rated in one of the four highest rating categories by
at least one Rating Agency (as defined herein). Each Owner Trust will be
the Certificateholder a single Series Certificate. The descriptions of the
Certificates in this Prospectus and in the related Prospectus Supplement
are important to purchasers of Notes because the Series Certificate will be
the most significant asset of each Owner Trust, and the terms and
provisions of the Series Certificate, including the payment terms, will be
reflected in the terms and provisions of the Notes. Each Series of Notes
will be issued pursuant to the terms of an indenture (each such agreement,
an "INDENTURE" and, together with the Trust Agreement and Deposit and
Administration Agreement, the "NOTE DOCUMENTS") between the trustee acting
on behalf of the Owner Trust (the "OWNER TRUSTEE") and the trustee acting
on behalf of the noteholders of such series (the "INDENTURE TRUSTEE"). The
Notes will be secured by the Series Certificate and the other collateral,
if any, pledged by the Owner Trust to secure the Notes pursuant to the
Indenture, including, if so specified in the Prospectus Supplement, a bank
account (the "NOTE RESERVE ACCOUNT") established for the benefit of one or
more classes of noteholders.
No Owner Trust will engage in any business activity other than
acquiring, holding and managing a Series Certificate and the other assets
of such Owner Trust and the proceeds therefrom, issuing a single Series of
Notes and making payments thereon, and engaging in other activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
CHASE USA'S CREDIT CARD ACTIVITIES
GENERAL
The Bank Portfolio consists of MasterCard(R) and VISA(R)1 accounts
that were originated prior to June 1, 1996 (the "ACCOUNT TRANSFER DATE") by
Chemical Bank (the "OLD CHEMICAL BANK PORTFOLIO"), the portfolio of
MasterCard and VISA accounts that have been originated on and after the
Account Transfer Date by Chase USA and that were originated pursuant to a
co-branding arrangement which had been in place prior to the Account
Transfer Date between a third party and Chemical Bank or were originated
through applications made available to prospective cardholders at branch
banking facilities operated by Chemical Bank prior to the Account Transfer
Date (the "NEW CHEMICAL BANK PORTFOLIO," and together with the Old Chemical
Bank Portfolio, the "CHEMICAL BANK PORTFOLIO"), the MasterCard and VISA
accounts that were originated prior to the Account Transfer Date by Chase
USA (the "OLD CHASE PORTFOLIO") and the portfolio of MasterCard and VISA
accounts that have been originated on and after the Account Transfer Date
and that are not part of the New Chemical Bank Portfolio (the "NEW CHASE
PORTFOLIO" and, together with the Old Chase Portfolio, the "CHASE
PORTFOLIO"). The Chemical Bank Portfolio together with the Chase Portfolio
is herein referred to as the "BANK PORTFOLIO." On the Account Transfer
Date, the MasterCard and VISA accounts comprising the Chemical Bank
Portfolio were transferred from Chemical Bank to Chase USA.
The receivables which the Bank will convey to the Master Trust
pursuant to the Pooling and Servicing Agreement (the "RECEIVABLES") have
been and will be generated from transactions made by holders of certain
VISA and MasterCard credit card accounts, including in each case co-branded
accounts (the "ACCOUNTS"). The Bank services these Accounts at its
facilities located in Hicksville, New York; Brooklyn, New York; Tempe,
Arizona; Tampa, Florida; and Matteson, Illinois. Certain data processing
and administrative functions associated with the servicing of the Bank
Portfolio are, performed through First Data Resources, Inc. ("FDR"). See "
- -- Description of FDR."
Pursuant to a master pooling and servicing agreement dated as of June
1, 1991 between Chase USA, as seller and servicer, and Yasuda Bank and
Trust Company (U.S.A.) as trustee, the Chase Manhattan Credit Card Master
Trust (the "CHASE MANHATTAN TRUST") has issued several series of asset
backed certificates (each such series, a "CHASE MANHATTAN SERIES") --------
1 MasterCard(R) and VISA(R) are registered trademarks of MasterCARD
International Inc. and VISA U.S.A., Inc., respectively. evidencing
undivided interests in receivables generated by certain accounts in the
Chase Portfolio (the "SECURITIZED CHASE PORTFOLIO"). As long as any Chase
Manhattan Series remains outstanding, receivables in accounts which remain
in the Securitized Chase Portfolio will not be available for addition to
the Master Trust although, subject to the satisfaction of certain
conditions, the Transferor would be permitted to add Participations in the
Chase Manhattan Trust to the assets of the Master Trust. See "Description
of the Securities--Addition of Trust Assets."
Accounts in the Chase Portfolio which are not in the Securitized
Chase Portfolio have been added and are expected to be added in the future
and accounts in the New Chase Portfolio are expected, at some time in the
future, to the Master Trust. There can be no assurance, however, that such
accounts will be added or that, if added, the receivables in such accounts
will constitute a material portion of the Receivables in the Master Trust.
In addition, accounts in the Chase Portfolio, the Chemical Bank
Portfolio and the New Chase Portfolio were originated under policies and
procedures which differed from each other in certain respects. The Bank
does not expect any of these differences to have a material adverse effect
on the credit quality of the Receivables in the Master Trust or on the
interests of the holders of the Securities (the "SECURITYHOLDERS").
ACQUISITION AND USE OF CREDIT CARD ACCOUNTS
The Accounts were generated under the VISA U.S.A., Inc. ("VISA") or
MasterCard International Inc. ("MASTERCARD INTERNATIONAL") programs and
were originated, purchased by, or otherwise transferred to, the Bank. The
Bank is a member of VISA and of MasterCard International. VISA and
MasterCard International license their respective marks permitting
financial institutions to issue credit cards to their customers. In
addition, VISA and MasterCard International provide clearing services
facilitating exchange of payments among member institutions and networks
linking members' credit authorization systems.
The VISA and MasterCard credit cards are issued as part of the
worldwide VISA and MasterCard International systems, and transactions
creating the receivables through the use of the credit cards are processed
through the VISA and MasterCard International authorization and settlement
systems.
The VISA and MasterCard credit cards from which the Accounts were
established may be used to purchase merchandise and services, to obtain
cash advances and to consolidate and transfer account balances from other
credit cards. Cardholders make purchases when using a credit card to buy
merchandise or services. A cash advance is made when a credit card is used
to obtain cash from a financial institution, from an automated teller
machine, by a check drawn on an Account or through the use of overdraft
protection. Amounts due with respect to purchases, cash advances and
transfers of account balances will be included in the Receivables.
The VISA and MasterCard credit card accounts owned by the Bank were
principally generated through: (a) direct mail and telemarketing
solicitation for accounts on a pre-screened credit basis, (b) applications
mailed directly to prospective cardholders, (c) applications made available
to prospective cardholders at the Bank's branch banking facilities and
point of sale outlets, (d) applications generated by advertising on
television, radio and in magazines and on the internet and (e) purchases of
accounts from other credit card issuers.
In each case where an account is generated through an application,
the Bank reviews the application for completeness and creditworthiness.
Applications provide information to the Bank on the applicant's employment
history, income and residence status. In addition to reviewing the
application, the Bank obtains a credit report issued by an independent
credit reporting agency with respect to the applicant. In the event there
are discrepancies between the application and the credit report, the Bank
may resolve the inconsistency regarding the applicant by contacting
employers or credit references. The Bank generally evaluates the ability of
an applicant for a VISA or MasterCard credit card account to repay credit
card balances by applying a credit scoring system using models developed by
independent consulting firms and proprietary models and data. Credit
scoring is intended to provide a general indication, based on the
information available, including data provided from applications and credit
bureaus, of the applicant's likelihood to repay his or her obligations.
Credit scoring assigns values to the information provided in each
applicant's application and credit bureau report and then estimates the
associated credit risk. The score at which an applicant will be approved
correlates to the Bank's credit risk tolerance at the time of approval. The
Bank's personnel and outside consultants regularly review the predictive
accuracy of the scoring models.
Once an application to open an account is approved an initial credit
limit is established for the account based on the applicant's credit score
and the applicant's level of income. At least once per year a systematic
evaluation of cardholder payment and behavioral information is used to
determine eligibility for automatic credit line adjustments. Credit limits
may also be adjusted at the request of the applicant, subject to the Bank's
independent evaluation of the applicant's payment and usage history.
The Bank also generates new accounts through direct mail and
telemarketing solicitation campaigns directed at individuals who have been
pre-screened by the Bank. A list of prospects from a variety of sources are
screened at one or more credit bureaus in accordance with the Bank's credit
criteria, including previous payment patterns and longevity of account
relationships. Individuals qualifying for pre-screened direct mail or
telemarketing solicitation are conditionally offered the Bank's credit card
without having to complete a detailed application. Various credit limits
are offered to members of the group being solicited, which are based upon
the prospective cardholder's credit profile and the level of existing and
potential indebtedness relative to inferred income based on geographic and
demographic characteristics.
Each cardholder is subject to an agreement governing the terms and
conditions of the accounts. Pursuant to such agreement, the Bank reserves
the right to change or terminate any terms, conditions, services or
features of the accounts (including increasing or decreasing periodic
finance charges, other charges or minimum payments) and to sell or transfer
the accounts and any amounts owed on such accounts to another creditor.
The Bank has added, and may continue to add, accounts to its
portfolio by purchasing credit card accounts from other financial
institutions. Credit card accounts that have been purchased by the Bank
were originally opened using criteria established by the institution from
which the accounts were purchased or by the institution from which the
selling institution originally purchased the accounts and may not have been
subject to the same level of credit review as accounts established by the
Bank. Following acquisition, purchased accounts are evaluated against the
same criteria utilized by the Bank to maintain Bank-originated accounts to
determine whether any of the purchased accounts should be closed
immediately. Any of the purchased accounts failing the criteria are closed
and no further purchases or cash advances are authorized. All other such
accounts remain open, subject to the same criteria the Bank uses to
evaluate Bank-originated accounts. The credit limits on such accounts are
based initially on the limits established or maintained by the selling
institution. Following acquisition, credit limits on purchased accounts
will be adjusted based on the criteria applied to Bank-originated accounts.
BILLING AND PAYMENTS
The Accounts have various billing and payment structures, including
varying minimum payment levels and fees. Monthly billing statements are
sent by the Bank to cardholders. The following information reflects the
current billing and payment characteristics of the Accounts.
When an account is established, it is randomly assigned to a billing
cycle. Currently, there are 20 billing cycles. Each billing cycle has a
separate monthly billing date at which time the activity in the related
accounts during the month ending on such billing date are processed and
billed to cardholders.
The Bank generally determines the minimum monthly payment with
respect to the accounts by multiplying the combined new balance of
purchases and cash advances, less any disputed amounts, by 2.000% (1/50
expressed as a percentage). If the amount so calculated is less than
$10.00, it is increased to $10.00. The sum of such amount and any past due
amounts equals the minimum payment amount. The minimum payment, however, is
never more than the new balance.
A daily periodic finance charge is assessed on certain Principal
Receivables for each billing cycle. Daily periodic finance charges for a
billing cycle are not assessed on Principal Receivables which arise from
new purchases made during such billing cycle if (i) on the first day of
such billing cycle there was no purchase balance outstanding, (ii) the
purchase balance outstanding on the first day of such billing cycle is paid
in full during such billing cycle or (iii) on the last day of such billing
cycle there is no purchase balance outstanding. The daily periodic finance
charge assessed on cash advances and applicable purchase balances is
calculated by multiplying (i) the average daily cash advance and applicable
purchase balance during the billing cycle by (ii) the applicable daily
periodic finance charge by (iii) the number of days in the billing cycle.
In calculating the daily cash advance and purchase balance on each day the
Bank will add the interest amount accrued on the previous day's ending
balance of the daily cash advance and purchase balance. Cash advances are
included in the average daily cash advance balance and purchases are
included in the average daily purchase balance from the date such advance
or purchase occurs or, in certain circumstances, on the first day of the
billing cycle following the billing cycle in which such advance or purchase
occurs. The annual percentage rate for fixed rate accounts generally ranges
from 9.9% per annum to 19.8% per annum. The current annual percentage rate
for variable rate accounts is based on The Wall Street Journal prime rate
plus a spread generally ranging from 4.4% to 13.99%. The Bank also offers
temporary promotional rates and promotional rates on transferred balances;
and, under certain circumstances, the periodic finance charges on a limited
number of accounts may be either greater than or less than those assessed
by the Bank generally. To the extent that the amount of any finance charge
applicable to a purchase balance is less than $0.50, the Bank increases
such amount to $0.50.
The Bank charges annual membership fees on accounts originated
pursuant to certain of its solicitations while certain other accounts carry
no annual membership fee. For those Accounts with an annual membership fee,
such fee is generally $20.00 for regular accounts, $40.00 for premium fixed
rate accounts and $45.00 for premium variable rate accounts. The Bank may
waive the annual membership fees, or a portion thereof, in connection with
solicitations of new accounts (and has done so for portions of recent
solicitations) or when the Bank determines a waiver to be necessary to
operate its credit card business on a competitive basis. In addition to the
annual membership fee, the Bank may charge accounts certain other fees
generally at the rates specified below, including: (i) a late fee of $29.00
with respect to any unpaid monthly payment if the Bank does not receive the
required minimum monthly payment by the payment due date set forth on the
monthly billing statement; (ii) a cash advance fee of 3.0% of the amount of
each cash advance, but such cash advance fee shall not be less than $3.00;
(iii) a fee of $29.00 for each check written on an account (a cash advance)
which is returned to the Bank as a result of the account being delinquent,
overdrawn or closed; (iv) a fee of $29.00 with respect to each check
submitted by a cardholder in payment of an account which is dishonored and
(v) an overlimit charge of $29.00 if, at the end of the billing cycle, the
total amount owed for principal and finance charges, in respect of
purchases and cash advances exceeds the cardholder's credit line.
Payments by cardholders to the Bank on the Accounts are processed and
applied first to any billed and unpaid finance charges and then to billed
and unpaid transactions in the order determined by the Bank. Any excess is
applied to unbilled transactions in the order determined by the Bank and
then to unbilled finance charges. There can be no assurance that periodic
finance charges, fees and other charges will remain at current levels in
the future.
COLLECTION OF DELINQUENT ACCOUNTS
The Bank considers an account delinquent if a payment due thereunder
is not received by the Bank by the payment due date shown on the statement
on which the amount is first stated to be due. The Bank classifies an
account as "over limit" if its posted balance exceeds its credit limit.
Efforts to collect delinquent credit card receivables are made by the
Bank's personnel and collection agencies and attorneys retained by the
Bank. Collection procedures are determined by an adaptive risk control
system that uses statistical models and basic account financial information
to determine the steps to be followed at various stages of delinquency.
Generally, the Bank includes a request for payment of overdue amounts on
billing statements issued after the account becomes delinquent. In
addition, after a period determined by the risk control system, the Bank
mails a separate notice to the cardholder notifying him or her of the
delinquency and possible revocation of the credit card and requesting
payment of the delinquent amount. Collection personnel generally initiate
telephone contact with cardholders whose credit card accounts have become
30 days or more delinquent. In the event that initial telephone contact
fails to resolve the delinquency, the Bank continues to contact the
cardholder by telephone and by mail. Based upon the risk control system,
the Bank may suspend an account as early as the date on which such account
becomes 30 days or more delinquent and generally does so by the time the
account becomes 50 days delinquent. One hundred days after an account
becomes delinquent the credit card is automatically canceled. Based on the
Bank's analysis of a cardholder's behavior through the risk control system,
the Bank may take any or all of the above actions at an earlier point in
time. In some cases, depending on the financial profile of the cardholder
and the stated reason for and magnitude of a delinquency, the Bank may
enter into arrangements with a delinquent cardholder to extend or otherwise
change the payment schedule.
The Bank's policy is to charge off an account during the billing
cycle immediately following the cycle in which such account became one
hundred fifty (150) days delinquent. If the Bank receives notice that a
cardholder is the subject of a bankruptcy proceeding, the Bank charges off
such cardholder's account upon the earlier of seventy-five (75) days after
receipt of such notice and the time period set forth in the previous
sentence. On February 10, 1999, the Federal Financial Institutions
Examination Council ("FFIEC") adopted a revised Uniform Retail Credit
Classification and Account Management Policy, which recommends that all
U.S. banks and thrift institutions should charge off accounts of obligors
who declare bankruptcy within 60 days of receipt of notification of filing
from the bankruptcy court, and that such charge offs should be implemented
with respect to reporting for the year ending December 31, 2000. Chase USA
expects that the implementation of a revised charge off policy as
recommended by the FFIEC would cause a temporary increase in charge-offs,
but would not materially affect the certificateholders.
Under the terms of the Pooling and Servicing Agreement, Recoveries
may be included in the assets of the Master Trust to the extent, if any,
specified in the applicable Series Supplement for any Series of
Certificates.
DESCRIPTION OF FDR
FDR is located in Omaha, Nebraska and provides computer data
processing services primarily to the bankcard industry. FDR is a subsidiary
of First Data Corp.
INTERCHANGE
Creditors participating in the VISA and MasterCard associations
receive certain fees ("INTERCHANGE") as partial compensation for taking
credit risk, absorbing fraud losses and funding receivables for a limited
period prior to initial billing. Under the VISA and MasterCard systems, a
portion of Interchange in connection with cardholder charges for goods and
services is passed from banks which clear the transactions for merchants to
credit card issuing banks. Interchange fees are set annually by MasterCard
and VISA and are based on the number of credit card transactions and the
amount charged per transaction. MasterCard and VISA may from time to time
change the amount of Interchange reimbursed to banks issuing their credit
cards. The Transferor will be required, pursuant to the terms of the
Pooling and Servicing Agreement, to transfer to the Master Trust a
percentage of Interchange. Interchange will be allocated to the Master
Trust, on the basis of the percentage equivalent of the ratio which the
amount of purchases of merchandise and services relating to the Accounts
made during such Monthly Period bears to the total amount of purchases of
merchandise and services relating to the Bank Portfolio with respect to
such Monthly Period. Interchange allocated to the Master Trust will be
treated as collections of Finance Charge Receivables.
RECOVERIES
The Transferor will be required, pursuant to the terms of the Pooling
and Servicing Agreement, to transfer to the Master Trust a percentage of
the recoveries on charged-off accounts in the Bank Portfolio ("RECOVERIES")
received each month. Recoveries will be allocated to the Master Trust on
the basis of the percentage equivalent of the ratio that the Principal
Receivables in the Defaulted Accounts for such Monthly Period bears to the
aggregate amount of principal receivables in the Bank Portfolio which were
charged-off by the Servicer as uncollectible for such Monthly Period or
shorter period. Recoveries allocated to the Master Trust will be treated as
collections of Finance Charge Receivables.
YEAR 2000 COMPLIANCE
Year 2000 efforts for Chase USA are being coordinated, managed and
monitored as part of the Year 2000 efforts of The Chase Manhattan
Corporation (the "CORPORATION") by the Corporation's Year 2000 Enterprise
Program Office (the "PROGRAM OFFICE"). The Program Office reports directly
to the Executive Committee of the Corporation and is responsible for the
Corporation's Year 2000 remediation efforts, on a global basis, both
technical and business-related. In addition, a Year 2000 Core Team (the
"CORE TEAM"), consisting of senior managers from internal audit, technology
risk and control, financial management and control, the technology
infrastructure division, legal and the Program Office, provides independent
oversight of the process. The Core Team, which also reports directly to the
Corporation's Executive Committee, is charged with identifying key risks
and ensuring necessary management attention for timely resolution of
project issues.
The Corporation's Year 2000 Program continues to evolve. On January
1, 1999, the Corporation established a Year 2000 Business Risk Council,
comprised of approximately 20 senior business leaders--line managers, risk
managers, and representatives of key staff functions--to identify potential
Year 2000 business risks, coordinate planning and readiness efforts, refine
contingency plans for Year 2000, and establish a Year 2000 command center
structure and rapid response teams.
The Corporation's Year 2000 Program is tracked against well-defined
milestones. The Corporation completed its inventory and assessment phases
on schedule on September 30, 1997, identifying affected hardware and
software, prioritizing tasks and establishing implementation plans. The
Corporation identified 97 business software applications (30 of which are
provided by third-party vendors) related to the cardmember services
functions of Chase USA as requiring Year 2000 remediation. At December 31,
1998, 65 of the 67 internal applications related to the cardmember services
operations of Chase USA, and 26 of the 30 third party applications, had
been remediated. The remaining six applications, which Chase USA and the
Corporation do not believe to be "mission critical," are in the process of
being remediated and are on schedule to be Year 2000 compliant by March
1999, in the case of the two internal applications, and June 30, 1999, in
the case of the four third party applications.
In addition, each of Chase USA's third party service providers has
been contacted to determine its Year 2000 readiness and establish a testing
schedule. In many cases (including with FDR) testing has begun and testing
with all such third party service providers (including additional testing
with FDR) is scheduled throughout 1999. The Corporation also expects to
continue to participate in tests organized by major industry and
governmental infrastructure organizations as they are scheduled during the
remainder of 1999. These include tests with the VISA and MasterCard
associations, which began in January 1999.
At September 30, 1998, the Corporation's estimate for Year 2000
remediation costs for 1997-1999 was approximately $363 million. None of
these costs will be borne by the Master Trust.
In its normal course of business, the Corporation manages many types
of risk. The Corporation recognizes that the risks presented by Year 2000
are unique given the pervasive nature of the problem and the higher
likelihood that Year 2000 risk may present itself in multiple, simultaneous
impacts. Because of this, the Corporation has adjusted and will continue to
adjust its risk management processes and contingency plans to take the most
probable anticipated effects into account. In this regard, the Corporation
has begun its event planning for the Year 2000 with the goal of preventing
or mitigating potential disruptions. The Corporation's Year 2000 event
planning includes creation of command centers; performance of dress
rehearsals and simulation modeling for various possible business and
operational risks; establishment of special rapid response technology
teams; scheduling of availability of key personnel; additional training and
testing activities; and the establishment of rapid decision processes.
The Corporation's expectations for completion of its Year 2000
remediation and testing efforts, the anticipated costs to complete the
project and the anticipated business, operational and financial risks to
the Corporation, Chase USA and the Master Trust are subject to a number of
uncertainties. Any failures by the VISA or MasterCard associations, FDR or
other service providers to implement successfully their Year 2000
remediation plans could adversely impact the timing of collections on the
Receivables. A large number of similar failures by account obligors, banks
and other financial institutions or other participants in the national
payments system could also adversely affect the timing of collections on
the Receivables. If collections that normally would have been received in
any particular month are delayed, the portfolio yield for that month will
be reduced to that extent. Any such reduction would increase the likelihood
of a pay out event resulting from insufficient portfolio yield.
THE RECEIVABLES
The assets of the Master Trust will include receivables arising under
certain MasterCard(R) and VISA(R) revolving credit card accounts selected
from the TrusT Portfolio and all monies due or to become due in payment of
the Receivables, all proceeds of the Receivables and proceeds of any credit
insurance policies relating to the Receivables, and may include the right
to receive Interchange and Recoveries, if any, allocable to the Master
Trust and all monies on deposit in certain bank accounts of the Master
Trust (including any permitted investments in which any such monies are
invested, but excluding investment earnings on such amounts unless
otherwise specified in the related Prospectus Supplement), and any
Enhancement with respect to any particular Series or Class, as described in
the related Prospectus Supplement. Interchange consists of certain fees
received by the Transferor from VISA and MasterCard as partial compensation
for taking credit risk, absorbing fraud losses and funding receivables for
a limited period prior to initial billing. The term "ENHANCEMENT" means,
with respect to any Series or Class of Certificates or Notes, any Credit
Enhancement, guaranteed rate agreement, maturity liquidity facility,
interest rate cap agreement, interest rate swap agreement, currency swap
agreement or other similar arrangement for the benefit of the
Securityholders of such Series or Class.
The Receivables will consist of amounts charged by cardholders for
goods and services, cash advances and consolidation or transfer of balances
from other credit cards (the "PRINCIPAL RECEIVABLES"), plus the related
periodic finance charges and amounts charged to the Accounts in respect of
certain credit card fees, including cash advance fees, late fees and annual
membership fees (the "FINANCE CHARGE RECEIVABLES"); provided, however, that
if the Transferor exercises the Discount Option with respect to the Master
Trust, an amount equal to the product of the Discount Percentage and the
amount of Receivables arising in the related accounts on and after the date
such option is exercised that otherwise would be Principal Receivables will
be treated as Finance Charge Receivables. See "Description of the
Certificates -- Discount Option." Recoveries and Interchange allocable to
the Master Trust will be treated as Finance Charge Receivables. See "Chase
USA's Credit Card Activities -- Interchange" and "-- Recoveries."
The Receivables conveyed to the Master Trust will arise in Accounts
selected from the Bank Portfolio on the basis of criteria set forth in the
Pooling and Servicing Agreement and described in the related Prospectus
Supplement as applied initially on the date (the "CUT-OFF DATE") specified
in the related Prospectus Supplement and, with respect to additional
eligible revolving credit card accounts to be included as Accounts
("ADDITIONAL ACCOUNTS"), as of the related date of their designation (the
"TRUST PORTFOLIO"). The Transferor will have the right (subject to certain
limitations and conditions set forth in the Pooling and Servicing
Agreement), and in some circumstances will be obligated, to designate from
time to time Additional Accounts and to transfer to the Master Trust all
Receivables of such Additional Accounts, whether such Receivables are then
existing or thereafter created, or to transfer to such Master Trust
Participations in lieu of such Receivables or in addition thereto. Any
Additional Accounts designated pursuant to the Pooling and Servicing
Agreement must be Eligible Accounts as of the date the Transferor
designates such accounts as Additional Accounts. Furthermore, pursuant to
the Pooling and Servicing Agreement, the Transferor has the right (subject
to certain limitations and conditions) to designate certain Accounts and to
accept the conveyance of all the receivables in such accounts (the "REMOVED
ACCOUNTS"), whether such Receivables are then existing or thereafter
created, and to require the Master Trust Trustee to reconvey all
receivables in such Removed Accounts to the Transferor, whether such
Receivables are then existing or thereafter created. Throughout the term of
the Master Trust, the related Accounts from which the Receivables arise
will be the Accounts designated by the Transferor on the relevant Cut-Off
Date plus any Additional Accounts minus any Removed Accounts. With respect
to each Series of Securities, the Transferor will represent and warrant to
the Master Trust that, as of the date of issuance of the related Series
(the "CLOSING DATE") and the date Receivables are conveyed to the Master
Trust, such Receivables meet certain eligibility requirements. See
"Description of the Certificates -- Representations and Warranties."
The Prospectus Supplement relating to each Series of Securities will
provide certain information about the Trust Portfolio as of the date
specified. Such information will include, but not be limited to, the amount
of Principal Receivables, the amount of Finance Charge Receivables, the
range of principal balances of the Accounts and the average thereof, the
range of credit limits of the Accounts and the average thereof, the
geographic distribution of the Accounts, the types of Accounts and
delinquency statistics relating to the Accounts.
MATURITY CONSIDERATIONS
SERIES OF CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, for
each Series of Certificates, following the Revolving Period, collections of
Principal Receivables are expected to be distributed to holders of
Certificates (the "CERTIFICATEHOLDERS") of such Series or any specified
class of Certificates (each, a "CLASS") thereof on each specified
Distribution Date during the Controlled Amortization Period or the
Principal Amortization Period (each, an "AMORTIZATION PERIOD"), or are
expected to be accumulated during a Controlled Accumulation Period for
payment to Certificateholders of such Series or any specified Class thereof
on a Scheduled Payment Date. Under certain limited circumstances if so
specified in the Prospectus Supplement, following the occurrence of a Pay
Out Event, a Rapid Accumulation Period (collectively with the Controlled
Accumulation Period, an "ACCUMULATION Period") will occur; provided,
however, that, if the Rapid Amortization Period commences, collections of
Principal Receivables will be paid to Certificateholders in the manner
described herein and in the related Prospectus Supplement. The related
Prospectus Supplement will specify when the Controlled Amortization Period,
the Principal Amortization Period or Accumulation Period, as applicable,
will commence, the principal payments expected or available to be received
or accumulated during such Controlled Amortization Period, Principal
Amortization Period or Accumulation Period, or on the Scheduled Payment
Date, as applicable, the manner and priority of principal accumulations and
payments among the Classes of a Series of Certificates, the payment rate
assumptions on which such expected principal accumulations and payments are
based and the Pay Out Events which, if any were to occur, would lead to the
commencement of a Rapid Amortization Period or, if so specified in the
related Prospectus Supplement, a Rapid Accumulation Period.
No assurance can be given, however, that the Principal Receivables
allocated to be paid to Certificateholders or the holders of any specified
Class thereof will be available for distribution or accumulation for
payment to Certificateholders on each Distribution Date during the
Controlled Amortization Period, the Principal Amortization Period or
Accumulation Period, or on the Scheduled Payment Date, as applicable. In
addition, the Transferor can give no assurance that the payment rate
assumptions for any Series of Certificates will prove to be correct. The
related Prospectus Supplement will provide certain historical data relating
to payments by cardholders, total charge-offs and other related information
relating to the Trust Portfolio. There can be no assurance that future
events will be consistent with such historical data.
The amount of collections of Receivables may vary from month to month
due to seasonal variations, general economic conditions and payment habits
of individual cardholders. There can be no assurance that collections of
Principal Receivables with respect to any Trust Portfolio, and thus the
rate at which the related Certificateholders could expect to receive or
accumulate payments of principal on their Certificates during a Principal
Amortization Period, Controlled Amortization Period or Rapid Amortization
Period (each, an "AMORTIZATION PERIOD") or an Accumulation Period, or on
any Scheduled Payment Date, as applicable, will be similar to any
historical experience set forth in a related Prospectus Supplement. If a
Pay Out Event occurs, the average life and maturity of such Series of
Certificates could be significantly reduced.
The actual payment rate for any Series of Certificates may be slower
than the payment rate used to determine the amount of collections of
Principal Receivables scheduled or available to be distributed or
accumulated for later payment to Certificateholders or any specified Class
thereof during the Controlled Amortization Period, the Principal
Amortization Period or Accumulation Period or on the Scheduled Payment
Date, as applicable, or a Pay Out Event may occur which would initiate the
Rapid Amortization Period. There can be no assurance that the actual number
of months elapsed from the date of issuance of such Series of Certificates
to the final Distribution Date with respect to the Certificates will equal
the expected number of months. In addition if, after the issuance of a
Series of Certificates, a related Companion Series is issued and a Rapid
Amortization Period or Rapid Accumulation Period commences, payments to the
Holders of such Series may be delayed. See "Description of the Certificates
- -- Companion Series."
SERIES OF NOTES
Each Series of Notes will be secured by the pledge by the Owner Trust
of a Series Certificate. The considerations described above with respect to
the payment of the Certificates will apply with respect to the repayment of
the Notes. If a Pay Out Event with respect to a Series Certificate occurs,
principal may be paid earlier than scheduled with respect to the Notes. In
addition, the Notes may be repaid earlier than their scheduled final
payment date upon the occurrence of an Event of Default. See "Description
of the Notes -- the Indenture -- Events of Default; Rights Upon Event of
Default."
CHASE USA
Chase USA, a wholly-owned banking subsidiary of the Corporation, was
formed in 1982 and is headquartered in Wilmington, Delaware. Chase USA is
currently chartered as a national bank and as such is regulated primarily
by the United States Comptroller of the Currency (the "COMPTROLLER"). Chase
USA's activities are predominantly related to credit card lending and other
forms of consumer lending.
The Corporation is a bank holding company the principal bank
subsidiary of which is The Chase Manhattan Bank, a New York State bank.
The "TRANSFEROR" shall mean (a) with respect to the time period prior
to June 1, 1996, CMB (formerly known as Chemical Bank), (b) with respect to
the time period beginning on June 1, 1996, Chase USA or (c) such other
entity as identified in the applicable Prospectus Supplement. The principal
executive office of Chase USA is located at 802 Delaware Avenue,
Wilmington, Delaware 19801, telephone number (302) 575-5000.
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement, the
net proceeds from the sale of each Series of Certificates offered hereby
will be paid to the Transferor.
With respect to each Series of Notes, the Transferor will deposit a
Series Certificate in an Owner Trust and, in exchange therefor, receive a
Series of Notes. Unless otherwise specified in the related Prospectus
Supplement, the net proceeds from the initial sale of each Series of Notes
offered hereby will be paid to the Transferor.
Unless otherwise specified in the related Prospectus Supplement, the
Transferor will use such proceeds for its general corporate purposes.
DESCRIPTION OF THE SECURITIES
The Certificates of the Master Trust and the Notes of each Owner
Trust offered hereby and pursuant to the related Prospectus Supplement
(referred to herein collectively as the "SECURITIES") will be issued in
Series. Each Series of Certificates will represent an interest in the
Master Trust other than the interests represented by any other Series of
Certificates issued by the Master Trust (which may include Series offered
pursuant to this Prospectus) and the Transferor Certificate. Each Series of
Certificates will be issued pursuant to the Pooling and Servicing Agreement
entered into by the Bank and the Master Trust Trustee and a series
supplement (a "SERIES SUPPLEMENT") to the Pooling and Servicing Agreement.
Each Series of Notes will be an obligation of a specified Owner Trust, the
assets of which will consist primarily of a Series Certificate issued by a
specified Master Trust. Each Series of Notes will be issued pursuant to an
Indenture entered into by the Owner Trustee and the Indenture Trustee of
such Owner Trust. The Prospectus Supplement for each Series will describe
any provisions of the Note Documents which may differ materially from the
Note Documents filed as exhibits to the Registration Statement. The
following is a summary of the provisions common to each Series of
Securities. The summaries are qualified in their entirety by reference to
the provisions of the Pooling and Servicing Agreement and Series Supplement
and, with respect to any Series of Notes, the related Note Documents.
GENERAL
Each Series of Securities may consist of one or more Classes, one or
more of which may be senior securities ("SENIOR SECURITIES") and one or
more of which may be subordinated securities ("SUBORDINATED SECURITIES").
Each Class of a Series will evidence the right to receive a specified
portion of amounts collected by the Master Trust in respect of the Finance
Charge Receivables and/or the Principal Receivables. The Securities of a
Class may differ from Securities of other Classes of the same Series in,
among other things, the amounts of Finance Charge Receivables and/or
Principal Receivables allocable to such class of Securities, maturity date,
interest rate per annum (with respect to a Certificate which is not
deposited in an Owner Trust and pledged to secure a series of Notes, the
"CERTIFICATE RATE"); with respect to a note, the "NOTE RATE"; and each of
the Certificate Rate and the Note Rate, a "SECURITY RATE") and the
availability of Enhancement.
For each Series of Securities, allocations and payments of Finance
Charge Receivables, and Principal Receivables will be made on Distribution
Dates specified in the related Prospectus Supplement to Securityholders in
whose names the Securities were registered on the record dates (each, a
"RECORD DATE") specified in the related Prospectus Supplement. Such amounts
will be distributed to Securityholders in the amounts, for the periods and
on the dates specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
Securities of each Series offered hereby initially will be represented by
certificates or notes registered in the name of the nominee of DTC
(together with any successor depository selected by the Bank, the
"DEPOSITORY") except as set forth below. Unless otherwise specified in the
related Prospectus Supplement, beneficial interests in the Securities
offered hereby will be available for purchase in minimum denominations of
$1,000 and integral multiples thereof in book-entry form only. The
Transferor has been informed by DTC that DTC's nominee will be Cede & Co.
("CEDE"). Accordingly, Cede is expected to be the holder of record of each
Series of Securities. No owner of beneficial interests in the Securities (a
"SECURITIES OWNER") acquiring an interest in the Securities will be
entitled to receive a certificate representing such person's interest in
the Securities. Unless and until Securities in fully registered,
certificated form ("DEFINITIVE SECURITIES") are issued for any Series under
the limited circumstances described herein, all references herein to
actions by Securityholders shall refer to actions taken by DTC upon
instructions from DTC Participants (as defined below), and all references
herein to distributions, notices, reports and statements to Securityholders
shall refer to distributions, notices, reports and statements to DTC or
Cede, as the registered holder of the Securities, as the case may be, for
distribution to Securities Owners in accordance with DTC procedures. See
"-- Book-Entry Registration" and "-- Definitive SecuritieS."
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Securities of such Series, or one or
more Classes thereof, on the Luxembourg Stock Exchange, or all or a portion
of such Series or Classes thereof on any other specified exchange.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Securities, Securityholders may hold their
Securities through DTC (in the United States) or Cedelbank or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations that are participants in such systems.
Cede, as nominee for DTC, will hold the global Securities. Cedelbank
and Euroclear will hold omnibus positions on behalf of the Cedelbank
Customers and the Euroclear Participants, respectively, through customers'
securities accounts in Cedelbank's and Euroclear's names on the books of
their respective depositaries (collectively, the "DEPOSITARIES") which in
turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). DTC
holds securities that its participating organizations ("DTC PARTICIPANTS")
deposit with DTC. DTC also facilitates the clearance and settlement among
DTC Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic book-entry changes in DTC
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. DTC Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. DTC is owned by a number of its DTC
Participants and the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
Indirect access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly ("INDIRECT PARTICIPANTS"). The rules applicable to
DTC and its DTC Participants are on file with the Securities and Exchange
Commission (the "SEC").
DTC management is aware that some computer applications and systems
used for processing data were written using two digits rather than four to
define the applicable year, and therefore may not recognize a date using
"00" as the year 2000. This could result in the inability of these systems
to properly process transactions with dates in the year 2000 and
thereafter. DTC has developed and is implementing a program to address this
problem so that its applications and systems as the same relate to the
timely payment of distributions (including principal and interest payments)
to Securityholders, book-entry deliveries and settlement of trades within
DTC continue to function properly. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC plans to implement a testing phase of this program which is expected to
be completed within appropriate time frames.
In addition, DTC is contacting (and will continue to contact) third
party vendors that provide services to DTC to determine the extent of their
Year 2000 compliance, and DTC will develop contingency plans as it deems
appropriate to address failures in Year 2000 compliance on the part of
third party vendors. However, there can be no assurance that the systems of
third party vendors will be timely converted and will not adversely affect
the proper functioning of DTC's services.
The information set forth in the preceding two paragraphs has been
provided by DTC for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
The Transferor makes no representations as to the accuracy or completeness
of such information.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedelbank Customers and Euroclear Participants
will occur in the ordinary way in accordance with their applicable rules
and operating procedures. Cross-market transfers between persons holding
directly or indirectly through DTC, on the one hand, and directly or
indirectly through Cedelbank Customers or Euroclear Participants, on the
other, will be effected in DTC in accordance with DTC rules on behalf of
the relevant European international clearing system by its Depositary;
however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to
effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedelbank
Customers and Euroclear Participants may not deliver instructions directly
to the Depositaries.
Because of time-zone differences, credits of securities in Cedelbank
or Euroclear as a result of a transaction with a DTC Participant will be
made during the subsequent securities settlement processing, dated the
business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Cedelbank Customers or Euroclear Participants on
such day. Cash received in Cedelbank or Euroclear as a result of sales of
securities by or through a Cedelbank Customer or a Euroclear Participant
will be received with value on the DTC settlement date but will be
available in the relevant Cedelbank or Euroclear cash account only as of
the business day following settlement in DTC.
Purchases of Securities under the DTC system must be made by or
through DTC Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual Securities Owner is in
turn to be recorded on the DTC Participants' and Indirect Participants'
records. Securities Owners will not receive written confirmation from DTC
of their purchase, but Securities Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC Participant or Indirect
Participant through which the Securities Owner entered into the
transaction. Transfers of ownership interests in the Securities are to be
accomplished by entries made on the books of DTC Participants acting on
behalf of Securities Owners. Securities Owners will not receive
certificates representing their ownership interest in Securities, except in
the event that use of the book-entry system for the Securities is
discontinued.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC are registered in the name of DTC's nominee, Cede.
The deposit of Securities with DTC and their registration in the name of
Cede effects no change in beneficial ownership. DTC has no knowledge of the
actual Securities Owners of the Securities; DTC's records reflect only the
identity of the DTC Participants to whose accounts such Securities are
credited, which may or may not be the Securities Owners. The DTC
Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect Participants, and by DTC
Participants and Indirect Participants to Securities Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede will consent or vote with respect to Securities.
Under its usual procedures, DTC mails an omnibus proxy to the Transferor as
soon as possible after the record date, which assigns Cede's consenting or
voting rights to those DTC Participants to whose accounts the Securities
are credited on the record date (identified in a listing attached thereto).
Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit DTC Participants' accounts on the
applicable Distribution Date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payment on such Distribution Date. Payments by DTC Participants to
Securities Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name" and will be the
responsibility of such DTC Participant and not of DTC, the Master Trust
Trustee, the Indenture Trustee, the Owner Trustee or the Transferor,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC is the
responsibility of the Master Trust Trustee, disbursement of such payments
to DTC Participants shall be the responsibility of DTC, and disbursement of
such payments to Securities Owners shall be the responsibility of DTC
Participants and Indirect Participants.
DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
the Transferor, the Master Trust Trustee or the Indenture Trustee. Under
such circumstances, in the event that a successor securities depository is
not obtained, Definitive Securities are required to be printed and
delivered. The Transferor may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Definitive Securities will be delivered to Securityholder. See
"--Definitive Securities."
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Transferor believes to be
reliable, but the Transferor takes no
responsibility for the accuracy thereof.
Cedelbank, societe anonyme ("CEDELBANK") is incorporated under the
laws of Luxembourg as a professional depository. Cedelbank holds securities
for its participating organizations ("CEDELBANK CUSTOMERS") and facilitates
the clearance and settlement of securities transactions between Cedelbank
Customers through electronic book-entry changes in accounts of Cedelbank
Customers, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedelbank in any of 36
currencies, including United States dollars. Cedelbank provides to its
Cedelbank Customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank deals with
domestic securities markets in over 30 countries through established
depository and custodial relationships. Cedelbank has established an
electronic bridge with Morgan Guaranty Trust as the Operator of the
Euroclear System ("MGT/EOC") in Brussels to facilitate settlement of trades
between Cedelbank and MGT/EOC. Cedelbank currently accepts over 110,000
securities issues on its books. As a professional depository, Cedelbank is
subject to regulation by the Luxembourg Commission for the Supervision of
the Financial Sector, which supervises Luxembourg banks. Cedelbank
Customers are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
underwriters of any Series of Securities. Cedelbank Customers in the United
States are limited to securities brokers and dealers and banks. Currently,
Cedelbank has approximately 2,000 customers located in over 80 countries,
including all major European countries, Canada and the United States.
Indirect access to Cedelbank is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedelbank Customer, either directly or
indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("EUROCLEAR PARTICIPANTS") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk
from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 34 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. The Euroclear System is operated by
Morgan Guaranty Trust Company of New York's Brussels, Belgium office (the
"EUROCLEAR OPERATOR" or "Euroclear"), under contract with Euro-clear
Clearance System, S.C., a Belgian cooperative corporation (the
"COOPERATIVE"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters of any Series of
Securities. Indirect access to the Euroclear System is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "TERMS AND CONDITIONS"). The
Terms and Conditions govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear
System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Securities held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank Customers or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions
will be subject to tax reporting in accordance with relevant United States
tax laws and regulations. See "Tax Matters." Cedelbank or the Euroclear
Operator, as the case may be, will take any other action permitted to be
taken by a Securityholder under the Pooling and Servicing Agreement or
Indenture on behalf of a Cedelbank Customer or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among
participants of DTC, Cedelbank and Euroclear, they are under no obligation
to perform or continue to perform such procedures and such procedures may
be discontinued at any time.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the
Securities of each Series will not be issued as Definitive Securities in
fully registered, certificated form to Securities Owners or their
respective nominees rather than to DTC or its nominee, unless (i) the
Transferor advises the Master Trust Trustee (in the case of Certificates)
or the Owner Trustee (in the case of Notes) for such Series in writing that
DTC is no longer willing or able to discharge properly its responsibilities
as Depository with respect to such Series of Securities, and the Master
Trust Trustee or the Owner Trustee (as applicable) or the Transferor is
unable to locate a qualified successor, (ii) the Transferor, at its option,
advises the Master Trust Trustee (in the case of Certificates) or the Owner
Trustee (in the case of Notes) in writing that it elects to terminate the
book-entry system through DTC or (iii) after the occurrence of a Servicer
Default (in the case of Certificates) or an Event of Default (in the case
of Notes), Securities Owners representing not less than 50% (or such other
percentage specified in the related Prospectus Supplement) of the
outstanding principal amount of the Certificates or the Notes, as
applicable, advise the Master Trust Trustee or the Owner Trustee, as
applicable and DTC through Participants in writing that the continuation of
a book-entry system through DTC (or a successor thereto) is no longer in
the best interest of the Securities Owner.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all DTC Participants of the
availability through DTC of Definitive Securities. Upon surrender by DTC of
the definitive certificate representing the Securities and instructions for
re-registration, the Master Trust Trustee will issue the Securities as
Definitive Securities, and thereafter the Master Trust Trustee (in the case
of the Certificates) or the Owner Trustee (in the case of the Notes) will
recognize the holders of such Definitive Securities as holders under the
Pooling and Servicing Agreement (in the case of Certificates) and the
Indenture (in the case of Notes) ("HOLDERS").
Allocations of Finance Charge Receivables and/or Principal
Receivables on the Certificates which are Definitive Securities will be
made by the Master Trust Trustee and distributions of such amounts on the
Notes which are Definitive Securities will be made by the Indenture Trustee
(following receipt of payment on the Series Certificates deposited in the
Owner Trust) directly to Holders of Definitive Securities in accordance
with the procedures set forth herein and in the Pooling and Servicing
Agreement and Note Documents. Allocations of Finance Charge Receivables
and/or Principal Receivables on each Distribution Date or Scheduled Payment
Date will be made to Holders in whose names the Definitive Securities were
registered at the close of business on the related Record Date.
Distributions will be made by check mailed to the address of such Holder as
it appears on the register maintained by the Master Trust Trustee or the
Indenture Trustee, as applicable, or, if such Holder holds more than an
aggregate principal amount of such Definitive Securities to be specified in
the Pooling and Servicing Agreement or the Indenture, by wire transfer to
such Holder's account. The final payment on any Security (whether
Definitive Securities or the Securities registered in the name of Cede
representing the Securities), however, will be made only upon presentation
and surrender of such Security at the office or agency specified in the
notice of final distribution to Securityholders. The Master Trust Trustee
or the Indenture Trustee, as applicable, will provide such notice to
registered Securityholders not later than the fifth day of the month of
such final distributions. In addition, if the Securities are listed on the
Luxembourg Stock Exchange, payments of principal and interest, including
the final payment on any Security, will also be made at the offices of
Banque Generale du Luxembourg, S.A.
Definitive Securities will be transferable and exchangeable at the
offices of any of the Transfer Agents and Registrars, which shall initially
be CMB and the Master Trust Trustee or Indenture Trustee, as applicable. No
service charge will be imposed for any registration of transfer or
exchange, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in
connection therewith. The Transfer Agent and Registrar shall not be
required to register the transfer or exchange of Definitive Securities for
a period of fifteen days preceding the due date for any payment with
respect to such Definitive Securities.
DESCRIPTION OF THE CERTIFICATES
The following is a summary of the provisions common to all Series of
Certificates, including Series of Certificates offered hereby and pursuant
to the related Prospectus Supplement and Series Certificates which are sold
to an Owner Trust and pledged to secure a Series of Notes. Such Series
Certificates are not offered hereby.
GENERAL
The assets of the Master Trust will be allocated among the
Certificateholders of each Series of such Master Trust (including each
Series Certificate sold to an Owner Trust and pledged to secure the Notes
of such Owner Trust) and the holder of the Transferor Certificate of such
Master Trust and, in certain circumstances, the related Credit Enhancement
Provider. With respect to a Master Trust, the aggregate principal amount of
the interest of the Certificateholders of a Series and the Series'
Certificates in such Master Trust is referred to herein as the "INVESTOR
INTEREST" and is based on the aggregate amount of the Principal
Receivables, plus the amount on deposit in certain accounts, in such Master
Trust allocated to such Series. If specified in any Prospectus Supplement,
the term "INVESTOR INTEREST" with respect to the related Series will
include the Collateral Interest with respect to such Series. The aggregate
principal amount of the interest of the holder of the Transferor
Certificate in a Master Trust is referred to herein as the "TRANSFEROR
INTEREST," and is based on the aggregate amount of Principal Receivables,
plus the amount on deposit in certain accounts, in such Master Trust not
allocated to the Certificateholders or any Credit Enhancement Provider with
respect to such Master Trust. It is currently contemplated that Chase
Manhattan Bank USA, National Association ("CHASE USA" or the "BANK") will
own the remaining undivided interest in the Master Trust not represented by
the Certificates issued by such Master Trust.
The Certificates of each Series will represent undivided interests in
certain assets of the Master Trust, including the right to the applicable
Investor Percentage of all cardholder payments on the Receivables in such
Master Trust. Unless otherwise specified in the related Prospectus
Supplement, the Investor Interest for each Series of Certificates on any
date will be equal to the initial Investor Interest as of the related
Closing Date for such Series (increased by the principal balance of any
Certificates of such Series issued after the Closing Date for such Series)
minus the amount of principal paid to the related Certificateholders prior
to such date and minus the amount of unreimbursed Investor Charge-Offs with
respect to such Certificates prior to such date. If so specified in the
Prospectus Supplement relating to any Series of Certificates, under certain
circumstances the Investor Interest may be further adjusted by the amount
of principal allocated to Certificateholders, the funds on deposit in any
specified account, and any other amount specified in the related Prospectus
Supplement.
The Certificateholders of each Series will have the right to receive
(but only to the extent needed to make required payments under the Pooling
and Servicing Agreement and the related Series Supplement and subject to
any reallocation of such amounts if the related Series Supplement so
provides) varying percentages of the collections of Finance Charge
Receivables and Principal Receivables for each month and will be allocated
a varying percentage of the amount of Receivables in Accounts which were
written off as uncollectible by the Servicer ("DEFAULTED ACCOUNTS") for
such month (each such percentage, an "INVESTOR PERCENTAGE"). The related
Prospectus Supplement will specify the Investor Percentages with respect to
the allocation of collections of Principal Receivables, Finance Charge
Receivables and Receivables in Defaulted Accounts during the Revolving
Period, any Amortization Period and any Accumulation Period, as applicable.
If the Certificates of a Series include more than one Class of
Certificates, the assets of the Master Trust allocable to the Certificates
of such Series may be further allocated among each Class in such Series as
described in the related Prospectus Supplement. See " -- Investor
Percentage and Transferor Percentage."
The Certificates of each Series will represent interests in the
Master Trust only, and will not represent interests in or recourse
obligations of Chase USA, CMB or any of their affiliates. A Certificate is
not a deposit and neither the Certificates nor the underlying Accounts or
Receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") or any other governmental agency.
For the Master Trust, the Transferor initially will own the
Transferor Certificate. The Transferor Certificate will represent the
undivided interest in the Master Trust not represented by the Certificates
issued and outstanding under such Master Trust or the rights, if any, of
any Credit Enhancement Providers to receive payments from the Master Trust.
The holder of the Transferor Certificate will have the right to a
percentage (the "TRANSFEROR PERCENTAGE") of all cardholder payments from
the Receivables in the Master Trust. If provided in the Pooling and
Servicing Agreement and Prospectus Supplement, the Transferor Certificate
may be transferred in whole or in part subject to certain limitations and
conditions set forth therein. See " -- Certain Matters Regarding the
Transferor and the Servicer."
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, during the Revolving Period, the
amount of the Investor Interest in the Master Trust will remain constant
except under certain limited circumstances. See " -- Defaulted Receivables;
Rebates and Fraudulent Charges; Investor Charge-Offs." The amount of
Principal Receivables in the Master Trust, however, will vary each day as
new Principal Receivables are created and others are paid. The amount of
the Transferor Interest will fluctuate each day, therefore, to reflect the
changes in the amount of the Principal Receivables in the Master Trust.
When a Series is amortizing or accumulating principal, the Investor
Interest of such Series will decline as customer payments of Principal
Receivables are collected and distributed to or accumulated for
distribution to the Certificateholders. As a result, the Transferor
Interest will generally increase to reflect reductions in the Investor
Interest for such Series and will also change to reflect the variations in
the amount of Principal Receivables in the Master Trust. The Transferor
Interest in the Master Trust may also be reduced as the result of an
Exchange. See " -- Exchanges."
INTEREST ALLOCATIONS
For each Series of Certificates and Class thereof, interest will
accrue from the date specified in the applicable Prospectus Supplement on
the applicable Investor Interest at the applicable Certificate Rate, which
may be a fixed, floating or other type of rate as specified in the related
Prospectus Supplement. Interest will be distributed to Certificateholders
or to the Noteholders with respect to Series Certificates which are
deposited in an Owner Trust and pledged to secure a series of Notes, in the
amounts and on the dates (which may be monthly, quarterly, semiannually or
otherwise as specified in the related Prospectus Supplement) (each, a
"DISTRIBUTION DATE") specified in the related Prospectus Supplement;
provided, however, that with respect to any Series Certificate which is
deposited in an Owner Trust and pledged to secure a Series of Notes, such
Series Certificates shall receive on the Distribution Date interest
allocations calculated in the manner specified in the applicable Prospectus
Supplement and the applicable Indenture. On any Distribution Date such
amounts will be funded from collections of Finance Charge Receivables
allocated to the Investor Interest during the preceding monthly period or
periods (each, a "MONTHLY PERIOD") or Monthly Periods and may be funded
from certain investment earnings on funds held in accounts of the Master
Trust and, from any applicable Credit Enhancement, if necessary, or certain
other amounts as specified in the related Prospectus Supplement. If the
Distribution Dates for payment of such amounts occur less frequently than
monthly, such collections or other amounts (or the portion thereof
allocable to such Class) may be deposited in one or more trust accounts
(each, an "INTEREST FUNDING ACCOUNT") pending distribution to the
Certificateholders of such Series or Class, or to the Noteholders with
respect to Series Certificates which are deposited in an Owner Trust and
pledged to secure a series of Notes, as described in the related Prospectus
Supplement. If a Series has more than one class of Certificates, each such
Class may have a separate Interest Funding Account. The Prospectus
Supplement relating to each Series of Certificates and each Class thereof
will describe the amounts and sources of interest payments to be made, the
Certificate Rate for each Class thereof, and, for a Series or each Class
thereof bearing interest at a floating Certificate Rate, the dates and the
manner for determining the Certificate Rate for each applicable interest
period, the formula, index or other method by which such Certificate Rates
are determined and any cap or other limitations on any Certificate Rate.
The Prospectus Supplement relating to each Series Certificate deposited in
an Owner Trust and pledged to secure a class or classes of Notes, will
describe the amounts and sources of interest payments to be made, the
applicable Note Interest Rate for each class of Notes to be issued, and for
a class of Notes which bears interest at a floating Note Interest Rate, the
dates and manner for determining the Note Interest Rate for each applicable
Interest Period, the formula, index or other method by which such Note
Interest Rates are determined and any cap or other limitations on any Note
Interest Rate.
PRINCIPAL ALLOCATIONS
The principal of the Certificates of each Series will be scheduled to
be paid either in installments commencing on a date specified in the
related Prospectus Supplement (the "PRINCIPAL COMMENCEMENT DATE"), in which
case such Series will have either a Controlled Amortization Period or a
Principal Amortization Period, as described below, or on an expected date
specified in, or determined in the manner specified in, the related
Prospectus Supplement (the "SCHEDULED PAYMENT DATE"), in which case such
Series will have an Accumulation Period, as described below. If a Series
has more than one Class of Certificates, a different method of paying
principal, Principal Commencement Date or Scheduled Payment Date may be
assigned to each Class. In the case of a Series Certificate deposited in an
Owner Trust and pledged to secure a Series of Notes, the Principal of the
Notes will be scheduled to be paid in full on the Note Maturity Date, as
defined in the applicable Prospectus Supplement. On each Transfer Date
relating to the Controlled Accumulation Period, the Master Trust Trustee
will deposit in the Principal Funding Account, for the benefit of the Owner
Trust, an amount equal to the least of (a) Available Investor Principal
Collections with respect to such Transfer Date, (b) the applicable
Controlled Deposit Amount and (c) the Adjusted Investor Interest prior to
any deposits on such date. Amounts in the Principal Funding Account will be
paid to the Noteholders on the Note Maturity Date (as defined in the
Prospectus Supplement). The payment of principal with respect to the
Securities of a Series or Class may commence earlier than the applicable
Principal Commencement Date or Scheduled Payment Date, and the final
principal payment with respect to the Certificates of a Series or Class may
be made later than the applicable expected payment date, Scheduled Payment
Date or other expected date, if a Pay Out Event occurs and the Rapid
Amortization Period commences with respect to such Series or Class or under
certain other circumstances described herein.
Unless otherwise specified in the related Prospectus Supplement,
during the Revolving Period for each Series of Certificates (which begins
on the Closing Date relating to such Series and ends on the day before an
Amortization Period or Accumulation Period begins), no principal payments
will be made to the Certificateholders of such Series. During the
Controlled Amortization Period, the Principal Amortization Period or an
Accumulation Period, as applicable, which will be scheduled to begin on the
date specified in, or determined in the manner specified in, the related
Prospectus Supplement, and during the Rapid Amortization Period, which will
begin upon the occurrence of a Pay Out Event, principal will be paid to the
Certificateholders in the amounts and on Distribution Dates specified in
the related Prospectus Supplement or will be accumulated in a trust account
established for the benefit of such Certificateholders (a "PRINCIPAL
FUNDING ACCOUNT") for later distribution to Certificateholders on the
Scheduled Payment Date, or to the Noteholders as the case may be, on the
applicable Scheduled Payment Date in the amounts specified in the related
Prospectus Supplement. Principal payments for any Series or Class thereof
or Class of Notes will be funded from collections of Principal Receivables
received during the related Monthly Period or Periods as specified in the
related Prospectus Supplement and allocated to such Series or Class or
Class of Notes and from certain other sources specified in the related
Prospectus Supplement. In the case of a Series with more than one Class of
Certificates, the Certificateholders of one or more Classes may receive
payments of principal at different times. The related Prospectus Supplement
will describe the manner, timing and priority of payments of principal to
Certificateholders of each Class.
Funds on deposit in any Principal Funding Account applicable to a
Series may be subject to a guaranteed rate agreement or guaranteed
investment contract or other arrangement specified in the related
Prospectus Supplement intended to assure a minimum rate of return on the
investment of such funds. In order to enhance the likelihood of the payment
in full of the principal amount of a Series of Certificates or Class
thereof at the end of an Accumulation Period, such Series of Certificates
or Class thereof may be subject to a principal payment guaranty or other
similar arrangement specified in the related Prospectus Supplement.
REVOLVING PERIOD
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series and any Class thereof, no principal will be payable
to Certificateholders until the Principal Commencement Date or the
Scheduled Payment Date with respect to such Series or Class, as described
below. For the period beginning on the Closing Date and ending with the
commencement of an Amortization Period or an Accumulation Period (the
"REVOLVING PERIOD"), collections of Principal Receivables otherwise
allocable to the Investor Interest will, subject to certain limitations, be
paid from the Master Trust to the holder of the Transferor Certificate or,
under certain circumstances and if so specified in the related Prospectus
Supplement, will be treated as Shared Principal Collections and paid to the
holders of other Series of Certificates issued by the Master Trust, as
described herein and in the related Prospectus Supplement. See "Description
of the Certificates -- Pay Out Events" in this Prospectus and the related
Prospectus Supplement for a discussion of the events which might lead to
early termination of the Revolving Period.
CONTROLLED AMORTIZATION PERIOD
If the Prospectus Supplement relating to a Series so specifies,
unless a Rapid Amortization Period with respect to such Series commences,
the Certificates of such Series or any Class thereof will have an
amortization period (the "CONTROLLED AMORTIZATION PERIOD") during which
collections of Principal Receivables allocable to the Investor Interest of
such Series (and certain other amounts if so specified in the related
Prospectus Supplement) will be used on each Distribution Date to make
principal distributions in amounts determined in the manner specified in
the related Prospectus Supplement to the Certificateholders of such Series
or any Class of such Series then scheduled to receive such distributions.
The amount to be distributed on any Distribution Date during the Controlled
Amortization Period will be limited to an amount (the "CONTROLLED
DISTRIBUTION AMOUNT") equal to an amount specified in the related
Prospectus Supplement (the "CONTROLLED AMORTIZATION AMOUNT") plus any
existing deficit controlled amortization amount arising from prior
Distribution Dates. If a Series has more than one Class of Certificates,
each Class may have a separate Controlled Amortization Amount. In addition,
the related Prospectus Supplement may describe certain priorities among
such Classes with respect to such distributions. The Controlled
Amortization Period will commence at the close of business on a date
specified in the related Prospectus Supplement and continue until the
earliest of (a) the commencement of the Rapid Amortization Period, (b)
payment in full of the Investor Interest of the Certificates of such Series
or Class and, if so specified in the related Prospectus Supplement, of the
Collateral Interest, if any, with respect to such Series and (c) the Series
Termination Date with respect to such Series.
Principal Amortization Period
If the Prospectus Supplement relating to a Series so specifies,
unless a Rapid Amortization Period with respect to such Series commences,
the Certificates of such Series or any Class thereof will have an
amortization period (the "PRINCIPAL AMORTIZATION PERIOD") during which
collections of Principal Receivables allocable to the Investor Interest of
such Series (and certain other amounts if so specified in the related
Prospectus Supplement) will be used on each Distribution Date to make
principal distributions in an amount specified in the Prospectus Supplement
to the Certificateholders of such Series or any Class of such Series then
scheduled to receive such distributions. If a Series has more than one
Class of Certificates, the related Prospectus Supplement may describe
certain priorities among such Classes with respect to such distributions.
The Principal Amortization Period will commence at the close of business on
a date specified in the related Prospectus Supplement and continue until
the earliest of (a) the commencement of the Rapid Amortization Period, (b)
payment in full of the Investor Interest of the Certificates of such Series
or Class and, if so specified in the related Prospectus Supplement, of the
Collateral Interest, if any, with respect to such Series and (c) the Series
Termination Date with respect to such Series.
ACCUMULATION PERIOD
If the Prospectus Supplement relating to a Series so specifies,
unless a Rapid Amortization Period with respect to such Series commences,
the Certificates of such Series or any Class thereof will have an
Accumulation Period during which collections of Principal Receivables
allocable to the Investor Interest of such Series (and certain other
amounts if so specified in the related Prospectus Supplement) will be
deposited on the business day immediately prior to each Distribution Date
or other business day specified in the related Prospectus Supplement (each,
a "TRANSFER DATE") in a Principal Funding Account and used to make
distributions of principal to the Certificateholders of such Series or
Class on the Scheduled Payment Date. The amount to be deposited in the
Principal Funding Account on any Transfer Date will be limited to an amount
(the "CONTROLLED DEPOSIT AMOUNT") equal to an amount specified in the
related Prospectus Supplement (the "CONTROLLED ACCUMULATION AMOUNT") plus
any deficit controlled accumulation amount arising from prior Distribution
Dates. If a Series has more than one Class of Certificates, each Class may
have a separate Principal Funding Account and Controlled Accumulation
Amount. In addition, the related Prospectus Supplement may describe certain
priorities among such Classes with respect to deposits of principal into
such Principal Funding Accounts. The Accumulation Period will commence at
the close of business on a date specified in or determined in the manner
specified in the related Prospectus Supplement and continue until the
earliest of (a) the commencement of the Rapid Amortization Period, or, if
so specified in the related Prospectus Supplement, the Rapid Accumulation
Period, (b) payment in full of the Investor Interest of the Certificates of
such Series or Class and, if so specified in the related Prospectus
Supplement, of the Collateral Interest, if any, with respect to such Series
and (c) the Series Termination Date with respect to such Series.
Funds on deposit in any Principal Funding Account may be invested in
Permitted Investments or subject to a guaranteed rate or investment
contract or other arrangement intended to assure a minimum return on the
investment of such funds. Investment earnings on such funds may be applied
to pay interest on the related Series of Certificates. In order to enhance
the likelihood of payment in full of principal at the end of an
Accumulation Period with respect to a Series of Certificates, such Series
or any Class thereof may be subject to a principal payment guaranty or
other similar arrangement.
RAPID ACCUMULATION PERIOD
If so specified and under the conditions set forth in the Prospectus
Supplement relating to a Series having a Controlled Accumulation Period,
during the period from the day on which a Pay Out Event has occurred until
the earliest of (a) the commencement of the Rapid Amortization Period, (b)
payment in full of the Investor Interest of the Certificates of such Series
and, if so specified in the related Prospectus Supplement, of the
Collateral Interest, if any, with respect to such Series and (c) the
related Series Termination Date (the "RAPID ACCUMULATION PERIOD"),
collections of Principal Receivables allocable to the Investor Interest of
such Series (and certain other amounts if so specified in the related
Prospectus Supplement) will be deposited on each Transfer Date in the
Principal Funding Account and used to make distributions of principal to
the Certificateholders of such Series or Class on the Scheduled Payment
Date. The amount to be deposited in the Principal Funding Account during
the Rapid Accumulation Period will not be limited to any Controlled Deposit
Amount. The term "PAY OUT EVENT" with respect to a Series of Certificates
issued by the Master Trust means any of the events identified as such in
the related Prospectus Supplement and any of the following: (a) certain
events of insolvency or receivership relating to the Transferor, (b) the
Transferor is unable for any reason to transfer Receivables to the Master
Trust in accordance with the provisions of the Pooling and Servicing
Agreement or (c) the Master Trust becomes an "investment company" within
the meaning of the Investment Company Act of 1940, as amended. See
"Description of the Certificates -- Pay Out Events" in this Prospectus and
the related Prospectus Supplement for a discussion of the events which
might lead to commencement of the Rapid Accumulation Period.
During the Rapid Accumulation Period, funds on deposit in any
Principal Funding Account may be invested in Permitted Investments subject
to a guaranteed rate or investment contract or other arrangement intended
to assure a minimum return on the investment of such funds. Investment
earnings on such funds may be applied to pay interest on the related Series
of Certificates or make other payments as specified in the related
Prospectus Supplement. In order to enhance the likelihood of payment in
full of principal at the end of the Rapid Accumulation Period with respect
to a Series of Certificates, such Series may be subject to a principal
guaranty or other similar arrangement.
RAPID AMORTIZATION PERIOD
During the period from the day on which a Pay Out Event has occurred
with respect to a Series or, if so specified in the Prospectus Supplement
relating to a Series with a Controlled Accumulation Period, from such time
specified in the related Prospectus Supplement after a Pay Out Event has
occurred and the Rapid Accumulation Period has commenced, to the earlier of
(a) the date on which the Investor Interest of the Certificates of such
Series and the Enhancement Invested Amount or the Collateral Interest, if
any, with respect to such Series have been paid in full and (b) the related
Series Termination Date (the "RAPID AMORTIZATION PERIOD"), collections of
Principal Receivables allocable to the Investor Interest of such Series
(and certain other amounts if so specified in the related Prospectus
Supplement) will be distributed as principal payments to the
Certificateholders of such Series and, in certain circumstances, to the
Credit Enhancement Provider, monthly on or before each Distribution Date
with respect to such Series in the manner and order of priority set forth
in the related Prospectus Supplement. During the Rapid Amortization Period
with respect to a Series, distributions of principal will not be limited by
any Controlled Deposit Amount or Controlled Distribution Amount. In
addition, upon the commencement of the Rapid Amortization Period with
respect to a Series, any funds on deposit in a Principal Funding Account
with respect to such Series or any Class thereof will be paid to the
Certificateholders of such Series or Class on the first Distribution Date
in the Rapid Amortization Period. See "Description of the Certificates --
Pay Out Events" in this Prospectus and the related Prospectus Supplement
for a discussion of the events which might lead to commencement of the
Rapid Amortization Period.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The Transferor will transfer and assign at the time of formation of
the Master Trust all of its right, title and interest in and to the
Receivables in the related Accounts and all
Receivables thereafter created in such Accounts.
In connection with the such initial transfer and in connection with
each subsequent transfer of Receivables to the Master Trust, the Transferor
will indicate in its computer files that the related Receivables have been
conveyed to the Master Trust. In addition, the Transferor will provide to
the Master Trust Trustee computer files or microfiche lists, containing a
true and complete list showing each related Account, identified by account
number and by total outstanding balance on the date of transfer. The
Transferor will not deliver to the Master Trust Trustee any other records
or agreements relating to the Accounts or the Receivables, except in
connection with additions or removals of Accounts. Except as stated above,
the records and agreements relating to the Accounts and the Receivables
maintained by the Transferor or the Servicer are not and will not be
segregated by the Transferor or the Servicer from other documents and
agreements relating to other credit card accounts and receivables and are
not and will not be stamped or marked to reflect the transfer of the
Receivables to the Master Trust, but the computer records of the Transferor
are and will be required to be marked to evidence such transfer. The
Transferor will file with respect to the Master Trust Uniform Commercial
Code financing statements with respect to the Receivables meeting the
requirements of applicable state law. See "Certain Legal Aspects of the
Receivables -- Transfer of Receivables" in this Prospectus and "Risk
Factors -- Certain Liens Could Be Given Priority Over Your Securities" in
the related Prospectus Supplement.
EXCHANGES
For each Series of Certificates, the Pooling and Servicing Agreement
will provide for the Master Trust Trustee to issue two types of
certificates: (i) one or more Series of Certificates which are transferable
and have the characteristics described below and (ii) the Transferor
Certificate, a certificate which evidences the Transferor Interest, which
initially will be held by the Transferor and will be transferable only as
provided in the Pooling and Servicing Agreement. The related Prospectus
Supplement may also provide that, pursuant to any one or more Series
Supplements, the holder of the Transferor Certificate may tender such
Transferor Certificate, or the Transferor Certificate together with the
Certificates evidencing any Series of Certificates issued by the Master
Trust, to the Master Trust Trustee in exchange for one or more new Series
(which may include Series offered pursuant to this Prospectus) and a
reissued Transferor Certificate (any such tender, an "EXCHANGE"). Pursuant
to the Pooling and Servicing Agreement, the holder of the Transferor
Certificate may define, with respect to any newly issued Series, all
principal terms of such new Series (the "PRINCIPAL TERMS"). Upon the
issuance of an additional Series of Certificates, none of the Transferor,
the Servicer, the Master Trust Trustee or the Master Trust will be required
or will intend to obtain the consent of any Certificateholder of any other
Series previously issued by the Master Trust. However, as a condition of an
Exchange, the holder of the Transferor Certificate will deliver to the
Master Trust Trustee written confirmation that the Exchange will not result
in the reduction or withdrawal by any Rating Agency of its rating of any
outstanding Series. The Transferor may offer any Series under a Prospectus
or other disclosure document (a "DISCLOSURE DOCUMENT") in offerings
pursuant to this Prospectus or in transactions either registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT") or exempt from
registration thereunder directly, through one or more other underwriters or
placement agents, in fixed-price offerings or in negotiated transactions or
otherwise. As used herein, "RATING AGENCY" shall mean a nationally
recognized rating organization selected by Chase USA to rate any Series.
Unless otherwise specified in the related Prospectus Supplement, the
holder of the Transferor Certificate may perform Exchanges and define
Principal Terms such that each Series issued under the Master Trust has a
period during which amortization or accumulation of the principal amount
thereof is intended to occur which may have a different length and begin on
a different date than such period for any other Series. Further, one or
more Series may be in their amortization or accumulation periods while
other Series are not. Moreover, each Series may have the benefit of a
Credit Enhancement which is available only to such Series. Under the
Pooling and Servicing Agreement, the Master Trust Trustee shall hold any
such form of Credit Enhancement only on behalf of the Series with respect
to which it relates. The holder of the Transferor Certificate may deliver a
different form of Credit Enhancement agreement with respect to each Series.
The holder of the Transferor Certificate may specify different certificate
rates and monthly servicing fees with respect to each Series (or a
particular Class within such Series). The holder of the Transferor
Certificate will also have the option under the Pooling and Servicing
Agreement to vary between Series the terms upon which a Series (or a
particular Class within such Series) may be repurchased by the Transferor.
Additionally, certain Series may be subordinated to other Series, or
Classes within a Series may have different priorities. There will be no
limit to the number of Exchanges that may be performed under a Pooling and
Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, an
Exchange may only occur upon the satisfaction of certain conditions
provided in the Pooling and Servicing Agreement. Under the Pooling and
Servicing Agreement, the holder of the Transferor Certificate may perform
an Exchange by notifying the Master Trust Trustee at least five days in
advance of the date upon which the Exchange is to occur. Under the Pooling
and Servicing Agreement, the notice will state the designation of any
Series to be issued on the date of the Exchange and, with respect to each
such Series (and, if applicable, each Class thereof): (i) its initial
principal amount (or method for calculating such amount) which amount may
not be greater than the current principal amount of the Transferor
Certificate, (ii) its certificate rate (or method of calculating such rate)
and (iii) the provider of Credit Enhancement, if any, which is expected to
provide support with respect to it. The Pooling and Servicing Agreement
will provide that on the date of the Exchange the Master Trust Trustee will
authenticate any such Series only upon delivery to it of the following,
among others, (i) a Series Supplement specifying the Principal Terms of
such Series, (ii) (a) an opinion of counsel to the effect that, unless
otherwise stated in the related Series Supplement, the Certificates of such
Series will be characterized as indebtedness for federal income tax
purposes and (b) an opinion of counsel to the effect that, for federal
income tax purposes, (1) such issuance will not adversely affect the tax
characterization as debt of Certificates of any outstanding Series or Class
that were characterized as debt at the time of their issuance, (2)
following such issuance the Master Trust will not be deemed to be an
association (or publicly traded partnership) taxable as a corporation and
(3) such issuance will not cause or constitute an event in which gain or
loss would be recognized by any Certificateholder or the Master Trust (an
opinion of counsel with respect to any matter to the effect referred to in
clause (b) with respect to any action is referred to herein as a "TAX
OPINION"), (iii) if required by the related Series Supplement, the form of
Credit Enhancement, (iv) if Credit Enhancement is required by the Series
Supplement, an appropriate Credit Enhancement agreement executed by the
Transferor and the provider of the Credit Enhancement, (v) 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 Series of Certificate or Notes rated by it, (vi) an officer's
certificate of the Transferor to the effect that after giving effect to the
Exchange the Transferor would not be required to add Additional Accounts
pursuant to the Pooling and Servicing Agreement and the Transferor Interest
would be at least equal to at a specified minimum level (the "MINIMUM
TRANSFEROR INTEREST") and (vii) the existing Transferor Certificate and, if
applicable, the certificates representing the Series to be exchanged. Upon
satisfaction of such conditions, the Master Trust Trustee will cancel the
existing Transferor Certificate and the certificates of the exchanged
Series, if applicable, and authenticate the new Series and a new Transferor
Certificate.
REPRESENTATIONS AND WARRANTIES
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Transferor will make in the Pooling and
Servicing Agreement certain representations and warranties to the Master
Trust to the effect that, among other things, (a) as of the Closing Date,
the Transferor was duly incorporated and in good standing and that it has
the authority to consummate the transactions contemplated by the Pooling
and Servicing Agreement and (b) as of the relevant Cut-Off Date (or as of
the date of the designation of Additional Accounts), each Account was an
Eligible Account (as defined below). If so provided in the related
Prospectus Supplement, if (i) any of these representations and warranties
proves to have been incorrect in any material respect when made, and
continues to be incorrect for 60 days after notice to the Transferor by the
Master Trust Trustee or to the Transferor and the Master Trust Trustee by
the Certificateholders holding more than 50% of the Investor Interest of
the related Series and (ii) as a result the interests of the
Certificateholders are materially and adversely affected, and continue to
be materially and adversely affected during such period, then the Master
Trust Trustee or Certificateholders holding more than 50% of the Investor
Interest may give notice to the Transferor (and to the Master Trust Trustee
in the latter instance) declaring that a Pay Out Event has occurred,
thereby commencing the Rapid Amortization Period.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Transferor will make in the Pooling and
Servicing Agreement representations and warranties to the Master Trust
relating to the Receivables in such Master Trust to the effect, among other
things, that (a) as of the Closing Date of the initial Series of
Certificates issued by such Master Trust, each of the Receivables then
existing is an Eligible Receivable (as defined below) and (b) as of the
date of creation of any new Receivable, such Receivable is an Eligible
Receivable and the representation and warranty set forth in clause (b) in
the immediately following paragraph is true and correct with respect to
such Receivable. In the event (i) of a breach of any representation and
warranty set forth in this paragraph, within 60 days, or such longer period
as may be agreed to by the Master Trust Trustee, of the earlier to occur of
the discovery of such breach by the Transferor or Servicer or receipt by
the Transferor of written notice of such breach given by the Master Trust
Trustee, or, with respect to certain breaches relating to prior liens,
immediately upon the earlier to occur of such discovery or notice and (ii)
that as a result of such breach, the Receivables in the related Accounts
are charged off as uncollectible, the Master Trust's rights in, to or under
the Receivables or its proceeds are impaired or the proceeds of such
Receivables are not available for any reason to the Master Trust free and
clear of any lien, the Transferor shall accept reassignment of each
Principal Receivable as to which such breach relates (an "INELIGIBLE
RECEIVABLE") on the terms and conditions set forth below; provided,
however, that no such reassignment shall be required to be made with
respect to such Ineligible Receivable if, on any day within the applicable
period (or such longer period as may be agreed to by the Master Trust
Trustee), the representations and warranties with respect to such
Ineligible Receivable shall then be true and correct in all material
respects. The Transferor shall accept reassignment of each such Ineligible
Receivable by directing the Servicer to deduct the amount of each such
Ineligible Receivable from the aggregate amount of Principal Receivables
used to calculate the Transferor Interest. In the event that the exclusion
of an Ineligible Receivable from the calculation of the Transferor Interest
would cause the Transferor Interest to be a negative number, on the date of
reassignment of such Ineligible Receivable the Transferor shall make a
deposit in the Principal Account in immediately available funds in an
amount equal to the amount by which the Transferor Interest would be
reduced below zero. Any such deduction or deposit shall be considered a
repayment in full of the Ineligible Receivable. The obligation of the
Transferor to accept reassignment of any Ineligible Receivable is the sole
remedy respecting any breach of the representations and warranties set
forth in this paragraph with respect to such Receivable available to the
Certificateholders, the Master Trust Trustee or the Indenture Trustee on
behalf of Certificateholders.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Transferor will make in the Pooling and
Servicing Agreement representations and warranties to the Master Trust to
the effect, among other things, that as of the Closing Date of the initial
Series of Certificates issued by the Master Trust (a) the Pooling and
Servicing Agreement will constitute a legal, valid and binding obligation
of the Transferor and (b) the transfer of Receivables by it to the Master
Trust under the Pooling and Servicing Agreement will constitute either a
valid transfer and assignment to the Master Trust of all right, title and
interest of the Transferor in and to the Receivables (other than
Receivables in Additional Accounts), whether then existing or thereafter
created and the proceeds thereof (including amounts in any of the accounts
established for the benefit of Certificateholders) or the grant of a first
priority perfected security interest in such Receivables (except for
certain tax liens) and the proceeds thereof (including amounts in any of
the accounts established for the benefit of Certificateholders), which is
effective as to each such Receivable upon the creation thereof. In the
event of a breach of any of the representations and warranties described in
this paragraph, either the Master Trust Trustee or the Holders of
Certificates evidencing undivided interests in the Master Trust aggregating
more than 50% of the aggregate Investor Interest of all Series outstanding
under the Master Trust may direct the Transferor to accept reassignment of
the Trust Portfolio within 60 days of such notice, or within such longer
period specified in such notice. The Transferor will be obligated to accept
reassignment of such Receivables on a Distribution Date occurring within
such applicable period. Such reassignment will not be required to be made,
however, if at any time during such applicable period, or such longer
period, the representations and warranties shall then be true and correct
in all material respects. The deposit amount for such reassignment will be
equal to the Investor Interest and Enhancement Invested Amount, if any, for
each Series outstanding under the Master Trust on the last day of the
Monthly Period preceding the Distribution Date on which the reassignment is
scheduled to be made less the amount, if any, previously allocated for
payment of principal to such Certificateholders or such holders of the
Enhancement Invested Amount or the Collateral Interest, if any, on such
Distribution Date, plus an amount equal to all accrued and unpaid interest
less the amount, if any, previously allocated for payment of such interest
on such Distribution Date. The payment of the reassignment deposit amount
and the transfer of all other amounts deposited for the preceding month in
the Distribution Account will be considered a payment in full of the
Investor Interest and the Enhancement Invested Amount, if any, for each
such Series required to be repurchased and will be distributed upon
presentation and surrender of the Certificates for each such Series. The
obligation of the Transferor to make any such deposit will constitute the
sole remedy respecting a breach of the representations and warranties
available to the Master Trust Trustee or such Certificateholders.
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, an "ELIGIBLE ACCOUNT" will mean, as
of the relevant Cut-Off Date (or, with respect to Additional Accounts, as
of their date of designation for inclusion in the Master Trust), each
Account owned by the Transferor (a) which was in existence and maintained
with the Transferor, (b) which is payable in United States dollars, (c) the
obligor of which has provided, as his most recent billing address, an
address located in the United States or its territories or possessions, (d)
which has not been classified by the Transferor as counterfeit, deleted,
fraudulent, stolen or lost, (e) which has either been originated by the
Transferor or acquired by the Transferor from other institutions and (f)
which has not been charged off by the Transferor in its customary and usual
manner for charging off such Account as of the Cut-Off Date and, with
respect to Additional Accounts, as of their date of designation for
inclusion in the Master Trust. Under the Pooling and Servicing Agreement,
the definition of Eligible Account may be changed by amendment to such
Pooling and Servicing Agreement without the consent of the related
Certificateholders if (i) the Transferor delivers to the Master Trust
Trustee a certificate of an authorized officer to the effect that, in the
reasonable belief of the Transferor, such amendment will not as of the date
of such amendment adversely affect in any material respect the interest of
such Certificateholders and (ii) such amendment will not result in a
withdrawal or reduction of the rating of any outstanding Series under the
Master Trust.
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, an "ELIGIBLE RECEIVABLE" will be
defined to mean each Receivable (a) which has arisen under an Eligible
Account, (b) which was created in compliance, in all material respects,
with all requirements of law applicable to the Transferor, and pursuant to
a credit card agreement which complies in all material respects with all
requirements of law applicable to the Transferor, (c) with respect to which
all consents, licenses or authorizations of, or registrations with, any
governmental authority required to be obtained or given by the Transferor
in connection with the creation of such Receivable or the execution,
delivery, creation and performance by the Transferor of the related credit
card agreement have been duly obtained or given and are in full force and
effect as of the date of the creation of such Receivable, (d) as to which,
at the time of its creation, the Transferor or the Master Trust has good
title free and clear of all liens and security interests arising under or
through the Transferor (other than certain tax liens for taxes not then due
or which the Transferor is contesting), (e) which is the legal, valid and
binding payment obligation of the obligor thereon, legally enforceable
against such obligor in accordance with its terms (with certain
bankruptcy-related exceptions) and (f) which constitutes an "account" or
"general intangible" under Article 9 of the UCC as then in effect in the
State of Delaware.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, it will not be required or anticipated that the
Master Trust Trustee will make any initial or periodic general examination
of the Receivables or any records relating to the Receivables for the
purpose of establishing the presence or absence of defects, compliance with
the Transferor's representations and warranties or for any other purpose.
The Servicer, however, will deliver to the Master Trust Trustee on or
before March 31 of each year (or such other date specified in the related
Prospectus Supplement) an opinion of counsel with respect to the validity
of the security interest of the Master Trust in and to the Receivables and
certain other components of the Master Trust.
ADDITION OF TRUST ASSETS
As described above under "The Receivables," the Transferor will have
the right to designate, from time to time, Additional Accounts to be
included as Accounts. In addition, the Transferor will be required to
designate Additional Accounts under the circumstances and in the amounts
specified in the related Prospectus Supplement. The Transferor will convey
to the Master Trust its interest in all Receivables of such Additional
Accounts, whether such Receivables are then existing or thereafter created.
The total amount of Receivables in the Master Trust will fluctuate from day
to day, because the amount of new Receivables arising in the Accounts and
the amount of payments collected on existing Receivables usually differ
each day.
Each Additional Account must be an Eligible Account at the time of
its designation. However, Additional Accounts may not be of the same credit
quality as the initial Accounts. Additional Accounts may have been
originated by the Transferor using credit criteria different from those
which were applied by the Transferor to the initial Accounts or may have
been acquired by the Transferor from an institution which may have had
different credit criteria.
In addition to or in lieu of Additional Accounts, the Transferor will
be permitted to add to the Master Trust participations representing
undivided interests in a pool of assets primarily consisting of receivables
arising under consumer revolving credit card accounts owned by the
Transferor and collections thereon ("PARTICIPATIONS").
Participations may be evidenced by one or more certificates of
ownership issued under a separate pooling and servicing agreement or
similar agreement (a "PARTICIPATION AGREEMENT") entered into by the
Transferor which entitles the certificateholder to receive percentages of
collections generated by the pool of assets subject to such Participation
Agreement from time to time and to certain other rights and remedies
specified therein. Participations may have their own credit enhancement,
pay out events, servicing obligations and servicer defaults, all of which
are likely to be enforceable by a separate trustee under the Participation
Agreement and may be different from those specified herein. The rights and
remedies of the Master Trust as the holder of a Participation (and
therefore the Certificateholders) will be subject to all the terms and
provisions of the related Participation Agreement. The Pooling and
Servicing Agreement may be amended to permit the addition of a
Participation in the Master Trust without the consent of the related
Certificateholders if (i) the Transferor delivers to the Master Trust
Trustee a certificate of an authorized officer to the effect that, in the
reasonable belief of the Transferor, such amendment will not as of the date
of such amendment adversely affect in any material respect the interest of
such Certificateholders, and (ii) such amendment will not result in a
withdrawal or reduction of the rating of any outstanding Series under the
Master Trust. To the extent required pursuant to the Securities Act, any
Participations transferred to the Master Trust (a) will have been (i)
registered under the Securities Act or (ii) held for at least the Rule
144(k) holding period, and (b) will be acquired in secondary market
transactions not from the issuer or an affiliate.
Except as described in the following paragraph, a conveyance by the
Transferor to a Master Trust of Receivables in Additional Accounts or
Participations is subject to the following conditions, among others: (i)
the Transferor shall give the Master Trust Trustee, each Rating Agency and
the Servicer written notice that such Additional Accounts or Participations
will be included, which notice shall specify the approximate aggregate
amount of the Receivables or interests therein to be transferred; (ii) the
Transferor shall have delivered to the Master Trust Trustee a written
assignment (including an acceptance by the Master Trust Trustee on behalf
of the Master Trust for the benefit of the Certificateholders) as provided
in the Pooling and Servicing Agreement relating to such Additional Accounts
or Participations (the "ASSIGNMENT") and, the Transferor shall have
delivered to the Master Trust Trustee a computer file or microfiche list,
dated the date of such Assignment, containing a true and complete list of
such Additional Accounts or Participations; (iii) the Transferor shall
represent and warrant that (x) each Additional Account is, as of the date
the Receivables in such Account are first added to the Master Trust (the
"ADDITION DATE"), an Eligible Account, and each Receivable in such
Additional Account is, as of the Addition Date, an Eligible Receivable, (y)
no selection procedures believed by the Transferor to be materially adverse
to the interests of the Certificateholders were utilized in selecting the
Additional Accounts from the available Eligible Accounts from the Trust
Portfolio, and (z) as of the Addition Date, the Transferor is not
insolvent; (iv) the Transferor shall deliver an opinion of counsel with
respect to the security interest of the Master Trust in the Receivables in
the Additional Accounts or the Participations transferred to the Master
Trust; and (v) under certain circumstances, if any, specified in the
related Prospectus Supplement with respect to Additional Accounts and to
Participations, each Rating Agency then rating any Series of Certificates
outstanding under the Master Trust shall have consented to the addition of
such Additional Accounts or Participations.
If specified in the related Prospectus Supplement, Additional
Accounts may be automatically added to the Accounts on an ongoing basis;
provided, however, that such automatic inclusion and transfer shall not
occur with respect to any such account if: (i) such account does not
qualify as an Eligible Account or (ii) the Transferor otherwise designates
such account as an account which is not to be included as an Account. The
Transferor will deliver to the Master Trust Trustee a computer file or
microfiche list of all such included Accounts. In connection with any such
automatic addition of Additional Accounts, the Transferor will be required
to satisfy the conditions specified in clause (iii) in the preceding
paragraph.
In addition to the periodic reports otherwise required to be filed by
the Servicer with the SEC pursuant to the Exchange Act, the Servicer
intends to file, on behalf of the Master Trust, a Report on Form 8-K with
respect to any addition to a Master Trust of Receivables in Additional
Accounts or Participations that would have a material effect on the
composition of the assets of the Master Trust.
REMOVAL OF ACCOUNTS
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, subject to the conditions set forth in the next
succeeding sentence, the Transferor may, but shall not be obligated to,
designate from time to time (which may be restricted to certain periods if
so specified in the related Prospectus Supplement) certain Accounts to be
Removed Accounts, all Receivables in which shall be subject to deletion and
removal from the Master Trust; provided, however, that the Transferor shall
not make more than one such designation in any Monthly Period. The
Transferor will be permitted to designate and require reassignment to it of
the Receivables from Removed Accounts only upon satisfaction of the
following conditions: (i) the removal of any Receivables of any Removed
Accounts shall not, in the reasonable belief of the Transferor, cause a Pay
Out Event for any Series to occur; (ii) the Transferor shall have delivered
to the Master Trust Trustee for execution a written assignment and a
computer file or microfiche list containing a true and complete list of all
Removed Accounts identified by account number and the aggregate amount of
the Receivables in such Removed Accounts; (iii) the Transferor shall
represent and warrant that no selection procedures believed by the
Transferor to be materially adverse to the interests of the holders of any
Series of Certificates outstanding under the Master Trust were utilized in
selecting the Removed Accounts to be removed from the Master Trust; (iv)
each Rating Agency then rating each Series of Certificates outstanding
under the Master Trust shall have received notice of such proposed removal
of Accounts and the Transferor shall have received notice from each such
Rating Agency that such proposed removal will not result in a downgrade of
its then current rating for any such Series; (v) the aggregate amount of
Principal Receivables of the Accounts then existing less the aggregate
amount of Principal Receivables of the Removed Accounts shall not be less
than the amount, if any, specified for any period specified; (vi) the
Principal Receivables of the Removed Accounts shall not equal or exceed 5%
(or such other percentage specified in the related Prospectus Supplement)
of the aggregate amount of the Principal Receivables in the Master Trust at
such time; provided, that if any Series has been paid in full, the
Principal Receivables in such Removed Accounts may equal or approximately
equal the initial Investor Interest or highest Investor Interest at any
time during the Revolving Period, as applicable, of such Series; (vii) such
other conditions as are specified in the related Prospectus Supplement; and
(viii) the Transferor shall have delivered to the Master Trust Trustee an
officer's certificate confirming the items set forth in clauses (i) through
(vii) above. Notwithstanding the above, the Transferor will be permitted to
designate as a Removed Account without the consent of the Master Trust
Trustee, Certificateholders or Rating Agencies any Account that has a zero
balance and which the Transferor will remove from its computer file.
COLLECTION AND OTHER SERVICING PROCEDURES
For each Series of Certificates, the Servicer will be responsible for
servicing and administering the Receivables in accordance with the
Servicer's policies and procedures for servicing credit card receivables
comparable to the Receivables. The Servicer will be required to maintain
fidelity bond coverage insuring against losses through wrongdoing of its
officers and employees who are involved in the servicing of credit card
receivables covering such actions and in such amounts as the Servicer
believes to be reasonable from time to time.
DISCOUNT OPTION
The Transferor may at any time designate a specified fixed or
variable percentage as specified in the related Prospectus Supplement (the
"DISCOUNT PERCENTAGE") of the amount of Receivables arising in the Accounts
with respect to the Master Trust on and after the date such option (the
"DISCOUNT OPTION") is exercised that otherwise would have been treated as
Principal Receivables to be treated as Finance Charge Receivables (the
"DISCOUNT OPTION RECEIVABLES"). Such designation will become effective upon
satisfaction of the requirements set forth in the Pooling and Servicing
Agreement, including confirmation by each Rating Agency in writing of its
then current rating on each outstanding Series of the Master Trust.
Collections of Receivables to which such Discount Option is applicable that
otherwise would be Principal Receivables will be deemed collections of
Finance Charge Receivables and will be applied accordingly, unless
otherwise provided in the related Prospectus Supplement.
TRUST ACCOUNTS
Unless otherwise specified in the Prospectus Supplement, the Master
Trust Trustee will establish and maintain in the name of the Master Trust
two separate accounts in a segregated trust account (which need not be a
deposit account), a "FINANCE CHARGE Account" and a "PRINCIPAL ACCOUNT," for
the benefit of the Certificateholders of all related Series, including any
Series offered pursuant to this Prospectus. The Pooling and Servicing
Agreement will provide that the Master Trust Trustee shall have the power
to establish series accounts in Series Supplements, including an Interest
Funding Account, a Principal Funding Account, a Pre-Funding Account or
such other account specified in the related Series Supplement, each of
which series accounts shall be held for the benefit of the
Certificateholders of the related Series and for the purposes set forth in
the related Prospectus Supplement. The Master Trust Trustee will also
establish one or more "DISTRIBUTION ACCOUNTS" each of which shall be
Eligible Deposit Accounts. The Servicer will establish and maintain, in the
name of the Master Trust, for the benefit of Certificateholders of all
Series issued thereby including any Series offered pursuant to this
Prospectus, a Collection Account, which will be an Eligible Deposit
Account. "ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States or any one of the states thereof, including the
District of Columbia (or any domestic branch of a foreign bank), and acting
as a trustee for funds deposited in such accounts, so long as any of the
Securities of such depository institution shall have a credit rating from
each Rating Agency in one of its generic credit rating categories which
signifies investment grade. "ELIGIBLE INSTITUTION" means (a) the Servicer,
(b) a depository institution (which may be the Master Trust Trustee or an
affiliate) organized under the laws of the United States or any one of the
states thereof which at all times (i) has a certificate of deposit rating
of "P-1" by Moody's Investors Service, Inc. ("MOODY'S"), (ii) has either
(x) a long-term unsecured debt rating of "AAA" by Standard & Poor's or (y)
a certificate of deposit rating of "A-1+" by Standard & Poor's Ratings
Services ("STANDARD & POOR'S") and (iii) is a member of the FDIC or (c) any
other institution that is acceptable to the Rating Agencies. Unless
otherwise specified in the related Prospectus Supplement, funds in the
Principal Account and the Finance Charge Account for the Master Trust will
be invested, at the direction of the Servicer, in (i) obligations fully
guaranteed by the United States of America, (ii) demand deposits, time
deposits or certificates of deposit of depository institutions or trust
companies, the certificates of deposit of which have a rating in the
highest rating category from Moody's and Standard & Poor's (unless
otherwise specified in the related Prospectus Supplement), (iii) commercial
paper having, at the time of the Master Trust's investment, a rating in the
highest rating category from Moody's and Standard & Poor's (unless
otherwise specified in the related Prospectus Supplement), (iv) bankers'
acceptances issued by any depository institution or trust company described
in clause (ii) above, (v) certain repurchase agreements transacted with
either (a) an entity subject to the United States federal bankruptcy code
or (b) 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. and (vi) any other investment that by its terms
converts to cash within a finite time period if the Rating Agency confirms
in writing that such investment will not adversely affect its then current
rating or ratings of the Certificates (such investments, "PERMITTED
INVESTMENTS"). Unless otherwise specified in the related Prospectus
Supplement, any earnings (net of losses and investment expenses) on funds
in the Finance Charge Account or the Principal Account will be paid to the
Transferor. Funds in any other series account established by a Series
Supplement may be invested in Permitted Investments or otherwise as
provided in the related Prospectus Supplement. The Servicer will have the
revocable power to withdraw funds from the Collection Account and to
instruct the Master Trust Trustee to make withdrawals and payments from the
Finance Charge Account and the Principal Account for the purpose of
carrying out the Servicer's duties under the Pooling and Servicing
Agreement. Unless otherwise specified in the related Prospectus Supplement,
CMB will be the paying agent (the "PAYING Agent") and will have the
revocable power to withdraw funds from the Distribution Account for the
purpose of making distributions to the Certificateholders.
FUNDING PERIOD
For any Series of Certificates, the related Prospectus Supplement may
specify that during a period beginning on the Closing Date and ending on a
specified date before the commencement of an Amortization Period or an
Accumulation Period with respect to such Series (the "FUNDING PERIOD") the
aggregate amount of Principal Receivables in the Master Trust allocable to
such Series may be less than the aggregate principal amount of the
Certificates of such Series and that the amount of such deficiency, which
may be up to 100% of the aggregate principal amount of the Certificates of
such Series, (the "PRE-FUNDING AMOUNT") will be held in a trust account
established with the Master Trust Trustee for the benefit of
Certificateholders of such Series (the "PRE-FUNDING ACCOUNT") pending the
transfer of additional Receivables to the Master Trust or pending the
reduction of the Investor Interests of other Series issued by the Master
Trust. The Prospectus Supplement relating to a Series of Certificates will
specify that the Funding Period for such Series will end on a specified
date certain or earlier under certain circumstances, such as the
commencement of the Rapid Amortization Period. The actual length of a
Funding Period for a Series may be contingent upon another event such as
the generation by the Transferor of additional Principal Receivables or the
term of the Amortization Period or Accumulation Period of a related
Companion Series. Generally, the Amortization Period or Accumulation Period
of a related Companion Series will depend upon the payment rate of the
Receivables in the Master Trust. See "Maturity Considerations." Until the
end of the Funding Period of a Series paired with a related Companion
Series, the Certificates of such Series will evidence an undivided interest
in Receivables to the extent of the Investor Interest in such Series and in
funds on deposit in the Pre-Funding Account and Permitted Investments of
such funds to the extent of the difference between the aggregate principal
amount of the Certificates of such Series (the "FULL INVESTOR INTEREST")
and the initial Investor Interest. The related Prospectus Supplement will
specify the initial Investor Interest with respect to such Series, the Full
Investor Interest and the date by which the Investor Interest is expected
to equal the Full Investor Interest. The Investor Interest will increase as
Receivables are delivered to the Master Trust or as the Investor Interests
of other Series of the Master Trust are reduced. The Investor Interest may
also decrease due to Investor Charge-Offs.
During the Funding Period, funds on deposit in the Pre-Funding
Account for a Series of Certificates will be withdrawn and paid to the
Transferor to the extent of any increases in the Investor Interest. In the
event that the Investor Interest does not for any reason equal the Full
Investor Interest by the end of the Funding Period, any amount remaining in
the Pre-Funding Account and any additional amounts specified in the related
Prospectus Supplement will be payable to the Certificateholders of such
Series in the manner and at such time as set forth in the related
Prospectus Supplement. Such event will result in an early repayment of
Certificate principal and the Certificateholders of such Series will not
receive the benefit of the Certificate Rate for the period of time
originally expected on the amount of such early repayment.
If so specified in the related Prospectus Supplement, monies in the
Pre-Funding Account will be invested by the Master Trust Trustee in
Permitted Investments or will be subject to a guaranteed rate or investment
agreement or other similar arrangement, and, in connection with each
Distribution Date during the Funding Period, investment earnings on funds
in the Pre-Funding Account during the related Monthly Period will be
withdrawn from the Pre-Funding Account and deposited, together with any
applicable payment under a guaranteed rate or investment agreement or other
similar arrangement, into the Finance Charge Account for distribution in
respect of interest on the Certificates of the related Series in the manner
specified in the related Prospectus Supplement.
COMPANION SERIES
If so specified in the related Prospectus Supplement, a Series of
Certificates may be paired with one or more other Series issued by the
Master Trust (each, a "COMPANION SERIES") on or prior to the commencement
of the Amortization Period or Accumulation Period for such Series. As the
Investor Interest of the Series having a Companion Series is reduced, the
Investor Interest in the Master Trust of the Companion Series will be
increased. If a Pay Out Event occurs with respect to the Series having a
Companion Series or with respect to the Companion Series when the Series is
in an Amortization Period, the Investor Percentage in respect of
collections of Principal Receivables for the Series and the Investor
Percentage in respect of collections of Principal Receivables for the
Companion Series may be reset as provided in the related Prospectus
Supplement. Resetting of such Investor Percentage may have the effect of
reducing the amount of collections of Principal Receivables allocable to
the Series that is paired with the Companion Series. While the issuance of
a Companion Series will be subject to the conditions described under " --
Exchanges," there can be no assurance that the terms of a Companion Series
might not have an impact on the timing or amount of payments received on
the Series with which it is paired. See "Maturity Considerations."
INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
The Servicer will allocate between the Investor Interest of each
Series (and between each Class of each Series) and the Transferor Interest,
and, in certain circumstances, the interest of certain Credit Enhancement
Providers, all amounts collected on Finance Charge Receivables, all amounts
collected on Principal Receivables and all Receivables in Defaulted
Accounts. The Servicer will make each allocation by reference to the
applicable Investor Percentage of each Series and the Transferor
Percentage, and, in certain circumstances, the percentage interest of
certain Credit Enhancement Providers (the "CREDIT ENHANCEMENT PERCENTAGE")
with respect to such Series. The Prospectus Supplement relating to a Series
will specify the Investor Percentage and, if applicable, the Credit
Enhancement Percentage (or the method of calculating such percentage) with
respect to the allocations of collections of Principal Receivables, Finance
Charge Receivables and Receivables in Defaulted Accounts during the
Revolving Period, any Amortization Period and the Accumulation Period, as
applicable. In addition, for each Series of Certificates having more than
one Class, the related Prospectus Supplement will specify the method of
allocation between such Classes.
The Transferor Percentage will, in all cases, be equal to 100% minus
the aggregate Investor Percentages and, if applicable, the Credit
Enhancement Percentages, for all Series then outstanding.
APPLICATION OF COLLECTIONS
Unless otherwise specified in the related Prospectus Supplement,
except as otherwise provided below, the Servicer will deposit into an
account required to be established for such purpose by the Pooling and
Servicing Agreement (the "COLLECTION ACCOUNT") for the Master Trust, no
later than the second business day (or such other day specified in the
related Prospectus Supplement) following the date of processing, any
payment collected by the Servicer on the Receivables. On the same day as
any such deposit is made, the Servicer will make the deposits and payments
to the accounts and parties as indicated below; provided, however, that for
as long as CMB remains the Servicer under the Pooling and Servicing
Agreement, and (a)(i) the Servicer provides to the Master Trust Trustee a
letter of credit or other credit support acceptable to each Rating Agency
and (ii) the Transferor shall not have received a notice from the Rating
Agency that such letter of credit would result in the lowering of such
Rating Agency's then existing rating of the related Series (and if the
Master Trust has issued more than one Series, any Series of certificates
then issued and outstanding thereunder), or (b) the Servicer has and
maintains a minimum certificate of deposit rating of "P-1" by Moody's and
"A-1" by Standard & Poor's unless otherwise specified in the related
Prospectus Supplement and deposit insurance provided by either the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF"),
then the Servicer may make such deposits and payments on a monthly or other
periodic basis on the Transfer Date in an amount equal to the net amount of
such deposits and payments which would have been made had the conditions of
this proviso not applied.
Unless otherwise specified in the related Prospectus Supplement,
notwithstanding anything in the Pooling and Servicing Agreement to the
contrary, whether the Servicer is required to make monthly or daily
deposits from the Collection Account into the Finance Charge Account or the
Principal Account, with respect to any Monthly Period, (i) the Servicer
will only be required to deposit collections from the Collection Account
into the Finance Charge Account, the Principal Account or any series
account established by a related Series Supplement up to the required
amount to be deposited into any such account or, without duplication,
distributed on or prior to the related Distribution Date to
Certificateholders or to the provider of Enhancement and (ii) if at any
time prior to such Distribution Date the amount of collections deposited in
the Collection Account exceeds the amount required to be deposited pursuant
to clause (i) above, the Servicer will be permitted to withdraw the excess
from the Collection Account.
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will withdraw the following amounts from the Collection Account
for application as indicated:
(a) an amount equal to the Transferor Percentage of the aggregate
amount of such deposits in respect of Principal Receivables and Finance
Charge Receivables, respectively, will be paid or held for payment to the
holder of the Transferor Certificate, provided that if after giving effect
to the inclusion in the Master Trust of all Receivables on or prior to such
date of processing the Transferor Interest would be reduced below the
Minimum Transferor Interest the excess will be deposited in the Principal
Account or other specified account and will be used as described in the
related Prospectus Supplement, including for payment to other Series of
Certificates issued by the Master Trust;
(b) an amount equal to the applicable Investor Percentage of the
aggregate amount of such deposits in respect of Finance Charge Receivables
will be deposited into the Finance Charge Account for allocation and
distribution as described in the related Prospectus Supplement;
(c) during the Revolving Period, an amount equal to the applicable
Investor Percentage of the aggregate amount of such deposits in respect of
Principal Receivables will be invested or held for investment in Principal
Receivables, provided that if after giving effect to the inclusion in the
Master Trust of all Receivables on or prior to such date of processing the
Transferor Interest would be reduced below the Minimum Transferor Interest
the excess will be deposited in the Principal Account or other specified
account and will be used as described in the related Prospectus Supplement,
including for payment to other Series of Certificates issued by the Master
Trust;
(d) during the Controlled Amortization Period or Accumulation Period,
as applicable, an amount equal to the applicable Investor Percentage of
such deposits in respect of Principal Receivables up to the amount, if any,
as specified in the related Prospectus Supplement will be deposited in the
Principal Account or Principal Funding Account, as applicable, for
allocation and distribution to Certificateholders as described in the
related Prospectus Supplement, provided that if collections of Principal
Receivables exceed the principal payments which may be allocated or
distributed to Certificateholders, the amount of such excess will be paid
to the holder of the Transferor Certificate until the Transferor Interest
is reduced to the Minimum Transferor Interest, and thereafter will be
deposited in the Principal Account or other specified account and will be
used as described in the related Prospectus Supplement, including for
payment to other Series of Certificates issued by the Master Trust; and
(e) during the Principal Amortization Period, if applicable, and the
Rapid Amortization Period, an amount equal to the applicable Investor
Percentage of such deposits in respect of Principal Receivables will be
deposited into the Principal Account for application and distribution as
provided in the related Prospectus Supplement.
In the case of a Series of Certificates having more than one Class,
the amounts in the Collection Account will be allocated and applied to each
Class in the manner and order of priority described in the related
Prospectus Supplement.
Any amounts collected in respect of Principal Receivables and not
paid to the Transferor because the Transferor Interest is zero as described
above (with respect to each Series, "UNALLOCATED PRINCIPAL COLLECTIONS"),
together with any adjustment payments as described below, will be paid to
and held in the Principal Account and paid to the Transferor if and to the
extent that the Transferor Interest is equal to or greater than zero. If an
Amortization Period or Accumulation Period has commenced, Unallocated
Principal Collections will be held for distribution to the
Certificateholders on the related Distribution Date or accumulated for
distribution on the Scheduled Payment Date, as applicable, and distributed
to the Certificateholders of each Class or held for and distributed to the
Certificateholders of other Series of Certificates issued by the Master
Trust in the manner and order of priority specified in the related
Prospectus Supplement.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any Series of Certificates may be included in a Group of Series
(each, a "GROUP"). The Prospectus Supplement relating to a Series will
specify whether such Series will be included in a Group and will identify
any previously issued Series included in such Group. If so specified in the
related Prospectus Supplement, the Certificateholders of a Series within a
Group or any Class thereof may be entitled to receive all or a portion of
Excess Finance Charge Collections with respect to another Series within
such Group to cover any shortfalls with respect to amounts payable from
collections of Finance Charge Receivables allocable to such Series or
Class. Unless otherwise provided in the related Prospectus Supplement, with
respect to any Series, "EXCESS FINANCE CHARGE COLLECTIONS" for any Monthly
Period will equal the excess of collections of Finance Charge Receivables,
annual membership fees and certain other amounts allocated to the Investor
Interest of such Series or Class over the sum of (i) interest accrued for
the current month ("MONTHLY INTEREST") and overdue Monthly Interest on the
Certificates of such Series or Class (together with, if applicable,
interest on overdue Monthly Interest at the rate specified in the related
Prospectus Supplement ("ADDITIONAL INTEREST")), (ii) accrued and unpaid
Investor Servicing Fees with respect to such Series or Class payable from
collections of Finance Charge Receivables, (iii) the Investor Default
Amount with respect to such Series or Class, (iv) unreimbursed Investor
Charge-Offs with respect to such Series or Class and (v) other amounts
specified in the related Prospectus Supplement. The term "INVESTOR
SERVICING FEE" for any Series of Certificates or Class thereof means the
Servicing Fee allocable to the Investor Interest with respect to such
Series or Class, as specified in the related Prospectus Supplement. The
term "INVESTOR DEFAULT AMOUNT" means, for any Monthly Period and for any
Series or Class thereof, the aggregate amount of the applicable Investor
Percentage of Principal Receivables in Defaulted Accounts. The term
"INVESTOR CHARGE-OFF" means, for any Monthly Period, and for any Series or
Class thereof, the amount by which (a) the related Monthly Interest and
overdue Monthly Interest (together with, if applicable, Additional
Interest), the accrued and unpaid Investor Servicing Fees payable from
collections of Finance Charge Receivables, the Investor Default Amount and
any other required fees exceeds (b) amounts available to pay such amounts
out of collections of Finance Charge Receivables, available Credit
Enhancement amounts, if any, and other sources specified in the related
Prospectus Supplement, if any, but not more than such Investor Default
Amount. See "- -- Application of Collections" and " -- Defaulted
Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs."
SHARED PRINCIPAL COLLECTIONS
If so specified in the related Prospectus Supplement, to the extent
that collections of Principal Receivables and certain other amounts that
are allocated to the Investor Interest of any Series are not needed to make
payments or deposits with respect to such Series, such collections ("SHARED
PRINCIPAL COLLECTIONS") will be applied to cover principal payments due to
or for the benefit of Certificateholders of other Series. If so specified
in the related Prospectus Supplement, the allocation of Shared Principal
Collections may be among Series within a Group. Any such reallocation will
not result in a reduction in the Investor Interest of the Series to which
such collections were initially allocated.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES; INVESTOR CHARGE-OFFS
Unless otherwise specified in the related Prospectus Supplement, for
each Series of Certificates, on the fourth business day preceding each
Transfer Date (the "DETERMINATION DATE"), the Servicer will calculate the
aggregate Investor Default Amount for the preceding Monthly Period, which
will be equal to the aggregate amount of the Investor Percentage of
Principal Receivables in Defaulted Accounts; that is, Accounts which in
such Monthly Period were written off as uncollectible in accordance with
the Servicer's policies and procedures for servicing credit card
receivables comparable to the Receivables. In the case of a Series of
Certificates having more than one Class, the Investor Default Amount will
be allocated among the Classes in the manner described in the related
Prospectus Supplement. If so provided in the related Prospectus Supplement,
an amount equal to the Investor Default Amount for any Monthly Period may
be paid from other amounts, including collections in the Finance Charge
Account or from Credit Enhancement, and applied to pay principal to
Certificateholders or the holder of the Transferor Certificate, as
appropriate. In the case of a Series of Certificates having one or more
Classes of subordinated certificates, the related Prospectus Supplement may
provide that all or a portion of amounts otherwise allocable to such
subordinated certificates may be paid to the Holders of senior certificates
to make up any Investor Default Amount allocable to such Holders of senior
certificates.
With respect to each Series of Certificates, the Investor Interest
with respect to such Series will be reduced by the amount of Investor
Charge-Offs for any Monthly Period. Investor Charge-Offs will be reimbursed
on any Distribution Date to the extent amounts on deposit in the Finance
Charge Account and otherwise available therefor exceed such interest, fees
and any aggregate Investor Default Amount payable on such date. Such
reimbursement of Investor Charge-Offs will result in an increase in the
Investor Interest with respect to such Series. In the case of a Series of
Certificates having more than one Class, the related Prospectus Supplement
will describe the manner and priority of allocating Investor Charge-Offs
and reimbursements thereof among the Investor Interests of the several
Classes.
If the Servicer adjusts the amount of any Principal Receivable
because of transactions occurring in respect of a rebate or refund to a
cardholder, or because such Principal Receivable was created in respect of
merchandise which was refused or returned by a cardholder, then the amount
of the Transferor Interest in the Master Trust will be reduced, on a net
basis, by the amount of the adjustment. In addition, the Transferor
Interest in the Master Trust will be reduced, on a net basis, as a result
of transactions in respect of any Principal Receivable which was discovered
as having been created through a fraudulent or counterfeit charge. In the
event that the exclusion of such Receivables from the calculation of the
Transferor Interest at such time would cause the Transferor Interest to be
less than the Minimum Transferor Interest, the Transferor will be required
to pay an amount equal to such deficiency to the Principal Account.
DEFEASANCE
If so specified in the Prospectus Supplement relating to a Series,
the Transferor may terminate its substantive obligations in respect of such
Series or the Master Trust by depositing with the Master Trust Trustee,
from amounts representing, or acquired with, collections of Receivables,
money or Permitted Investments sufficient to make all remaining scheduled
interest and principal payments on such Series or all outstanding Series of
Certificates of the Master Trust, as the case may be, on the dates
scheduled for such payments and to pay all amounts owing to any Credit
Enhancement Provider with respect to such Series or all outstanding Series,
as the case may be, if such action would not result in a Pay Out Event for
any Series. Prior to its first exercise of its right to substitute money or
Permitted Investments for Receivables, the Transferor will deliver to the
Master Trust Trustee (i) an opinion of counsel to the effect that such
deposit and termination of obligations will not result in the Master Trust
being required to register as an "investment company" within the meaning of
the Investment Company Act of 1940, as amended and (ii) a Tax Opinion.
FINAL PAYMENT OF PRINCIPAL; TERMINATION
With respect to each Series, the Certificates will be subject to
optional repurchase by the Transferor on any Distribution Date after the
total Investor Interest of such Series and the Enhancement Invested Amount,
if any, with respect to such Series, is reduced to an amount less than or
equal to 5% of the initial Investor Interest, if any (or such other amount
specified in the related Prospectus Supplement), if certain conditions set
forth in the Pooling and Servicing Agreement are met. Unless otherwise
specified in the related Prospectus Supplement, the repurchase price will
be equal to the total Investor Interest of such Series (less the amount, if
any, on deposit in any Principal Funding Account with respect to such
Series), plus the Enhancement Invested Amount, if any, with respect to such
Series, plus accrued and unpaid interest on the Certificates and interest
or other amounts payable on the Enhancement Invested Amount or the
Collateral Interest, if any, through the day preceding the Distribution
Date on which the repurchase occurs.
The Certificates of each Series will be retired on the day following
the Distribution Date on which the final payment of principal is scheduled
to be made to the Certificateholders, whether as a result of optional
reassignment to the Transferor or otherwise. Each Prospectus Supplement
will specify the final date on which principal and interest with respect to
the related Series of Certificates will be scheduled to be distributed (the
"SERIES TERMINATION DATE"); provided, however, that the Certificates may be
subject to prior termination as provided above. If the Investor Interest is
greater than zero on the Series Termination Date, the Master Trust Trustee
or Servicer may be required to sell or cause to be sold certain Receivables
in the manner provided in the Pooling and Servicing Agreement and Series
Supplement and to pay the net proceeds of such sale and any collections on
the Receivables, in an amount at least equal to the sum of the Investor
Interest and the Enhancement Invested Amount, if any, with respect to such
Series plus accrued interest due thereon.
Unless the Servicer and the holder of the Transferor Certificate
instruct the Master Trust Trustee otherwise, the Master Trust will
terminate on the earliest of (a) the day after the Distribution Date on
which the aggregate Investor Interest and Enhancement Invested Amount or
Collateral Interest, if any, with respect to each Series outstanding is
zero, (b) August 31, 2016, or (c) if the Receivables are sold, disposed of
or liquidated following the occurrence of an insolvency event, immediately
following such sale, disposition or liquidation (such date, the "TRUST
TERMINATION DATE"). Upon the termination of the Master Trust and the
surrender of the Transferor Certificate, the Master Trust Trustee shall
convey to the holder of the Transferor Certificate all right, title and
interest of the Master Trust in and to the Receivables and other funds of
the Master Trust.
PAY OUT EVENTS
Unless otherwise specified in the related Prospectus Supplement, as
described above, the Revolving Period will continue through the date
specified in the related Prospectus Supplement unless a Pay Out Event
occurs prior to such date. A Pay Out Event occurs with respect to all
Series issued by the Master Trust upon the occurrence of one of the
following events:
(a) certain events of insolvency or receivership relating to the
Transferor;
(b) the Transferor is unable for any reason to transfer Receivables
to the Master Trust in accordance with the provisions of the Pooling and
Servicing Agreement; or
(c) the Master Trust becomes subject to regulation as an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
In addition, a Pay Out Event may occur with respect to any Series
upon the occurrence of any other event specified in the related Prospectus
Supplement. On the date on which a Pay Out Event is deemed to have
occurred, the Rapid Amortization Period will commence. If, because of the
occurrence of a Pay Out Event, the Rapid Amortization Period begins earlier
than the scheduled commencement of an Amortization Period or prior to a
Scheduled Payment Date, Certificateholders will begin receiving
distributions of principal earlier than they otherwise would have, which
may shorten the average life of the Certificates.
In addition to the consequences of a Pay Out Event discussed above,
unless otherwise specified in the related Prospectus Supplement, if
pursuant to certain provisions of federal law, the Transferor voluntarily
enters liquidation or a receiver is appointed for the Transferor, on the
day of such event the Transferor will immediately cease to transfer
Principal Receivables to the Master Trust and promptly give notice to the
Master Trust Trustee of such event. Within 15 days, the Master Trust
Trustee will publish a notice of the liquidation or the appointment stating
that the Master Trust Trustee intends to sell, dispose of, or otherwise
liquidate the Receivables in a commercially reasonable manner. Unless
otherwise instructed within a specified period by Certificateholders
representing undivided interests aggregating more than 50% of the Investor
Interest of each such Series (or if any Series has more than one Class, of
each Class, and any other person specified in the Pooling and Servicing
Agreement or a Series Supplement) issued and outstanding, the Master Trust
Trustee will sell, dispose of, or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds from the sale, disposition or liquidation of the Receivables will
be treated as collections of the Receivables and applied as specified above
in "-- Application of Collections" and in the related Prospectus
Supplement.
If the only Pay Out Event to occur is either the insolvency of the
Transferor or the appointment of a conservator or receiver for the
Transferor, the conservator or receiver may have the power to prevent the
early sale, liquidation or disposition of the Receivables and the
commencement of the Rapid Amortization Period. In addition, a conservator
or receiver may have the power to cause the early sale of the Receivables
and the early retirement of the Certificates. See "Certain Legal Aspects of
the Receivables -- Certain Matters Relating to Receivership."
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, for
each Series of Certificates, the Servicer's compensation for its servicing
activities and reimbursement for its expenses will take the form of the
payment to it of a fee (the "SERVICING Fee") payable at the times and in
the amounts specified in the related Prospectus Supplement. The Investor
Servicing Fee will be funded from collections of Finance Charge Receivables
allocated to the Investor Interest and will be paid each month, or on such
other specified periodic basis, from amounts so allocated and on deposit in
the Finance Charge Account (which, if so specified in the related
Prospectus Supplement, may include all or a portion of the Interchange
arising from the Accounts) or, in certain limited circumstances, from
amounts available from Enhancement and other sources, if any. The remainder
of the servicing fee will be allocable to the Transferor Interest, the
Investor Interests of any other Series issued by the Master Trust and the
interest represented by the Enhancement Invested Amount or the Collateral
Interest, if any, with respect to such Series, as described in the related
Prospectus Supplement. Neither the Master Trust nor the Certificateholders
will have any obligation to pay the portion of the servicing fee allocable
to the Transferor Interest.
The Servicer will pay from its servicing compensation certain
expenses incurred in connection with servicing the Receivables including,
without limitation, payment of the fees and disbursements of the Master
Trust Trustee and independent certified public accountants and other fees
which are not expressly stated in the Pooling and Servicing Agreement to be
payable by the Master Trust or the Certificateholders other than federal,
state and local income and franchise taxes, if any, of the Master Trust.
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The Chase Manhattan Bank ("CMB"), an affiliate of Chase USA,
initially will service the Receivables. In certain limited circumstances,
CMB may resign or be removed, in which event the Master Trust Trustee or a
third party servicer may be appointed as successor servicer (CMB, or any
such successor servicer, is referred to herein as the "Servicer"). CMB is a
wholly-owned subsidiary of the Corporation. The principal executive office
of CMB is located at 270 Park Avenue, New York, New York 10017, telephone
number (212) 270-6000. CMB has delegated some of its servicing duties to
FDR and has delegated substantially all of its other servicing duties to
Chase USA effective as of June 1, 1996. The Servicer will receive the
Servicing Fee as servicing compensation from the Master Trust in respect of
each Series in the amounts and at the times specified in the related
Prospectus Supplement. The Servicing Fee may be payable from Finance Charge
Receivables, Interchange or other amounts as specified in the related
Prospectus Supplement.
With respect to each Series of Certificates, the Servicer may not
resign from its obligations and duties under the Pooling and Servicing
Agreement, except upon determination that performance of its duties is no
longer permissible under applicable law. No such resignation will become
effective until the Master Trust Trustee or a successor to the Servicer has
assumed the Servicer's responsibilities and obligations under the Pooling
and Servicing Agreement. CMB has delegated some of its servicing duties to
FDR and substantially all of its other servicing duties to the Bank;
however, such delegation does not relieve it of its obligation to perform
such duties in accordance with the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will provide that the Servicer
will indemnify the Master Trust and Master Trust Trustee from and against
any reasonable loss, liability, expense, damage or injury suffered or
sustained by reason of any acts or omissions or alleged acts or omissions
of the Servicer with respect to the activities of the Master Trust or the
Master Trust Trustee; provided, however, that the Servicer shall not
indemnify (a) the Master Trust Trustee for liabilities imposed by reason of
fraud, negligence, or willful misconduct by the Master Trust Trustee in the
performance of its duties under the Pooling and Servicing Agreement, (b)
the Master Trust, the Certificateholders or the Certificate Owners for
liabilities arising from actions taken by the Master Trust Trustee at the
request of Certificateholders, (c) the Master Trust, the Certificateholders
or the Certificate Owners for any losses, claims, damages or liabilities
incurred by any of them in their capacities as investors, including without
limitation, losses incurred as a result of defaulted Receivables or
Receivables which are written off as uncollectible or (d) the Master Trust,
the Certificateholders, or the Certificate Owners for any liabilities,
costs or expenses of the Master Trust, the Certificateholders, or the
Certificate Owners arising under any tax law, including without limitation,
any federal, state or local income or franchise tax 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 Master Trust, the Certificateholders or the Certificate Owners in
connection with the Pooling and Serv icing Agreement to any taxing
authority.
In addition, the Pooling and Servicing Agreement will provide that,
subject to certain exceptions, the Transferor will indemnify an injured
party for any losses, claims, damages or liabilities (other than those
incurred by a Certificateholder as an investor in the Certificates or those
which arise from any action of a Certificateholder) arising out of or based
upon the arrangement created by the Pooling and Servicing Agreement as
though the Pooling and Servicing Agreement created a partnership under the
New York Revised Limited Partnership Act in which the Transferor is a
general partner.
The Pooling and Servicing Agreement will provide that neither the
Transferor nor the Servicer nor any of their respective directors,
officers, employees or agents will be under any other liability to the
Master Trust, Master Trust Trustee, Certificateholders, or any other person
for any action taken, or for refraining from taking any action, in good
faith pursuant to the Pooling and Servicing Agreement. Neither the
Transferor, the Servicer, nor any of their respective directors, officers,
employees or agents will be protected against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence of the Transferor, the Servicer or any such person in the
performance of its duties or by reason of reckless disregard of obligations
and duties thereunder. In addition, the Pooling and Servicing Agreement
will provide that the Servicer is not under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its
servicing responsibilities under the Pooling and Servicing Agreement and
which in its opinion may expose it to any expense or liability.
The Pooling and Servicing Agreement will provide that, in addition to
Exchanges, if applicable, the Bank may transfer its interest in all or a
portion of the Transferor Certificate, provided that prior to any such
transfer (a) the Master Trust Trustee receives written notification from
each Rating Agency that such transfer will not result in a lowering of its
then existing rating of the Certificates of each outstanding Series rated
by it and (b) the Master Trust Trustee receives a Tax Opinion.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Transferor or the Servicer may be merged or consolidated or
any person resulting from any merger or consolidation to which the
Transferor or the Servicer is a party, or any person succeeding to the
business of the Transferor or the Servicer, upon execution of a supplement
to the Pooling and Servicing Agreement and delivery of an opinion of
counsel with respect to the compliance of the transaction with the
applicable provisions of the Pooling and Servicing Agreement, will be the
successor to the Transferor or the Servicer, as the case may be, under the
Pooling and Servicing Agreement.
SERVICER DEFAULT
Unless otherwise specified in the related Prospectus Supplement, in
the event of any Servicer Default (as defined below), either the Master
Trust Trustee or Certificateholders representing undivided interests
aggregating more than 50% of the Investor Interests for all Series of
Certificates of the Master Trust, by written notice to the Servicer (and to
the Master Trust Trustee if given by the Certificateholders), may terminate
all of the rights and obligations of the Servicer as servicer under the
Pooling and Servicing Agreement and in and to the Receivables and the
proceeds thereof and the Master Trust Trustee may appoint a new Servicer (a
"SERVICE TRANSFER"). The rights and interest of the Transferor under the
Pooling and Servicing Agreement and in the Transferor Interest will not be
affected by such termination. The Master Trust Trustee shall as promptly as
possible appoint a successor Servicer. If no such Servicer has been
appointed and has accepted such appointment by the time the Servicer ceases
to act as Servicer, all authority, power and obligations of the Servicer
under the Pooling and Servicing Agreement shall pass to and be vested in
the Master Trust Trustee. If the Master Trust Trustee is unable to obtain
any bids from eligible servicers 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 Master Trust
Trustee is legally unable to act as successor Servicer, then the Master
Trust Trustee shall give the Transferor the right of first refusal to
purchase the Receivables on terms equivalent to the best purchase offer as
determined by the Master Trust Trustee.
Unless otherwise specified in the related Prospectus Supplement,
"SERVICER DEFAULT" under the Pooling and Servicing Agreement refers to any
of the following events:
(a) failure by the Servicer to make any payment, transfer or deposit,
or to give instructions to the Master Trust Trustee to make certain
payments, transfers or deposits, on the date the Servicer is required to do
so under the Pooling and Servicing Agreement or any Series Supplement (or
within the applicable grace period, which shall not exceed 10 business
days);
(b) failure on the part of the Servicer duly to observe or perform in
any respect any other covenants or agreements of the Servicer which has a
material adverse effect on the Certificateholders of any Series issued and
outstanding under such Master Trust and which continues unremedied for a
period of 60 days after written notice and continues to have a material
adverse effect on such Certificateholders; or the delegation by the
Servicer of its duties under the Pooling and Servicing Agreement, except as
specifically permitted thereunder;
(c) any representation, warranty or certification made by the
Servicer in the Pooling and Servicing Agreement, or in any certificate
delivered pursuant to the Pooling and Servicing Agreement, proves to have
been incorrect when made which has a material adverse effect on the
Certificateholders of any Series issued and outstanding under such Master
Trust, and which continues to be incorrect in any material respect for a
period of 60 days after written notice and continues to have a material
adverse effect on such Certificateholders;
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership of the Servicer, or
(e) such other event specified in the related Prospectus Supplement.
Unless otherwise stated in the related Prospectus Supplement,
notwithstanding the foregoing, a delay in or failure of performance
referred to in clause (a) above for a period of 10 business days, or
referred to under clause (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 other similar occurrence.
Upon the occurrence of any such event, the Servicer shall not be relieved
from using its best efforts to perform its obligations in a timely manner
in accordance with the terms of the Pooling and Servicing Agreement, and
the Servicer shall provide the Master Trust Trustee, any provider of
Enhancement and/or any issuer of any third-party Credit Enhancement (a
"CREDIT ENHANCEMENT PROVIDER"), the Transferor and the holders of
Certificates of each Series issued and outstanding under the Master Trust
prompt notice of such failure or delay by it, together with a description
of the cause of such failure or delay and its efforts to perform its
obligations.
In the event of a Servicer Default, if a conservator or receiver is
appointed for the Servicer and no Servicer Default other than such
conservatorship or receivership or the insolvency of the Servicer exists,
the conservator or receiver may have the power to prevent either the Master
Trust Trustee or the majority of the Certificateholders from effecting a
Service Transfer.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, for
each Series of Certificates offered hereby, on each Distribution Date, or
as soon thereafter as is practicable, as specified in the related
Prospectus Supplement, the Paying Agent will forward to each
Certificateholder of record a statement prepared by the Servicer setting
forth, among other things: (a) the total amount distributed, (b) the amount
of distribution on such Distribution Date allocable to principal on the
Certificates, (c) the amount of such distribution allocable to interest on
the Certificates, (d) the amount of collections of Principal Receivables
processed during the preceding month or months since the last Distribution
Date and allocated in respect of the Certificates, (e) the aggregate amount
of Principal Receivables, the Investor Interest and the Investor Interest
as a percentage of the aggregate amount of the Principal Receivables in the
Master Trust as of the end of the last day of the preceding Monthly Period
or Periods since the last Distribution Date, (f) the aggregate outstanding
balance of Accounts which are at least a specified number of days
delinquent by class of delinquency as of the end of the last day of the
preceding Monthly Period or Periods since the last Distribution Date, (g)
the aggregate Investor Default Amount for the preceding Monthly Period or
Periods since the last Distribution Date, (h) the amount of Investor
Charge-Offs for the preceding Monthly Period or Periods since the last
Distribution Date and the amount of reimbursements of previous Investor
Charge-Offs for the preceding Monthly Period or Periods since the last
Distribution Date, (i) the amount of the Investor Servicing Fee for the
preceding Monthly Period or Periods since the last Distribution Date, (j)
the amount available under any Enhancement and Credit Enhancement, if any,
as of the close of business on such Distribution Date, (k) the "pool
factor" as of the end of the related Record Date (consisting of a
seven-digit decimal expressing the ratio of the Investor Interest to the
initial Investor Interest), (l) the aggregate amount of collections on
Finance Charge Receivables and annual membership fees processed during the
preceding Monthly Period or Periods since the last Distribution Date, (m)
the Portfolio Yield (as such term is defined in the related Prospectus
Supplement and relating to such Series) for the preceding Monthly Period or
Periods since the last Distribution Date and (n) certain information
relating to the floating or variable Certificate Rates, if applicable, for
the Monthly Period or Periods ending on such Distribution Date. In the case
of a Series of Certificates having more than one Class, the statements
forwarded to Certificateholders will provide information as to each Class
of Certificates, as appropriate.
On or before January 31 of each calendar year or such other date as
specified in the related Prospectus Supplement, the Paying Agent will
furnish to each person who at any time during the preceding calendar year
was a Certificateholder of record, a statement prepared by the Servicer
containing the information required to be contained in the regular monthly
report to Certificateholders, as set forth in clauses (a), (b) and (c)
above aggregated for such calendar year or the applicable portion thereof
during which such person was a Certificateholder, together with such other
customary information (consistent with the treatment of the Certificates as
debt) as the Master Trust Trustee or the Servicer deems necessary or
desirable to enable the Certificateholders to prepare their United States
tax returns.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, the
Pooling and Servicing Agreement will provide that on or before March 31 of
each calendar year, or such other date as specified in the related
Prospectus Supplement, the Servicer will cause a firm of independent
certified public accountants to furnish (i) a report to the effect that
such accounting firm has examined management's assertion that, as of the
date of such report, the system of internal control over servicing of
securitized credit card receivables met the criteria for effective internal
control described in the report entitled "Internal Control-Integrated
Framework" issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") and that in their opinion, management's
assertion is fairly stated, in all material respects and (ii) a report,
prepared using generally accepted attestation standards to the effect that
such accountants have compared the amounts set forth in at least two of the
monthly certificates forwarded by the Servicer during the period covered by
such report (which shall be the twelve-month period ending on December 31
of the preceding calendar year) with the Servicer's computer reports which
were the source of such amounts and found them to be in agreement or shall
disclose any exceptions noted and that such firm has recalculated the
mathematical accuracy of amounts derived in the monthly certificates.
The Pooling and Servicing Agreement will provide for delivery to the
Master Trust Trustee on or before August 31 of each calendar year, or such
other date as specified in the related Prospectus Supplement, of an annual
statement signed by an officer of the Servicer to the effect that the
Servicer has fully performed its obligations under the Pooling and
Servicing Agreement throughout the preceding year, or, if there has been a
default in the performance of any such obligation, specifying the nature
and status of the default.
AMENDMENTS
Unless otherwise specified in the related Prospectus Supplement, the
Pooling and Servicing Agreement and any Series Supplement may be amended by
the Transferor, the Servicer and the Master Trust Trustee, without the
consent of Securityholders of any Series then outstanding, to cure any
ambiguity, to revise certain exhibits and schedules, to correct or
supplement any provision therein which may be inconsistent with any other
provision therein, or to add any other provisions with respect to matters
or questions arising thereunder which are not inconsistent with the
provisions of the Pooling and Servicing Agreement or Series Supplement. No
such amendment, however, may adversely affect in any material respect the
interests of the Securityholders of any Series then outstanding.
The Pooling and Servicing Agreement and any related Series Supplement
may be amended by the Transferor, the Servicer and the Master Trust Trustee
without the consent of any of the Certificateholders of any Series then
outstanding for the purpose of adding, changing or eliminating any
provision thereof or any right of the holders of Certificates thereunder,
provided that (i) the Servicer shall have furnished the Master Trust
Trustee with an officer's certificate to the effect that the amendment will
not materially and adversely affect the interests of any
Certificateholders, (ii) such amendment will not cause the Master Trust to
be characterized as a corporation for federal income tax purposes or
otherwise have a material adverse effect on the federal income taxation of
any Series and (iii) the Servicer shall have given each Rating Agency ten
business days' prior written notice of such amendment and shall have
received written confirmation from each Rating Agency that the rating of
the Certificates of any Series will not be reduced or withdrawn as a result
of such amendment. No such amendment, however, may effect any of the
amendments that require unanimous Certificateholder consent as set forth in
the next paragraph, or (i) reduce in any manner the amount of, or delay the
timing of, distributions which are required to be made on Certificates of
any Series, (ii) change the definition of or the manner of calculating the
interest of any Certificateholder of any Series, (iii) alter the
requirements for changing the percentage by which the Minimum Transferor
Interest for Certificates of any Series is determined, (iv) change the
manner in which the Transferor Interest of any Series is determined or (v)
reduce the percentage required in the following paragraphs to consent to
such amendment.
The Pooling and Servicing Agreement may also be amended by the
Transferor, the Servicer and the Master Trust Trustee with the consent of
the holders of the Certificates evidencing undivided interests aggregating
more than 50% of the Investor Interest of each Series adversely affected
for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of the Pooling and Servicing Agreement or
of modifying in any manner the rights of holders of Certificates. No such
amendment, however, may (a) reduce in any manner the amount of, or delay
the timing of, distributions required to be made on any Certificate of such
Series without the consent of all the related Certificateholders, (b)
change the definition of or the manner of calculating the Investor
Interest, the Investor Percentage or the Investor Default Amount of such
Series without the consent of each holder of Certificates adversely
affected thereby or (c) reduce the aforesaid percentage of undivided
interests the holders of which are required to consent to any such
amendment, without the consent of each holder of Certificates and Series
Certificates of all Series affected thereby.
LIST OF CERTIFICATEHOLDERS
With respect to each Series of Certificates, upon written request of
Certificateholders of record representing undivided interests in the Master
Trust aggregating not less than 10% (or such other percentage specified in
the related Prospectus Supplement) of the Investor Interest, the Master
Trust Trustee after having been adequately indemnified by such
Certificateholder for its costs and expenses, and having given the Servicer
notice that such request has been made, will afford such Certificateholders
access during business hours to the current list of Certificateholders of
the Master Trust for purposes of communicating with other
Certificateholders with respect to their rights under the Pooling and
Servicing Agreement. See "-- Book-Entry Registration" and "-- Definitive
Securities" above.
THE MASTER TRUST TRUSTEES
The Prospectus Supplement for each Series will specify the Master
Trust Trustee under the Pooling and Servicing Agreement. The Transferor,
the Servicer and their respective affiliates may from time to time enter
into normal banking and trustee relationships with the Master Trust Trustee
and its affiliates. The Master Trust Trustee, the Transferor, the Servicer
and any of their respective affiliates may hold Certificates in their own
names. In addition, for purposes of meeting the legal requirements of
certain local jurisdictions, the Master Trust Trustee shall have the power
to appoint a co-trustee or separate trustees of all or any part of the
Master Trust. In the event of such appointment, all rights, powers, duties
and obligations conferred or imposed upon the Master Trust Trustee by the
Pooling and Servicing Agreement shall be conferred or imposed upon the
Master Trust Trustee and such separate trustee or co-trustee jointly, or,
in any jurisdiction in which the Master Trust Trustee shall be incompetent
or unqualified to perform certain acts, singly upon such separate trustee
or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Master Trust Trustee.
The Master Trust Trustee may resign at any time, in which event the
Transferor will be obligated to appoint successor trustees. The Transferor
may also remove the Master Trust Trustee if the Master Trust Trustee ceases
to be eligible to continue as such under the Pooling and Servicing
Agreement or if the Master Trust Trustee becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor
Master Trust Trustee. Any resignation or removal of the Master Trust
Trustee and appointment of a successor Master Trust Trustee does not become
effective until acceptance of the appointment by the successor Master Trust
Trustee.
DESCRIPTION OF THE NOTES
The following is a summary of the provisions common to each Series of
Notes. This summary is qualified in its entirety by reference to the
provisions of the related Note Documents.
GENERAL
The Notes will be issued by an Owner Trust pursuant to the terms of
an Indenture. Pursuant to the Indenture, the Owner Trust will pledge
certain collateral to the Indenture Trustee to secure the payment of the
Notes. The collateral for each Series of Notes will include a Series
Certificate issued by a Master Trust. For a summary of the provisions
common to each Series Certificate, see "Description of the Certificates."
Each Owner Trust will issue one or more Classes of Notes which may have
different maturity dates, interest rates, priorities of payments and debt
ratings.
For each Owner Trust, the Transferor will own the residual interest.
Amounts paid to the Owner Trust as holder of a Series Certificate that are
not payable in respect of the Notes issued by such Owner Trust will be
distributed to the Transferor.
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Note Rate and amount of or method of determining payments of principal and
interest on each Class of Notes of a given Series will be described in the
related Prospectus Supplement. The right of holders of any Class of Notes
to receive payments of principal and/or interest may be senior or
subordinate to the rights of holders of any other Class or Classes of Notes
of such Series, as described in the related Prospectus Supplement. Payments
of interest on the Notes of such Series may be made prior to payments of
principal thereon. The dates for payments of interest and principal on the
Notes of such Series may be different from the Distribution Dates for the
Series Certificates of such Series. One or more Classes of Notes of a
Series may be redeemable in whole or in part under the circumstances
specified in the related Prospectus Supplement, including on the scheduled
final payment date or as a result of the Transferor exercising its option
under the Pooling and Servicing Agreement for the Master Trust to purchase
the related Series Certificates issued by the Master Trust. See
"Description of the Certificates -- Final Payment of Principal;
Termination."
To the extent specified in any Prospectus Supplement, one or more
Classes of Notes of a given Series may have fixed principal payment
schedules. Noteholders of such Notes would be entitled to receive as
payments of principal on any given Distribution Date the applicable amounts
set forth on such schedule with respect to such Notes, in the manner and to
the extent set forth in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, payments to
holders of the Notes (the "NOTEHOLDERS") of a Class or all Classes within a
Series in respect of interest will have the same priority. Under certain
circumstances, the amount available for such payments could be less than
the amount of interest payable on the Notes on any of the dates specified
for payments in the related Prospectus Supplement, in which case each Class
of Noteholders will receive its ratable share (based upon the aggregate
amount of interest due to such Class of Noteholders) of the aggregate
amount available to be distributed in respect of interest on the Notes of
such Series.
In the case of a Series of Notes which includes two or more Classes
of Notes, the sequential order and priority of payment in respect of
principal and interest, and any schedule or formula or other provisions
applicable to the determination thereof, of each such Class will be set
forth in the related Prospectus Supplement. Payments in respect of
principal and interest, and any schedule or formula or other provisions
applicable to the determination thereof, of each such Class will be set
forth in the related Prospectus Supplement. Payments in respect of
principal and interest of any Class of Notes will be made on a pro rata
basis among all the Noteholders of such Class.
THE INDENTURES
With respect to each Owner Trust, one or more Classes of Notes of the
related Series will be issued pursuant to the terms of an Indenture, a form
of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
Events of Default: Rights Upon Event of Default. With respect to the
Notes of a given Series, unless otherwise specified in the related
Prospectus Supplement, "EVENTS OF DEFAULT" under the related Indenture will
consist of (a) failure by the Owner Trust to pay interest or principal on
their respective payments dates, (b) the Owner Trust becomes an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, and (c) the occurrence of certain events of bankruptcy with
respect to the Owner Trust.
If an Event of Default should occur and be continuing with respect to
the Notes of any Series, unless otherwise specified in the related
Prospectus Supplement, the related Indenture Trustee or holders of a
majority in principal amount of such Notes then outstanding may declare the
principal of such Notes to be immediately due and payable. Unless otherwise
specified in the related Prospectus Supplement, such declaration may, under
certain circumstances, be rescinded by the holders of a majority in
principal amount of such Notes then outstanding.
If the Notes of any Series are declared to be due and payable
following an Event of Default with respect thereto, the related Indenture
Trustee may institute proceedings to collect amounts due or foreclose on
the related Owner Trust estate, exercise remedies as a secured party, sell
the related Owner Trust estate or elect to have the related Owner Trust
maintain possession of such Owner Trust estate and continue to apply
collections on such Owner Trust estate as if there had been no declaration
of acceleration. Unless otherwise specified in the related Prospectus
Supplement, however, the related Indenture Trustee is prohibited from
selling the related Owner Trust estate following an Event of Default,
unless (i) the holders of all such outstanding Notes consent to such sale,
(ii) the proceeds of such sale are sufficient to pay in full the principal
and the accrued interest on such outstanding Notes at the date of such
sale, or (iii) there has been an Event of Default arising from a failure to
make a required payment of principal or interest on any such Notes, and
such Indenture Trustee determines that the proceeds of the Owner Trust
estate would not be sufficient on an ongoing basis to make all payments on
such Notes as such payments would have become due if such obligations had
not been declared due and payable, and such Indenture Trustee obtains the
consent of the holders of sixty-six and two-thirds percent of the aggregate
outstanding principal amount of such Notes.
If an Event of Default occurs and is continuing with respect to a
Series of Notes, the related Indenture Trustee will be under no obligation
to exercise any of the rights or powers under the related Indenture at the
request or direction of any of the holders of such Notes, if such Indenture
Trustee reasonably believes it will not be adequately indemnified against
the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to the provisions for indemnification
and certain limitations contained in the related Indenture, the holders of
a majority in principal amount of the outstanding Notes of a given Series
will have the right to direct the time, method and place of conducting any
proceeding or any remedy available to the related Indenture Trustee, and
the holders of a majority in principal amount of such Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in
respect of a covenant or provision of such Indenture that cannot be
modified without the waiver or consent of all the holders of such
outstanding Notes.
If the Indenture Trustee seeks to foreclose on the Owner Trust estate
and liquidate the Series Certificate, the ability to liquidate the Series
Certificate in foreclosure is subject to certain restrictions on
transferability applicable to the Series Certificate set forth in the
applicable Series Supplement. Such restrictions include: (a) a requirement
that no more than ninety-nine persons hold interests in the Master Trust
(including the Series Certificate) with respect to which an opinion has not
been rendered for federal income tax purposes that such interests would be
treated as debt and (b) limitations on the nature of the potential
purchasers of the Series Certificate (for example, (i) any foreign
purchaser must certify that its ownership of the Series Certificate is
effectively connected with a trade or business within the United States,
(ii) any potential purchaser that is a partnership, Subchapter S
corporation or grantor trust for federal income tax purposes shall be
required to represent that its interest in the Series Certificate
represents less than a specified percentage of its assets and (iii) a
potential purchaser shall not be an employee benefit plan, a Plan or any
entity whose underlying assets include "plan assets"). In addition, any
transfer of the Series Certificate in foreclosure will be subject to the
requirement that each purchaser of an interest in the Series Certificate
deliver to the Master Trust Trustee and the Transferor an investment letter
relating to compliance with applicable securities laws and other
restrictions as set forth in the applicable Series Supplement. Pursuant to
the terms of the Series Supplement, the Transferor and the Servicer will
agree to facilitate the transfer of the Series Certificate consistent with
the requirements for transfer of the Series Certificate in the event of a
foreclosure.
Unless and to the extent the related Prospectus Supplement specifies
other circumstances in which a holder of a Note of a Series will have the
right to institute the proceedings described below, no holder of such a
Note will have the right to institute any proceeding with respect to the
related Indenture unless (i) such holder has previously given written
notice to the related Indenture Trustee of a continuing Event of Default,
(ii) the holders of not less than 25% in principal amount of the
outstanding Notes of such Series have made written request to such
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee, (iii) such holder or holders have offered such Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request, (iv) such
Indenture Trustee has for 60 days after receipt of such notice, request and
offer of indemnity failed to institute such proceeding, and (v) no
direction inconsistent with such written request has been given to such
Indenture Trustee during such 60-day period by the holders of a majority
in principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the related Owner Trust or Master Trust any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.
With respect to any Owner Trust, neither the related Indenture
Trustee nor the related Owner Trustee in its individual capacity, nor any
holder of a certificate representing an ownership interest in such Owner
Trust or any of their respective owners, beneficiaries, agents, officers,
directors, employees, affiliates, successors or assigns will, in the
absence of an express agreement to the contrary, be personally liable for
the payment of the principal of or interest on the related Notes or for the
agreements of such Owner Trust contained in the related Indenture.
Modification of Indenture. With respect to each Owner Trust that has
issued Notes pursuant to an Indenture, such Owner Trust and the related
Indenture Trustee may, with the consent of the holders of a majority of the
outstanding Notes of the related Series, execute a supplemental indenture
to add provisions to, change in any manner or eliminate any provisions of,
the related Indenture, or modify (except as provided below) in any manner
the rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a Series of Notes, without the consent of the holder of each
such outstanding Note affected thereby, no supplemental indenture will: (i)
change the date of payment of any installment of principal of or interest
on any such Note or reduce the principal amount thereof, the Note Rate
specified thereon or the redemption price with respect thereto or change
any place of payment where, or the coin or currency in which, any such Note
or any interest thereon is payable; (ii) impair the right to institute suit
for the enforcement of certain provisions of the related Indenture
regarding payment; (iii) reduce the percentage of the aggregate amount of
the outstanding Notes of such Series, the consent of the holders of which
is required (a) for any such supplemental indenture or (b) for any waiver
of compliance with certain provisions of the related Indenture or of
certain defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the Master Trust, any other obligor
on such Notes, the Transferor or an affiliate of any of them; (v) reduce
the percentage of the aggregate outstanding amount of such Notes required
to direct the related Indenture Trustee to sell or liquidate the Owner
Trust estate, the consent of the holders of which is required if the
proceeds of such sale or liquidation would be insufficient to pay the
principal amount and accrued but unpaid interest on the outstanding Notes
of such Series; (vi) decrease the percentage of the aggregate principal
amount of such Notes required to amend the sections of the related
Indenture that specify the applicable percentage of aggregate principal
amount of the Notes of such Series necessary to amend such Indenture or
certain other related agreements; (vii) modify any provisions of the
Indenture in such a manner as to affect the calculation of the amount of
any payment of interest or principal due on any Note on any date on which
payment on the Notes issued by the Owner Trust is made (each a "PAYMENT
DATE") (including the calculation of any of the individual components of
such calculation); or (viii) permit the creation of any lien ranking prior
to or on a parity with the lien of the related Indenture with respect to
any of the collateral for such Notes or, except as otherwise permitted or
contemplated in such Indenture, terminate the lien of such Indenture on any
such collateral or deprive the holder of any such Note of the security
afforded by the lien of such Indenture.
Unless otherwise provided in the related Prospectus Supplement, the
related Indenture Trustee may also enter into supplemental indentures,
without obtaining the consent of the Noteholders of the related Series, for
the purpose of, among other things, adding any provisions to or changing in
any manner or eliminating any of the provisions of the related Indenture or
of modifying in any manner the rights of such Noteholders; provided that
(a) such action will not materially and adversely affect the interest of
any such Noteholder, and (b) each Rating Agency will provide confirmation
that such change will not result in such Rating Agency's reducing or
withdrawing its rating on any then outstanding Notes rated by it
CERTAIN COVENANTS
Each Indenture will provide that the related Owner Trust may not
consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the
laws of the United States, any state or the District of Columbia, (ii) such
entity expressly assumes such Owner Trust's obligation to make due and
punctual payments of principal and interest on the Notes of the related
series and the performance or observance of every agreement and covenant of
such Owner Trust under the Indenture, (iii) such entity is not an
"investment company" as defined in the Investment Company Act of 1940, as
amended, (iv) no Event of Default with respect to such Series shall have
occurred and be continuing immediately after such merger or consolidation,
(v) such Owner Trust has been advised that the rating of the Notes of such
Series, if any, then in effect would not be downgraded or withdrawn by the
related Rating Agencies as a result of such merger or consolidation, (vi)
such action as was necessary to maintain the lien and security interest
created by such Indenture shall have been taken, and (vii) such Owner Trust
has received an opinion of counsel to the effect that such consolidation or
merger would have no material adverse tax consequence to such Owner Trustor
to any related Noteholder.
Each Owner Trust will not, among other things, (i) except as
expressly permitted by the related Indenture, Deposit and Administration
Agreements or certain related documents with respect to such Owner Trust
(collectively, the "RELATED DOCUMENTS"), sell, transfer, exchange or
otherwise dispose of any of the properties or assets of such Owner Trust,
(ii) claim any credit on or make any deduction from the principal or
interest payable in respect of the Notes of the related Series (other than
amounts withheld under the Code or applicable state law) or assert any
claim against any present or former holder of such Notes because of the
payment of taxes levied or assessed upon such Owner Trust, (iii) permit the
validity or effectiveness of the related Indenture to be impaired or permit
any person to be released from any covenants or obligations with respect to
such Notes under such Indenture except as may be expressly permitted
thereby, (iv) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise
arise upon or burden the assets of such Owner Trust or any party thereof,
or any interest therein or the proceeds thereof, or (v) permit any lien of
such Indenture not to constitute a valid first priority security interest
in such Owner Trust.
No Owner Trust may engage in any activity other than as specified in
this Prospectus and in the related Prospectus Supplement. No Owner Trust
will incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related Notes and the related Indenture, or
otherwise in accordance with the Related Documents.
Annual Compliance Statement. Each Owner Trust will be required to
file annually with the related Indenture Trustee a written statement as to
the fulfillment of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each
Owner Trust will be required to mail each year to all related Noteholders a
brief report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it
under the related Indenture, the amount, interest rate and maturity date of
certain indebtedness owing by such Owner Trust to the related Indenture
Trustee in its individual capacity, the property and funds physically held
by such Indenture Trustee as such and any action taken by it that
materially affects the related Notes and that has not been previously
reported.
List of Noteholders. Upon the issuance of Definitive Notes, three or
more holders of the Notes (each of whom has owned a Note for at least six
months) may, by written request to the Indenture Trustee pursuant to the
terms of the Indenture, obtain access to the list of all Noteholders
maintained by the Indenture Trustee for the purpose of communicating with
other Noteholders with respect to their rights under the Indenture or the
Notes. The Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of such Noteholders if it agrees to mail the
desired communication or proxy, on behalf and at the expense of the
requesting Noteholders, to all Noteholders of record.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the related Notes upon the delivery to the
related Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a Series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any Series may
resign at any time, in which event the Administrator of the related Owner
Trust will be obligated to appoint a successor indenture trustee for such
Series. The Administrator of the related Owner Trust may also remove any
such Indenture Trustee if such Indenture Trustee ceases to be eligible to
continue as such under the related Indenture or if such Indenture Trustee
becomes insolvent. In such circumstances, the Administrator of the related
Owner Trust will be obligated to appoint a successor Indenture Trustee for
the related Series of Notes. If an Event of Default occurs under an
Indenture and the related Prospectus Supplement provides that a given class
of Notes of the related Series is subordinated to one or more other Classes
of Notes of such Series, pursuant to the Trust Indenture Act of 1939, as
amended, the related Indenture Trustee may be deemed to have a conflict of
interest and be required to resign as Indenture Trustee for one or more of
such Classes of Notes. In any such case, the related Indenture will provide
for a successor Indenture Trustee to be appointed for one or more of such
classes of Notes and may provide for rights of senior Noteholders to
consent to or direct actions by the related Indenture Trustee which are
different from those of subordinated Noteholders. Any resignation or
removal of the Indenture Trustee and appointment of a successor Indenture
Trustee for any series of Notes will not become effective until acceptance
of the appointment by the successor Indenture Trustee for such series.
TRANSFER AND ASSIGNMENT OF THE SERIES CERTIFICATE
On the Closing Date for any Series of Notes, the Transferor will
deposit in the Owner Trust, without recourse, all of its right, title and
interest in and to a Series Certificate pursuant to a Deposit and
Administration Agreement. The Owner Trustee, on behalf of the Owner Trust,
will, concurrently with such deposit on such Closing Date, execute, and the
Indenture Trustee will authenticate and deliver, the Notes.
REPORTS TO NOTEHOLDERS
With respect to each Owner Trust, on or prior to each Transfer Date,
the Administrator will provide to the Indenture Trustee for the Indenture
Trustee to forward to each Noteholder of record of the related Series, and
to the Owner Trustee, a statement setting forth (to the extent applicable)
the following information as to the Notes with respect to the related
Payment Date or the period since the previous Payment Date, as applicable:
(i) the amount of the distribution allocable to principal of the
Notes;
(ii) the amount of the distribution allocable to interest on or with
respect to the
Notes;
(iii) the aggregate outstanding principal balance of the Notes after
giving effect to all payments reported under clause (i) above on such
date; and
(iv) the amount on deposit in a Note Reserve Account, if any, on such
Payment Date, after giving effect to all transfers and withdrawals
therefrom and all transfers and deposits thereto on such Payment
Date, and the amount required to be on deposit in the Note Reserve
Account on such date.
Each amount set forth pursuant to clauses (i) and (ii) above will be
expressed as a dollar amount per $1,000 of the initial principal balance of
the Notes.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Indenture, the
Indenture Trustee will mail to each person who at any time during such
calendar year has been a Noteholder and received any payment on the Notes,
a statement containing certain information for the purposes of such
Noteholder's preparation of federal income tax returns. See "Tax Matters."
CERTAIN MATTERS REGARDING THE ADMINISTRATOR
The Bank, in its capacity as administrator (the "ADMINISTRATOR")
under the Deposit and Administration Agreement, will agree, to the extent
provided in the Deposit and Administration Agreement, to provide the
notices and to perform on behalf of the Owner Trust certain other
administrative obligations required by the Indenture.
AMENDMENT
With respect to each Series, each of the Deposit and Administration
Agreement and the Trust Agreement (together, the "TRANSACTION AGREEMENTS")
may be amended by the parties thereto with the written consent of the
Indenture Trustee, but without the consent of the related Noteholders, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of any such Transaction Agreement or of
modifying in any manner the rights of such Noteholders; provided, however,
that such amendment will not, (i) as evidenced by an officer's certificate
from the Transferor addressed and delivered to the Indenture Trustee and
the Owner Trustee, materially and adversely affect the interest of any
Noteholder and (ii) as evidenced by an opinion of counsel, cause the Owner
Trust to be classified as an association (or a publicly traded partnership)
taxable as a corporation for federal income tax purposes. In addition, each
of the Transaction Agreements may be amended by the parties thereto with
the written consent of the Indenture Trustee, and with the consent of the
holders of Notes evidencing at least a majority of the then outstanding
principal amount of the Notes for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of such
Transaction Agreements or of modifying in any manner the rights of
Noteholders; provided, however, that such action will not, as evidenced by
an opinion of counsel, cause the Owner Trust to be classified as an
association (or a publicly traded partnership) taxable as a corporation for
federal income tax purposes; provided, further, that without the consent of
the holders of all of the Notes then outstanding, no such amendment shall
(i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments in respect of the Series Certificate
or payments that are required to be made for the benefit of the Noteholders
or (ii) reduce the aforesaid percentage of the Notes, the holders of which
are required to consent to any such amendment.
TERMINATION
With respect to each Series of Notes, the obligations of the
Administrator, the Transferor, the Owner Trustee and the Indenture Trustee
pursuant to the Note Documents will terminate upon the earlier of (i) the
payment to Noteholders of the Note principal balance and all amounts
required to be paid to them pursuant to the Transaction Agreements and (ii)
the Note Maturity Date (as defined in the Prospectus Supplement).
CREDIT ENHANCEMENT
GENERAL
For any Series offered hereby, "CREDIT ENHANCEMENT" may be provided
with respect to one or more Classes thereof. Credit Enhancement may be in
the form of the subordination of one or more Classes of the Certificates or
the Notes of such Series, a letter of credit, the establishment of a cash
collateral guaranty or account, a collateral interest, a surety bond, an
insurance policy, a spread account, a reserve account, the use of cross
support features or another method of Credit Enhancement described in the
related Prospectus Supplement, or any combination of the foregoing. If so
specified in the related Prospectus Supplement, any form of Credit
Enhancement may be structured so as to be drawn upon by more than one Class
to the extent described therein.
The type, characteristics and amount of the Credit Enhancement for
any Series or Class will be determined based on several factors, including
the characteristics of the Receivables and Accounts included in the Trust
Portfolio as of the Closing Date with respect to such Series and the
desired rating for each Class, and will be established on the basis of
requirements of each Rating Agency rating the Certificates or the Notes of
such Series or Class.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Credit Enhancement will not provide protection against all
risks of loss and will not guarantee repayment of the entire principal
balance of the Certificates or the Notes
and interest thereon.
If losses occur which exceed the amount covered by the Credit Enhancement
or which are not covered by the Credit Enhancement, Certificateholders and
Noteholders, as applicable, will bear their allocable share of
deficiencies.
If Credit Enhancement is provided with respect to a Series, the
related Prospectus Supplement will include a description of (a) the amount
payable under such Credit Enhancement, (b) any conditions to payment
thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Credit Enhancement may be reduced
and under which such Credit Enhancement may be terminated or replaced and
(d) any material provision of any agreement relating to such Credit
Enhancement. Additionally, the related Prospectus Supplement may set forth
information with respect to any Credit Enhancement Provider, including (i)
a brief description of its principal business activities, (ii) its
principal place of business, place of incorporation and the jurisdiction
under which it is chartered or licensed to do business, (iii) if
applicable, the identity of regulatory agencies which exercise primary
jurisdiction over the conduct of its business and (iv) its total assets,
and its stockholders' or policy holders' surplus, if applicable, and other
appropriate financial information as of the date specified in the
Prospectus Supplement. If so specified in the related Prospectus
Supplement, Credit Enhancement with respect to a Series may be available to
pay principal of the Certificates of such Series following the occurrence
of certain Pay Out Events with respect to such Series. In such event, the
Credit Enhancement Provider may have an interest in certain cash flows in
respect of the Receivables to the extent described in such Prospectus
Supplement (the "ENHANCEMENT INVESTED AMOUNT").
SUBORDINATION
If so specified in the related Prospectus Supplement, one or more
Classes of Securities of any Series will be subordinated as described in
the related Prospectus Supplement to the extent necessary to fund payments
with respect to the Senior Securities. The rights of the holders of any
such Subordinated Securities to receive distributions of principal and/or
interest on any Distribution Date for such Series will be subordinated in
right and priority to the rights of the holders of Senior Securities, but
only to the extent set forth in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, subordination may apply
only in the event of certain types of losses not covered by another Credit
Enhancement. The related Prospectus Supplement will also set forth
information concerning the amount of subordination of a Class or Classes of
Subordinated Securities in a Series, the circumstances in which such
subordination will be applicable, the manner, if any, in which the amount
of subordination will be applicable, the manner, if any, in which the
amount of subordination will decrease over time, and the conditions under
which amounts available from payments that would otherwise be made to
Holders of such Subordinated Securities will be distributed to Holders of
Senior Securities. If collections of Receivables otherwise distributable to
Holders of a subordinated Class of a Series will be used as support for a
Class of another Series, the related Prospectus Supplement will specify the
manner and conditions for applying such a cross-support feature.
LETTER OF CREDIT
If so specified in the related Prospectus Supplement, support for a
Series or one or more Classes thereof will be provided by one or more
letters of credit. A letter of credit may provide limited protection
against certain losses in addition to or in lieu of other Credit
Enhancement. The issuer of the letter of credit (the "L/C BANK") will be
obligated to honor demands with respect to such letter of credit, to the
extent of the amount available thereunder, to provide funds under the
circumstances and subject to such conditions as are specified in the
related Prospectus Supplement.
CASH COLLATERAL GUARANTY OR ACCOUNT
If so specified in the related Prospectus Supplement, support for a
Series or one or more Classes thereof will be provided by a guaranty (the
"CASH COLLATERAL Guaranty") secured by the deposit of cash or certain
permitted investments in an account (the "CASH COLLATERAL ACCOUNT")
reserved for the beneficiaries of the Cash Collateral Guaranty or by a Cash
Collateral Account alone. The amount available pursuant to the Cash
Collateral Guaranty or the Cash Collateral Account will be the lesser of
amounts on deposit in the Cash Collateral Account and an amount specified
in the related Prospectus Supplement. The related Prospectus Supplement
will set forth the circumstances under which payments are made to
beneficiaries of the Cash Collateral Guaranty from the Cash Collateral
Account or from the Cash Collateral Account directly.
COLLATERAL INTEREST
If so specified in the related Prospectus Supplement, support for a
Series of Certificates or one or more Classes thereof will be provided
initially by an undivided interest in the Master Trust (the "COLLATERAL
INTEREST") in an amount initially equal to a percentage of the Certificates
of such Series as specified in the Prospectus Supplement. Such Series may
also have the benefit of a Cash Collateral Guaranty or Cash Collateral
Account with an initial amount on deposit therein, if any, as specified in
the related Prospectus Supplement which will be increased (i) to the extent
the Transferor elects, subject to certain conditions specified in such
Prospectus Supplement, to apply collections of Principal Receivables
allocable to the Collateral Interest to decrease the Collateral Interest,
(ii) to the extent collections of Principal Receivables allocable to the
Collateral Interest are required to be deposited into the Cash Collateral
Account as specified in such Prospectus Supplement and (iii) to the extent
excess collections of Finance Charge Receivables are required to be
deposited into the Cash Collateral Account as specified in such Prospectus
Supplement. The total amount of the Credit Enhancement available pursuant
to the Collateral Interest and, if applicable, the Cash Collateral Guaranty
or Cash Collateral Account will be the lesser of the sum of the Collateral
Interest and the amount on deposit in the Cash Collateral Account and an
amount specified in such Prospectus Supplement. The related Prospectus
Supplement will set forth the circumstances under which payments which
otherwise would be made to holders of the Collateral Interest will be
distributed to holders of Certificates and, if applicable, the
circumstances under which payment will be made under the Cash Collateral
Guaranty or under the Cash Collateral Account.
SURETY BOND OR INSURANCE POLICY
If so specified in the related Prospectus Supplement, insurance with
respect to a Series of Securities or one or more Classes thereof will be
provided by one or more insurance companies. Such insurance will guarantee,
with respect to one or more Classes of the related Series, distributions of
interest or principal in the manner and amount specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond
will be purchased for the benefit of the holders of any Series or Class of
such Series to assure distributions of interest or principal with respect
to such Series or Class of Securities in the manner and amount specified in
the related Prospectus Supplement.
SPREAD ACCOUNT
If so specified in the related Prospectus Supplement, support for a
Series of Certificates or one or more Classes thereof will be provided by
the periodic deposit of certain available excess cash flow from the Master
Trust assets into an account (the "SPREAD ACCOUNT") intended to assist with
subsequent distribution of interest and principal on the Certificates of
such Class or Series in the manner specified in the related Prospectus
Supplement.
RESERVE ACCOUNT
If so specified in the related Prospectus Supplement, support for a
Series of Securities or one or more Classes thereof will be provided by the
establishment of a reserve account (the "RESERVE ACCOUNT"). The Reserve
Account may be funded, to the extent provided in the related Prospectus
Supplement, by an initial cash deposit, the retention of certain excess
cash, certain periodic distributions of principal or interest or both
otherwise payable to one or more Classes of Securities, including the
Subordinated Securities, or the provision of a letter of credit, guarantee,
insurance policy or other form of credit or any combination thereof. The
Reserve Account will be established to assist with the subsequent
distribution of principal or interest on the Securities of such Series or
Class in the manner provided in the related Prospectus Supplement.
SECURITY RATINGS
Any rating of the Securities by a Rating Agency will indicate:
o its view on the likelihood that Securityholders will receive
required interest and principal payments; and
o its evaluation of the Receivables and the availability of any
Credit Enhancement for the Securities.
Among the things a rating will not indicate are:
o the likelihood that a Pay Out Event will occur;
o the likelihood that a United States withholding tax will be
imposed on non-U.S. Securityholders;
o the marketability of the Securities;
o the market price of the Securities; or
o whether the Securities are an appropriate investment for any
purchaser.
A rating will not be a recommendation to buy, sell or hold the
Securities. A rating may be lowered or withdrawn at any time by a Rating
Agency.
The Transferor will request a rating of the Securities offered by
this Prospectus and the Prospectus Supplement from at least one Rating
Agency. It will be a condition to the issuance of the Securities of each
Series or Class offered pursuant to this Prospectus and the related
Prospectus Supplement (including each Series that includes a Pre-Funding
Account, and, with respect to any Series of Notes, the related Series
Certificate) that they be rated in one of the four highest rating
categories by at least one nationally recognized rating organization (each
such rating agency selected by the Transferor to rate any Series, a "RATING
Agency"). The rating or ratings applicable to the Securities of each Series
or Class offered hereby will be set forth in the related Prospectus
Supplement. Rating agencies other than those requested could assign a
rating to the Securities and such a rating could be lower than any rating
assigned by a Rating Agency chosen by the Transferor.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The Transferor will represent and warrant in the Pooling and
Servicing Agreement that the transfer of Receivables by it to the Master
Trust, is either a valid transfer and assignment to such Master Trust of
all right, title and interest of the Transferor in and to the related
Receivables, except for the interest of the Transferor as holder of the
Transferor Certificate, or the grant to the Master Trust of a security
interest in such Receivables. The Transferor will also represent and
warrant in the Pooling and Servicing Agreement that, in the event the
transfer of Receivables by the Transferor to the Master Trust is deemed to
create a security interest under the Uniform Commercial Code as in effect
in the State of Delaware (the "UCC") there will exist a valid, subsisting
and enforceable first priority perfected security interest in such
Receivables created thereafter in favor of the Master Trust on and after
their creation, except for certain tax and other governmental liens,
subject to the limitations described below. For a discussion of the Master
Trust's rights arising from a breach of these warranties, see "Description
of the Certificates -- Representations and Warranties."
The Transferor will represent as to Receivables to be conveyed, that
the Receivables are "accounts" or "general intangibles" for purposes of the
UCC. Both the transfer and assignment of accounts and chattel paper and the
transfer of accounts as security for an obligation are treated under
Article 9 of the UCC as creating a security interest therein and are
subject to its provisions, and the filing of an appropriate financing
statement is required to perfect the security interest of the Master Trust.
If a transfer of general intangibles is deemed to create a security
interest, the UCC applies and filing an appropriate financing statement or
statements is also required in order to perfect the Master Trust's security
interest. Financing statements covering the Receivables have been and will
be filed with the appropriate governmental authority to protect the
interests of the Master Trust in the Receivables. If a transfer of general
intangibles is deemed to be a sale, then the UCC is not applicable and no
further action under the UCC is required to protect the Master Trust's
interest from third parties.
There are certain limited circumstances under the UCC in which a
prior or subsequent transferee of Receivables coming into existence after a
Closing Date could have an interest in such Receivables with priority over
such Master Trust's interest. Under the Pooling and Servicing Agreement,
however, the Transferor will represent and warrant that it transferred the
Receivables to the Master Trust free and clear of the lien of any third
party. In addition, the Transferor has covenanted and will covenant that it
will not sell, pledge, assign, transfer or grant any lien on any Receivable
(or any interest therein) other than to the Master Trust. A tax or
government lien or other nonconsensual lien on property of the Transferor
arising prior to the time a Receivable comes into existence may also have
priority over the interest of the Master Trust in such Receivable. If the
FDIC were appointed as receiver of the Transferor, certain administrative
expenses of the receiver may also have priority over the interest of the
Master Trust in such Receivable. While CMB is the Servicer, collections
will be commingled with CMB's general funds and used for CMB's benefit
prior to each Distribution Date. Accordingly, in the event of the
insolvency of CMB, the Master Trust may not have a perfected security
interest in such collections. If the short-term deposit rating of CMB is
reduced below "A-1" or "P-1" by the applicable Rating Agency, CMB will be
obligated to cease commingling collections and commence depositing
collections into the Collection Account within two business days after the
date of processing.
CERTAIN MATTERS RELATING TO RECEIVERSHIP
The Bank is chartered as a national banking corporation and is
subject to regulation and supervision by the Comptroller. If the Bank
becomes insolvent or is in an unsound condition or if certain other
circumstances occur, the Comptroller is authorized to appoint the FDIC as
receiver.
The Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA") sets forth certain powers that the FDIC may exercise as
receiver for the Bank. The FDIC as receiver of the Bank would have the
right to repudiate or disaffirm the obligations of the Bank under the
Pooling and Servicing Agreement. To the extent that (i) the Transferor
granted a security interest in the Receivables to the Master Trust, (ii)
the interest was validly perfected before the Transferor's insolvency,
(iii) the interest was not taken or granted in contemplation of the
Transferor's insolvency or with the intent to hinder, delay or defraud the
Transferor or its creditors, (iv) the Pooling and Servicing Agreement is
continuously a record of the Bank, and (v) the Pooling and Servicing
Agreement represents a bona fide and arm's-length transaction undertaken
for adequate consideration in the ordinary course of business and that the
Master Trust Trustee is the secured party and is not an insider or
affiliate of the Transferor, such valid perfected security interest of the
Master Trust Trustee would be enforceable (to the extent of the Master
Trust's "actual direct compensatory damages") notwithstanding the
insolvency of, or the appointment of a receiver or conservator for, the
Transferor and the subsequent repudiation or disaffirmation of the Pooling
and Servicing Agreement. Thus payments to the Master Trust with respect to
the Receivables (up to the amount of such damages) should not be subject to
an automatic stay of payment or to recovery by the FDIC as conservator or
receiver of the Transferor. If, however, the FDIC were to require the
Master Trust Trustee to establish its right to those payments by submitting
to and completing the administrative claims procedure established under
FIRREA, or the conservator or receiver were to request a stay of
proceedings with respect to the Transferor as provided under FIRREA, delays
in payments on the Certificates and possible reductions in the amount of
those payments could occur.
Upon repudiation or disaffirmation, assuming the transaction meets
the requirements described above, the FDIC is obligated to pay to the
investors "actual direct compensatory damages" determined as of the date of
the appointment of the receiver. The FDIC does not define "actual direct
compensatory damages." The staff of the FDIC takes the position that upon
repudiation or disaffirmation such damages would not include interest
accrued to the date of actual repudiation or disaffirmation. Under the FDIC
interpretation, investors in the Certificates would receive interest only
through the date of the appointment of the receiver. Since the FDIC may
delay actual repudiation or disaffirmation for up to 180 days following its
appointment as receiver, investors may not receive the full amount of
interest owing to them under the Certificates or the Notes. There is one
reported federal district court decision that construes the term "actual
direct compensatory damages." This 1993 court case construed the term, in
the context of the repudiation of zero coupon bonds, to mean the fair
market value of such bonds as of the date of repudiation. Under neither
interpretation, however, would investors be compensated for the period
between the appointment of the receiver and the date of repudiation.
Upon the appointment of a conservator or receiver or upon a voluntary
liquidation with respect to the Transferor, the Transferor will promptly
give notice thereof to the Master Trust Trustee and a Pay Out Event will
occur with respect to all Series then outstanding under the Master Trust.
Pursuant to the Pooling and Servicing Agreement, newly created Principal
Receivables will not be transferred to the Master Trust on and after any
such appointment or voluntary liquidation, and the Master Trust Trustee
will proceed to sell, dispose of or otherwise liquidate the Receivables in
a commercially reasonable manner and on commercially reasonable terms,
unless otherwise instructed within a specified period by holders of
Certificates representing undivided interests aggregating more than 50% of
the Investor Interest of each Series (or if any Series has more than one
Class, of each Class, and any other Person specified in the Pooling and
Servicing Agreement or Series Supplement), or unless otherwise required by
the FDIC as receiver or conservator of the Bank. Under the Pooling and
Servicing Agreement, the proceeds from the sale of the Receivables would be
treated as collections of the Receivables and the Investor Percentage of
such proceeds would be distributed to the Certificateholders. This
procedure could be delayed, as described above. If the only Pay Out Event
to occur is either the insolvency of the Transferor or the appointment of a
conservator or receiver for the Transferor, the conservator or receiver may
have the power to prevent the early sale, liquidation or disposition of the
Receivables and the commencement of the Rapid Amortization Period. In
addition, a conservator or receiver may have the power to cause the early
sale of the Receivables and the early retirement of the Certificates or to
prohibit the continued transfer of Principal Receivables to the Master
Trust. However, if no Servicer Default other than the conservatorship or
receivership of the Servicer exists, the conservator or receiver for the
Servicer may have the power to prevent either the Master Trust Trustee or
the Certificateholders from appointing a successor Servicer under the
Pooling and Servicing Agreement. See "Description of the Certificates --
Pay Out Events."
CONSUMER PROTECTION LAWS
The relationships of the cardholder and credit card issuer and the
lender are extensively regulated by federal and state consumer protection
laws. With respect to credit cards issued by CMB or Chase USA, the most
significant laws include the federal Truth-in-Lending, Equal Credit
Opportunity, Fair Credit Reporting, Fair Debt Collection Practices and
Electronic Funds Transfer Acts. These statutes impose disclosure
requirements when a credit card account is advertised, when it is opened,
at the end of monthly billing cycles, and at year end. In addition, these
statutes limit customer liability for unauthorized use, prohibit certain
discriminatory practices in extending credit, and impose certain
limitations on the type of account-related charges that may be assessed.
Cardholders are entitled under these laws to have payments and credits
applied to the credit card accounts promptly, to receive prescribed notices
and to require billing errors to be resolved promptly. The Master Trust may
be liable for certain violations of consumer protection laws that apply to
the related Receivables, either as assignee from the Transferor with
respect to obligations arising before transfer of the Receivables to the
Master Trust or as a party directly responsible for obligations arising
after the transfer. In addition, a cardholder may be entitled to assert
such violations by way of set-off against his obligation to pay the amount
of Receivables owing. The Transferor will warrant in the Pooling and
Servicing Agreement that all related Receivables have been and will be
created in compliance with the requirements of such laws. The Servicer will
also agree in the Pooling and Servicing Agreement to indemnify the Master
Trust, among other things, for any liability arising from such violations
caused by the Servicer. For a discussion of the Master Trust's rights
arising from the breach of these warranties, see "Description of the
Certificates -- Representations and Warranties."
Various proposed laws and amendments to existing laws have from time
to time been introduced in Congress and certain state and local
legislatures that, if enacted, would further regulate the credit card
industry, certain of which would, among other things, impose a ceiling on
the rate at which a financial institution may assess finance charges and
fees on credit card accounts that would be substantially below the rates of
the finance charges and fees the Bank currently assesses on its accounts.
In particular, on June 19, 1997, a proposal to amend the federal
Truth-in-Lending Act was introduced in the House of Representatives and
referred to the Committee on Banking and Financial Services, which would,
among other things, prohibit the imposition of certain minimum finance
charges and other fees, prohibit certain methods of calculating finance
charges, require prior notice of any increase in the interest rate assessed
with respect to a credit card account and limit the amount of certain fees.
Although such proposed legislation has not been enacted, there can be no
assurance that such a bill will not become law in the future. The potential
effect of any legislation which limits the amount of finance charges and
fees that may be charged on credit cards could be to reduce the portfolio
yield on the Accounts. If such portfolio yield is reduced, a Pay Out Event
may occur, and the Rapid Amortization Period would commence.
Application of federal and state bankruptcy and debtor relief laws
would affect the interests of the Certificateholders if such laws result in
any related Receivables being written off as uncollectible when the amount
available under any Credit Enhancement is equal to zero. See "Description
of the Certificates -- Defaulted Receivables; Rebates and Fraudulent
Charges; Investor Charge-Offs."
INDUSTRY LITIGATION
In October 1998, the United States Department of Justice (the "DOJ")
filed an antitrust lawsuit in federal court in Manhattan against VISA
U.S.A., Inc., VISA International Inc. and MasterCard International
Incorporated alleging that these credit card associations restrain
competition and limit consumer choice. The DOJ in such lawsuit challenges,
among other things, the control of VISA U.S.A., Inc., VISA International
Inc. and MasterCard International Incorporated by the same set of banks,
the ability of banks to issue both VISA and MasterCard cards as well as the
rules adopted by these associations prohibiting members from offering
credit cards of certain competitors. In public statements, VISA U.S.A.,
Inc., VISA International Inc. and MasterCard International Incorporated
have contested the DOJ's allegations. The Bank is unable to predict the
effect of such lawsuit on the Bank's credit card business. A final adverse
decision against VISA U.S.A., Inc., VISA International Inc. and MasterCard
International Incorporated or a similar settlement with the DOJ by these
associations, could result in changes in the current associations and the
Bank's ability to issue both VISA and MasterCard cards as well as cards of
certain other competitors.
TAX MATTERS
GENERAL
The following is a general discussion of the material United States
("U.S.") federal income tax consequences relating to the purchase,
ownership and disposition of a Security. Unless otherwise indicated, this
summary deals only with Security Owners (as defined below) who acquire
their Securities at their original issue price pursuant to the original
issuance of such Securities, and who hold such Securities as capital
assets. This discussion is based on the Internal Revenue Code of 1986, as
amended (the "CODE"), the proposed, temporary and final Treasury
regulations promulgated thereunder, administrative rulings or
pronouncements and judicial decisions, all as in effect on the date hereof
and all of which are subject to change, possibly with retroactive effect.
The discussion does not address all of the tax consequences that may be
relevant to a particular Security Owner in light of that Security Owner's
circumstances, nor does it discuss the U.S. federal income tax consequences
that may be relevant to certain types of Security Owners, such as those of
dealers in securities or currencies, financial institutions, tax-exempt
entities, life insurance companies, persons holding Securities as a part of
a hedging, integrated, conversion or constructive sale transaction or a
straddle or persons whose functional currency is not the U.S. dollar, who
may be subject to special rules and limitations under the Code which are
not discussed below. In addition, the following discussion does not discuss
the alternative minimum tax consequences, if any, of an investment in the
Securities, or the state, local or foreign tax consequence of such an
investment. Consequently, each prospective Security Owner is urged to
consult its own tax adviser in determining the federal, state, local and
foreign income and any other tax consequences of the purchase, ownership
and disposition of a Security.
Prospective investors should note that (i) no ruling will be sought
from the Internal Revenue Service (the "IRS") with respect to any of the
U.S. federal income tax consequences discussed herein and (ii) opinions of
counsel, such as those described below, are not binding on the IRS or the
courts. Consequently, no assurance can be given that the IRS will not take
positions contrary to those described below. In addition, the opinions of
Simpson Thacher & Bartlett ("TAX COUNSEL") described below are based upon
the representations and assumptions set forth therein, including, but not
limited to, the assumption that all of the relevant parties will comply
with the terms of the Pooling and Servicing Agreement and the other related
documents. If such representations are inaccurate and/or the relevant
parties fail to comply with the terms of the Pooling and Servicing
Agreement or the other related documents, the conclusions of Tax Counsel
described in such opinions and the discussion of the U.S. federal income
tax consequences set forth herein may not be accurate.
For purposes of this discussion, (i) the terms Security and
Certificate do not include the Series Certificate, (ii) the terms
"CERTIFICATE OWNER" and "NOTE OWNER" (collectively, a "SECURITY OWNER")
refer to the beneficial owner of a Certificate or a Note, respectively,
(iii) the terms "U.S. CERTIFICATE OWNER" and "U.S. NOTE OWNER"
(collectively, a "U.S. SECURITY OWNER") mean, respectively, a Certificate
Owner or a Note Owner who is (a) a citizen or resident of the United
States, (b) a corporation or partnership created or organized in the United
States or under the laws of the United States or any political subdivision
thereof, (c) an estate the income of which is subject to United States
federal income taxation regardless of its source, or (d) a trust (x) which
is subject to the supervision of a court within the United States and the
control of a United States person as described in section 7701 (a)(30) of
the Code or (y) that has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a United States person and (iv) the
terms "NON-U.S. CERTIFICATE OWNER" and "NON-U.S. NOTE OWNER" (collectively,
a "NON-U.S. SECURITY OWNER") mean, respectively, any Certificate Owner or
Note Owner other than a U.S. Certificate Owner or U.S. Note Owner.
TAX CHARACTERIZATION OF THE MASTER TRUST
Tax Counsel will deliver its opinion that the Master Trust will not
be classified as an association or as a publicly traded partnership taxable
as a corporation for U.S. federal income tax purposes. However, as
discussed above, such opinion is not binding on the IRS and, consequently,
no assurance can be given that this characterization will prevail. See --
"Tax Considerations Relating to Certificate Owners--Possible Alternative
Characterizations" below.
TAX CONSIDERATIONS RELATING TO CERTIFICATE OWNERS
Tax Characterization of the Certificates as Debt
The Transferor will express in the Pooling and Servicing Agreement
its intent that the Certificates will be treated as debt for all U.S. tax
purposes, and the Transferor, by entering into the Pooling and Servicing
Agreement, and each Certificate Owner, by the acceptance of a beneficial
interest in a Certificate, will agree to treat the Certificates as debt for
such purposes. However, the Pooling and Servicing Agreement generally
refers to the transfer of Receivables as a "transfer, assignment and
conveyance," and the Transferor will treat the Pooling and Servicing
Agreement, for certain non-tax accounting purposes, as causing a transfer
of an ownership interest in the Receivables and not as creating a debt
obligation.
For U.S. federal income tax purposes, the economic substance of a
transaction often determines its tax consequences. The form of a
transaction, while a relevant factor, is generally not conclusive evidence
of the economic substance of the transaction. In appropriate circumstances,
the courts have allowed the IRS, as well as taxpayers (in more limited
circumstances), to treat a transaction in accordance with its economic
substance, as determined under U.S. federal income tax law, even though the
participants in the transaction have characterized it differently for
non-tax purposes. In Commissioner v. Danielson, 378 F.2d 771 (3d Cir. 1967)
("DANIELSON"), the Third Circuit Court of Appeals substantially limited the
circumstances in which a taxpayer for tax purposes could ignore the form of
a transaction. Certain courts have followed this decision while others have
not. Danielson related to the treatment of a bargained-for allocation of
purchase price, which various taxpayers were characterizing in different
ways, and the application of the Danielson rationale to the Certificates,
where all of the parties have agreed on a consistent tax characterization
of the transaction, is arguably not appropriate. However, in United States
v. Scharrer, 1999 WL 39131 (M.D. Fla. 1999), the District Court, citing
Danielson, reversed a bankruptcy court's decision that a purported sale of
lease payments was a borrowing, on the grounds that the form of the
transaction was a sale rather than a borrowing. While the facts of the case
differ from those involving the Certificates, the case extends Danielson to
sale/borrowing transactions. Nevertheless, Tax Counsel has advised that, in
a properly presented case, the Danielson doctrine would not prevent a
determination of the tax characterization of the Certificates based on the
economic substance of the transaction.
President Clinton's Fiscal 2000 Budget Proposal includes a
legislative proposal that would codify the Danielson rule if tax
indifferent parties are involved. The proposal would only apply to
transactions entered into on or after the date of first committee action.
As currently drafted, it is unclear whether the proposal would apply to
securities such as the Certificates. It is impossible to predict whether
the proposed legislation will be enacted and, if so, in what form.
Prospective investors should consult their own tax advisors regarding the
proposed legislation.
The determination of whether the economic substance of a purported
sale of an interest in property is, instead, a loan secured by such
transferred property has been made by the IRS and the courts on the basis
of numerous factors designed to determine whether the seller has
relinquished (and the purchaser has obtained) substantial incidents of
ownership in the transferred property. Among those factors, the primary
factors examined are whether the purchaser has the opportunity for gain if
the property increases in value and has the risk of loss if the property
decreases in value. Tax Counsel will deliver its opinion that, although no
transaction closely comparable to that contemplated herein has been the
subject of any Treasury regulation, revenue ruling or judicial decision,
the Certificates will be properly characterized as indebtedness for U.S.
federal income tax purposes. Except where indicated to the contrary, the
following discussion assumes that the Certificates will be considered debt
for U.S. federal income tax purposes.
Taxation of Interest Income on the Certificates
Unless otherwise specified in the related Prospectus Supplement, the
Transferor intends to take the position that a U.S. Certificate Owner
generally will include the stated interest on a Certificate in gross income
at the time such interest income is received or accrued in accordance with
such U.S. Certificate Owner's regular method of tax accounting. This
conclusion is based on the Transferor's position that the stated interest
on a Certificate is "unconditionally payable."
Under the applicable Treasury regulations, the stated interest on the
Certificates will be considered "unconditionally payable" only if the terms
and conditions of the Certificates make the likelihood of late payment or
non-payment of such stated interest a "remote contingency." Since the
Master Trust and the Master Trustee will have no discretion to withhold,
delay or otherwise defer scheduled monthly payments of stated interest on
the Certificates (provided the Master Trust has sufficient cash on hand to
allow the Master Trustee to make such interest payments), the Transferor
believes that the late payment or non-payment of stated interest on the
Certificates is a remote contingency.
If, however, the stated interest on the Certificates is not
considered "unconditionally payable", the stated interest on the
Certificates will be considered original issue discount ("OID") within the
meaning of section 1273(a) of the Code and a U.S. Certificate Owner will be
required to include such stated interest in income (as OID) on a daily
economic accrual basis regardless of the U.S. Certificate Owner's regular
method of tax accounting and in advance of receipt of the cash related to
such income. In addition, if the stated interest on the Certificates is not
paid in full on a Distribution Date, the Certificates may at such time, and
at all times thereafter, be considered to be issued with OID and all U.S.
Certificate Owners would be required to include such stated interest in
income as OID on an economic accrual basis.
Sale, Exchange or Retirement of Certificates
Upon a sale, exchange, retirement or other disposition of a
Certificate, a U.S. Certificate Owner generally will recognize gain or loss
equal to the difference between the amount realized on such sale, exchange,
retirement or other disposition (less an amount equal to any accrued but
unpaid interest that the U.S. Certificate Owner has not included in gross
income previously, which will be taxable as such) and the U.S. Certificate
Owner's adjusted tax basis in such Certificate. Such gain or loss generally
will be capital gain or loss and generally will be considered long-term
capital gain or loss if the U.S. Certificate Owner held such Certificate
for more than one year at the time of such sale, exchange, retirement or
other disposition. The long-term capital gains of individuals generally are
eligible for reduced rates of taxation. Capital losses generally may be
used only to offset capital gains.
Possible Alternative Characterizations
Although, as described above, it is the opinion of Tax Counsel that
the Certificates will be properly characterized as debt for U.S. federal
income tax purposes, such opinion is not binding on the IRS and,
consequently, no assurance can be given that this characterization will
prevail. If the IRS were to contend successfully that some or all of the
Certificates or any Collateral Interest were not debt obligations for U.S.
federal income tax purposes, all or a portion of the Master Trust could be
classified as a partnership or as a publicly traded partnership taxable as
a corporation for such purposes. Because (i) in the opinion of Tax Counsel
the Certificates will be characterized as debt for U.S. federal income tax
purposes and (ii) any beneficial owner of an interest in a Collateral
Interest will agree to treat that interest as debt, no attempt will be made
to comply with any IRS reporting or other requirements that would apply if
all or a portion of the Master Trust were treated as a partnership or as a
publicly traded partnership taxable as a corporation.
If the Master Trust were treated in whole or in part as a partnership
(other than a publicly traded partnership taxable as a corporation) for
U.S. federal income tax purposes, such partnership would not itself be
subject to U.S. federal income tax. Rather, each item of income, gain, loss
and deduction of such partnership would be taken into account directly in
computing the taxable income of the Transferor (or the beneficial owner of
the Transferor Certificate) and any Certificate Owners treated as partners
in such partnership in accordance with their respective partnership
interests therein. The amount and timing of income reportable by any
Certificate Owners treated as partners in such partnership would likely
differ from that reportable by such Certificate Owners had they been
treated as owning debt. Moreover, unless the partnership were treated as
engaged in a trade or business, an individual's (and, under certain
circumstances, a trust's) share of the expenses of such partnership would
be miscellaneous itemized deductions that, in the aggregate, would be
allowed as deductions only to the extent that they exceeded two percent of
the individual's adjusted gross income, and would be subject to reduction
if the individual's adjusted gross income exceeded certain limits. As a
result, in these circumstances, a Certificate Owner subject to these
limitations may be taxed on a greater amount of income than the interest
payable on such Certificate Owner's Certificates. In addition, all or a
portion of the partnership's taxable income that is allocable to a
Certificate Owner that is a pension, profit sharing or employee benefit
plan or other tax exempt entity (including an individual retirement
account) may, under certain circumstances, constitute "unrelated business
taxable income," which generally would be taxable to such Certificate Owner
under the Code.
Alternatively, if the Master Trust were treated in whole or in part
as a publicly traded partnership taxable as a corporation, the taxable
income of the Master Trust would be subject to U.S. federal income tax at
the applicable marginal corporate income tax rates applicable to such
income. Such entity-level tax could result in reduced distributions to
Certificate Owners. In addition, the distributions from the Master Trust
would not be deductible in computing the taxable income of such deemed
corporation, except to the extent that any Certificates were treated as
debt of the corporation and distributions to the related Certificate Owners
were treated as payments of interest thereon. Moreover, in this instance,
distributions to Certificate Owners not treated as holding debt would be
treated as "dividends" for U.S. federal income tax purposes to the extent
of the current and accumulated earnings and profits of the deemed
corporation.
TAX CONSIDERATIONS RELATING TO NOTE OWNERS
Tax Characterization of the Owner Trust
Tax Counsel will deliver its opinion with respect to each Owner Trust
that such Owner Trust will not be classified as an association or as a
publicly traded partnership taxable as a corporation for U.S. tax purposes.
However, as discussed above, such opinion is not binding on the IRS and,
consequently, no assurance can be given that this characterization will
prevail. See -- "Tax Considerations Relating to Note Owners--Possible
Alternative Characterizations-- Alternative Characterizations Relating to
the Notes" below.
Tax Characterization of the Notes
The Transferor will express in the Indenture its intent that the
Notes will be treated as debt for all U.S. tax purposes and, under the
terms of the Indenture and the related Notes, the Transferor, and each Note
Owner (by the acceptance of a beneficial interest in a Note) will agree to
treat each Note as debt for such purposes. Tax Counsel will deliver its
opinion that, although no transaction closely comparable to that
contemplated herein has been the subject of any Treasury regulation,
revenue ruling or judicial decision, the Notes will be properly
characterized as indebtedness for such purposes. Except where indicated to
the contrary, the discussion below assumes that the Notes will be
considered debt for U.S. federal income tax purposes.
Taxation of Interest Income on the Notes
Unless otherwise specified in the related Prospectus Supplement, the
Notes will not be issued with OID. Consequently, a U.S. Note Owner
generally will include the stated interest on a Note in gross income at the
time such interest income is received or accrued in accordance with such
U.S. Note Owner's regular method of tax accounting.
Sale, Exchange or Retirement of Notes
Upon a sale, exchange, retirement or other disposition of a Note, a
U.S. Note Owner generally will recognize gain or loss equal to the
difference between the amount realized on such sale, exchange, retirement
or other disposition (less an amount equal to any accrued but unpaid
interest which the U.S. Note Owner has not included in gross income
previously, which will be taxable as such) and the U.S. Note Owner's
adjusted tax basis in such Note. Such gain or loss generally will be
capital gain or loss and generally will be long-term gain or loss if the
U.S. Note Owner held such Note for more than one year at the time of such
sale, exchange, retirement or other disposition. The long-term capital
gains of individuals generally are eligible for reduced rates of taxation.
Capital losses generally may be used only to offset capital gains.
Possible Alternative Characterizations
Although, as described above, it is the opinion of Tax Counsel that
the Notes will be properly characterized as debt for U.S. federal income
tax purposes, such opinion is not binding on the IRS and, consequently, no
assurance can be given that such a characterization will prevail. If the
IRS were to contend successfully that some or all of the Notes were not
debt obligations for U.S. federal income tax purposes, an Owner Trust could
be classified either as a partnership or as a publicly traded partnership
taxable as a corporation for such purposes. Because in the opinion of Tax
Counsel the Notes will be characterized as debt for U.S. federal income tax
purposes, no attempt will be made to comply with any IRS reporting or other
requirements that would apply if an Owner Trust were treated as a
partnership or as a publicly traded partnership taxable as a corporation.
If an Owner Trust were treated as a partnership (other than as a
publicly traded partnership taxable as a corporation) for U.S. federal
income tax purposes, such partnership would not be subject to U.S. federal
income tax. Rather, each item of income, gain, loss and deduction of the
partnership would be taken into account directly in computing the taxable
income of the Transferor and any Note Owners treated as partners in such
partnership in accordance with their respective partnership interests
therein. The amount and timing of income reportable by any Note Owners
treated as partners in such partnership would likely differ from that
reportable by such Note Owners had they been treated as owning debt.
Moreover, unless the partnership were treated as engaged in a trade or
business, an individual's (and, under certain circumstances, a trust's)
share of the expenses of such partnership would be miscellaneous itemized
deductions that, in the aggregate, would be allowed as deductions only to
the extent that they exceeded two percent of such individual's adjusted
gross income, and would be subject to reduction if the individual's
adjusted gross income exceeded certain limits. As a result, under these
circumstances, a Note Owner subject to these limitations may be taxed on a
greater amount of income than the interest payable on such Note Owner's
Notes. In addition, all or a portion of any taxable income allocated to a
Note Owner that is a pension, profit sharing or employee benefit plan or
other tax exempt entity (including an individual retirement account) may,
under certain circumstances, constitute "unrelated business taxable income"
which generally would be taxable to such Note Owner under the Code.
Alternatively, if an Owner Trust were classified as a publicly traded
partnership taxable as a corporation, the taxable income of such Owner
Trust would be subject to U.S. federal income tax at the marginal corporate
income tax rates applicable to such income. Such entity-level tax could
result in reduced distributions to Note Owners. In addition, the
distributions from such Owner Trust would not be deductible in computing
the taxable income of such deemed corporation, except to the extent that
any Notes were treated as debt of such corporation and distributions to the
related Note Owners were treated as payments of interest thereon. Moreover,
distributions to Note Owners not treated as holding debt would be treated
as "dividends" for U.S. federal income tax purposes to the extent of the
current and accumulated earnings and profits of such deemed corporation.
Alternative Characterizations Relating to the Master Trust. If the
Master Trust were treated in whole or in part as a publicly traded
partnership taxable as a corporation, the taxable income of the Master
Trust would be subject to U.S. federal income tax at the marginal corporate
income rates applicable to such income. See --"Tax Considerations Relating
to Certificate Owners--Possible Alternative Characterizations" above. Such
entity-level tax could result in reduced distributions to an Owner Trust
and, therefore, to Note Owners.
NON-U.S. SECURITY OWNERS
Assuming that all of the Securities issued to Non-U.S. Security
Owners are considered debt of the Transferor for U.S. federal income tax
purposes, under present U.S. federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of U.S. federal income tax will be required with
respect to the payment by the Transferor or any other person that is
required to withhold U.S. taxes (each, a "WITHHOLDING AGENT") of principal
or interest on a Security owned by a Non-U.S. Security Owner, provided that
(i) such Non-U.S. Security Owner does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of
the Transferor entitled to vote within the meaning of section 871(h)(3) of
the Code and the Treasury regulations promulgated thereunder, (ii) such
Non-U.S. Security Owner is not a controlled foreign corporation that is
related to the Transferor through stock ownership, (iii) such Non-U.S.
Security Owner is not a bank whose receipt of interest on a Security is
described in section 881(c)(3)(A) of the Code and (iv) such Non-U.S.
Security Owner satisfies the statement requirement (described generally
below) set forth in section 871 (h) and section 881 (c) of the Code and the
Treasury regulations promulgated thereunder;
(b) except as discussed below, no withholding of U.S. federal income
tax will be required with respect to any gain realized by a Non-U.S.
Security Owner upon the sale, exchange, retirement or other disposition of
a Security; and
(c) a Security beneficially owned by an individual who at the time of
his or her death is a Non-U.S. Security Owner will not be subject to U.S.
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Transferor
entitled to vote within the meaning of section 871(h)(3) of the Code and
provided that the interest payments with respect to such Security would not
have been, if received at the time of such individual's death, effectively
connected with the conduct of a U.S. trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the Non-U.S.
Security Owner or a financial institution holding the Security on behalf of
such Non-U.S. Security Owner, must provide, in accordance with specified
procedures, the Transferor or any Withholding Agent with a statement to the
effect that such Non-U.S. Security Owner is not a U.S. Security Owner.
Currently, these requirements will be met if (1) the Non-U.S. Security
Owner provides its name and address, and certifies, under penalties of
perjury, that it is not a U.S. Security Owner (which certification may be
made on an IRS Form W-8 or successor form), or (2) a financial institution
holding the Security on behalf of the Non-U.S. Security Owner certifies,
under penalties of perjury, that such statement has been received by it and
furnishes any Withholding Agent with a copy thereof. Under recently
finalized Treasury regulations (the "Final Regulations"), the statement
requirement referred to in (a)(iv) above also may be satisfied with other
documentary evidence for interest paid after December 31, 1999 to an
offshore account or through certain foreign intermediaries.
If a Non-U.S. Security Owner cannot satisfy the requirements of the
"portfolio interest" exception described in paragraph (a) above, payments
of interest made to such Non-U.S. Security Owner will be subject to a 30%
withholding tax unless the Non-U.S. Security Owner provides the Transferor
or any Withholding Agent with a properly executed (1) IRS Form 1001 (or
successor form) claiming an exemption from, or a reduction in the rate of,
such withholding tax under the benefit of an applicable U.S. income tax
treaty or (2) IRS Form 4224 (or successor form) stating that the interest
paid on the Security is not subject to such withholding tax because it is
effectively connected with the Non-U.S. Security Owner's conduct of a trade
or business in the United States. Under the Final Regulations, Non-U.S.
Security Owners generally will be required to provide an IRS Form W-8 in
lieu of an IRS Form 1001 and IRS Form 4224, although alternative
documentation may be applicable in certain situations.
If a Non-U.S. Security Owner is engaged in a trade or business in the
United States and the interest on such Non-U.S. Security Owner's Securities
is effectively connected with the conduct of such trade or business, the
Non-U.S. Security Owner, although exempt from the U.S. withholding tax
discussed above, will be subject to U.S. federal income tax on such
interest on a net income basis in the same manner as if it were a U.S.
Security Owner. In addition, if such Non-U.S. Security Owner is a foreign
corporation, it may be subject to a U.S. branch profits tax equal to 30%
(or lower applicable treaty rate) of its effectively connected earnings and
profits for the taxable year, subject to adjustments. For this purpose,
such interest income will be included in such foreign corporation's
earnings and profits.
Any gain realized by a Non-U.S. Security Owner upon the sale,
exchange, retirement or other disposition of a Security generally will not
be subject to U.S. federal income or withholding tax unless (i) such gain
is effectively connected with a U.S. trade or business of the Non-U.S.
Security Owner in the United States, (ii) in the case of a Non-U.S.
Security Owner who is an individual, such individual is present in the
United States for 183 days or more in the taxable year of such sale,
exchange, retirement or other disposition, and certain other conditions are
met or (iii) to the extent such gain is considered accrued but unpaid
interest on such Security, the requirements described above are not
satisfied.
If the Securities were treated as an interest in a partnership (other
than a publicly traded partnership taxable as a corporation), such
recharacterization could cause a Non-U.S. Security Owner to be treated as
engaged in a trade or business in the United States. In that event, the
Non-U.S. Security Owner would be required to file a U.S. federal income tax
return and, generally, would be subject to U.S. federal income tax
(including, in the case of a Non-U.S. Security Owner that is a corporation,
the U.S. branch profits tax) on its allocable share of the net income from
such partnership. Further, certain withholding obligations may apply with
respect to partnership income that is allocable to a Non-U.S. Security
Owner that is considered to be a partner in such partnership. Such
withholding would be imposed at a rate equal to the highest marginal U.S.
federal income tax rate applicable to the Non-U.S. Security Owner.
Alternatively, if some or all of the Securities were treated as equity
interests in a publicly traded partnership taxable as a corporation, the
gross amount of any related dividend distributions to a Non-U.S. Security
Owner generally would be subject to U.S. withholding tax at the rate of 30
percent, unless that rate were reduced under an applicable U.S. income tax
treaty. See --"Tax Considerations Relating to Certificate Owners--Possible
Alternative Characterizations" and "Tax Considerations Relating to Note
Owners--Possible Alternative Characterizations" above.
Special rules may apply in the case of Non-U.S. Security Owners who
(i) have an office or other fixed place of business in the U.S., (ii) are
former U.S. citizens, (iii) are engaged in a banking, financing, insurance
or similar business in the U.S. or (iv) are "controlled foreign
corporations," "foreign personal holding companies," "passive foreign
investment companies" or corporations that accumulate earnings in order to
avoid U.S. federal income tax. Such persons should consult their own U.S.
tax advisors before investing in the Securities.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal and interest paid on Securities and to the proceeds
of the sale of a Security made by U.S. Security Owners other than certain
exempt recipients (such as corporations). A 31% backup withholding tax will
apply to such payments if the U.S. Security Owner fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Transferor or any Withholding Agent to a
Non-U.S. Security Owner if a statement described in (a)(iv) above under
- --"Non-U.S. Security Owners" has been received and the payor does not have
knowledge that the Non-U.S. Security Owner is actually a U.S. Security
Owner.
In addition, backup withholding and information reporting will not
apply if payments of principal and interest on a Security are paid or
collected by a foreign office of a custodian, nominee or other foreign
agent on behalf of a Security Owner, or if a foreign office of a broker (as
defined in applicable Treasury regulations) pays the proceeds of the sale
of a Security to the owner thereof. If, however, such nominee, custodian,
agent or broker is, for U.S. federal income tax purposes, a United States
person, a controlled foreign corporation or a foreign person that derives
50% or more of its gross income for certain periods from the conduct of a
trade or business in the United States, or, for taxable years beginning
after December 31, 1999, a foreign partnership in which one or more United
States persons, in the aggregate, own more than 50% of the income or
capital interests in the partnership or which is engaged in a trade or
business in the United States, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (1) such
custodian, nominee, agent or broker has documentary evidence in its records
that the relevant Security Owner is not a United States person and certain
other conditions are met or (2) the Security Owner otherwise establishes an
exemption.
Payments of principal and interest on a Security paid to the Security
Owner by a United States office of a custodian, nominee or agent, or the
payment by the United States office of a broker of the proceeds of sale of
a Security, will be subject to both backup withholding and information
reporting unless the relevant Security Owner provides the statement
referred to in (a)(iv) above under --"Non-U.S. Security Owners" and the
payor does not have actual knowledge that the Security Owner is actually a
U.S. Security Owner or the Security Owner otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a Security Owner's U.S. federal
income tax liability provided the required information is furnished to the
IRS.
STATE AND LOCAL TAXATION
The discussion above does not address the tax consequences of the
purchase, ownership or disposition of a Security under any state or local
tax law. Each investor should consult its own tax advisor regarding state
and local tax consequences of purchasing, owning and disposing of a
Security.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code impose certain requirements on those employee
benefit plans ("Plans") to which they apply and entities which are deemed
to hold the assets of such Plans and on those persons who are fiduciaries
with respect to such Plans. In accordance with ERISA's general fiduciary
standards, before investing in Securities, a Plan fiduciary should
determine, among other factors, whether such an investment (i) is permitted
under the governing Plan instruments, (ii) is appropriate for the Plan in
view of its overall investment policy and the composition and
diversification of its portfolio and (iii) is prudent considering the
factors discussed in this Prospectus.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ("parties in interest" within the
meaning of ERISA or "disqualified persons" within the meaning of the Code).
Prohibited transactions may generate excise taxes and other liabilities.
Thus, a Plan fiduciary considering an investment in the Securities should
also consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or the Code.
CERTAIN ERISA CONSIDERATIONS WITH RESPECT TO NOTES
The Notes are eligible for purchase by Plans to which the fiduciary
and prohibited transactions rules of ERISA and the Code apply, and entities
which are deemed to hold the assets of such Plans, subject to the
considerations described below.
PROHIBITED TRANSACTION CONSIDERATIONS
TREATMENT OF THE NOTES AS DEBT INSTRUMENTS
Certain transactions involving the operation of the Owner Trust could
give rise to prohibited transactions under ERISA and the Code if the assets
of the Owner Trust were deemed to be assets of an investing Plan. Pursuant
to a Department of Labor ("DOL") regulation codified at 29 C.F.R. Section
2510.3-101 (the "PLAN ASSETS REGULATION"), in general when a Plan acquires
an "equity interest" in an entity such as the Owner Trust, the Plan's
assets include both the equity interest and an undivided interest in each
of the underlying assets of the entity unless certain exceptions set forth
in the Plan Assets Regulation apply.
In general, an "equity interest" is defined under the Plan Assets
Regulation as any interest in an entity other than an instrument which is
treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is very little published
authority concerning the application of this definition, the Transferor
believes that the Notes should be treated as debt rather than equity
interests under the Plan Assets Regulation because the Notes (a) should be
treated as indebtedness under applicable local law and debt, rather than
equity, for United States tax purposes (see "-Tax Considerations Relating
to Note Owners" above) and (b) should not be deemed to have any
"substantial equity features". Accordingly, the assets of the Owner Trust
should not constitute "plan assets" subject to the fiduciary or prohibited
transaction rules of ERISA or the Code.
ACQUISITION OF NOTES
Regardless of whether the Owner Trust is deemed to hold "plan assets"
of Plans that are Noteholders (as discussed above), the purchase of Notes
by a Plan with respect to which persons with certain relationships to the
Owner Trust, such as the Transferor, the Servicer, the Trustee, or
underwriters, or any of their affiliates, are a "party in interest" under
ERISA or a "disqualified person" under the Code could constitute a
prohibited transaction under ERISA or the Code unless an exemption is
applicable. Accordingly, fiduciaries of a Plan considering an investment in
the Notes should consult their own counsel concerning the propriety of the
investment prior to making the purchase.
In light of the foregoing, by acceptance of a Note, each holder will
be deemed to have represented and warranted that either: (i) such holder is
not acquiring (or considered to be acquiring) the Note with the assets of a
Plan or (ii) no non-exempt prohibited transaction will occur as a result of
such acquisition of the Notes.
EACH PLAN FIDUCIARY SHOULD CONSULT WITH ITS COUNSEL REGARDING THE
POTENTIAL CONSEQUENCES UNDER ERISA, THE CODE OR SIMILAR STATE LAW OF THE
ACQUISITION AND HOLDING OF THE NOTES.
CERTAIN ERISA CONSIDERATIONS WITH RESPECT TO CERTIFICATES
PROHIBITED TRANSACTION CONSIDERATIONS
TREATMENT OF MASTER TRUST ASSETS AS PLAN ASSETS
Certain transactions involved in the operation of the Master Trust
might be deemed to constitute prohibited transactions under ERISA and the
Code, if assets of the Trust were deemed to be assets of an investing Plan.
As noted above, the Plan Assets Regulation concerns whether or not a Plan's
assets would be deemed to include an interest in the underlying assets of
an entity (such as the Master Trust) for purposes of the reporting and
disclosure and fiduciary responsibility provisions of ERISA. If assets of
the Master Trust were deemed to be assets of an investing Plan, any person
who has discretionary authority or control with respect to Master Trust
assets will be a fiduciary of the investing Plan, thus increasing the scope
of activities which could be considered prohibited transactions under ERISA
and the Code. Accordingly, if investments by Plans are made in the Master
Trust, the Master Trust could be deemed to hold plan assets unless one of
the exceptions contained in the Plan Assets Regulation is applicable to the
Master Trust.
EXCEPTION FOR INSIGNIFICANT PARTICIPATION BY BENEFIT PLAN INVESTORS
The Plan Assets Regulation provides that the assets of an entity such
as the Master Trust will not be deemed to be plan assets if equity
participation in the entity by "benefit plan investors" (e.g. employee
welfare benefit plans and employee pension benefit plans defined pursuant
to Section 3(3) of ERISA, trusts described in Section 401(a) of the Code or
a plan described in Section 403(a) of the Code, which trust or plan is
exempt from tax under Section 501(a) of the Code, an individual retirement
account or annuity under Section 408 of the Code and any entity whose
underlying assets include plan assets by reason of a plan's investment in
the entity) is not "significant." Equity participation in an entity by
benefit plan investors is not significant on any date if, immediately after
the most recent acquisition of any equity interests in the entity, less
than 25% of the value of each class of equity interests in the entity
(excluding the value of any equity interests held by the Transferor, the
Master Trust Trustee or its affiliates) is held by benefit plan investors.
No monitoring or other measures will be taken to ensure that the exception
applies with respect to the Master Trust and no assurance can be given as
to whether the value of any class of equity interests in the Master Trust
held by benefit plan investors will be less than 25%, or whether the value
will remain below 25%.
EXCEPTION FOR PUBLICLY TRADED SECURITIES
The Plan Assets Regulation contains an exception which provides that
if a Plan acquires a "publicly-offered security," the issuer of the
security is not deemed to hold plan assets solely by reason of such
acquisition. A publicly-offered security is a security that is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or
more investors independent of the issuer and of one another and (iii)
either (A) part of a class of securities registered under section 12(b) or
12(g) of the Exchange Act, or (B) sold to the plan as part of an offering
of securities to the public pursuant to an effective registration statement
under the Securities Act and the class of securities of which such security
is a part is registered under the Exchange Act within 120 days) or such
later time as may be allowed by the SEC) after the end of the fiscal year
of the issuer during which the offering of such securities to the public
occurred.
Although it is anticipated that the conditions of this exception may
be met with respect to certain classes of the Certificates, no assurance
can be given, and no monitoring will be done.
In light of the foregoing, fiduciaries of a Plan considering the
purchase of Certificates should consult their own counsel regarding whether
the assets of the Master Trust which are represented by the Certificates
would be considered plan assets, the consequences that would apply if the
Master Trust's assets were considered plan assets and the applicability of
exemptive relief from the prohibited transaction rules.
ADDITIONAL CONSIDERATIONS FOR INSURANCE COMPANY GENERAL ACCOUNTS
In particular, insurance companies considering the purchase of
Certificates of any Series should consult their own employee benefits
counsel or other appropriate counsel with respect to the United States
Supreme Court's decision in John Hancock Mutual Life Insurance Co. v.
Harris Trust & Savings Bank, 114 S. Ct. 517 (1993) ("JOHN HANCOCK"). In
John Hancock, the Supreme Court held that assets held in an insurance
company's general account may be deemed to be "plan assets" of plans that
were issued policies supported by such general account under certain
circumstances; however, the Small Business Job Protection Act of 1996 added
a new Section 401(c) of ERISA relating to the status of the assets of
insurance company general accounts under ERISA and Section 4975 of the
Code. Section 401(c) provides that assets underlying general account
policies issued before December 31, 1998 will not be considered "plan
assets" to the extent criteria set forth in DOL regulations are satisfied.
Section 401(c) also requires the DOL to issue regulations establishing such
criteria. On December 22, 1997, the DOL published proposed regulations (the
"GENERAL ACCOUNT REGULATIONS") for this purpose. The General Account
Regulations provide that when a plan acquires a transition policy issued by
an insurance company on or before December 31, 1998, which is supported by
assets of the insurance company's general account, the plan's assets will
include the policy but not the underlying assets of the general account to
the extent the requirements set forth in the General Account Regulations
are satisfied. The General Account Regulations also require an independent
fiduciary who has the authority to manage the plan's assets to expressly
authorize the acquisition of such a transition policy. If adopted as
proposed, the General Account Regulations would not apply to any general
account policies issued after December 31, 1998. Accordingly, investors
should analyze whether John Hancock, Section 401(c) and the General Account
Regulations may have an impact with respect to their purchase of the
Certificates of any Series.
In light of the foregoing, by acceptance of a Certificate, each
holder will be deemed to have represented and warranted that either: (i)
such holder is not acquiring (or considered to be acquiring) the
Certificate with the assets of a Plan or (ii) no non-exempt prohibited
transaction will occur as a result of such acquisition and holding of the
Certificates.
PLAN OF DISTRIBUTION
The Transferor may sell Securities (a) through underwriters or
dealers, (b) directly to one or more purchasers, or (c) through agents. The
related Prospectus Supplement will set forth the terms of the offering of
any Securities offered hereby, including, without limitation, the names of
any underwriters, the purchase price of such Securities and the proceeds to
the Transferor from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in a sale of any Securities of a Series
offered hereby, such Securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices to be determined at the time of sale or at the
time of commitment therefor. Such Securities may be offered to the public
either through underwriting syndicates represented by managing underwriters
or by underwriters without a syndicate. Unless otherwise set forth in the
related Prospectus Supplement, the obligations of the underwriters to
purchase such Securities will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all of such Securities
if any of such Securities are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Securities may also be sold directly by the Transferor or through
agents designated by the Transferor from time to time. Any agent involved
in the offer or sale of Securities will be named, and any commissions
payable by the Transferor to such agent will be set forth, in the related
Prospectus Supplement. Unless otherwise indicated in the related Prospectus
Supplement, any such agent will act on a best efforts basis for the period
of its appointment.
Any underwriters, agents or dealers participating in the distribution
of Securities may be deemed to be underwriters, and any discounts or
commissions received by them on the sale or resale of Securities may be
deemed to be underwriting discounts and commissions, under the Securities
Act. Agents and underwriters may be entitled under agreements entered into
with the Transferor to indemnification by the Transferor against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
affiliates or customers of, engage in transactions with, or perform
services for, the Transferor or its affiliates in the ordinary course of
business.
Each underwriting agreement will provide that the Transferor will
indemnify the related underwriters against certain liabilities, including
liabilities under the Securities Act.
This Prospectus and the attached Prospectus Supplement may be used by
Chase Securities Inc., a wholly owned subsidiary of The Chase Manhattan
Corporation and an affiliate of the Transferor, in connection with offers
and sales related to market-making transactions in Securities. Chase
Securities Inc. may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the
time of sale.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Securities will
be passed upon for the Transferor by Simpson Thacher & Bartlett, New York,
New York. Certain legal matters relating to the issuance of the Securities
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York. Helene L. Kaplan, of counsel to Skadden,
Arps, Slate, Meagher & Flom LLP, is a member of the Board of Directors of
The Chase Manhattan Bank and The Chase Manhattan Corporation and owns _____
shares of the Corporation's common stock, with the associated rights
attached thereto, ________ units of the Corporation's common stock
equivalents which entitle the holder upon termination of service as a
member of the Corporation's Board of Directors to receive a cash payment
for each unit equal to the fair market value at that time of a share of the
Corporation's common stock and __________ units of the Corporation's common
stock equivalents which entitle the holder upon termination of service as a
member of the Corporation's Board of Directors to receive an equal number
of shares of the Corporation's common stock.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Securities are issued, monthly and annual
reports, containing information concerning the applicable Master Trust or
Owner Trust and prepared by the Servicer or the Administrator, will be sent
on behalf of such Master Trust or Owner Trust to Cede as nominee of DTC and
registered holder of the related Securities. See "Description of the
Securities -- Book-Entry Registration," "Description of the Certificates --
Reports to Certificateholders" and " -- Evidence as to Compliance." Such
reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The Servicer does not intend
to send any financial reports of Chase USA or CMB to the Securities Owners.
The Servicer will file with the SEC such periodic reports with respect to
the Master Trust and the Owner Trusts as are required under the Exchange
Act and the rules and regulations of the SEC thereunder.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Securities with the
SEC. This Prospectus is part of the registration statement, but the
registration statement includes additional information.
All required annual, monthly and special SEC reports and other
information will be filed by the Transferor with respect to the Master
Trust or will be filed by the Transferor with respect to each Owner Trust.
You may read and copy any reports, statements or other information we
file at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
(800) SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the
SEC Internet site (http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be part of this Prospectus. Information that we file later
with the SEC will automatically update the information in this Prospectus.
In all cases, you should rely on the later information over different
information included in this Prospectus or the Prospectus Supplement. We
incorporate by reference any future annual, monthly and special SEC reports
and proxy materials filed by or on behalf of the Master Trust and any
related Owner Trust until we terminate our offering of the Securities.
As a recipient of this Prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents
(unless the exhibits are specifically incorporated by reference), at no
cost, by writing or calling us at: Comptroller of Chase USA, 802 Delaware
Avenue, Wilmington, Delaware 19801, (302) 575-5000.
INDEX OF TERMS FOR PROSPECTUS
TERM PAGE
- ---- ----
Account Transfer Date........................................................3
Accounts .................................................................3
Accumulation Period.........................................................13
Addition Date...............................................................38
Additional Accounts.........................................................12
Additional Interest.........................................................46
Administrator...............................................................66
Amortization Period.........................................................13
Assignment ................................................................38
Bank .......................................................2, 24, II-1
Bank Portfolio...............................................................3
banking organization........................................................17
BIF ................................................................44
Cash Collateral Account.....................................................68
Cash Collateral Guaranty....................................................68
Cede ................................................................16
Cedelbank ................................................................20
Cedelbank Customers.........................................................20
Certificate Owner...........................................................76
Certificate Rate............................................................16
Certificateholders..........................................................13
Certificates.................................................................2
Chase Manhattan Series.......................................................4
Chase Manhattan Trust........................................................4
Chase Portfolio..............................................................3
Chase USA .............................................................2, 23
Chemical Bank Portfolio......................................................3
Class ................................................................13
clearing agency.............................................................17
clearing corporation........................................................17
Closing Date................................................................12
CMB ................................................................51
Code ................................................................75
Collateral Interest.........................................................69
Collection Account..........................................................44
Companion Series............................................................43
Comptroller ................................................................14
Controlled Accumulation Amount..............................................29
Controlled Amortization Amount..............................................28
Controlled Amortization Period..............................................28
Controlled Deposit Amount...................................................29
Controlled Distribution Amount..............................................28
Cooperative ................................................................20
Core Team .................................................................9
Corporation .................................................................9
COSO ................................................................56
Credit Enhancement..........................................................67
Credit Enhancement Percentage...............................................43
Credit Enhancement Provider.................................................54
Cut-Off Date................................................................12
Danielson ................................................................77
Defaulted Accounts..........................................................24
Definitive Securities.......................................................16
Deposit and Administration Agreement.........................................2
Depositaries................................................................17
Depository ................................................................16
Determination Date..........................................................47
Disclosure Document.........................................................32
Discount Option.............................................................40
Discount Option Receivables.................................................40
Discount Percentage.........................................................40
Distribution Accounts.......................................................40
Distribution Date...........................................................25
DOJ ................................................................75
DOL ................................................................86
DTC ................................................................99
DTC Participants............................................................17
Eligible Account............................................................35
Eligible Deposit Account....................................................40
Eligible Institution........................................................40
Eligible Receivable.........................................................36
Enhancement ................................................................11
Enhancement Invested Amount.................................................68
ERISA ................................................................86
Euroclear ................................................................20
Euroclear Operator..........................................................20
Euroclear Participants......................................................20
Events of Default...........................................................60
Excess Finance Charge Collections...........................................46
Exchange ................................................................32
Exchange Act................................................................17
FDIC ................................................................24
FDR .................................................................3
FFIEC .................................................................8
Finance Charge Account......................................................40
Finance Charge Receivables..................................................12
FIRREA ................................................................72
Full Investor Interest......................................................42
Funding Period..............................................................41
General Account Regulations.................................................89
Global Securities...........................................................99
Group ................................................................46
Holders ................................................................22
Indenture .................................................................2
Indenture Trustee............................................................2
Indirect Participants.......................................................17
Ineligible Receivable.......................................................34
Interchange .................................................................9
Interest Funding Account....................................................25
investment company......................................................30, 60
Investor Charge-Off.........................................................46
Investor Default Amount.....................................................46
Investor Interest...........................................................23
Investor Percentage.........................................................24
Investor Servicing Fee......................................................46
IRS ................................................................76
John Hancock................................................................89
L/C Bank ................................................................68
Master Trust.................................................................2
Master Trust Trustee.........................................................2
MasterCard International.....................................................4
MGT/EOC ................................................................20
Minimum Transferor Interest.................................................33
Monthly Interest............................................................46
Monthly Period..............................................................25
Moody's ................................................................41
New Chase Portfolio..........................................................3
New Chemical Bank Portfolio..................................................3
Non-U.S. Certificate Owner..................................................76
Non-U.S. Note Owner.........................................................76
Non-U.S. Security Owner.....................................................77
Note Documents...............................................................2
Note Owner ................................................................76
Note Rate ................................................................16
Note Reserve Account.........................................................3
Noteholders ................................................................59
Notes .................................................................2
OID ................................................................78
Old Chase Portfolio..........................................................3
Old Chemical Bank Portfolio..................................................3
Owner Trust .................................................................2
Owner Trustee................................................................2
Participation Agreement.....................................................37
Participations..............................................................37
Pay Out Event...............................................................30
Paying Agent................................................................41
Payment Date................................................................62
Permitted Investments.......................................................41
Plan Assets Regulation......................................................87
Plans ................................................................86
Pooling and Servicing Agreement..............................................2
Pre-Funding Account.........................................................41
Pre-Funding Amount..........................................................41
Principal Account...........................................................40
Principal Amortization Period...............................................28
Principal Commencement Date.................................................26
Principal Funding Account...................................................27
Principal Receivables.......................................................11
Principal Terms.............................................................32
Program Office...............................................................9
Prospectus Supplement........................................................2
Rapid Accumulation Period...................................................30
Rapid Amortization Period...................................................30
Rating Agency...........................................................32, 71
Receivables .................................................................3
Record Date ................................................................16
Recoveries .................................................................9
Related Documents...........................................................63
Removed Accounts............................................................12
Reserve Account.............................................................70
Revolving Period............................................................27
SAIF ................................................................44
Scheduled Payment Date......................................................26
SEC ................................................................17
Securities ................................................................15
Securities Act..............................................................32
Securities Owner............................................................16
Securitized Chase Portfolio..................................................4
Security Owner..............................................................76
Security Rate...............................................................16
Securityholders..............................................................4
Senior Securities...........................................................15
Series .............................................................2, 99
Series Certificate...........................................................2
Series Supplement...........................................................15
Series Termination Date.....................................................49
Service Transfer............................................................53
Servicer ................................................................51
Servicer Default............................................................53
Servicing Fee...............................................................50
Shared Principal Collections................................................47
Spread Account..............................................................70
Standard & Poor's...........................................................41
Subordinated Securities.....................................................15
Tax Counsel ................................................................76
Tax Opinion ................................................................33
Terms and Conditions........................................................21
Transaction Agreements......................................................66
Transfer Date...............................................................29
Transferor ................................................................14
Transferor Certificate.......................................................2
Transferor Interest.........................................................23
Transferor Percentage.......................................................24
Trust Agreement..............................................................2
Trust Portfolio.............................................................12
Trust Termination Date......................................................49
U.S. ................................................................75
U.S. Certificate Owner......................................................76
U.S. Note Owner.............................................................76
U.S. Person ...............................................................102
U.S. Security Owner.........................................................76
UCC ................................................................71
Unallocated Principal Collections...........................................45
VISA .................................................................4
Withholding Agent...........................................................82
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase
Credit Card Master Trusts Asset Backed Securities (the "GLOBAL SECURITIES")
to be issued in Series from time to time (each, a "SERIES") will be
available only in book-entry form. Investors in the Global Securities may
hold such Global Securities through any of The Depository Trust Company
("DTC"), Cedelbank or Euroclear. The Global Securities will be tradeable as
home market instruments in both the European and U.S. domestic markets.
Initial settlement and all secondary trades will settle in same day funds.
Secondary market trading between investors holding Global Securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding Securities will be effected on a
delivery-against-payment basis through the respective Depositaries of
Cedelbank and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on
their behalf as direct and indirect Participants in DTC. As a result,
Cedelbank and Euroclear will hold positions on behalf of their participants
through their respective Depositaries, which in turn will hold such
positions in accounts as DTC Participants.
Custody accounts of investors electing to hold their Global
Securities through DTC will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedelbank
or Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and
seller's accounts are located to ensure that settlement can be made on the
desired value date.
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary
market trading between Cedelbank Customers or Euroclear Participants will
be settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC
Participant to the account of a Cedelbank Customer or a Euroclear
Participant, the purchaser will send instructions to Cedelbank or Euroclear
through a Cedelbank Customer or Euroclear Participant at least one business
day prior to settlement. Cedelbank or Euroclear will instruct the
respective Depositary, as the case may be, to receive the Global Securities
against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by the respective depositary
to the DTC Participant's account against delivery of the Global Securities.
After settlement has been completed, the Global Securities will be credited
to the respective clearing system and by the clearing system, in accordance
with its usual procedures, to the Cedelbank Customer's or Euroclear
Participant's account. The Global Securities credit will appear the next
day (European time) and the cash debit will be back-valued to, and the
interest on the Global Securities will accrue from, the value date (which
would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade
fails), the Cedelbank or Euroclear cash debit will be valued instead as of
the actual settlement date.
Cedelbank Customers and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within
Cedelbank or Euroclear. Under this approach, they may take on credit
exposure to Cedelbank or Euroclear until the Global Securities are credited
to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank Customers or Euroclear Participants can elect not
to pre-position funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedelbank Customers or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities
were credited to their accounts. However, interest on the Global Securities
would accrue from the value date. Therefore, in many cases the investment
income on the Global Securities earned during that one-day period may
substantially reduce or offset the amount of such overdraft charges,
although this result will depend on each Cedelbank Customer's or Euroclear
Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Securities to the respective Depositary for the benefit of Cedelbank
Customers or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participant a
cross-market transaction will settle no differently than a trade between
two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due
to time zone differences in their favor, Cedelbank Customers and Euroclear
Participants may employ their customary procedures for transactions in
which Global Securities are to be transferred by the respective clearing
system, through the respective Depositary, to a DTC Participant. The seller
will send instructions to Cedelbank or Euroclear through a Cedelbank
Customer or Euroclear Participant at least one business day prior to
settlement. In these cases, Cedelbank or Euroclear will instruct the
respective Depositary, as appropriate, to deliver the bonds to the DTC
Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date. The payment will then be
reflected in the account of the Cedelbank Customer or Euroclear Participant
the following day, and receipt of the cash proceeds in the Cedelbank
Customer's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedelbank Customer or Euroclear Participant have a
line of credit with its respective clearing system and elect to be in debit
in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedelbank
Customer's or Euroclear Participant's account would instead be valued as of
the actual settlement date. Finally, day traders that use Cedelbank or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to Cedelbank Customers or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
(1) borrowing through Cedelbank or Euroclear for one day (until
the purchase side of the day trade is reflected in their Cedelbank or
Euroclear accounts) in accordance with the clearing system's
customary procedure;
(2) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement which would
give the Global Securities sufficient time to be reflected in their
Cedelbank or Euroclear account in order to settle the sale side of
the trade; or
(3) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale
to the Cedelbank Customer or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue document) on
registered debt issued by U.S. Persons, unless (i) each clearing system,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business in the chain of intermediaries
between such beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Securities that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Securities Owners residing
in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing
Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty
provides only for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed
by the Securities Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. PERSON" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any state, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of its source or (iv) a trust the income of which is
subject to United States federal income taxation regardless of its source;
provided, however, that for tax years beginning after December 31, 1996
(and, if a trustee so elects, for tax years ending after August 20, 1996),
a "U.S. PERSON" shall include any trust (x) which is subject to the
supervision of a court within the United States and the control of a United
States person as described in section 7701(a)(30) of the Code or (y) that
has a valid election in effect under applicable U.S. treasury regulations
to be treated as a United States person. This summary does not deal with
all aspects of U.S. Federal income tax withholding that may be relevant to
foreign holders of the Global Securities. Investors are advised to consult
their own tax advisors for specific tax advice concerning their holding and
disposing of the Global Securities.
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee.................................. $278
Printing and Engraving ........................... *
Trustee's Fees ................................... *
Legal Fees and Expenses .......................... *
Blue Sky Fees and Expenses ....................... *
Accountants' Fees and Expenses ................... *
Rating Agency Fees ............................... *
Miscellaneous Fees ............................... ______
Total.......................................... $ *
======
- ------------
* to be provided by amendment.
Item 15. Indemnification of Directors and Officers
Article IX of the By-laws of Chase Manhattan Bank USA, National
Association (the "BANK") provide that any person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "PROCEEDING"), by reason of the fact that he or she is or
was a director or officer of the Bank or is or was serving at the request
of the Bank as a director, officer, employee or agent or another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (an
"INDEMNITEE"), whether the basis for such proceeding is alleged action in
an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Bank to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Bank to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in the second following paragraph with respect to
proceedings to enforce rights to indemnification, the Bank shall indemnify
any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the board of directors of the Bank.
The right to indemnification described in the immediately preceding
paragraph shall include the right to be paid by the Bank the expenses
incurred in defending any proceeding for which such right to
indemnification is applicable in advance of its final disposition
(hereafter an "ADVANCEMENT OF EXPENSES"); provided, however, that, if the
Delaware General Corporation Law requires an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Bank of an undertaking
(hereinafter an "UNDERTAKING"), by or on behalf of such indemnitee, to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal
(hereinafter a "FINAL ADJUDICATION") that such indemnitee is not entitled
to be indemnified for such expenses under such Article IX or otherwise.
The rights to indemnification and to the advancement of expenses
described in the two preceding paragraphs are contract rights. If a claim
under either of such paragraphs is not paid in full by the Bank within
sixty days after a written claim has been received by the Bank except in
the case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may at any time
thereafter bring suit against the Bank to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, or in a suit
brought by the Bank to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also
the expense of prosecuting or defending such suit. In any suit brought b
the indemnitee to enforce a right to indemnification under such Article IX
(but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and in any suit by the
Bank to recover an advancement of expenses pursuant to the terms of an
undertaking, the Bank shall be entitled to recover such expense upon a
final adjudication that, the indemnitee has not met any applicable standard
for indemnification set forth in the Delaware General Corporation Law.
Neither the failure of the Bank (including its board of directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification
of the indemnitee is proper in the circumstances because the indemnitee has
met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Bank (including its
board of directors, independent legal counsel, or its stockholders) that
the indemnitee has not met such applicable standard of conduct shall create
a presumption that the indemnitee has not met such applicable standard of
conduct or, in the case of such a suit brought by the indemnitee, be a
defense to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses under such
Article IX, or by the Bank to recover an advancement of expenses pursuant
to the terms of an undertaking, the burden of proving that the indemnitee
is not entitled to be indemnified, or to such advancement of expenses,
under such Article IX or otherwise shall be on the Bank.
Article IX of the Bank's By-Laws also provides that the foregoing
right of indemnification or reimbursement shall not be exclusive of other
rights to which any person may be entitled under any statute, Articles of
Association, by-law, agreement, or vote of stockholders of disinterested
stockholders or otherwise. Section 145 of the Delaware General Corporation
Law provides that a Delaware corporation must indemnify a director or
officer who has defended successfully, on the merits or otherwise, any
proceeding against him or any claim, matter or issue therein, for
reasonable expenses actually incurred in such defense.
There are directors and officers liability insurance policies
presently outstanding which insure directors and officers of the Bank, the
Bank's parent and certain of its subsidiaries. The policies cover losses
for which the Bank, the Bank's parent or any of those subsidiaries shall be
required or permitted by law to indemnify directors and officers and which
result from claims made against such directors or officers based upon the
commission of wrongful acts in the performance of their duties. The
policies also cover losses which the directors or officers must pay as the
result of claims brought against them based upon the commission of wrongful
acts in the performance of their duties and for which they are not
indemnified by the Bank, the Bank's parent or any of those subsidiaries.
The losses covered by the policies are subject to certain exclusions and do
not include fines or penalties imposed by law or other matters deemed
uninsurable under the law. The policies contain self-insured retention
provisions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
1.1-- Form of Underwriting Agreement for Certificates
(incorporated by reference to Exhibit 1.1 to the
Registration Statement on Form S-3 of Chemical Bank
(No. 33-94190)).*
1.2-- Form of Underwriting Agreement for Notes.*
4.1-- Amended and Restated Pooling and Servicing Agreement,
dated as of June 1, 1996, among the Registrant, Chemical
Bank and The Bank of New York (incorporated by reference
to Exhibit 4.2 to the Registration Statement on From S-3
of the Registrant (No. 333-04607)).*
4.2-- Form of Trust Agreement of Chase Credit Card Owner Trust
199__ between the Transferor and the Owner Trustee.*
4.3-- Form of Deposit and Administration Agreement among the
Transferor, the Administrator and Chase Credit Card Owner
Trust 199__.*
4.4-- Form of Indenture between Chase Credit Card Owner Trust
199__ and the Indenture Trustee *
4.5-- Form of Note (contained in Exhibit 4.4)*
5.1-- Opinion of Simpson Thacher & Bartlett.*
8.1-- Opinion of Simpson Thacher & Bartlett with respect to
certain tax matters (included in opinion to be filed as
Exhibit 5.1).*
23.1-- Consent of Simpson Thacher & Bartlett (included in
opinion to be filed as Exhibit 5.1).*
24.1-- Powers of Attorney.
25.1-- Form T-1 of Indenture Trustee*
99.1-- Form of Prospectus Supplement for Certificates.
99.1-- Form of Prospectus Supplement for Notes.
- ------------------------
* to be filed by amendment
(b) Financial Statements
All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "ACT"); notwithstanding
the foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; (ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that (a)(i) and (a)(ii) will not apply
if the information required to be included in a post-effective
amendment thereby is contained in periodic reports filed pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(b) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold
at the termination of the offering.
(d) That, for purposes of determining any liability under the
Act, each filing of the Master Trust's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(e) That insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under
Item 15 above, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(f) That, for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) under the Act shall be deemed to be part of
this Registrant Statement as of the time it was declared effective.
(g) That, for the purpose of determining any liability under
the Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable ground to believe
that it meets all the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wilmington, State of
Delaware, on March __, 1999
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION
as originator of the Trust
By \s\ Keith Schuck
--------------------------------
Keith Schuck
Controller
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed on March __, 1999 by
the following persons in the capacities indicated.
SIGNATURES TITLE
---------- -----
* Chairman of the Board and Director
_________________________________
Donald L. Boudreau
* President (Chief Executive Officer) and
__________________________________ Director
Michael Barrett
*
__________________________________ Director
Luke S. Hayden
* Director
__________________________________
William H. Hoefling
* Director
__________________________________
Kevin T. Hurley
* Director
__________________________________
Thomas Jacob
* Director
__________________________________
John M. Nuzum
* Director
__________________________________
Peter Schleif
__________________________________ Director
Michael Urkowitz
\s\ Keith Schuck Vice President and Controller (Chief
__________________________________ Financial Officer and Principal
Keith Schuck Accounting Officer)
- ------------------------
* The undersigned, by signing his name hereto, does hereby sign this
Registration Statement on behalf of each of the above-indicated
directors and officers of the Registrant pursuant to powers of
attorney signed by such directors and officers.
\s\ Keith Schuck
------------------------
Keith Schuck
Attorney-in-Fact