[EXECUTION COPY]
Exhibit 10.24
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PRIME II RECEIVABLES CORPORATION
Transferor
FDS BANK
Servicer
and
JPMORGAN CHASE BANK
Trustee
on behalf of the Series 2002-1 Certificateholders
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SERIES 2002-1 VARIABLE FUNDING SUPPLEMENT
Dated as of November 6, 2002
to
POOLING AND SERVICING AGREEMENT
Dated as of January 22, 1997
------------------------------
Class A Variable Funding Certificates, Series 2002-1
Class B Variable Funding Certificates, Series 2002-1
PRIME CREDIT CARD MASTER TRUST II
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TABLE OF CONTENTS
SECTION 1. DESIGNATION.......................................................2
SECTION 2. DEFINITIONS.......................................................2
SECTION 3. REASSIGNMENT AND TRANSFER TERMS..................................19
SECTION 4. DELIVERY AND PAYMENT FOR THE SERIES 2002-1 CERTIFICATES..........20
SECTION 5. DEPOSITARY; FORM OF DELIVERY OF SERIES 2002-1 CERTIFICATES.......20
SECTION 6. ADDITION AND REMOVAL OF ACCOUNTS.................................20
SECTION 7. ARTICLE IV OF THE AGREEMENT......................................21
SECTION 8. ARTICLE V OF THE AGREEMENT.......................................40
SECTION 9. ARTICLE VI OF THE AGREEMENT......................................42
SECTION 10. SERIES 2002-1 PAY OUT EVENTS.....................................49
SECTION 11. SUCCESSOR SERVICER AND DELEGATION................................52
SECTION 12. SUCCESSOR TRUSTEE................................................52
SECTION 13. NOTICES TO ADMINISTRATIVE AGENT..................................53
SECTION 14. CHARGE ACCOUNT AGREEMENTS AND CREDIT AND COLLECTION POLICIES.....54
SECTION 15. MINIMUM DENOMINATIONS............................................54
SECTION 16. CASH EQUIVALENTS.................................................54
SECTION 17. AUTOMATIC ADDITIONAL ACCOUNTS....................................54
SECTION 18. SERIES 2002-1 TERMINATION........................................54
SECTION 19. ACTIONS BY ADMINISTRATIVE AGENT..................................54
SECTION 20. PERIODIC FINANCE CHARGES AND OTHER FEES..........................55
SECTION 21. RATING AGENCY CONDITION..........................................55
SECTION 22. DISTRIBUTION ACCOUNT.............................................55
SECTION 23. CERTIFICATE PURCHASE AGREEMENTS..................................55
SECTION 24. RATIFICATION OF AGREEMENT........................................55
SECTION 25. COUNTERPARTS.....................................................55
SECTION 26. GOVERNING LAW....................................................55
SECTION 27. THE TRUSTEE......................................................56
SECTION 28. INSTRUCTIONS IN WRITING..........................................56
i
LIST OF EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT A-3 Form of Class C Certificate
EXHIBIT B Form of Extension Notice
EXHIBIT C Form of Investor Certificate Election Notice
EXHIBIT D Form of Investment Letter for Series C
EXHIBIT E Form of Servicer Report
ii
SERIES 2002-1 VARIABLE FUNDING SUPPLEMENT, dated as of November 6, 2002
(this "VARIABLE FUNDING SUPPLEMENT") by and among PRIME II RECEIVABLES
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware, as Transferor (the "Transferor"), FDS BANK ("FDSB"), a federal thrift
institution organized and existing under the federal laws of the United States,
successor in interest to FDS National Bank, as Servicer (the "Servicer"), and
JPMORGAN CHASE BANK, a banking corporation organized and existing under the laws
of State of New York, successor in interest to The Chase Manhattan Bank, as
trustee (together with its successors in trust thereunder as provided in the
Agreement referred to below, the "TRUSTEE") under the Pooling and Servicing
Agreement dated as of January 22, 1997 (the "AGREEMENT") among the Transferor,
the Servicer and the Trustee.
Section 6.9 of the Agreement provides, among other things, that the
Transferor and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the issuance by the
Trustee to the Transferor, for execution and redelivery to the Trustee for
authentication, one or more Series of Certificates.
Pursuant to this Variable Funding Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof.
SECTION 1. DESIGNATION. There is hereby created a Series of Investor
Certificates to be issued pursuant to the Agreement and this Variable Funding
Supplement to be known generally as the "SERIES 2002-1 VARIABLE FUNDING
CERTIFICATES." The Series 2002-1 Variable Funding Certificates shall be issued
in two Classes, which shall be designated generally as the Class A Variable
Funding Certificates, Series 2002-1 (the "CLASS A VARIABLE FUNDING
CERTIFICATES"), and the Class B Variable Funding Certificates, Series 2002-1
(the "CLASS B VARIABLE FUNDING CERTIFICATES"). In addition, there is also hereby
created a third Class of interest in the Trust which shall be deemed to be an
"Investor Certificate" for all purposes under the Agreement and this Variable
Funding Supplement, except as expressly provided herein, and which shall be
known as the Class C Certificates, Series 2002-1 (the "CLASS C CERTIFICATES").
The Series 2002-1 Variable Funding Certificates and the Class C Certificates are
collectively referred to sometimes in this Variable Funding Supplement as the
"SERIES 2002-1 CERTIFICATES". There is hereby established a Group to be known as
"Group I", in which the Series 2002-1 shall be included as the initial member.
The Class C Certificates shall be Transferor Retained Certificates so long as
and to the extent held of record by the Transferor.
SECTION 2. DEFINITIONS. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any provision contained in
the Agreement, the terms and provisions of this Variable Funding Supplement
shall govern. All Article, Section or subsection references herein shall mean
Article, Section or subsections of the Agreement, as amended or supplemented by
this Variable Funding Supplement except as otherwise provided herein. All
capitalized terms not otherwise defined herein are defined in the Agreement or
in the applicable Certificate Purchase Agreement. Each capitalized term defined
herein shall relate only to the Series 2002-1 Certificates and no other Series
of Certificates issued by the Trust.
"AAA RESERVE ACCOUNT TRIGGER" shall mean, with respect to any
Determination Date (i) the Payment Rate Percentage for the Monthly Period
immediately preceding such Determination Date being less than 18%, (ii) the
Delinquency Ratio for the Monthly Period immediately preceding such
Determination Date being greater than 5%, or (iii) the Charge Off Ratio for the
Monthly Period immediately preceding such Determination Date being greater than
10%.
"ADMINISTRATIVE AGENT" shall mean Bank One, NA (Main Branch Chicago), or
any successor designated as the Administrative Agent in the Class A Certificate
Purchase Agreement and the Class B Certificate Purchase Agreement.
"AMORTIZATION PERIOD" shall mean the period commencing on the Amortization
Period Commencement Date and ending on the earlier to occur of (i) the date of
termination of the Trust pursuant to Section 12.1 of the Agreement or (ii) the
Series 2002-1 Termination Date.
"AMORTIZATION PERIOD COMMENCEMENT DATE" shall mean, initially, with
respect to the Investor Certificates, the earlier of the first day of the
November 2005 Monthly Period and the Pay Out Commencement Date, and, with
respect to an Extension, the earlier of the date specified as such in the
Extension Notice and the Pay Out Commencement Date.
2
"ANNUAL PORTFOLIO TURNOVER RATE" shall mean with respect to any Business
Day during a Monthly Period, the aggregate of Receivables arising under Accounts
from sales of goods and services or cash advances, excluding any portion thereof
representing Periodic Finance Charges, Late Fees, annual membership fees or
other fees and similar charges during each of the twelve Monthly Periods ending
on the last day of the second preceding Monthly Period DIVIDED by the average of
the aggregate Outstanding Balances of Receivables as of the last day of each
such Monthly Period.
"ASSIGNEE" shall have the meaning specified in subsection 6.18(b) of the
Agreement.
"AUTOMATIC ADDITION PERCENTAGE" shall mean for any date of determination
(i) if an AAA Reserve Account Trigger has occurred and is continuing on such
date of determination, 2.0%, and (ii) on any other date of determination, 0.0%;
provided, that if a Reserve Account Increase Notice shall have been delivered
and an AAA Reserve Account Trigger has occurred and is continuing, the Automatic
Addition Percentage shall not exceed 100% minus the Enhancement Percentage then
in effect.
"AVAILABLE RESERVE AMOUNT" shall mean, for any Business Day, the lesser of
(i) the amount on deposit in the Reserve Account on such Business Day (after
giving effect to any deposit to, or withdrawal from, the Reserve Account to be
made with respect to such Business Day), and (ii) the Required Reserve Amount as
of such Business Day.
"BASE RATE" shall mean, with respect to the Investor Certificates, the sum
of (i) the weighted average of the annualized Class A Certificate Rate, the
annualized Class B Certificate Rate and the annualized Class C Certificate Rate
and (ii) the Series Servicing Fee Percentage per annum.
"CARRYOVER DISCOUNT AMOUNT" shall mean, for Series 2002-1 for any Business
Day, the excess, if any, of (i) the sum of (A) the product of the Discount
Allocation Percentage and the Discount Amount and (B) the Carryover Discount
Amount for Series 2002-1 for the preceding Business Day over (ii) the amount of
Principal Collections added to Total Finance Charge Collections for such Series
on such preceding Business Day.
"CERTIFICATE PURCHASE AGREEMENTS" shall mean the Class A Certificate
Purchase Agreement and the Class B Certificate Purchase Agreement.
"CHARGE OFF RATIO" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is the
Investor Default Amount for such Monthly Period and the denominator of which is
the average daily Invested Amount during such Monthly Period.
"CLASS A ADDITIONAL PAYMENTS" shall mean amounts payable pursuant to
Section 2.4 or 2.5 of the Class A Certificate Purchase Agreement in an aggregate
amount not exceeding, for any Business Day, the product of (i) a fraction, the
numerator of which is the actual number of days from and including the preceding
Business Day to but excluding such Business Day and the denominator of which is
360, (ii) 0.25% and (iii) the Class A Invested Amount for such Business Day.
3
"CLASS A AGENT" shall mean Bank One, NA (Main Office Chicago), or any
successor at the time designated as the Agent for the Class A Certificateholders
under the Class A Certificate Purchase Agreement.
"CLASS A CARRYING COST DAILY FACTOR" shall mean, on any Business Day, the
Class A Carrying Costs for such Business Day DIVIDED by the Class A Invested
Amount for such Business Day.
"CLASS A CARRYING COSTS" shall mean, for any Business Day, the sum
allocated to the Class A Certificates of (a) as to any Structured Purchaser, the
amount of all accrued Commercial Paper Costs since the preceding Business Day
and (b) as to the Committed Purchasers and any liquidity providers, the amount
of all accrued Yield since the preceding Business Day.
"CLASS A CERTIFICATE PURCHASE AGREEMENT" shall mean the Class A
Certificate Purchase Agreement, dated as of November 6, 2002, among the
Transferor, the Servicer, the purchasers of Class A Certificates named therein
and Bank One, NA (Main Office Chicago), as the Class A Agent and the
Administrative Agent, as amended from time to time.
"CLASS A CERTIFICATE RATE" shall mean, with respect to the Class A
Certificates, the Class A Carrying Cost Daily Factor.
"CLASS A CERTIFICATEHOLDER" shall mean any Person in whose name a Class A
Certificate is registered in the Certificate Register.
"CLASS A CERTIFICATEHOLDERS' INTEREST" shall mean the portion of the
Series 2002-1 Certificateholders' Interest evidenced by the Class A
Certificates.
"CLASS A CERTIFICATES" shall mean any of the Certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-1 hereto.
"CLASS A DAILY PRINCIPAL AMOUNT" shall have the meaning specified in
subsection 4.6(e)(i) of the Agreement.
"CLASS A FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount for such Business Day and the denominator of which
is the sum of the amount of Principal Receivables in the Trust and the amount on
deposit in the Excess Funding Account as of the end of the preceding Business
Day.
"CLASS A INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Class A Certificates on the Issuance Date.
"CLASS A INTEREST" shall mean with respect to any Business Day an amount
equal to the product of the Class A Certificate Rate and the outstanding
principal balance of the Class A Certificates as of the close of business on
such Business Day.
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"CLASS A INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to (a) the Class A Initial Invested Amount, PLUS
(b) the aggregate principal amount of any VFC Additional Class A Invested
Amounts purchased by the Class A Certificateholders through the end of the
preceding Business Day pursuant to Section 6.15 of the Agreement, MINUS (c) the
aggregate amount of principal payments made to the Class A Certificateholders
prior to such Business Day and MINUS (d) the excess, if any, of the aggregate
amount of unreimbursed Class A Investor Charge-Offs for all Distribution Dates
preceding such date over Class A Investor Charge-Offs reimbursed pursuant to
subsection 4.8(c) of the Agreement prior to such Business Day.
"CLASS A INVESTOR CHARGE-OFF" shall have the meaning specified in
subsection 4.8(c) of the Agreement.
"CLASS A INVESTOR PERCENTAGE" shall mean, for any Business Day, the Class
A Invested Amount as a percentage of the Invested Amount on such Business Day.
"CLASS A PROGRAM FEE" shall mean the fees or other amounts payable
pursuant to subsection 2.3(a) of the Class A Certificate Purchase Agreement, to
the extent not included in Class A Carrying Costs.
"CLASS A REQUIRED AMOUNT" shall mean the amount, if any, by which (x) the
sum of the amounts described in subsections 4.6(a)(i), (v), (vi) or (viii) of
the Agreement during the Revolving Period or subsections 4.6(b)(i), (v), (vi) or
(viii) or 4.6(c)(i), (v), (vi) or (viii) of the Agreement during the
Amortization Period, as applicable, plus the Class A Investor Percentage of the
amount described in subsection 4.6(a)(iv) of the Agreement during the Revolving
Period, or subsection 4.6(b)(iv) or 4.6(c)(iv) of the Agreement during the
Amortization Period, as applicable, exceeds (y) the Total Finance Charge
Collections available for application thereto pursuant to subsections 4.6(a),
(b) or (c) of the Agreement, as applicable, on any Business Day.
"CLASS A SUPPLEMENTAL PAYMENTS" shall mean, on any Business Day, the sum
of all unpaid amounts owed to the Administrative Agent, the Class A Agent or any
Class A Purchaser (as defined in the Class A Purchase Agreement) pursuant to the
Class A Certificate Purchase Agreement which have arisen prior to such Business
Day (including, without limitation, amounts payable pursuant to Section 2.4 or
2.5 of the Class A Purchase Agreement on any Business Day in excess of the
maximum amount of Class A Additional Payments for such Business Day), other than
Class A Interest, Class A Additional Payments and the unpaid principal amount of
the Class A Certificates.
"CLASS B ADDITIONAL PAYMENTS" shall mean amounts payable pursuant to
Section 2.4 or 2.5 of the Class B Certificate Purchase Agreement in an aggregate
amount not exceeding, for any Business Day, the product of (i) a fraction, the
numerator of which is the actual number of days from and including the preceding
Business Day to but excluding such Business Day and the denominator of which is
360, (ii) 0.25% and (iii) the Class B Invested Amount for such Business Day.
5
"CLASS B AGENT" shall mean Bank One, NA (Main Office Chicago), or any
successor at the time designated as the Agent for the Class B Certificateholders
under the Class B Certificate Purchase Agreement.
"CLASS B CARRYING COST DAILY FACTOR" shall mean, on any Business Day, the
Class B Carrying Costs for such Business Day DIVIDED by the Class B Invested
Amount for such Business Day.
"CLASS B CARRYING COSTS" shall mean, for any Business Day, the sum
allocated to the Class B Certificates of (a) as to any Structured Purchaser, the
amount of all accrued Commercial Paper Costs since the preceding Business Day
and (b) as to the Committed Purchasers and any liquidity providers, the amount
of all accrued Yield since the preceding Business Day.
"CLASS B CERTIFICATE PURCHASE AGREEMENT" shall mean the Class B
Certificate Purchase Agreement, dated as of November 6, 2002, among the
Transferor, the Servicer, the purchasers of Class B Certificates named therein
and Bank One, NA (Main Office Chicago), as the Class B Agent and the
Administrative Agent, as amended from time to time.
"CLASS B CERTIFICATE RATE" shall mean the Class B Carrying Cost Daily
Factor.
"CLASS B CERTIFICATEHOLDER" shall mean any Person in whose name a Class B
Certificate is registered in the Certificate Register.
"CLASS B CERTIFICATEHOLDERS' INTEREST" shall mean the portion of the
Series 2002-1 Certificateholders' Interest evidenced by the Class B
Certificates.
"CLASS B CERTIFICATES" shall mean any of the Certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-2 hereto.
"CLASS B DAILY PRINCIPAL AMOUNT" shall have the meaning specified in
subsection 4.6(e)(ii) of the Agreement.
"CLASS B FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to
any Business Day, the percentage equivalent of a fraction the numerator of which
is equal to the Class B Invested Amount for the day immediately following the
last day of the Revolving Period and the denominator of which is equal to the
greater of (x) the sum of the aggregate amount of Principal Receivables in the
Trust and the amount on deposit in the Excess Funding Account as of the end of
the preceding Business Day and (y) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Receivables of all Series
outstanding on such Business Day.
"CLASS B FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount for such Business Day and the denominator of which
is the sum of
6
the total amount of Principal Receivables in the Trust and the amount on deposit
in the Excess Funding Account as of the end of the preceding Business Day.
"CLASS B INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Class B Certificates on the Issuance Date.
"CLASS B INTEREST" shall mean, with respect to any Business Day, an amount
equal to the product of the Class B Certificate Rate and the outstanding
principal balance of the Class B Certificates as of the close of business on
such Business Day.
"CLASS B INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to (a) the Class B Initial Invested Amount, PLUS
(b) the aggregate principal amount of any VFC Additional Class B Invested
Amounts purchased by the Class B Certificateholders through the end of the
preceding Business Day pursuant to Section 6.15 of the Agreement, MINUS (c) the
aggregate amount of principal payments made to Class B Certificateholders prior
to such Business Day, MINUS (d) the aggregate amount of Class B Investor
Charge-Offs and the amount of Reallocated Class B Principal Collections for all
prior Business Days and PLUS (e) the aggregate amount allocated to the Class B
Certificates and available on all prior Business Days in accordance with
subsection 4.8(b) of the Agreement, for the purpose of reimbursing amounts
deducted pursuant to the foregoing clause (d).
"CLASS B INVESTOR CHARGE-OFF" shall have the meaning specified in
subsection 4.8(b) of the Agreement.
"CLASS B INVESTOR PERCENTAGE" shall mean, for any Business Day, the Class
B Invested Amount as a percentage of the Invested Amount on such Business Day.
"CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean, following an
Amortization Period Commencement Date, the earlier of (a) the Business Day on
which the Class A Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 2002-1 Certificates remaining after payments
have been made to the Class A Certificates on such Business Day, the Business
Day following the Business Day on which the Class A Invested Amount is paid in
full and (b) the Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(d), 9.2, 10.2, 12.1 or 12.2 of the
Agreement or Section 3 of this Variable Funding Supplement.
"CLASS B PROGRAM FEE" shall mean the fees payable pursuant to subsection
2.3(a) of the Class B Certificate Purchase Agreement, to the extent not included
in Class B Carrying Costs.
"CLASS B REQUIRED AMOUNT" shall mean the amount, if any, by which (x) the
sum of the amounts described in subsections 4.6(a)(ii), (v), (vii) or (ix) of
the Agreement during the Revolving Period or subsections 4.6(b)(ii), (v), (vii)
or (ix) or 4.6(c)(ii), (v), (vii) or (ix) of the Agreement during the
Amortization Period, as applicable, plus the Class B Investor Percentage of the
amount described in subsection 4.6(a)(iv) of the Agreement during the Revolving
Period, or subsection 4.6(b)(iv) or 4.6(c)(iv) of the Agreement during the
Amortization Period, as applicable, exceeds (y) the Total Finance Charge
Collections available
7
for application thereto pursuant to subsections 4.6(a), (b) or (c) of the
Agreement, as applicable, on any Business Day.
"CLASS B SUPPLEMENTAL PAYMENTS" shall mean, on any Business Day, the sum
of all unpaid amounts owed to the Administrative Agent, the Class B Agent or any
Class B Purchaser (as defined in the Class B Purchase Agreement) pursuant to the
Class B Certificate Purchase Agreement which have arisen prior to such Business
Day (including, without limitation, amounts payable pursuant to Section 2.4 or
2.5 of the Class B Purchase Agreement on any Business Day in excess of the
maximum amount of Class B Additional Payments for such Business Day), other than
Class B Interest, Class B Additional Payments and the unpaid principal amount of
the Class B Certificates.
"CLASS C ADDITIONAL INTEREST" shall have the meaning specified in
subsection 6.17(c) of the Agreement.
"CLASS C ASSIGNEE" shall have the meaning specified in subsection 6.17(a)
of the Agreement.
"CLASS C CERTIFICATE RATE" shall mean 0% per annum; PROVIDED, HOWEVER,
that such rate may be increased pursuant to the terms of a supplemental
agreement entered into in accordance with subsection 6.17(c) of the Agreement.
"CLASS C CERTIFICATEHOLDER" shall mean any Person in whose name a Class C
Certificate is registered in the Certificate Register.
"CLASS C CERTIFICATEHOLDERS' INTEREST" shall mean the portion of the
Series 2002-1 Certificateholders' Interest evidenced by the Class C
Certificates.
"CLASS C CERTIFICATES" shall mean any of the Certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-3 hereto.
"CLASS C DAILY PRINCIPAL AMOUNT" shall have the meaning specified in
subsection 4.6(e)(iii) of the Agreement.
"CLASS C FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to
any Business Day, the percentage equivalent of a fraction the numerator of which
is equal to the Class C Invested Amount for the day immediately following the
last day of the Revolving Period and the denominator of which is equal to the
greater of (x) the sum of the aggregate amount of Principal Receivables in the
Trust and the amount on deposit in the Excess Funding Account as of the end of
the preceding Business Day and (y) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Receivables of all Series
outstanding on such Business Day.
"CLASS C FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class C Invested Amount for such Business Day and the denominator of which
is the sum of
8
the total amount of Principal Receivables in the Trust and the amount on deposit
in the Excess Funding Account as of the end of the preceding Business Day.
"CLASS C INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Class C Certificates on the Issuance Date.
"CLASS C INTEREST" shall have the meaning specified in subsection 6.17(c)
of the Agreement.
"CLASS C INTEREST SHORTFALL" shall have the meaning specified in
subsection 6.17(c) of the Agreement.
"CLASS C INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to (a) the Class C Initial Invested Amount, PLUS
(b) the aggregate principal amount of any VFC Additional Class C Invested
Amounts purchased by the Class C Certificateholders through the end of the
preceding Business Day pursuant to Section 6.15 of the Agreement, MINUS (c) the
aggregate amount of principal payments made to Class C Certificateholders prior
to such Business Day, MINUS (d) the aggregate amount of Class C Investor
Charge-Offs and the amount of Reallocated Class C Principal Collections for all
prior Business Days and PLUS (e) the aggregate amount allocated to the Class C
Certificates and available on all prior Business Days in accordance with
subsection 4.9(b) of the Agreement, for the purpose of reimbursing amounts
deducted pursuant to the foregoing clause (d).
"CLASS C INVESTOR CHARGE-OFF" shall have the meaning specified in
subsection 4.8(a) of the Agreement.
"CLASS C INVESTOR PERCENTAGE" shall mean, for any Business Day, the Class
C Invested Amount as a percentage of the Invested Amount on such Business Day.
"CLASS C PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean, following an
Amortization Period Commencement Date, the earlier of (a) the Business Day on
which the Class A Invested Amount and the Class B Invested Amount are paid in
full or, if there are no Principal Collections allocable to the Series 2002-1
Variable Funding Certificates remaining after payments have been made to the
Class A Certificates and the Class B Certificates on such Business Day, the
Business Day following the Business Day on which the Class A and the Class B
Invested Amount are paid in full and (b) the Distribution Date following a sale
or repurchase of the Receivables as set forth in Section 2.4(d), 9.2, 10.2, 12.1
or 12.2 of the Agreement or Section 3 of this Variable Funding Supplement.
"CLOSING DATE" shall mean November 6, 2002.
"DELINQUENCY RATIO" shall mean, with respect to any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of all Receivables that were more than 60 days past due as of the end of
each billing cycle during such Monthly Period and the denominator of which is
the aggregate amount of all Receivables as of the end of each billing cycle
during such Monthly Period.
9
"DISCOUNT ALLOCATION PERCENTAGE" shall mean with respect to Series 2002-1
and any Business Day the percentage equivalent of a fraction the numerator of
which is the Series 2002-1 Discount Factor and the denominator of which is the
Discount Factor on such Business Day.
"DISCOUNT AMOUNT" shall mean for any Business Day the Discount Factor
multiplied by the Outstanding Balance of Receivables transferred to the Trust on
such Business Day.
"DISCOUNT FACTOR" shall mean for any Business Day an amount equal to the
sum of each Series Discount Factor for all Series then outstanding on such
Business Day.
"DISCOUNT TRIGGER EVENT" shall mean for any Business Day (i) the Discount
Factor for the second preceding Monthly Period being in excess of zero, (ii) the
Transferor having elected, by not less than 30 days' prior written notice to the
Servicer, the Trustee, the Rating Agencies and the Administrative Agent, to
commence discounting of purchases of Receivables, and (iii) the Rating Agencies
and the Administrative Agent on behalf of the Class A Certificateholders and
Class B Certificateholders having consented in writing (a copy of which is
delivered to the Trustee) to such discounting of purchases of Receivables on or
prior to such Business Day and having not revoked such consent in writing (a
copy of which is to be delivered to the Trustee).
"DISTRIBUTION DATE" shall mean the 15th day of each month or, if such 15th
day is not a Business Day, the next succeeding Business Day, and the Scheduled
Series 2002-1 Termination Date.
"ELECTION DATE" shall have the meaning specified in subsection 6.16(a) of
the Agreement.
"ELECTION NOTICE" shall have the meaning specified in subsection 6.16(a)
of the Agreement.
"ENHANCEMENT" shall mean with respect to the Class A Certificates, the
subordination of the Class B Invested Amount and the Class C Invested Amount and
the Reserve Account and, with respect to the Class B Certificates, the
subordination of the Class C Invested Amount and the Reserve Account; PROVIDED,
HOWEVER that neither the Holders of the Class B Certificates nor the Holders of
the Class C Certificates nor any provider of amounts on deposit in the Reserve
Account shall be an "Enhancement Provider" for the purposes of the Agreement or
this Supplement.
"ENHANCEMENT PERCENTAGE" shall mean, 0.0% for each Business Day from the
Closing Date to and excluding the Determination Date which occurs during the
December 2002 Monthly Period, and thereafter for each Business Day during the
period commencing on a Determination Date to but excluding the next following
Determination Date (an "ENHANCEMENT PERCENTAGE DETERMINATION PERIOD"), the
greater of (i) the sum of the Excess Spread Enhancement Cap Percentage for the
Monthly Period immediately preceding such Enhancement Percentage Determination
Period and the Payment Rate Enhancement Cap Percentage for such Monthly Period
and (ii) the Enhancement Percentage for
10
the preceding Enhancement Percentage Determination Period minus 1.0%; PROVIDED
that so long as no Reserve Account Increase Notice shall have been delivered,
the Enhancement Percentage shall not exceed 4.0%, and PROVIDED FURTHER that if a
Reserve Account Increase Notice shall have been delivered, the Enhancement
Percentage shall at all times thereafter equal 100%.
"EXCESS FINANCE CHARGE COLLECTIONS" shall mean, with respect to any
Business Day, as the context requires, either (x) the amount described in
subsection 4.6(a)(xvi) of the Agreement during the Revolving Period or
subsection 4.6(b)(xii) or 4.6(c)(xvi) of the Agreement, as applicable, during
the Amortization Period allocated to the Series 2002-1 Certificates but
available to cover shortfalls in amounts paid from Finance Charge Collections
for other Series, if any, or (y) the aggregate amount of Total Finance Charge
Collections allocable to other Series in excess of the amounts necessary to make
required payments with respect to such Series, if any, and available to cover
shortfalls with respect to the Series 2002-1 Certificates.
"EXCESS PURCHASE ACCOUNT" shall have the meaning specified in subsection
4.10(a) of the Agreement.
"EXCESS SPREAD PERCENTAGE" shall mean, for a Monthly Period, (a) the
lesser of (i) the aggregate Total Finance Charge Collections deposited in the
Collection Account on each Business Day during such Monthly Period and (ii) the
sum for each Business Day during such Monthly Period of the product of the
Floating Allocation Percentage for Series 2002-1 and the amount of Finance
Charge Collections for such Business Day, MINUS (b) the sum for each Business
Day during such Monthly Period of the product of the Floating Allocation
Percentage for Series 2002-1 and the amount of Finance Charge Collections for
such Business Day described in clause (e) of the definition of the term "Finance
Charge Collections" in Section 1.1 of the Agreement, MINUS (c) the aggregate
amounts withdrawn from the Collection Account during such Monthly Period
pursuant to subsections 4.6(a)(i) through (vii), (x), (xi) or (xv), 4.6(b)(i)
through (vii) or (x) or 4.6(c)(i) through (vii), (x), (xi) or (xv) of the
Agreement, as applicable, during such Monthly Period, expressed as an annualized
percentage of the average daily Invested Amount during such Monthly Period.
"EXCESS SPREAD ENHANCEMENT CAP PERCENTAGE" shall mean, for any Monthly
Period, if the average of the Excess Spread Percentages for such Monthly Period
and the two preceding Monthly Periods (or (i) in the case of the November 2002
Monthly Period, for such Monthly Period, and (ii) in the case of the December
2002 Monthly Period, for such Monthly Period and the November 2002 Monthly
Period) is greater than the percentage (if any) set forth in the left-hand
column below and less than or equal to the percentage (if any) set forth in the
middle column below, the percentage set forth opposite such percentages in the
right-hand column below:
Three-Month Average Excess Spread
Excess Spread Percentage Enhancement Cap
Percentage
----- ----- ---------------
5.00% -- 0.00%
4.00% 5.00% 1.00%
11
3.00% 4.00% 2.00%
2.00% 3.00% 3.00%
-- 2.00% 4.00%
PROVIDED, that following any date on which the Excess Spread Enhancement Cap
Percentage for a Monthly Period shall have increased from the percentage
applicable to the prior Monthly Period, such increased Excess Spread Enhancement
Cap Percentage shall not thereafter be reduced until the Monthly Period for
which both (i) the average of the Excess Spread Percentages for such Monthly
Period and the two preceding Monthly Periods (or, if less, the number of Monthly
Periods which have been completed following the November 2002 Monthly Period)
and (ii) the average of the Excess Spread Percentages for such Monthly Period
and the five preceding Monthly Periods (or, if less, the number of Monthly
Periods which have been completed following the November 2002 Monthly Period)
would, based on the percentages (if any) set forth in the left-hand and middle
columns above, have resulted in a lower Excess Spread Enhancement Cap Percentage
in the right-hand column above, and the amount of any reduction for a Monthly
Period shall not exceed 1.00%.
"EXTENSION" shall mean the procedure by which all or a portion of the
Investor Certificateholders consent to the extension of the Revolving Period to
the new Amortization Period Commencement Date set forth in the Extension Notice,
pursuant to Section 6.16 of the Agreement.
"EXTENSION DATE" shall mean the last day of the October 2005 Monthly
Period or if an Extension has already occurred, the date of the next Extension
Date set forth in the Extension Notice relating to the Extension then in effect
(or, if any such date is not a Business Day, the next preceding Business Day).
"EXTENSION NOTICE" shall have the meaning specified in subsection 6.16(a)
of the Agreement.
"EXTENSION OPINION" shall have the meaning specified in subsection 6.16(a)
of the Agreement.
"EXTENSION TAX OPINION" shall have the meaning specified in subsection
6.16(a) of the Agreement.
"FEE LETTERS" shall mean the Class A Fee Letter and the Class B Fee
Letter.
"FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean for any Business Day the
percentage equivalent of a fraction, the numerator of which the Invested Amount
for the day immediately following the last day of the Revolving Period and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables in the Trust and the amount on deposit in the Excess
Funding Account as of the end of the preceding Business Day and (b) the sum of
the numerators used to calculate the allocation percentages with respect to
Principal Receivables of all Series outstanding on such Business Day.
12
"FLOATING ALLOCATION PERCENTAGE" shall mean for any Business Day the sum
of the applicable Class A Floating Allocation Percentage, Class B Floating
Allocation Percentage and the Class C Floating Allocation Percentage for such
Business Day.
"INITIAL INVESTED AMOUNT" shall mean the aggregate initial principal
amount of the Series 2002-1 Certificates on the Issuance Date.
"INTERCHANGE COLLECTIONS" shall mean, with respect to Series 2002-1 on any
Business Day, the product of the Floating Allocation Percentage for Series
2002-1 and the amount of Interchange for such Business Day.
"INTEREST FUNDING ACCOUNT" shall have the meaning specified in subsection
4.11(a) of the Agreement.
"INVESTED AMOUNT" shall mean, when used with respect to any Business Day,
an amount equal to the sum of (a) the Class A Invested Amount as of such date,
(b) the Class B Invested Amount as of such date and (c) the Class C Invested
Amount as of such date.
"INVESTOR CERTIFICATES" shall mean the Class A Certificates, the Class B
Certificates and the Class C Certificates.
"INVESTOR CHARGE-OFFS" shall mean the sum of Class A Investor Charge-Offs,
Class B Investor Charge-Offs and the Class C Investor Charge-Offs.
"INVESTOR DEFAULT AMOUNT" shall mean, with respect to each Business Day,
an amount equal to the product of the aggregate Default Amount for all Defaulted
Accounts on such Business Day and the Floating Allocation Percentage applicable
for such Business Day.
"INVESTOR PERCENTAGE" shall mean for any Business Day, (a) with respect to
(i) Receivables in Defaulted Accounts or any Uncovered Dilution Amount at any
time, (ii) Finance Charge Collections so long as no Pay Out Event has occurred
with respect to the Series 2002-1 or any other Series, and (iii) Principal
Collections during the Revolving Period, the Floating Allocation Percentage and
(b) with respect to (i) Finance Charge Collections if a Pay Out Event has
occurred with respect to the Series 2002-1 or any other Series and (ii)
Principal Collections during the Amortization Period, the Fixed/Floating
Allocation Percentage.
"INVESTOR SERVICING FEE" shall mean for any Business Day, an amount equal
to the product of (i) a fraction, the numerator of which is the actual number of
days from and including the preceding Business Day to but excluding such
Business Day and the denominator of which is the actual number of days in the
year, (ii) the Series Servicing Fee Percentage and (iii) the Invested Amount for
such Business Day.
"INVESTOR UNCOVERED DILUTION AMOUNT" shall mean, with respect to each
Business Day, an amount equal to the product of the Uncovered Dilution Amount
for such Business Day and the Floating Allocation Percentage applicable for such
Business Day.
"ISSUANCE DATE" shall mean the initial date on which the Investor
Certificates are issued.
13
"LIQUIDITY TRANSFER" shall have the meaning specified in subsection
6.18(b) of the Agreement.
"MAXIMUM FACILITY AMOUNT" shall mean for any Business Day, the sum of (i)
the aggregate Commitments, as defined in the Class A Certificate Purchase
Agreement, plus (ii) the aggregate Commitments, as defined in the Class B
Certificate Purchase Agreement on such Business Day.
"MINIMUM TRANSFEROR PERCENTAGE" shall mean 2.0%.
"MONTHLY PERIOD" shall have the meaning specified in the Agreement, except
that the first Monthly Period with respect to the Series 2002-1 Certificates
shall begin on and include the Closing Date and shall end on and include
November 30, 2002.
"NET FINANCE CHARGE PORTFOLIO YIELD" shall mean, for Series 2002-1 with
respect to any Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is the amount of Finance Charge Collections
allocable to Series 2002-1 for such Monthly Period, calculated on a cash basis
after subtracting the Investor Default Amount applicable to Series 2002-1 for
such Monthly Period, and the denominator of which is the average daily Invested
Amount of Series 2002-1 during such Monthly Period.
"NET PRINCIPAL COLLECTIONS" shall mean, for Series 2002-1 on any Business
Day, the sum of (i) the product, during the Revolving Period, of the Floating
Allocation Percentage for Series 2002-1 and, during the Amortization Period, of
the Fixed/Floating Allocation Percentage for Series 2002-1 and the amount of
Principal Collections on such Business Day MINUS on and after the occurrence of
and during the continuance of a Discount Trigger Event (ii) the lesser of (a)
the sum of (x) the product of the Discount Allocation Percentage for Series
2002-1 and the Discount Amount for such Business Day and (y) the Carryover
Discount Amount for Series 2002-1 for such Business Day and (b) the amount
determined in clause (i).
"PAY OUT COMMENCEMENT DATE" shall mean the date on which a Trust Pay Out
Event is deemed to occur pursuant to Section 9.1 of the Agreement or a Series
2002-1 Pay Out Event is deemed to occur pursuant to Section 10 of this Variable
Funding Supplement.
"PAYMENT RATE ENHANCEMENT CAP PERCENTAGE" shall mean, for any Monthly
Period, if the average of the Payment Rate Percentages for such Monthly Period
and the two preceding Monthly Periods (or (i) in the case of the November 2002
Monthly Period, for such Monthly Period, and (ii) in the case of the December
2002 Monthly Period, for such Monthly Period and the November 2002 Monthly
Period) is greater than the percentage (if any) set forth in the left-hand
column below and less than or equal to the percentage (if any) set forth in the
middle column below, the percentage set forth opposite such percentages in the
right-hand column below:
14
Three-Month Average Payment Rate
Payment Rate Percentage Enhancement Cap
Percentage
------ ------ ---------------
30.00% -- 0.00%
25.00% 30.00% 1.00%
-- 25.00% 2.00%
PROVIDED, that following any date on which the Payment Rate Enhancement Cap
Percentage for a Monthly Period shall have increased from the percentage
applicable to the prior Monthly Period, such increased Payment Rate Enhancement
Cap Percentage shall not thereafter be reduced until the Monthly Period for
which both (i) the average of the Payment Rate Percentages for such Monthly
Period and the two preceding Monthly Periods (or, if less, the number of Monthly
Periods which have been completed following the November 2002 Monthly Period)
and (ii) the average of the Payment Rate Percentages for such Monthly Period and
the five preceding Monthly Periods (or, if less, the number of Monthly Periods
which have been completed following the November 2002 Monthly Period) would,
based on the percentages (if any) set forth in the left-hand and middle columns
above, have resulted in a lower Payment Rate Enhancement Cap Percentage in the
right-hand column above, and the amount of any reduction for a Monthly Period
shall not exceed 1.00%.
"PAYMENT RATE PERCENTAGE" shall mean, for a Monthly Period, the aggregate
Net Principal Collections deposited into the Collection Account during such
Monthly Period, expressed as a percentage of (i) during the Revolving Period,
Floating Allocation Percentage for Series 2002-1 times the Principal Receivables
on the first day of such Monthly Period, and (ii) during the Amortization
Period, the Fixed/Floating Allocation Percentage for Series 2002-1 times the
Principal Receivables on the first day of such Monthly Period.
"PORTFOLIO YIELD" shall mean for the Series 2002-1 Certificates, with
respect to any Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is an amount equal to the aggregate Total
Finance Charge Collections allocated to the Series 2002-1 Certificates for such
Monthly Period, calculated on a cash basis, minus the aggregate Investor Default
Amounts for each Business Day during such Monthly Period, and the denominator of
which is the average daily Invested Amount during such Monthly Period.
"PRINCIPAL ACCOUNT" shall have the meaning specified in subsection 4.11(a)
of the Agreement.
"PRINCIPAL SHORTFALLS" shall mean, as the context requires, either (a) the
amounts specified as such in the Supplement for any other Series or (b) with
respect to the Series 2002-1 Certificates, the amount specified as such in
subsection 4.6(f) of the Agreement.
"PROCEEDS ACCOUNT" shall have the meaning specified in Section 4.12 of the
Agreement.
"RATING AGENCY" shall mean each of Moody's and Standard & Poor's.
15
"RATING AGENCY CONDITION" shall mean, with respect to any action or series
of related actions or proposed transaction or series or related proposed
transactions, that each Rating Agency shall have notified the Administrative
Agent in writing that such action or series of related actions or proposed
transaction or series or related proposed transactions will not result in a
reduction or withdrawal of the rating of any commercial paper notes or other
short-term or intermediate term obligation issued by any Structured Purchaser
(as defined in either the Class A Purchase Agreement or the Class B Purchase
Agreement) or in a reduction in any informal long-term rating assigned by such
Rating Agency to the Class A Certificates or the Class B Certificates.
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS" shall have the meaning
specified in subsection 4.7(d) of the Agreement.
"REALLOCATED CLASS C PRINCIPAL COLLECTIONS" shall have the meaning
specified in subsection 4.7(c) of the Agreement.
"REQUIRED CLASS B INVESTED AMOUNT" shall mean, (a) for any Business Day
during the Revolving Period, an amount equal to 12.5% of the Class A Invested
Amount on such Business Day or (b) for any Business Day if, on or prior to such
Business Day, there have been any reductions in the Class B Invested Amount
pursuant to clause (d) of the definition of such term or if the Amortization
Period shall have commenced, an amount equal to the Required Class B Invested
Amount on the Business Day immediately preceding such reduction or commencement;
PROVIDED that from and after the Class B Principal Payment Commencement Date,
the Required Class B Invested Amount shall equal $0.
"REQUIRED CLASS C INVESTED AMOUNT" shall mean, (a) for any Business Day
during the Revolving Period, an amount equal to the greater of (i) 10% of the
Invested Amount on such Business Day or (ii) 5% of the Maximum Facility Amount
on such Business Day, or (b) for any Business Day if, on or prior to such
Business Day, there have been any reductions in the Class C Invested Amount
pursuant to clause (d) of the definition of such term or if the Amortization
Period shall have commenced, an amount equal to the Required Class C Invested
Amount on the Business Day immediately preceding such reduction or commencement;
PROVIDED that from and after the Class C Principal Payment Commencement Date,
the Required Class C Invested Amount shall equal $0.
"REQUIRED RESERVE AMOUNT" shall mean, with respect to any Business Day,
the product of (i) the sum of (A) Automatic Addition Percentage for such
Business Day, and (B) the Enhancement Percentage for such Business Day, times
(ii) during the Revolving Period, the Invested Amount on such Business Day or,
during the Amortization Period, the Invested Amount on the last day of the
Revolving Period; PROVIDED that during the Amortization Period, the Required
Reserve Amount on any Business Day shall not exceed the Invested Amount on such
Business Day.
"RESERVE ACCOUNT" shall have the meaning specified in subsection 4.9(a) of
the Agreement.
16
"RESERVE ACCOUNT INCREASE NOTICE" shall mean a written notice delivered by
the Administrative Agent to the Servicer pursuant to the Class A Certificate
Purchase Agreement at the instruction of the Class A Certificateholders or
pursuant to the Class B Certificate Purchase Agreement at the instruction of the
Class B Certificateholders stating that a Termination Event shall have occurred
thereunder and directing that the Enhancement Percentage be increased to 100%.
"REVOLVING PERIOD" shall mean (a) the period from and including the
Closing Date to, but not including, the Amortization Period Commencement Date,
or (b) with respect to an Extension, the period beginning on the Extension Date
and ending on the date specified in the Extension Notice.
"SCHEDULED SERIES 2002-1 TERMINATION DATE" shall mean November 3, 2007
unless a different date shall be set forth in the Extension Notice.
"SERIES 2002-1" shall mean the Series of the Prime Credit Card Master
Trust II represented by the Series 2002-1 Certificates.
"SERIES 2002-1 CERTIFICATEHOLDER" shall mean the Holder of any Series
2002-1 Certificate.
"SERIES 2002-1 CERTIFICATEHOLDERS' INTEREST" shall have the meaning
specified in Section 4.4 of the Agreement.
"SERIES 2002-1 CERTIFICATES" shall have the meaning specified in Section 1
of this Variable Funding Supplement.
"SERIES 2002-1 DISCOUNT FACTOR" shall mean with respect to Series 2002-1
for any Business Day, the amount for Series 2002-1, if any, calculated as of the
second preceding Monthly Period, by which either (x) (a) the product of (i) the
Base Rate plus one-half of one percent MINUS the Net Finance Charge Portfolio
Yield divided by the Annual Portfolio Turnover Rate and (ii) the Floating
Allocation Percentage exceeds (b) zero or, (y) solely at the option of the
Transferor, the amount by which (a) the product of (i) the Base Rate plus one
percent MINUS the Net Finance Charge Portfolio Yield divided by the Annual
Portfolio Turnover Rate and (ii) the Floating Allocation Percentage exceeds (b)
zero; PROVIDED, HOWEVER, that the Series Discount Factor shall not exceed 4.00%.
"SERIES 2002-1 PAY OUT EVENT" shall have the meaning specified in Section
10 of this Variable Funding Supplement.
"SERIES 2002-1 SHORTFALL" shall mean the amount, if any, by which (x) the
sum of the amounts described in subsections 4.6(a)(i) through (xv) of the
Agreement during the Revolving Period or subsections 4.6(b)(i) through (xi) or
4.6(c)(i) through (xv) of the Agreement during the Amortization Period, as
applicable, exceeds (y) the Total Finance Charge Collections available for
application thereto pursuant to subsections 4.6(a), (b) or (c) of the Agreement,
as applicable, on any Business Day.
17
"SERIES 2002-1 TERMINATION DATE" shall mean the earlier to occur of (i)
the day after the Distribution Date on which the Series 2002-1 Certificates are
paid in full including any Supplemental Payments, or (ii) the Scheduled Series
2002-1 Termination Date.
"SERIES 2002-1 VARIABLE FUNDING CERTIFICATES" shall have the meaning
specified in Section 1 of this Variable Funding Supplement.
"SERIES SERVICING FEE PERCENTAGE" shall mean 2.00%.
"SHARED PRINCIPAL COLLECTIONS" shall mean, as the context requires, either
(a) the amount allocated to the Series 2002-1 Certificates which, in accordance
with subsections 4.6(e)(iii) and 4.6(f) of the Agreement, may be applied to
Principal Shortfalls with respect to other outstanding Series or (b) the amounts
allocated to the investor certificates of other Series which the applicable
Supplements for such Series specify are to be treated as "Shared Principal
Collections" and which may be applied to cover Principal Shortfalls with respect
to the Series 2002-1 Certificates.
"TARGETED HOLDER" shall mean (i) each holder of a right to receive
interest, principal or any other amount with respect to any Class C Certificate
or any other certificates or other interest in the Trust, excluding any
certificates or other interest in the Trust (including, if applicable, the Class
A Variable Funding Certificates and the Class B Variable Funding Certificates)
with respect to which an opinion is rendered that such certificates or other
such interests will be treated as debt for federal income tax purposes, and
(iii) any holder of a right to receive any amount in respect of the Transferor
Interest; PROVIDED, that any Person holding more than one interest each of which
would cause such Person to be a Targeted Holder shall be treated as a single
Targeted Holder.
"TERMINATION EVENT" shall mean the occurrence of any event or condition
constituting a "Termination Event" in the Class A Certificate Purchase Agreement
or the Class B Certificate Purchase Agreement.
"TERMINATION PAYMENT DATE" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an insolvency or bankruptcy event and the occurrence of the Scheduled
Series 2002-1 Termination Date.
"TOTAL FINANCE CHARGE COLLECTIONS" shall mean, with respect to Series
2002-1 on any Business Day, the sum of (i) the product of applicable Investor
Percentage for the Series 2002-1 and the amount of Finance Charge Collections
for such Business Day, PLUS (ii) on and after the occurrence of and during the
continuance of a Discount Trigger Event the lesser of (a) the sum of (x) the
product of the Discount Allocation Percentage for Series 2002-1 and the Discount
Amount for such Business Day and (y) the Carryover Discount Amount for Series
2002-1 for such Business Day and (b) the product of the applicable Investor
Percentage for the Series 2002-1 and the amount of Principal Collections for
such Business Day, PLUS (iii) available cash investment earnings for such
Business Day on amounts on deposit in the Reserve Account to the extent such
earnings are to be treated as Total Finance Charge Collections in accordance
with subsection 4.9(b), PLUS (iv) available cash investment earnings
18
for such Business Day on amounts on deposit in the Interest Funding Account, the
Principal Account, the Proceeds Account or the Excess Purchase Account.
"TRANSFER" shall have the meaning specified in subsection 6.17(a) of the
Agreement.
"VFC ADDITIONAL CLASS A INVESTED AMOUNT" shall have the meaning specified
in subsection 6.15(a) of the Agreement.
"VFC ADDITIONAL CLASS B INVESTED AMOUNT" shall have the meaning specified
in subsection 6.15(a) of the Agreement.
"VFC ADDITIONAL CLASS C INVESTED AMOUNT" shall have the meaning specified
in subsection 6.15(a) of the Agreement.
"VFC ADDITIONAL INVESTED AMOUNT" shall have the meaning specified in
subsection 6.15(a) of the Agreement.
"VFC PRINCIPAL COLLECTIONS" shall mean amounts specified as such in
subsections 4.6(a)(v), 4.6(a)(vi), 4.6(a)(vii), 4.6(a)(x) and 4.6(d) of the
Agreement.
SECTION 3. REASSIGNMENT AND TRANSFER TERMS.
(a) The Series 2002-1 Certificates shall be subject to termination by the
Transferor, at its option in accordance with the terms specified in subsection
12.2(a) of the Agreement on any Distribution Date on which the Invested Amount
shall be less than 10% of the highest Invested Amount since the Closing Date.
The deposit required in connection with any such termination and final
distribution shall be equal to the Invested Amount plus (i) all accrued and
unpaid interest on the Series 2002-1 Certificates, (ii) all accrued and unpaid
Class A Program Fees, (iii) all unpaid Class A Additional Payments and Class A
Supplemental Payments, (iv) all accrued and unpaid Class B Program Fees, and (v)
all unpaid Class B Additional Payments and Class B Supplemental Payments,
through the day prior to the Distribution Date on which the repurchase occurs.
(b) In no event shall the Class C Certificates or any interest therein be
transferred, sold, exchanged, pledged, participated or otherwise assigned, in
whole or in part, unless the Transferor shall have consented in writing to such
transfer and unless (1) the Rating Agency Condition shall have been satisfied,
and (2) the Trustee shall have received an Opinion of Counsel that such transfer
does not (i) adversely affect the conclusions reached in any of the federal
income tax opinions dated the applicable Closing Date issued in connection with
the original issuance of any Series of Investor Certificates or (ii) result in a
taxable event to the holders of any such Series.
(c) Each Series 2002-1 Certificateholder, by accepting and holding a
Series 2002-1 Certificate or interest therein, will be deemed to have
represented and warranted that it is not (i) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, or
19
(iii) an entity whose underlying assets include plan assets by reason of a
plan's investment in the entity.
SECTION 4. DELIVERY AND PAYMENT FOR THE SERIES 2002-1 CERTIFICATES. The
Transferor shall execute and deliver the Series 2002-1 Certificates to the
Trustee for authentication in accordance with Section 6.1 of the Agreement. The
Trustee shall deliver the Series 2002-1 Certificates when authenticated in
accordance with Section 6.2 of the Agreement.
SECTION 5. DEPOSITARY; FORM OF DELIVERY OF SERIES 2002-1 CERTIFICATES. The
Class A Certificates, the Class B Certificates and the Class C Certificates
shall be delivered as Definitive Certificates as provided in Section 6.12 of the
Agreement.
SECTION 6. ADDITION AND REMOVAL OF ACCOUNTS. (a) Paragraph (b) of the
definition of "AUTOMATIC ADDITIONAL ACCOUNT" in Section 1.1 of the Agreement
shall read in its entirety as follows and shall be applicable only to the Series
2002-1 Certificates:
"(b) any other consumer revolving credit card account, Receivables
from which each Rating Agency permits to be added automatically to the
Trust; PROVIDED:
(i) the Rating Agency Condition shall have been satisfied with
respect to the inclusion of such accounts as Automatic
Additional Accounts pursuant to this paragraph (b); and
(ii) the Administrative Agent on behalf of the Class A
Certificateholders and Class B Certificateholders shall have
consented in writing to including as Automatic Additional
Accounts any Accounts the receivables of which have been
purchased (but the accounts of which have not been originated)
by the Originator or any VISA(R) or MasterCard(R) revolving
credit card accounts which have not been originated by the
Originator in accordance with the Credit and Collection Policy
substantially as in effect on the Closing Date (subject to
changes therein which would not materially and adversely affect
the interests of the Series 2002-1 Certificateholders) with
respect to the retail operating subsidiaries of Federated as at
the Closing Date."
(b) Subsection (viii) of Section 2.6(e) of the Agreement shall read
in its entirety as follows and shall be applicable only to the Series 2002-1
Certificates:
"(viii) the Administrative Agent on behalf of the Class A
Certificateholders and Class B Certificateholders shall have
consented in writing to including as Automatic Additional
Accounts any Accounts the receivables of which have been
purchased (but the accounts of which have not been originated)
by the Originator or any VISA(R) or MasterCard(R) revolving
credit card accounts which have not been originated by the
Originator in accordance with the Credit and Collection Policy
substantially as in effect on the Closing Date (subject to
changes therein which would not materially and
20
adversely affect the interests of the Series 2002-1
Certificateholders) with respect to the retail operating
subsidiaries of Federated as at the Closing Date."
(c) Section 2.7(d) shall read in its entirety as follows and shall
be applicable only to the Series 2002-1 Certificates:
"Notwithstanding the foregoing, the Transferor will be permitted to
designate Removed Accounts in connection with the sale by Federated
or any Affiliate of Federated of all or substantially all of the
capital stock or assets of any retail subsidiary of Federated if the
conditions in clauses (i), (iii) and (iv) of subsection 2.7(b) have
been met and the Transferor shall have delivered to the Trustee and
the Administrative Agent an Officer's Certificate confirming the
compliance with such conditions."
SECTION 7. ARTICLE IV OF THE AGREEMENT. Sections 4.1, 4.2 and 4.3 of the
Agreement shall be read in their entirety as provided in the Agreement. Article
IV of the Agreement (except for Sections 4.1, 4.2 and 4.3 thereof) shall read in
its entirety as follows and shall be applicable only to the Series 2002-1
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS
AND ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 RIGHTS OF CERTIFICATEHOLDERS. The Series 2002-1 Certificates
shall represent Undivided Interests in the Trust, consisting of the right to
receive, to the extent necessary to make the required payments with respect to
such Series 2002-1 Certificates at the times and in the amounts specified in
this Agreement, (a) the Floating Allocation Percentage and Fixed/Floating
Allocation Percentage (as applicable from time to time) of Collections received
with respect to the Receivables and (b) funds on deposit in the Collection
Account and the Excess Funding Account (for such Series, the "SERIES 2002-1
CERTIFICATEHOLDERS' INTEREST"). The Class B Invested Amount and the Class C
Invested Amount shall be subordinate to the Class A Certificates, and the Class
C Invested Amount shall be subordinated to the Class B Certificates.
From and after the Amortization Period Commencement Date, the Class B
Certificates will not have the right to receive payments of principal until the
Class A Invested Amount has been paid in full, and the Class C Certificates will
not have the right to receive payments of principal until the Class A Invested
Amount and the Class B Invested Amount have been paid in full. The Exchangeable
Transferor Certificate shall not represent any interest in the Collection
Account or the Excess Funding Account, except as specifically provided in this
Article IV.
Section 4.5 COLLECTIONS AND ALLOCATION. The Servicer will apply or will
instruct the Trustee to apply all funds on deposit in the Collection Account or
the Excess Funding Account that are allocable to the Series 2002-1 Certificates
as described in this Article IV. On each Business Day, the Servicer shall
determine whether a Pay Out Event is
21
deemed to have occurred with respect to the Series 2002-1 Certificates, and the
Servicer shall allocate Collections in accordance with the Daily Report with
respect to such Business Day in accordance with the terms of Section 4.6 of the
Agreement.
Section 4.6 APPLICATION OF FUNDS ON DEPOSIT IN THE COLLECTION ACCOUNT FOR
THE SERIES 2002-1 CERTIFICATES. (a) On each Business Day with respect to the
Revolving Period, the Servicer shall instruct the Trustee in writing to withdraw
and the Trustee, acting in accordance with such instructions, shall withdraw, to
the extent of Total Finance Charge Collections, the amounts required to be
withdrawn from the Collection Account pursuant to subsections 4.6(a)(i) through
4.6(a)(xvi) of the Agreement.
(i) CLASS A INTEREST AND PROGRAM FEES. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and deposit into the Interest Funding
Account, to the extent of Total Finance Charge Collections for such Business
Day, an amount equal to sum of the Class A Interest and the Class A Program Fees
accrued since the preceding Business Day PLUS any Class A Interest or Class A
Program Fees due with respect to any prior Business Day but not previously paid
to the Class A Certificateholders.
(ii) CLASS B INTEREST AND PROGRAM FEES. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and deposit into the Interest Funding
Account, to the extent of Total Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to subsection 4.6(a)(i) of the
Agreement), an amount equal to the sum of the Class B Interest and the Class B
Program Fees accrued since the preceding Business Day PLUS any Class B Interest
or Class B Program Fees due with respect to any prior Business Day but not
previously paid to the Class B Certificateholders.
(iii) INVESTOR SERVICING FEE PAYABLE FROM INTERCHANGE. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account and distribute to the
Servicer, to the extent of the lesser of (A) Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsection 4.6(a)(i) and (ii) of the Agreement) and (B) Interchange Collections
for such Business Day, the Investor Servicing Fee accrued since the preceding
Business Day PLUS any Investor Servicing Fee due with respect to any prior
Business Day but not distributed to the Servicer.
(iv) INVESTOR SERVICING FEE. On each Business Day, if FDSB or any
Affiliate of FDSB is not the Servicer, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection Account and
distribute to the Servicer, to the extent of Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsection 4.6(a)(i) through (iii) of the Agreement), the Investor Servicing Fee
accrued since the preceding Business Day PLUS any Investor Servicing Fee due
with respect to any prior Business Day but not distributed to the Servicer, to
the extent not withdrawn on such Business Day pursuant to subsection 4.6(a)(iii)
of the Agreement.
22
(v) INVESTOR DEFAULT AMOUNT AND UNCOVERED DILUTION AMOUNT. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account, to the extent of Total
Finance Charge Collections for such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(a)(i) through (iv) of the Agreement), an
amount equal to the sum of (A) the aggregate Investor Default Amount for such
Business Day, PLUS (B) the unpaid Investor Default Amount for any previous
Business Day, PLUS (C) the Investor Uncovered Dilution Amount for such Business
Day, PLUS (D) the unpaid Investor Uncovered Dilution Amount for any previous
Business Day, such amount to be treated as VFC Principal Collections during the
Revolving Period.
(vi) REIMBURSEMENT OF CLASS A INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (v) of the Agreement), an amount equal
to the unreimbursed Class A Investor Charge-Offs, such amount to be treated as
VFC Principal Collections during the Revolving Period.
(vii) REIMBURSEMENT OF CLASS B INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (vi) of the Agreement), an amount
equal to the unreimbursed Class B Investor Charge-Offs, such amount to be
treated as VFC Principal Collections during the Revolving Period.
(viii) CLASS A ADDITIONAL PAYMENTS. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class A Certificateholders, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsection 4.6(a)(i) through (vii) of the
Agreement), the portion of the Class A Additional Payments accrued since the
preceding Business Day PLUS any Class A Additional Payments due with respect to
any prior Business Day but not distributed to the Class A Certificateholders,
with interest thereon as provided in the Class A Certificate Purchase Agreement.
(ix) CLASS B ADDITIONAL PAYMENTS. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class B Certificateholders, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsection 4.6(a)(i) through (viii) of the
Agreement), the portion of the Class B Additional Payments accrued since the
preceding Business Day PLUS any Class B Additional Payments with respect to any
prior Business Day but not distributed to the Class B Certificateholders, with
interest thereon as provided in the Class B Certificate Purchase Agreement.
(x) REIMBURSEMENT OF CLASS C INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
23
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (ix) of the Agreement), an amount
equal to the unreimbursed Class C Investor Charge-Offs, such amount to be
treated as VFC Principal Collections during the Revolving Period.
(xi) CLASS C INTEREST. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and pay to the Class C Certificateholders to the extent of
Total Finance Charge Collections for such Business Day (after giving effect to
the withdrawals pursuant to subsections 4.6(a)(i) through (x) of the Agreement),
an amount equal to (x) the amount of interest which has accrued with respect to
the outstanding aggregate principal amount of the Class C Certificates at the
Class C Certificate Rate but which has not been paid to the Class C
Certificateholders PLUS (y) additional interest at the Class C Certificate Rate
for interest that has accrued on interest that was due pursuant to this
subsection but was not previously paid to the Class C Certificateholders.
(xii) REQUIRED RESERVE AMOUNT. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and deposit into the Reserve Account, to the extent of
Total Finance Charge Collections for such Business Day (after giving effect to
the withdrawals pursuant to subsections 4.6(a)(i) through (xi) of the
Agreement), an amount equal to the excess, if any, of the Required Reserve
Amount (determined after all deposits, withdrawals, reductions, payments and
adjustments to be made with respect to such date) over the Available Reserve
Amount (without giving effect to any deposit made on such Business Day under
Section 4.6).
(xiii) CLASS A SUPPLEMENTAL PAYMENTS. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and pay to the Class A Agent, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsections 4.6(a)(i) through (xii) of the
Agreement), an amount equal to the sum of all unpaid Class A Supplemental
Payments.
(xiv) CLASS B SUPPLEMENTAL PAYMENTS. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and pay to the Class B Agent, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsections 4.6(a)(i) through (xiii) of the
Agreement), an amount equal to the sum of all unpaid Class B Supplemental
Payments.
(xv) FDSB SERVICING FEE. On each Business Day, if FDSB or any
Affiliate of FDSB is the Servicer, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection Account and
distribute to the Servicer, to the extent of Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (xiv) of the Agreement) the Investor Servicing Fee
accrued since the preceding Business Day PLUS any Investor Servicing Fee due
with respect to any prior Business Day but not distributed to the Servicer, to
the extent not withdrawn on such Business Day pursuant to subsection 4.6(a)(iii)
of the Agreement.
24
(xvi) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts remaining in the
Collection Account to the extent of the Total Finance Charge Collections for
such Business Day (after giving effect to the withdrawals pursuant to
subsections 4.6(a)(i) through (xv) of the Agreement) shall be treated as Excess
Finance Charge Collections allocable to other Series in Group I, and the
Servicer shall direct the Trustee in writing on each Business Day to withdraw
and the Trustee, acting in accordance with such instructions, shall withdraw
such amounts from the Collection Account and first make such amounts available
as Excess Finance Charge Collections to pay to Certificateholders of other
Series in Group I to the extent of shortfalls, if any, in amounts payable to
such certificateholders from Finance Charge Collections allocated to such other
Series, then pay any unpaid commercially reasonable costs and expenses of a
Successor Servicer, if any, and then pay any remaining Excess Finance Charge
Collections to the Transferor.
(b) On each Business Day prior to the last Business Day of any monthly
Period with respect to the Amortization Period, the Servicer shall instruct the
Trustee in writing to withdraw and the Trustee, acting in accordance with such
instructions, shall withdraw, to the extent of Total Finance Charge Collections,
the amounts required to be withdrawn from the Collection Account pursuant to
subsections 4.6(b)(i) through 4.6(b)(xii) of the Agreement.
(i) CLASS A INTEREST AND PROGRAM FEES. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and deposit into the Interest Funding
Account, to the extent of Total Finance Charge Collections for such Business
Day, an amount equal to the sum of the Class A Interest and the Class A Program
Fees accrued since the preceding Business Day PLUS any Class A Interest or Class
A Program Fees due with respect to any prior Business Day but not previously
paid to the Class A Certificateholders.
(ii) CLASS B INTEREST AND PROGRAM FEES. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and deposit into the Interest Funding
Account, to the extent of Total Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to subsection 4.6(b)(i) of the
Agreement), an amount equal to the sum of the Class B Interest and the Class B
Program Fees accrued since the preceding Business Day PLUS any Class B Interest
or Class B Program Fees due with respect to any prior Business Day but not
previously paid to the Class B Certificateholders.
(iii) INVESTOR SERVICING FEE PAYABLE FROM INTERCHANGE. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account and distribute to the
Servicer, to the extent of the lesser of (A) Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsection 4.6(b)(i) and (ii) of the Agreement) and (B) Interchange Collections
for such Business Day, the Investor Servicing Fee accrued since the preceding
Business Day PLUS any Investor Servicing Fee due with respect to any prior
Business Day but not distributed to the Servicer.
(iv) INVESTOR SERVICING FEE. On each Business Day, if FDSB or any
Affiliate of FDSB is not the Servicer, the Trustee, acting in accordance with
instructions
25
from the Servicer, shall withdraw from the Collection Account and distribute to
the Servicer, to the extent of Total Finance Charge Collections for such
Business Day (after giving effect to the withdrawals pursuant to subsection
4.6(b)(i) through (iii) of the Agreement), the Investor Servicing Fee accrued
since the preceding Business Day PLUS any Investor Servicing Fee due with
respect to any prior Business Day but not distributed to the Servicer, to the
extent not withdrawn on such Business Day pursuant to subsection 4.6(a)(iii) of
the Agreement.
(v) INVESTOR DEFAULT AMOUNT AND UNCOVERED DILUTION AMOUNT. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account, to the extent of Total
Finance Charge Collections for such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(b)(i) through (iv) of the Agreement), an
amount equal to the sum of (A) the aggregate Investor Default Amount for such
Business Day, PLUS (B) the unpaid Investor Default Amount for any previous
Business Day, PLUS (C) the Investor Uncovered Dilution Amount for such Business
Day, PLUS (D) the unpaid Investor Uncovered Dilution Amount for any previous
Business Day, such amount to be deposited into the Principal Account or paid
pursuant to subsection 4.6(e) to the applicable Class or Classes of
Certificateholders on such Business Day.
(vi) REIMBURSEMENT OF CLASS A INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsections 4.6(b)(i) through (v) of the Agreement), an amount equal
to the unreimbursed Class A Investor Charge-Offs, such amount to be deposited
into the Principal Account or paid pursuant to subsection 4.6(e) to the
applicable Class or Classes of Certificateholders on such Business Day.
(vii) REIMBURSEMENT OF CLASS B INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsections 4.6(b)(i) through (vi) of the Agreement), an amount
equal to the unreimbursed Class B Investor Charge-Offs, such amount to be
deposited into the Principal Account or paid pursuant to subsection 4.6(e) to
the applicable Class or Classes of Certificateholders on such Business Day.
(viii) CLASS A ADDITIONAL PAYMENTS. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class A Certificateholders, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsection 4.6(b)(i) through (vii) of the
Agreement), the portion of the Class A Additional Payments accrued since the
preceding Business Day PLUS any Class A Additional Payments due with respect to
any prior Business Day but not distributed to the Class A Certificateholders,
with interest thereon as provided in the Class A Certificate Purchase Agreement.
(ix) CLASS B ADDITIONAL PAYMENTS. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class B Certificateholders, to the extent
of Total Finance
26
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsection 4.6(b)(i) through (viii) of the Agreement), the portion
of the Class B Additional Payments accrued since the preceding Business Day PLUS
any Class B Additional Payments due with respect to any prior Business Day but
not distributed to the Class B Certificateholders, with interest thereon as
provided in the Class B Certificate Purchase Agreement.
(x) REIMBURSEMENT OF CLASS C INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day after giving effect to the withdrawals
pursuant to subsections 4.6(b)(i) through (ix) of the Agreement), an amount
equal to the unreimbursed Class C Investor Charge-Offs, such amount to be
deposited into the Principal Account or paid pursuant to subsection 4.6(e) to
the applicable Class or Classes of Certificateholders on such Business Day.
(xi) REQUIRED RESERVE AMOUNT. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and deposit into the Reserve Account, to the extent of
Total Finance Charge Collections for such Business Day (after giving effect to
the withdrawals pursuant to subsections 4.6(b)(i) through (x) of the Agreement),
an amount equal to the excess, if any, of the Required Reserve Amount
(determined after all deposits, withdrawals, reductions, payments and
adjustments to be made with respect to such date) over the Available Reserve
Amount (without giving effect to any deposit made on such Business Day under
Section 4.6).
(xii) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts remaining in the
Collection Account to the extent of the Total Finance Charge Collections for
such Business Day (after giving effect to the withdrawals pursuant to
subsections 4.6(b)(i) through (xi) of the Agreement), shall be treated as Excess
Finance Charge Collections, and the Trustee shall deposit any such remaining
Total Finance Charge Collections into the Collection Account and shall add such
funds to the Total Finance Charge Collections on each subsequent Business Day in
such Monthly Period until the last Business Day of the related Monthly Period.
(c) On the last Business Day of each Monthly Period with respect to the
Amortization Period, the Servicer shall instruct the Trustee in writing to
withdraw and the Trustee, acting in accordance with such instructions, shall
withdraw, to the extent of Total Finance Charge Collections, the amounts
required to be withdrawn from the Collection Account pursuant to subsections
4.6(c)(i) through 4.6(c)(xvi) of the Agreement.
(i) CLASS A INTEREST AND PROGRAM FEES. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and deposit into the Interest Funding
Account, to the extent of Total Finance Charge Collections for such Business
Day, an amount equal to the sum of the Class A Interest and Class A Program Fees
accrued since the preceding Business Day PLUS any Class A Interest or Class A
Program Fees due with respect to any prior Business Day but not previously paid
to the Class A Certificateholders.
(ii) CLASS B INTEREST AND PROGRAM FEES. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
27
withdraw from the Collection Account and deposit into the Interest Funding
Account, to the extent of Total Finance Charge Collections for such Business Day
(after giving effect to the withdrawals pursuant to subsection 4.6(c)(i) of the
Agreement), an amount equal to the sum of the Class B Interest and the Class B
Program Fees accrued since the preceding Business Day PLUS any Class B Interest
or the Class B Program Fees due with respect to any prior Business Day but not
previously paid to the Class B Certificateholders.
(iii) INVESTOR SERVICING FEE PAYABLE FROM INTERCHANGE. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account and distribute to the
Servicer, to the extent of the lesser of (A) Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsection 4.6(c)(i) and (ii) of the Agreement) and (B) Interchange Collections
for such Business Day, the Investor Servicing Fee accrued since the preceding
Business Day PLUS any Investor Servicing Fee due with respect to any prior
Business Day but not distributed to the Servicer.
(iv) INVESTOR SERVICING FEE. On each Business Day, if FDSB or any
Affiliate of FDSB is not the Servicer, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection Account and
distribute to the Servicer, to the extent of Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsection 4.6(c)(i) through (iii) of the Agreement), the Investor Servicing Fee
accrued since the preceding Business Day PLUS any Investor Servicing Fee due
with respect to any prior Business Day but not distributed to the Servicer, to
the extent not withdrawn on such Business Day pursuant to subsection 4.6(c)(iii)
of the Agreement.
(v) INVESTOR DEFAULT AMOUNT AND UNCOVERED DILUTION AMOUNT. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account, to the extent of Total
Finance Charge Collections for such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(c)(i) through (iv) of the Agreement), an
amount equal to the sum of (A) the aggregate Investor Default Amount for such
Business Day, PLUS (B) the unpaid Investor Default Amount for any previous
Business Day, PLUS (C) the Investor Uncovered Dilution Amount for such Business
Day, PLUS (D) the unpaid Investor Uncovered Dilution Amount for any previous
Business Day, such amount to be deposited into the Principal Account or paid
pursuant to subsection 4.6(e) to the applicable Class or Classes of
Certificateholders on such Business Day.
(vi) REIMBURSEMENT OF CLASS A INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsections 4.6(c)(i) through (v) of the Agreement), an amount equal
to the unreimbursed Class A Investor Charge-Offs, such amount to be deposited
into the Principal Account or paid pursuant to subsection 4.6(e) to the
applicable Class or Classes of Certificateholders on such Business Day.
(vii) REIMBURSEMENT OF CLASS B INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
28
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day (after giving effect to the withdrawals
pursuant to subsections 4.6(c)(i) through (vi) of the Agreement), an amount
equal to the unreimbursed Class B Investor Charge-Offs, such amount to be
deposited into the Principal Account or paid pursuant to subsection 4.6(e) to
the applicable Class or Classes of Certificateholders on such Business Day.
(viii) CLASS A ADDITIONAL PAYMENTS. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class A Certificateholders, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsection 4.6(c)(i) through (vii) of the
Agreement), the portion of the Class A Additional Payments accrued since the
preceding Business Day PLUS any Class A Additional Payments due with respect to
any prior Business Day but not distributed to the Class A Certificateholders,
with interest thereon as provided in the Class A Certificate Purchase Agreement.
(ix) CLASS B ADDITIONAL PAYMENTS. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and pay to the Class B Certificateholders, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsection 4.6(c)(i) through (viii) of the
Agreement), the portion of the Class B Additional Payments accrued since the
preceding Business Day PLUS any Class B Additional Payments due with respect to
any prior Business Day but not distributed to the Class B Certificateholders,
with interest thereon as provided in the Class B Certificate Purchase Agreement.
(x) REIMBURSEMENT OF CLASS C INVESTOR CHARGE-OFFS. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Total Finance
Charge Collections for such Business Day after giving effect to the withdrawals
pursuant to subsections 4.6(c)(i) through (ix) of the Agreement), an amount
equal to the unreimbursed Class C Investor Charge-Offs, such amount to be
deposited into the Principal Account or paid pursuant to subsection 4.6(e) to
the applicable Class or Classes of Certificateholders on such Business Day.
(xi) CLASS C INTEREST. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and pay to the Class C Certificateholders to the extent of
Total Finance Charge Collections for such Business Day (after giving effect to
the withdrawals pursuant to subsections 4.6(c)(i) through (x) of the Agreement),
an amount equal to (x) the amount of interest which has accrued with respect to
the outstanding aggregate principal amount of the Class C Certificates at the
Class C Certificate Rate but which has not been paid to the Class C
Certificateholders PLUS (y) additional interest at the Class C Certificate Rate
for interest that has accrued on interest that was due pursuant to this
subsection but was not previously paid to the Class C Certificateholders.
(xii) REQUIRED RESERVE AMOUNT. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw from
the Collection Account and deposit into the Reserve Account, to the extent of
Total Finance Charge Collections for such Business Day (after giving effect to
the withdrawals pursuant to subsections 4.6(c)(i) through (xi) of the
Agreement), an amount equal to excess, if any, of the
29
Required Reserve Amount (determined after all deposits, withdrawals, reductions,
payments and adjustments to be made with respect to such date) over the
Available Reserve Amount (without giving effect to any deposit made on such
Business Day under Section 4.6).
(xiii) CLASS A SUPPLEMENTAL PAYMENTS. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and pay to the Class A Agent, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsections 4.6(c)(i) through (xii) of the
Agreement), an amount equal to the sum of all unpaid Class A Supplemental
Payments.
(xiv) CLASS B SUPPLEMENTAL PAYMENTS. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and pay to the Class B Agent, to the extent
of Total Finance Charge Collections for such Business Day (after giving effect
to the withdrawals pursuant to subsections 4.6(c)(i) through (xiii) of the
Agreement), an amount equal to the sum of all unpaid Class B Supplemental
Payments.
(xv) FDSB SERVICING FEE. On each Business Day, if FDSB or any
Affiliate of FDSB is the Servicer, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection Account and
distribute to the Servicer, to the extent of Total Finance Charge Collections
for such Business Day (after giving effect to the withdrawals pursuant to
subsections 4.6(c)(i) through (xiv) of the Agreement) the Investor Servicing Fee
accrued since the preceding Business Day PLUS any Investor Servicing Fee due
with respect to any prior Business Day but not distributed to the Servicer, to
the extent not withdrawn on such Business Day pursuant to subsection 4.6(c)(iii)
of the Agreement.
(xvi) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts remaining in the
Collection Account to the extent of Total Finance Charge Collections for such
Business Day (after giving effect to the withdrawals pursuant to subsections
4.6(c)(i) through (xv) of the Agreement), shall be treated as Excess Finance
Charge Collections allocable to other Series in Group I, and the Servicer shall
direct the Trustee on such Business Day to withdraw such amounts from the
Collection Account and to first make such amounts available as Excess Finance
Charge Collections to pay to Certificateholders of other Series in Group I to
the extent of shortfalls, if any, in amounts payable to such certificateholders
from Finance Charge Collections allocated to such other Series, then to pay any
unpaid commercially reasonable costs and expenses of a Successor Servicer, if
any, and then pay any remaining Excess Finance Charge Collections to the
Transferor.
(d) For each Business Day (i) the funds on deposit in the Collection
Account in an amount not to exceed, during the Revolving Period, the Class C
Floating Allocation Percentage or, during the Amortization Period, the Class C
Fixed/Floating Allocation Percentage of Net Principal Collections with respect
to such Business Day shall be applied by the Servicer or by the Trustee acting
in accordance with the instructions of the Servicer as Reallocated Class C
Principal Collections to the extent necessary to pay first the Class A Required
Amount and then the Class B Required Amount on such Business Day as described in
subsection 4.7(c) of the Agreement, (ii) if any Class A Required Amount remains
after giving effect to such
30
application, the funds on deposit in the Collection Account in an amount not to
exceed, during the Revolving Period, the Class B Floating Allocation Percentage
or, during the Amortization Period, the Class B Fixed/Floating Allocation
Percentage of Net Principal Collections with respect to such Business Day shall
be applied by the Servicer or by the Trustee acting in accordance with the
instructions of the Servicer as Reallocated Class B Principal Collections to the
extent necessary to pay the remaining Class A Required Amount on such Business
Day as described in subsection 4.7(d) of the Agreement, and (iii) the remainder
of the Net Principal Collections shall be treated as VFC Principal Collections
and applied as provided in subsection 4.6(f) of the Agreement.
(e) For each Business Day on and after the Amortization Period
Commencement Date, the funds on deposit in the Collection Account will be
distributed by the Trustee acting in accordance with the instructions of the
Servicer in the following priority:
(i) an amount equal to the sum of (A) Net Principal
Collections for such Business Day (MINUS the amount of Reallocated
Class B Principal Collections and Reallocated Class C Principal
Collections with respect to such Business Day which is required to
fund a deficiency pursuant to subsection 4.7(c) or 4.7(d) of the
Agreement for such Business Day, if any), (B) any amount on deposit in
the Excess Funding Account allocated to the Investor Certificates on
such Business Day, and (C) the aggregate amounts, if any, allocated on
such Business Day pursuant to subsections 4.6(b)(v), (vi), (vii) or
(x) or 4.6(c)(v), (vi), (vii) or (x) (such sum, the "CLASS A DAILY
PRINCIPAL AMOUNT"), plus the amount of Shared Principal Collections
allocated to the Series 2002-1 Certificates in accordance with
Sections 4.3(e) and 4.6(f) of the Agreement, will be deposited into
the Principal Account until the amount on deposit therein equals the
Class A Invested Amount;
(ii) on and after the Class B Principal Payment Commencement
Date, an amount equal to the sum of (A) Net Principal Collections for
such Business Day (MINUS the amount of Reallocated Class C Principal
Collections with respect to such Business Day which is required to
fund a deficiency with respect to the Class B Certificates pursuant to
subsection 4.7(c) of the Agreement for such Business Day), (B) any
amount on deposit in the Excess Funding Account allocated to the
Investor Certificates on such Business Day, and (C) the amount, if
any, allocated to pursuant to subsections 4.6(b)(v), (vii) or (x) or
4.6(c)(v), (vii) or (x) of the Agreement with respect to such Business
Day, MINUS, in the case of each of clauses (A), (B) and (C) above, the
amount thereof paid to the Class A Certificateholders pursuant to
subsection 4.6(e)(i) of the Agreement (such sum, after such reduction,
the "CLASS B DAILY PRINCIPAL Amount"), will be deposited into the
Principal Account until the amount on deposit therein equals the Class
B Invested Amount;
(iii) on and after the Class C Principal Payment
Commencement Date, an amount equal to (A) Net Principal Collections
for such Business Day, (B) any amount on deposit in the Excess Funding
Account allocated to the Class C Certificates on such Business Day,
and (C) the amount, if any, allocated to pursuant to subsections
4.6(b)(v) or (x) or 4.6(c)(v) or (x) of the Agreement with respect to
such Business Day, MINUS, in the case of each of clauses (A), (B) and
(C) above, the amount thereof paid to the Class A
31
Certificateholders pursuant to subsection 4.6(e)(i) of the Agreement
or to the Class B Certificateholders pursuant to subsection 4.6(e)(ii)
of the Agreement (such sum, after such reduction, the "CLASS C DAILY
PRINCIPAL AMOUNT") will be paid to the Holders of the Class C
Certificates; and
(iv) an amount equal to the balance of any such remaining
funds on deposit in the Collection Account on such Business Day
allocated to the Series 2002-1 Certificates shall be treated as Shared
Principal Collections and applied as provided in subsection 4.3(e) of
the Agreement.
(f) VFC Principal Collections shall be applied by the Servicer or by the
Trustee acting in accordance with the instructions of the Servicer on each
Business Day with respect to the Revolving Period first, at the option of the
Transferor and in an amount to be determined by the Transferor, to make payments
of principal to (i) the Class A Certificateholders, (ii) if after giving effect
to such payment, both (A) no Series 2002-1 Pay Out Event shall have occurred and
be continuing and (B) the Class B Invested Amount shall not be less than the
Required Class B Invested Amount, to the Class A Certificateholders and the
Class B Certificateholders pro rata based on the Invested Amount of each such
Class on such Business Day, or (iii) if after giving effect to such payment,
both (A) no Series 2002-1 Pay Out Event shall have occurred and be continuing,
(B) the Class B Invested Amount shall not be less than the Required Class B
Invested Amount, and (C) the Class C Invested Amount shall not be less than the
Required Class C Invested Amount, to the Class A Certificateholders, the Class B
Certificateholders and the Class C Certificateholders pro rata based on the
Invested Amount of each such Class on such Business Day and, then the remaining
VFC Principal Collections shall be treated as Shared Principal Collections
available to make payments with respect to other Series pursuant to subsection
4.3(e) of the Agreement. On any Business Day Shared Principal Collections
allocated to the Series 2002-1 Certificates for such Business Day may be applied
by the Servicer or by the Trustee acting in accordance with the instructions of
the Servicer, at the option of the Transferor and in an amount (such amount to
be deemed the "PRINCIPAL SHORTFALL" with respect to the Series 2002-1
Certificates) to be determined by the Transferor, to make payments of principal
to (i) the Class A Certificateholders, (ii) if after giving effect to such
payment, both (A) no Series 2002-1 Pay Out Event shall have occurred and be
continuing and (B) the Class B Invested Amount shall not be less than the
Required Class B Invested Amount, to the Class A Certificateholders and the
Class B Certificateholders pro rata based on the Invested Amount of each such
Class on such Business Day, or (iii) if after giving effect to such payment,
both (A) no Series 2002-1 Pay Out Event shall have occurred and be continuing,
(B) the Class B Invested Amount shall not be less than the Required Class B
Invested Amount, and (C) the Class C Invested Amount shall not be less than the
Required Class C Invested Amount, to the Class A Certificateholders, the Class B
Certificateholders and the Class C Certificateholders pro rata based on the
Invested Amount of each such Class on such Business Day. Amounts of principal to
be paid to the Class A Certificateholders or the Class B Certificateholders
pursuant to this subsection 4.6(f) shall be deposited into the Principal
Account.
(g) At the option of the Transferor on any Business Day, all or any
portion of Principal Collections otherwise to be paid to the Transferor as
Holder of the Exchangeable Transferor Certificate pursuant to subsection 4.3(b)
of the Agreement on such Business Day or of Shared Principal Collections
otherwise to be paid to the Transferor pursuant to
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subsection 4.3(e) of the Agreement on such Business Day may be deposited into
the Reserve Account.
Section 4.7 COVERAGE OF REQUIRED AMOUNTS FOR THE SERIES 2002-1
CERTIFICATES. (a) To the extent that any amounts are on deposit in the Excess
Funding Account on any Business Day, the Servicer shall apply Transferor Finance
Charge Collections in an amount equal to the excess of (x) the product of (a)
the Base Rate and (b) the product of (i) the amount on deposit in the Excess
Funding Account and (ii) the number of days elapsed since the previous Business
Day divided by the actual number of days in such year OVER (y) the aggregate
amount of all earnings since the previous Business Day available from the Cash
Equivalents in which funds on deposit in the Excess Funding Account are
invested, such amount to be applied during the Revolving Period in the manner
specified in subsections 4.6(a)(i) through (ix) and (xii) through (xv) of the
Agreement or during the Amortization Period in the manner specified in
subsections 4.6(b)(i) through (ix) and (xi) of the Agreement or subsections
4.6(c)(i) through (ix) and (vii) through (xv), as applicable, of the Agreement.
After giving effect to such application, on each Business Day, the Servicer
shall determine the Class A Required Amount, the Class B Required Amount and the
Series 2002-1 Shortfall, if any. In the event that the Class A Required Amount,
the Class B Required Amount or the Series 2002-1 Shortfall for a Business Day is
greater than zero, the Servicer shall reflect such positive amount on the Daily
Report for such Business Day.
(b) To the extent of any Series 2002-1 Shortfall, the Servicer shall apply
any Excess Finance Charge Collections allocable to the Series 2002-1
Certificates in an amount equal to such Series 2002-1 Shortfall in the manner
specified in subsections 4.6(a)(i) through (xv) of the Agreement during the
Revolving Period or in the manner specified in subsections 4.6(b)(i) through
(xi) or 4.6(c)(i) through (xv) of the Agreement, as applicable, during the
Amortization Period. Excess Finance Charge Collections allocated to the Series
2002-1 Certificates for any Business Day shall mean an amount equal to the
product of (x) Excess Finance Charge Collections available from all other Series
in Group I for such Business Day and (y) a fraction, the numerator of which is
the Series 2002-1 Shortfall for such Business Day and the denominator of which
is the aggregate amount of shortfalls in required amounts or other amounts to be
paid from Finance Charge Collections for all Series in Group I for such Business
Day. If there is any Class A Required Amount for a Business Day after such
application of Excess Finance Charge Collections, the amount thereof, up to the
Available Reserve Amount, shall be withdrawn by the Trustee acting in accordance
with the instructions of the Servicer on such Business Day from the Reserve
Account and shall be applied during the Revolving Period in the manner specified
in subsections 4.6(a)(i), (v), (vi) or (viii) of the Agreement, or during the
Amortization Period in the manner described in subsections 4.6(b)(i), (v), (vi)
or (viii) of the Agreement or subsections 4.6(c)(i), (v), (vi) or (viii) of the
Agreement, as applicable. If there is any Class B Required Amount for a Business
Day after such application of Excess Finance Charge Collections, the amount
thereof, up to the Available Reserve Amount (after giving effect to any
withdrawals in respect of the Class A Required Amount), shall be withdrawn by
the Trustee acting in accordance with the instructions of the Servicer on such
Business Day from the Reserve Account and shall be applied during the Revolving
Period in the manner specified in subsections 4.6(a)(ii), (v), (vii) or (ix) of
the Agreement, or during the Amortization Period in the manner described in
subsections 4.6(b)(ii), (v), (vi) or (ix) or 4.6(c)(ii), (v), (vii) or (ix) of
the Agreement, as applicable.
33
(c) In the event that the sum of the Class A Required Amount and the Class
B Required Amount for a Business Day exceeds the sum of the Available Reserve
Amount and the amount of the Excess Finance Charge Collections allocated thereto
on such Business Day, a portion of the Net Principal Collections allocable to
the Class C Certificates in an amount equal to the lesser of such excess and
product of (i) (x) during the Revolving Period, the Class C Floating Allocation
Percentage or (y) during the Amortization Period, the Class C Fixed/Floating
Allocation Percentage and (ii) the amount of Net Principal Collections in the
Collection Account with respect to such Business Day shall be allocated by the
Servicer first to the Class A Certificates and then to the Class B Certificates
and applied on such Business Day in accordance with the provisions during the
Revolving Period of subsections 4.6(a)(i), (ii) or (iv) through (ix) of the
Agreement and during the Amortization Period, in accordance with the provisions
of subsections 4.6(b)(i), (ii) or (iv) through (ix) of the Agreement or
4.6(c)(i), (ii) or (iv) through (ix) of the Agreement, as applicable; PROVIDED,
HOWEVER, that with respect to amounts applied pursuant to subsections
4.6(a)(iv), (b)(iv) and (c)(iv), such amounts shall be applied only to the
extent of the sum of the Class A Floating Allocation Percentage and the Class B
Floating Allocation Percentage of the shortfall arising pursuant to such
subsections (any such amount so applied, "REALLOCATED CLASS C PRINCIPAL
COLLECTIONS"). In the event that the sum of the Class A Required Amount and the
Class B Required Amount (determined in accordance with the first sentence of
this subsection (c)) exceeds such Available Reserve Amount and the amount of
such Excess Finance Charge Collections and of the Reallocated Class C Principal
Collections applied pursuant to the preceding sentence, the Class C Invested
Amount shall be reduced to the extent of any remaining Investor Default Amount
and Investor Uncovered Dilution Amount but not to an amount less than zero.
(d) In the event that the Class A Required Amount for a Business Day
exceeds the sum of the Available Reserve Amount, the amount of the Excess
Finance Charge Collections and the amount of Reallocated Class C Principal
Collections allocated thereto on such Business Day, a portion of the Net
Principal Collections allocable to the Class B Certificates in an amount equal
to the lesser of such excess and the product of (i) (x) during the Revolving
Period, the Class B Floating Allocation Percentage or (y) during the
Amortization Period, the Class B Fixed/Floating Allocation Percentage and (ii)
the amount of Net Principal Collections in the Collection Account with respect
to such Business Day, shall be allocated by the Servicer first to the Class A
Certificates and applied on such Business Day in accordance with the provisions
during the Revolving Period of subsections 4.6(a)(i), (iv), (v), (vi) and (viii)
of the Agreement and during the Amortization Period, in accordance with the
provisions of subsection 4.6(b)(i), (iv), (v), (vi) and (viii) of the Agreement
or subsection 4.6(c)(i), (iv), (v), (vi) and (viii) of the Agreement, as
applicable; PROVIDED, HOWEVER, that with respect to amounts applied pursuant to
subsections 4.6(a)(iv), (b) (iv) and (c) (iv), such amounts shall be applied
only to the extent of the Class A Floating Allocation Percentage of the
shortfall arising pursuant to such subsections (any such amount so applied,
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS"). In the event that the Class A
Required Amount (determined in accordance with the first sentence of this
subsection (d)) exceeds such Available Reserve Amount and the amount of such
Excess Finance Charge Collections and of the Reallocated Class B Principal
Collections applied pursuant to the preceding sentence, the Class B Invested
Amount shall be reduced to the extent of any remaining Investor Default Amount
and Investor Uncovered Dilution Amount but not to an amount less than zero.
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Section 4.8 INVESTOR CHARGE-OFFS. (a) If, on any Determination Date with
respect to a Distribution Date on or prior to the Class C Principal Payment
Commencement Date, the sum of (i) aggregate Investor Default Amount, if any, for
each Business Day in the preceding Monthly Period plus (ii) the aggregate
Investor Uncovered Dilution Amount, if any, for each Business Day in the
preceding Monthly Period exceeded the aggregate amount of Finance Charge
Collections applied to the payment thereof pursuant to subsection 4.6(a)(v) of
the Agreement during the Revolving Period or subsection 4.6(b)(v) or 4.6(c)(v)
of the Agreement, as applicable, during the Amortization Period and the
Available Reserve Amount and the amount of Excess Finance Charge Collections and
Reallocated Class C Principal Collections allocated thereto pursuant to
subsections 4.7(b) and (c) of the Agreement, the Class C Invested Amount will be
reduced (without duplication of any reduction pursuant to the last sentence of
subsection 4.7(c)) by the amount by which such aggregate Investor Default Amount
and Investor Uncovered Dilution Amount exceeds the amount applied with respect
thereto during such preceding Monthly Period (a "CLASS C INVESTOR CHARGE-OFF").
To the extent that on any subsequent Business Day VFC Additional Amounts are
purchased pursuant to Section 6.15, the Holder of the Class C Certificates shall
first deposit into the Excess Funding Account an amount equal to any Class C
Investor Charge-Offs on such Business Day and then shall purchase any other
Class C Invested Amount pursuant to Section 6.15. To the extent that on any
subsequent Business Day there is a remaining positive balance of Total Finance
Charge Collections on deposit in the Collection Account after giving effect
during the Revolving Period to subsections 4.6(a)(i) through (ix) of the
Agreement or during the Amortization Period to subsections 4.6(b)(i) through
(ix) or subsections 4.6(c)(i) through (ix) of the Agreement, as applicable, the
Servicer will apply such excess Finance Charge Collections as provided in
subsection 4.6(a)(x) of the Agreement during the Revolving Period or subsection
4.6(b)(x) or 4.6(c)(x) of the Agreement, as applicable, during the Amortization
Period to reimburse the aggregate amount of Class C Investor Charge-Offs not
previously reimbursed, up to the amount so available.
(b) In the event that any reduction of the Class C Invested Amount
pursuant to subsection 4.8(a) of the Agreement would cause the Class C Invested
Amount to be a negative number, the Class C Invested Amount will be reduced to
zero, and the Class B Invested Amount will be reduced by the lesser of (i) the
amount by which the Class C Invested Amount would have been reduced below zero
and (ii) the sum of (A) aggregate Investor Default Amount, if any, for each
Business Day in the preceding Monthly Period plus (B) the aggregate Investor
Uncovered Dilution Amount, if any, for each Business Day in the preceding
Monthly Period (a "CLASS B INVESTOR CHARGE-OFF"). To the extent that on any
subsequent Business Day there is a positive balance of Total Finance Charge
Collections on deposit in the Collection Account after giving effect to
subsections 4.6(a)(i) through (vi) of the Agreement during the Revolving Period
or subsections 4.6(b)(i) through (vi) or 4.6(c)(i) through (vi) of the
Agreement, as applicable, during the Amortization Period, the Servicer will
apply such excess Finance Charge Collections as provided in subsection
4.6(a)(vii) of the Agreement during the Revolving Period or subsection
4.6(b)(vii) or 4.6(c)(vii) of the Agreement, as applicable, during the
Amortization Period to reimburse the aggregate amount of Class B Investor
Charge-Offs not previously reimbursed, up to the amount so available.
(c) In the event that any such reduction of the Class B Invested Amount
pursuant to subsection 4.8(b) of the Agreement would cause the Class B Invested
Amount to be a
35
negative number, the Class B Invested Amount will be reduced to zero, and the
Class A Invested Amount will be reduced by the lesser of (i) the amount by which
the Class B Invested Amount would have been reduced below zero and (ii) the sum
of (A) aggregate Investor Default Amount, if any, for each Business Day in the
preceding Monthly Period plus (B) the aggregate Investor Uncovered Dilution
Amount, if any, for each Business Day in the preceding Monthly Period (a "CLASS
A INVESTOR CHARGE-OFF"). To the extent that on any subsequent Business Day there
is a positive balance of Total Finance Charge Collections on deposit in the
Collection Account after giving effect to subsections 4.6(a)(i) through (v) of
the Agreement during the Revolving Period or subsections 4.6(b)(i) through (v)
or 4.6(c)(i) through (v) of the Agreement, as applicable, during the
Amortization Period, the Servicer will apply such excess Finance Charge
Collections as provided in subsection 4.6(a)(vi) of the Agreement during the
Revolving Period or subsection 4.6(b)(vi) or 4.6(c)(vi) of the Agreement, as
applicable, during the Amortization Period to reimburse the aggregate amount of
Class A Investor Charge-Offs not previously reimbursed, up to the amount so
available.
Section 4.9 RESERVE ACCOUNT. (a) The Servicer shall establish and maintain
with an Eligible Institution, which may be the Trustee, in the name of the
Trustee, on behalf of the Trust, a segregated trust account (the "RESERVE
ACCOUNT") bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Holders of Series 2002-1 Variable
Funding Certificates. The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Reserve Account and in all
proceeds thereof. Except as provided in Section 4.9(b), the Reserve Account
shall be under the sole dominion and control of the Trustee for the benefit of
the Holders of Series 2002-1 Variable Funding Certificates. If at any time an
Eligible Institution holding the Reserve Account ceases to be an Eligible
Institution, the Transferor shall notify the Trustee in writing, and the Trustee
upon being notified (or the Servicer on its behalf) shall within 10 Business
Days establish a new Reserve Account meeting the conditions specified above, and
shall transfer any cash or any investments to such new Reserve Account. The
Trustee, at the direction of the Servicer, shall make deposits to and
withdrawals from the Reserve Account in the amounts and at the times set forth
in Sections 4.6, 4.7 and 4.9 of the Agreement. All withdrawals from the Reserve
Account shall be made in the priority set forth below. Notwithstanding any other
provision of this Agreement, the Transferor may at any time and from time to
time in the Transferor's discretion deposit funds directly into the Reserve
Account.
(b) No deposit into the Reserve Account shall be required on the Closing
Date. Funds on deposit in the Reserve Account from time to time shall be
invested and/or reinvested at the direction of the Servicer by the Trustee in
Cash Equivalents that will mature so that such funds will be available for
withdrawal on the following Transfer Date. No Cash Equivalent shall be disposed
of prior to its maturity unless the Servicer so directs and prior to the
maturity of such Cash Equivalent, a default occurs in the payment of principal,
interest or any other amount with respect to such Cash Equivalent. The Trustee
shall maintain for the benefit of the Holders of Series 2002-1 Variable Funding
Certificates possession of the negotiable instruments or securities, if any,
evidencing such Cash Equivalents. All cash interest and earnings (net of losses
and investment expenses) received on each Business Day on funds on deposit in
the Reserve Account shall be retained therein to the extent that the Available
Reserve Amount is less than the Required Reserve Amount on such Business Day,
and such retained amounts shall be considered to be available and on deposit in
the Reserve Account until
36
withdrawn therefrom. All cash interest and earnings (net of losses and
investment expenses) received on each Business Day on funds on deposit in the
Reserve Account in excess of the amount, if any, required to be retained in the
Reserve Account on such Business Day shall be treated as a component of Total
Finance Charge Collections and, for purposes of determining the availability of
funds or the balances in the Reserve Account for any other reason under this
Variable Funding Supplement, all such investment earnings on such funds shall be
deemed not to be available or on deposit in the Reserve Account. If on any
Business Day the amount on deposit in the Reserve Account exceeds the Required
Reserve Amount, the amount of such excess shall be treated as a component of
Total Finance Charge Collections.
Section 4.10 EXCESS PURCHASE ACCOUNT. (a) The Servicer shall establish and
maintain with an Eligible Institution, which may be the Trustee, in the name of
the Trustee, on behalf of the Trust, a segregated trust account (the "EXCESS
PURCHASE ACCOUNT") bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Holders of Series 2002-1
Variable Funding Certificates. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Excess Purchase
Account and in all proceeds thereof. Except as provided in Section 4.10(b), the
Excess Purchase Account shall be under the sole dominion and control of the
Trustee for the benefit of the Holders of Series 2002-1 Variable Funding
Certificates. If at any time an Eligible Institution holding the Excess Purchase
Account ceases to be an Eligible Institution, the Transferor shall notify the
Trustee in writing, and the Trustee upon being notified (or the Servicer on its
behalf) shall within 10 Business Days establish a new Excess Purchase Account
meeting the conditions specified above, and shall transfer any cash or any
investments to such new Excess Purchase Account. The Trustee, at the direction
of the Servicer, shall make deposits to the Excess Purchase Account in the
amounts and at the times set forth in Section 6.15 of the Agreement.
(b) Funds on deposit in the Excess Purchase Account from time to time
shall be invested and/or reinvested at the direction of the Servicer by the
Trustee in Cash Equivalents that will mature so that such funds will be
available for withdrawal not later than the following Transfer Date. No Cash
Equivalent shall be disposed of prior to its maturity unless the Servicer so
directs and prior to the maturity of such Cash Equivalent, a default occurs in
the payment of principal, interest or any other amount with respect to such Cash
Equivalent. The Trustee shall maintain for the benefit of the Holders of Series
2002-1 Variable Funding Certificates possession of the negotiable instruments or
securities, if any, evidencing such Cash Equivalents. All cash interest and
earnings (net of losses and investment expenses) received on each Business Day
on funds on deposit in the Excess Purchase Account shall be treated as a
component of Total Finance Charge Collections. For purposes of determining the
availability of funds or the balances in the Excess Purchase Account for any
other reason under this Variable Funding Supplement, all investment earnings on
such funds shall be deemed not to be available or on deposit.
(c) If on any Business Day prior to the Amortization Period Commencement
Date the greater of (i) the sum of (A) the aggregate Invested Amount of each
Series then outstanding as of such day including the Series 2002-1 Variable
Funding Certificates minus amounts on deposit in the principal funding account
for any Series and (B) the Minimum Transferor Amount as of such day or (ii) the
Minimum Aggregate Principal Receivables exceeds an amount equal to (a) the
aggregate amount of Principal Receivables and amounts on deposit in
37
the Excess Funding Account (other than investment earnings thereon), PLUS (b)
the amount on deposit in the Excess Purchase Account, the amount of such excess
shall be withdrawn by the Trustee in accordance with the instructions of the
Servicer from the Excess Purchase Account and paid to the Transferor in respect
of VFC Additional Invested Amounts theretofore purchased hereunder. On the
Amortization Period Commencement Date, the amount on deposit in the Excess
Purchase Account or, if less, the sum of the Class A Invested Amount and the
Class B Invested Amount shall be withdrawn by the Trustee at the direction of
the Servicer and deposited into the Principal Account.
Section 4.11 PRINCIPAL AND INTEREST FUNDING ACCOUNTS. (a) The Servicer
shall establish and maintain with an Eligible Institution approved by the Class
A Agent and the Class B Agent, which may be the Trustee, in the name of the
Trustee, on behalf of the Trust, segregated trust accounts (the "PRINCIPAL
ACCOUNT" and the "INTEREST FUNDING ACCOUNT", respectively), each bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Holders of Series 2002-1 Variable Funding Certificates. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Principal Account and the Interest Funding Account and in
all proceeds thereof. Except as provided in Section 4.11(b), the Principal
Account and the Interest Funding Account shall each be under the sole dominion
and control of the Trustee for the benefit of the Holders of Series 2002-1
Variable Funding Certificates. If at any time an Eligible Institution holding
the Principal Account or the Interest Funding Account ceases to be an Eligible
Institution, the Transferor shall notify the Trustee in writing and the
Administrative Agent, and the Trustee upon being notified (or the Servicer on
its behalf ) shall within ten Business Days establish a new Principal Account or
Interest Funding Account, as the case may be, meeting the conditions specified
above, and shall transfer any cash or any investments to such new Principal
Account or Interest Funding Account. The Trustee, at the direction of the
Servicer, shall make deposits to the Principal Account in the amounts and at the
times set forth in Section 4.6 or 4.10 of the Agreement and shall make deposits
to the Interest Funding Account in the amounts and at the times set forth in
Section 4.6 of the Agreement. Amounts deposited into the Principal Account or
Interest Funding Account shall not reduce the Invested Amount.
(b) Funds on deposit in the Principal Account and the Interest Funding
Account in respect of the Class A Variable Funding Certificates from time to
time shall be invested and/or reinvested at the written direction of the Class A
Agent by the Trustee in Cash Equivalents that will mature so that such funds
will be available for withdrawal on the Business Day preceding the respective
dates on which the related payments are required to be made under the Class A
Certificate Purchase Agreement. No Cash Equivalent shall be disposed of prior to
its maturity unless the Class A Agent so directs and prior to the maturity of
such Cash Equivalent, a default occurs in the payment of principal, interest or
any other amount with respect to such Cash Equivalent. The Trustee shall
maintain for the benefit of the Holders of Class A Certificates possession of
the negotiable instruments or securities, if any, evidencing such Cash
Equivalents. Funds on deposit in the Principal Account and the Interest Funding
Account in respect of the Class B Variable Funding Certificates from time to
time shall be invested and/or reinvested at the written direction of the Class B
Agent by the Trustee in Cash Equivalents that will mature so that such funds
will be available for withdrawal on the Business Day preceding the respective
dates on which the related payments are required to be made under the Class B
Certificate Purchase Agreement. No Cash Equivalent shall be disposed of prior to
its
38
maturity unless the Class B Agent so directs and prior to the maturity of such
Cash Equivalent, a default occurs in the payment of principal, interest or any
other amount with respect to such Cash Equivalent. The Trustee shall maintain
for the benefit of the Holders of Class B Certificates possession of the
negotiable instruments or securities, if any, evidencing such Cash Equivalents.
(c) All cash interest and earnings (net of losses and investment expenses)
received on each Business Day on funds on deposit in the Principal Account or
the Interest Funding Account shall be treated as a component of Total Finance
Charge Collections. For purposes of determining the availability of funds or the
balances in the Principal Account or the Interest Funding Account for any other
reason under this Variable Funding Supplement, all investment earnings on such
funds shall be deemed not to be available or on deposit.
(d) Amounts on deposit in the Principal Account shall be withdrawn by the
Trustee acting at the written direction of the Class A Agent at the end of each
Fixed Period (as defined in the Class A Certificate Purchase Agreement) for any
portion of the Class A Investor Principal Balance (as so defined) or on any
other date on which a payment in respect of principal of the Class A
Certificates is due as contemplated by the Class A Certificate Purchase
Agreement, to pay to Class A Certificateholders such portion of the Class A
Investor Principal Balance. Amounts on deposit in the Interest Funding Account
shall be withdrawn by the Trustee acting at the written direction of the Class A
Agent at the end of each Fixed Period (as defined in the Class A Certificate
Purchase Agreement) for any portion of the Class A Investor Principal Balance
(as so defined) or on any other date on which a payment in respect of interest
on the Class A Certificates is due as contemplated by the Class A Certificate
Purchase Agreement, to pay to Class A Certificateholders accrued and unpaid
interest on such portion of the Class A Investor Principal Balance and, on each
Distribution Date, to pay accrued and unpaid Class A Program Fees. Amounts on
deposit in the Principal Account shall be withdrawn by the Trustee acting at the
written direction of the Class B Agent at the end of each Fixed Period (as
defined in the Class B Certificate Purchase Agreement) for any portion of the
Class B Investor Principal Balance (as so defined) or on any other date on which
a payment in respect of principal of the Class B Certificates is due as
contemplated by the Class B Certificate Purchase Agreement, to pay to Class B
Certificateholders such portion of the Class B Investor Principal Balance.
Amounts on deposit in the Interest Funding Account shall be withdrawn by the
Trustee acting at the written direction of the Class B Agent at the end of each
Fixed Period (as defined in the Class B Certificate Purchase Agreement) for any
portion of the Class B Investor Principal Balance (as so defined) or on any
other date on which a payment in respect of interest on the Class B Certificates
is due as contemplated by the Class B Certificate Purchase Agreement, to pay to
Class B Certificateholders accrued and unpaid interest on such portion of the
Class B Investor Principal Balance and, on each Distribution Date, to pay
accrued and unpaid Class B Program Fees.
Section 4.12 PROCEEDS ACCOUNT. The Servicer shall establish and maintain
with an Eligible Institution, which may be the Trustee, in the name of the
Trustee, on behalf of the Trust, a segregated trust account (the "PROCEEDS
ACCOUNT") bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Holders of Series 2002-1 Variable
Funding Certificates. The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Proceeds Account and in all
proceeds thereof. The Proceeds Account shall be under the sole dominion and
control of the Trustee for
39
the benefit of the Holders of Series 2002-1 Variable Funding Certificates. If at
any time an Eligible Institution holding the Proceeds Account ceases to be an
Eligible Institution, the Transferor shall notify the Trustee in writing, and
the Trustee upon being notified (or the Servicer on its behalf) shall within 10
Business Days establish a new Proceeds Account meeting the conditions specified
above, and shall transfer any cash or any investments to such new Proceeds
Account. The Trustee, at the direction of the Servicer, shall make deposits to
and withdrawals from the Proceeds Account in the amounts and at the times set
forth in Section 6.15 of the Agreement. Funds on deposit in the Proceeds Account
from time to time shall be held uninvested.
SECTION 8. ARTICLE V OF THE AGREEMENT. Article V of the Agreement shall
read in its entirety as follows and shall be applicable only to the Series
2002-1 Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 DISTRIBUTIONS. (a) On each Business Day, the Paying Agent
shall distribute to the Class A Certificateholders the amount, if any, specified
in subsection 4.11(d) of the Agreement to be paid to the Class A
Certificateholders on such Business Day; PROVIDED, HOWEVER, that the final
payment in retirement of the Class A Certificates will be made only upon
presentation and surrender of the Class A Certificates at the office or offices
specified in the notice of such final distribution delivered by the Trustee
pursuant to Section 12.3 of the Agreement.
(b) On each Business Day, the Paying Agent shall distribute to the Class B
Certificateholders the amount, if any, specified in subsection 4.11(d) of the
Agreement to be paid to the Class B Certificateholders on such Business Day;
PROVIDED, HOWEVER, that the final payment in retirement of the Class B
Certificate will be made only upon presentation and surrender of the Class B
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3 of the Agreement.
(c) On each Business Day, the Paying Agent shall distribute (in accordance
with the Daily Report delivered by the Servicer to the Trustee pursuant to
subsection 3.4(b) of the Agreement) to each Class C Certificateholder of record
(other than as provided in subsection 2.4(d) or in Section 12.3 of the Agreement
respecting a final distribution) such Certificateholder's PRO RATA share (based
on the aggregate Undivided Interests represented by Class C Certificates held by
such Certificateholder) of such amounts on deposit in the Collection Account as
are payable to the Class C Certificateholders pursuant to Section 4.6 of the
Agreement; PROVIDED, HOWEVER, that the final payment in retirement of the Class
C Certificate will be made only upon presentation and surrender of the Class C
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3 of the Agreement.
Section 5.2 MONTHLY CERTIFICATEHOLDERS' STATEMENT. As soon as practicable,
but no later than each Determination Date following the end of each Monthly
40
Period with respect to items (i) through (vii) below, and no later than 30 days
following the end of each Monthly Period with respect to the remaining items
listed below, the Servicer shall forward to the Trustee, the Administrative
Agent and the Rating Agencies a statement, substantially in the form of Exhibit
E to this Variable Funding Supplement, including the following information:
(i) the amount of Net Principal Collections received in the
Collection Account during the related Monthly Period and allocated in
respect of each Class of Series 2002-1 Certificates;
(ii) the amount of Total Finance Charge Collections
processed during the related Monthly Period and allocated in respect
of each Class of Series 2002-1 Certificates;
(iii) the aggregate amount of Principal Receivables, the
Invested Amount, the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount, the Transferor Amount, the
Floating Allocation Percentage and, during the Amortization Period,
the Fixed/Floating Allocation Percentage with respect to the Principal
Receivables in the Trust as of the end of the day on the last day of
the Monthly Period preceding such Distribution Date;
(iv) the aggregate outstanding balance of Accounts which are
30, 60, 90, 120, 150 and 180 days or more delinquent as of the end of
each billing cycle during the preceding Monthly Period for such
account;
(v) the aggregate Investor Default Amount for the related
Monthly Period;
(vi) the aggregate Investor Uncovered Dilution Amount for
the related Monthly Period;
(vii) the aggregate amount of Class A Investor Charge-Offs,
Class B Investor Charge-Offs and Class C Investor Charge-Offs for the
related Monthly Period and reimbursements thereof;
(viii) the aggregate amount of the Monthly Servicing Fee for
the related Monthly Period;
(ix) the Excess Spread Percentage, the Excess Spread
Enhancement Cap Percentage, the Payment Rate Percentage, the Payment
Rate Enhancement Cap Percentage, the Enhancement Percentage, the
Charge Off Ratio, the Delinquency Ratio and the Automatic Addition
Percentage for the related Monthly Period;
(x) the Available Reserve Account Amount on the last day of
Monthly Period immediately preceding the related Monthly Period, the
aggregate deposits in the Reserve Account during the related Monthly
Period, the aggregate disbursements from the Reserve Account during
such Monthly Period, and the Available Reserve Account
41
Amount and the Required Reserve Account Amount on the last day of such
Monthly Period; and
(xi) the Portfolio Yield and the average of the daily Base
Rates for the related Monthly Period.
Section 5.3 ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before January
31 of each calendar year, beginning with calendar year 2003, the Trustee shall
distribute to each Person who at any time during the preceding calendar year was
a Series 2002-1 Certificateholder, a statement prepared by the Servicer
containing information regarding the amounts distributed to such Person and the
principal and interest portion thereof, aggregated for such calendar year or the
applicable portion thereof during which such Person was a Series 2002-1
Certificateholder, together with such other customary information (consistent
with the treatment of the Certificates as debt) as the Trustee or the Servicer
deems necessary or desirable to enable the Series 2002-1 Certificateholders to
prepare their tax returns. Such obligations of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to any requirements of the Internal
Revenue Code as from time to time in effect.
SECTION 9. ARTICLE VI OF THE AGREEMENT. The Opinion of Counsel referred to
in clause (d)(i) of the seventh sentence of Section 6.9(b) of the Agreement
shall mean, with respect to the Series 2002-1 Certificates, an Opinion of
Counsel to the effect that the Class A Certificates and the Class B Certificates
will not represent interests in an association taxable as a corporation or a
publicly traded partnership for federal income tax purposes. Except as provided
in the preceding sentence, sections 6.1 through 6.14 of the Agreement shall be
read in their entirety as provided in the Agreement. Article VI (except for
Sections 6.1 through 6.14 thereof) shall read in its entirety as follows and
shall be applicable only to the Series 2002-1 Certificates:
Section 6.15 VFC ADDITIONAL INVESTED AMOUNTS. (a) The Holders of the Class
A Certificates, the Holders of the Class B Certificates and the Holders of the
Class C Certificates agree, by acceptance of the Class A Certificates, the Class
B Certificates or the Class C Certificates, respectively, that the Transferor
may from time to time prior to the Amortization Period Commencement Date for the
Variable Funding Certificates (i) as to any Committed Purchaser, require and
(ii) as to any Noncommitted Purchaser, request that such Holder acquire as of
any Business Day additional undivided interests in the Trust in specified
amounts (such amounts, respectively, the "VFC ADDITIONAL CLASS A INVESTED
AMOUNT," the "VFC ADDITIONAL CLASS B INVESTED AMOUNT," and the "VFC ADDITIONAL
CLASS C INVESTED AMOUNT" and, collectively, the "VFC ADDITIONAL INVESTED
AMOUNTS") not to exceed, after giving effect thereto, an amount equal to (1) the
aggregate amount of Principal Receivables and amounts on deposit in the Excess
Funding Account (other than investment earnings thereon), (2) PLUS the amount on
deposit in the Excess Purchase Account, MINUS (3) the greater of (A) the sum of
(x) the aggregate Invested Amount of each Series then outstanding as of such day
including the Variable Funding Certificates minus amounts on deposit in the
principal funding account for any Series and (y) the Minimum Transferor Amount
as of such day or (B) the Minimum Aggregate Principal Receivables.
42
(b) The obligation of any Holder of Class A Certificates to acquire any
VFC Additional Class A Invested Amount shall be subject to the satisfaction of
any applicable conditions provided in the Class A Certificate Purchase Agreement
and subject to the further conditions that, after giving effect to such
acquisition and to any concurrent acquisitions of VFC Additional Invested
Amounts, (i) the Class B Invested Amount shall be equal to or greater than the
Required Class B Invested Amount and the Class C Invested Amount shall be equal
to or greater than the Required Class C Invested Amount and (ii) the sum of the
Available Reserve Amount plus the excess, if any, of the Class C Invested Amount
over 10% of the Invested Amount shall be equal to or greater than the Required
Reserve Amount. The obligation of any Holder of Class B Certificates to acquire
any VFC Additional Class B Invested Amount shall be subject to the satisfaction
of any applicable conditions provided in the Class B Certificate Purchase
Agreement and subject to the further conditions that, after giving effect to
such acquisition and to any concurrent acquisitions of VFC Additional Invested
Amounts, (i) the Class C Invested Amount shall be equal to or greater than the
Required Class C Invested Amount and (ii) the sum of the Available Reserve
Amount plus the excess, if any, of the Class C Invested Amount over 10% of the
Invested Amount shall be equal to or greater than the Required Reserve Amount.
(c) If the Holders of the Class A Certificates acquire such additional
interest, then in consideration of such Holder's payments of the VFC Additional
Class A Invested Amount, the Servicer shall note such VFC Additional Class A
Invested Amount on the related Daily Report and direct the Trustee to pay to the
Transferor such VFC Additional Invested Amounts, and the Invested Amount of the
Class A Variable Funding Certificates will be equal to the Invested Amount of
the Class A Certificates stated in such Daily Report. If the Holders of the
Class B Certificates acquire such additional interest, then in consideration of
such Holder's payments of the VFC Additional Class B Invested Amount, the
Servicer shall note such VFC Additional Class B Invested Amount on the related
Daily Report and direct the Trustee to pay to the Transferor such VFC Additional
Invested Amounts, and the Invested Amount of the Class B Certificates will be
equal to the Invested Amount of the Class B Certificates stated in such Daily
Report. If the Holders of the Class C Certificates acquire such additional
interest, then in consideration of such Holder's payments of the VFC Additional
Class C Invested Amount, the Servicer shall appropriately note such VFC
Additional Class C Invested Amount on the related Daily Report and direct the
Trustee to pay to the Transferor such VFC Additional Invested Amounts, and the
Invested Amount of the Class C Certificates will be equal to the Invested Amount
of the Class C Certificates stated in such Daily Report.
(d) The proceeds of the purchase on any Business Day of VFC Additional
Invested Amounts received by the Trustee shall be deposited upon receipt into
the Proceeds Account. To the extent that on any purchase date and after giving
effect to the purchase of VFC Additional Invested Amounts pursuant to this
Section 6.15, (a) the greater of (i) the sum of (A) the aggregate Invested
Amount of each Series then outstanding as of such day including the Variable
Funding Certificates minus amounts on deposit in the principal funding account
for any Series and (B) the Minimum Transferor Amount as of such day or (ii) the
Minimum Aggregate Principal Receivables exceeds (b) an amount equal to the
aggregate amount of Principal Receivables and amounts on deposit in the Excess
Funding Account (other than investment earnings thereon), the Servicer shall
instruct the Trustee, and the Trustee, upon such instruction from the Servicer,
shall withdraw a portion of the purchase price for such VFC Additional
43
Invested Amounts equal to such excess from the Proceeds Account and deposit such
portion into the Excess Purchase Account. The Trustee shall withdraw any
remaining Proceeds of such purchase price from the Proceeds Account and transfer
such amounts to the Transferor in accordance with the instructions of the
Servicer.
(e) In the event that the proceeds of a purchase of any VFC Additional
Class A Invested Amounts required to be made on a Business Day pursuant to the
Class A Certificate Purchase Agreement shall not have been received in the
Proceeds Account by 1:00 p.m., New York City time, on such Business Day, the
Servicer shall notify the Class A Agent and the Transferor by not later than
1:30 p.m., New York City time, on such Business Day. In the event that the
proceeds of a purchase of any VFC Additional Class B Invested Amounts required
to be made on a Business Day pursuant to the Class B Certificate Purchase
Agreement shall not have been received in the Proceeds Account by 1:00 p.m., New
York City time, on such Business Day, the Servicer shall notify the Class B
Agent and the Transferor by not later than 1:30 p.m., New York City time, on
such Business Day.
Section 6.16 EXTENSION. (a) If a Pay Out Event has not occurred or has
occurred but has been remedied on or before the 30th Business Day preceding the
Extension Date, the Transferor, in its sole discretion, may deliver to the
Trustee on or before such date a notice substantially in the form of Exhibit B
(the "EXTENSION NOTICE") to this Variable Funding Supplement. The Trustee shall
mail a copy of the Extension Notice and all documents annexed thereto to the
Investor Certificateholders of record on the date of receipt thereof. The
Transferor shall state in the Extension Notice that it intends to extend the
Revolving Period until the later Amortization Period Commencement Date set forth
in the Extension Notice. The Extension Notice shall also set forth the next
Extension Date. The following documents shall be annexed to the Extension
Notice: (i) a form of the Opinion of Counsel addressed to the Transferor and the
Trustee to the effect that despite the Extension the Trust will not be treated
as an association taxable as a corporation (the "EXTENSION TAX OPINION"); (ii) a
form of the Opinion of Counsel addressed to the Transferor and the Trustee (the
"EXTENSION OPINION") to the effect that (A) the Transferor has the corporate
power and authority to effect the Extension, (B) the Extension has been duly
authorized by the Transferor, and (C) all conditions precedent to the Extension
required by this Section 6.16 have been fulfilled; and (iii) a form of Investor
Certificateholder Election Notice substantially in the form of Exhibit C (the
"ELECTION NOTICE") to this Variable Funding Supplement. In addition, the
Extension Notice shall state that any Investor Certificateholder electing to
approve the Extension must do so on or before the Election Date (as defined
below) by returning the annexed Election Notice properly executed to the Trustee
in the manner described below. The Extension Notice shall also state that an
Investor Certificateholder may withdraw any such election in whole or in part on
or before the Election Date, and the Transferor, in its sole discretion, may,
prior to the Election Date, withdraw its election to extend the Revolving
Period. Any Holder that elects to approve an Extension hereunder shall deliver a
duly executed Election Notice to the Trustee at the address designated in the
Extension Notice on or before 3:00 p.m., New York City time, on or before the
fifth Business Day preceding the Extension Date (such Business Day constituting
the "ELECTION DATE").
(b) No Extension shall occur until prior satisfaction of the following
conditions at the close of business on the Election Date: (i) no Pay Out Event
shall have
44
occurred and be continuing, (ii) there shall have been delivered to the Trustee
(A) the Extension Tax Opinion and the Extension Opinion, each addressed to the
Transferor and the Trustee and (B) written confirmation from each Rating Agency
rating the Class A Certificates or the Class B Certificates or providing
informal ratings on such Series 2002-1 Variable Funding Certificates for the
benefit of a Class A Certificateholder or Class B Certificateholder that the
Extension will not cause such Rating Agency to lower its then current rating or
informal rating or withdraw its ratings or informal ratings of such Investor
Certificates, (iii) the holders of more than 50% of the principal amount of
Class A Certificates and of more than 50% of the principal amount of Class B
Certificates shall have elected to approve the Extension by returning to the
Trustee on or before the Election Date the executed Election Notice annexed to
the Extension Notice delivered to such Class A Certificateholders and Class B
Certificateholders pursuant to subsection 6.16(a) of the Agreement, (iv) if
provided for by the Transferor, in its sole discretion, in the Extension Notice,
the holders of a specified minimum amount of outstanding Class C Certificates
shall have elected to approve of the Extension by returning to the Trustee on or
before the Election Date the executed form of Election Notice annexed to the
Extension Notice delivered to such Class C Certificateholders pursuant to
subsection 6.16(a) of the Agreement and (v) the Transferor shall have delivered
to the Trustee an Officer's Certificate and an Opinion of Counsel, each to the
effect that all conditions precedent in this subparagraph (b) have been
satisfied. If, by the close of business on the Election Date, all of the
conditions stated in this subsection 6.16(b) of the Agreement have not been
satisfied and all such documents delivered to the Trustee pursuant to this
subsection 6.16(b) of the Agreement are not in form satisfactory to it, or if
the Transferor has notified the Trustee, prior to the Election Date, that the
Transferor has exercised its right to withdraw its election of an Extension, no
Extension shall occur.
(c) The execution by the required number of Investor Certificateholders of
the applicable Election Notice and return thereof to the Trustee by the required
date and time, the continued election by the Transferor to extend the Revolving
Period at the Election Date, and the compliance with all of the provisions of
this Section 6.16, shall evidence an extension or renewal of the obligations
represented by the Investor Certificates delivered in exchange therefor, and not
a novation or extinguishment of such obligations or a substitution with respect
thereto.
(d) To the extent required by applicable laws and regulations, as
evidenced by an Opinion of Counsel delivered by the Transferor to the Trustee,
the provisions of this Section 6.16 shall or may be modified to comply with all
applicable laws and regulations in effect at the time of a prepared Extension.
Section 6.17 TRANSFERS OF CLASS C CERTIFICATES; LEGENDS. (a) No Class C
Certificate or any interest therein may be sold (including in the initial
offering), conveyed, assigned, hypothecated, pledged, participated or otherwise
transferred (each such act or event, a "TRANSFER"), except in accordance with
this Section 6.17. Any Transfer of a Class C Certificate otherwise permitted by
this Section 6.17 will be permitted only if it consists of a PRO RATA percentage
interest in all payments made with respect to such Holder's beneficial interest
in the Class C Certificates. No Transfer of a Class C Certificate or any
interest therein to any Person (each, a "CLASS C ASSIGNEE") may occur, unless
the Class C Assignee shall have executed and delivered to the Trustee an
investment letter substantially in the form of Exhibit D hereto and the
Transferor shall have granted its prior written consent thereto. Such consent
shall not be granted if the Transferor determines in its sole and absolute
discretion that
45
such Transfer would create a risk that the Trust would be classified for federal
or any applicable state tax purposes as an association or publicly traded
partnership taxable as a corporation; PROVIDED, that any attempted Transfer that
would cause the number of Targeted Holders to exceed ninety-nine shall be void;
and PROVIDED, FURTHER, that the number of Targeted Holders for the Trust as a
result of Transfers of Class C Certificates shall not be more than ten or such
other number as may be consented to by the Transferor, which consent may be
withheld in its sole and absolute discretion. The Transferor agrees to monitor
the number of Targeted Holders and to deny its consent to any transfer of a
Class C Certificate or any interest therein if such transfer could cause the
number of Targeted Holders to exceed ninety-nine.
(b) Each initial purchaser of a Class C Certificate or any interest
therein and any Class C Assignee thereof shall certify to the Transferor, the
Servicer and the Trustee that it has neither acquired nor will it sell, trade or
transfer any interest in a Class C Certificate or cause an interest in a Class C
Certificate to be marketed on or through an "established securities market"
within the meaning of Section 7704(b)(1) of the Code and any proposed, temporary
or final treasury regulation thereunder, including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations. In addition, each initial purchaser of
a Class C Certificate or any interest therein and any Class C Assignee shall
certify, prior to any delivery or Transfer to it of a Class C Certificate, that
it is not and, for so long as it holds any interest in a Class C Certificate,
will not become a partnership, Subchapter S corporation or grantor trust for
U.S. federal income tax purposes. If an initial purchaser of an interest in a
Class C Certificate or a Class C Assignee cannot make the certification
described in the preceding sentence, the Transferor may, in its sole discretion,
prohibit a Transfer to such entity; PROVIDED, HOWEVER, that if the Transferor
agrees to permit such a Transfer, the Transferor or the Servicer may require
additional certifications in order to prevent the Trust from being treated as a
publicly traded partnership. Each initial purchaser of an interest in a Class C
Certificate and each Class C Assignee acknowledges that any Opinion of Counsel
furnished to the Transferor or the Trustee to the effect that the Trust will not
be treated as a publicly traded partnership taxable as a corporation will be
dependent in part on the accuracy of the certifications described in this
subsection 6.17(b).
(c) Subject to the provisions of subsections 6.17(a) and 6.17(b) above,
the Transferor may at any time, without the consent of the Investor
Certificateholders, (i) sell or transfer all or a portion of the Class C
Certificates and (ii) in connection with any such sale or transfer, enter into a
supplemental agreement with the Trustee pursuant to which the Transferor may
amend the Class C Certificate Rate, set forth the amount of monthly interest due
Class C Certificateholders (the "CLASS C INTEREST"), provide for the payment of
additional amounts (the "CLASS C ADDITIONAL INTEREST") with respect to any
shortfall (the "CLASS C INTEREST SHORTFALL") in payments of such Class C
Interest and provide for such other provisions with respect to the Class C
Certificates as may be specified in such supplemental agreement, PROVIDED that
in each such case (A) the Transferor shall have given written notice to the
Trustee, the Servicer, the Administrative Agent and the Rating Agencies of such
proposed sale or transfer of the Class C Certificates and such supplemental
agreement at least five Business Days prior to the consummation of such sale or
transfer and the execution of such proposed supplemental agreement; (B) the
Rating Agency Condition shall have been satisfied; (C) no Trust Pay Out Event or
Series 2002-1 Pay Out Event shall have occurred prior to the consummation of
such proposed sale or transfer of Class C Certificates or the execution of such
46
supplemental agreement; (D) the Transferor shall have delivered an Officer's
Certificate, dated the date of the consummation of such sale or transfer and the
effectiveness of such supplemental agreement, to the effect that, in the
reasonable belief of the Transferor, such action will not, based on the facts
known to such officer at the time of such certification, cause a Pay Out Event
to occur with respect to any Series, (E) the Transferor will have delivered an
Opinion of Counsel, dated the date of such certificate with respect to such
action to the effect that such action will not adversely affect the Federal or
Applicable Tax State income tax characterization of any outstanding Series of
Investor Certificates or the taxability of the Trust under Federal or Applicable
Tax State income tax laws, and (F) either (x) the Available Reserve Amount on
the most recent Determination Date (after giving effect to all payments and
allocations on such Determination Date) shall have been equal to or greater than
the Required Reserve Amount on such Determination Date, each recalculated on a
pro forma basis as though the Class C Certificates had borne interest at the
amended Class C Interest Rate throughout each of the three Monthly Periods
preceding such Determination Date or (y) the Administrative Agent shall have
consented to such supplemental agreement and the terms and conditions set forth
therein; PROVIDED, FURTHER, as a condition to the sale or transfer of all or a
portion of the Class C Certificates the transferee shall be required to agree
not to institute against, or join any other Person in instituting against, or
join any other Person instituting against, the Trust or the Transferor any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, for
one year and one day after all Investor Certificates are paid in full.
(d) Transfers of Class C Certificates shall also be subject to the
provisions of subsection 3(c) of this Variable Funding Supplement.
Section 6.18 TRANSFERS OF VARIABLE FUNDING CERTIFICATES; LEGENDS. (a) The
provisions of this Section 6.18 shall apply to the Class A Certificates and the
Class B Certificates unless, with respect to such Class, the Transferor and the
Trustee shall have received an Opinion of Counsel to the effect that such Class
will be treated as indebtedness for federal income tax purposes.
(b) Subject to subsection 6.18(a), no Transfer of a Class A Certificate or
Class B Certificate or any interest therein (including in the initial offering)
may occur, except in accordance with this Section 6.18. Any Transfer of a Class
A Certificate or Class B Certificate otherwise permitted by this Section 6.18
will be permitted only if it consists of a PRO RATA percentage in all payments
made with respect to such Holder's beneficial interest in the Class A
Certificates or Class B Certificates, as the case may be. No Transfer of a Class
A Certificate or a Class B Certificate or any interest therein to any Person (an
"ASSIGNEE") shall be permitted, unless such Assignee shall have executed and
delivered to the Trustee an investment letter substantially in the form of
Exhibit A to the Class A Certificate Purchase Agreement or to the Class B
Certificate Purchase Agreement, as applicable. A Structured Purchaser may effect
a Transfer of a Class A Certificate or a Class B Certificate to one or more
Support Banks pursuant to a Liquidity Agreement (a "LIQUIDITY TRANSFER") without
the Transferor's consent, PROVIDED, that each Support Bank satisfies the
certification requirements of Section 6.18(c). Any Transfer of a Class A
Certificate or a Class B Certificate or any interest therein other than a
Liquidity Transfer shall require the Transferor's prior written consent. For
transfers other than Liquidity Transfers, the Transferor shall monitor the
number of Targeted Holders and shall not
47
deny its consent unless the Transferor reasonably determines that such Transfer
would (i) create a risk that the Trust would be classified for federal or any
applicable state tax purposes as an association or publicly traded partnership
taxable as a corporation, (ii) cause the number of Targeted Holders, including
potential Liquidity Transfer transferees, to exceed ninety-nine, or (iii) cause
the number of Targeted Holders, including potential Liquidity Transfer
transferees, of Class A or Class B Certificates or any interest therein to
exceed twenty (or such higher number as the Transferor in its sole discretion
may agree to), (iv) be to a transferee that cannot make the certifications
required under Section 6.18(c), or (v) be prohibited by the Class A Certificate
Purchase Agreement or the Class B Certificate Purchase Agreement, as applicable.
To assist the Transferor in this regard, each Structured Purchaser, at the time
of initial purchase and at the time of any increase therein, shall advise the
Transferor in writing of the maximum number of Support Banks to which such
Structured Purchaser could transfer a Class A or Class B Certificate pursuant to
the related Liquidity Agreement. Any attempted Transfer (other than a Liquidity
Transfer) that would cause the number of Targeted Holders to exceed ninety-nine
shall be void.
(c) Each initial purchaser of a Class A Certificate or a Class B
Certificate, as applicable, or any interest therein and any Assignee thereof
shall certify to the Transferor, the Servicer and the Trustee that it has
neither acquired nor will it sell, trade or transfer any interest in a Class A
Certificate or Class B Certificate, as applicable, or cause an interest in a
Class A Certificate or Class B Certificate, as applicable, to be marketed on or
through an "established securities market" within the meaning of Section
7704(b)(1) of the Code and any proposed, temporary or final treasury regulation
thereunder, including, without limitation, an over-the-counter-market or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations. In addition, each initial purchaser of a Class A Certificate or a
Class B Certificate, as applicable, or any interest therein and any Assignee
shall certify, prior to any delivery or Transfer to it of a Class A Certificate
or Class B Certificate, as applicable, that it is not and, for so long as it
holds any interest in a Class A Certificate or Class B Certificate, as
applicable, will not become a partnership, Subchapter S corporation or grantor
trust for U.S. federal income tax purposes. If an initial purchaser of an
interest in a Class A Certificate or Class B Certificate or an Assignee cannot
make the certification described in the preceding sentence, the Transferor may,
in its sole discretion, by written notice to the Trustee permit a Transfer to
such entity; PROVIDED, HOWEVER, that if the Transferor agrees to permit such a
Transfer, the Transferor, the Servicer or the Trustee may require additional
certifications in order to prevent the Trust from being treated as a publicly
traded partnership. Each initial purchaser of an interest in a Class A
Certificate or a Class B Certificate and each Assignee acknowledges that the
Opinion of Counsel to the effect that the Trust will not be treated as a
publicly traded partnership taxable as a corporation is dependent in part on the
accuracy of the certifications described in this subsection 6.18(c).
(d) Transfers of Class A Certificates or Class B Certificates shall also
be subject to the provisions of subsection 3(c) of this Variable Funding
Supplement.
SECTION 10. SERIES 2002-1 PAY OUT EVENTS. The Pay Out Events which can
cause the commencement of the Amortization Period with respect to the Series
2002-1 Variable Funding Certificates include the Trust Pay Out Events described
in Section 9.1 of the
48
Agreement and the Series 2002-1 Pay Out Events described in the following
sentence. If any one of the following events shall occur with respect to the
Series 2002-1 Certificates:
(a) failure on the part of the Transferor (i) to make any payment or
deposit required by the terms of (A) the Agreement or (B) this Variable Funding
Supplement, on or before the date occurring five days after the date such
payment or deposit is required to be made herein or (ii) duly to observe or
perform in any material respect any covenants or agreements of the Transferor
set forth in the Agreement or this Variable Funding Supplement, which failure
has a material adverse effect on the Series 2002-1 Variable Funding
Certificateholders and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of Class A Certificates evidencing
Undivided Interests aggregating more than 50% of the Class A Invested Amount or
of Class B Certificates evidencing Undivided Interests aggregating more than 50%
of the Class B Invested Amount, and continues to affect materially and adversely
the interests of the Series 2002-1 Variable Funding Certificateholders for such
period;
(b) any representation or warranty made by the Transferor in the Agreement
or this Series 2002-1 Variable Funding Supplement, or any information contained
in a computer file or microfiche list required to be delivered by the Transferor
pursuant to Section 2.1 or 2.6 of the Agreement, (i) shall prove to have been
incorrect in any material respect when made or when delivered, which continues
to be incorrect in any material respect for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Transferor by the Trustee, or to the Transferor and
the Trustee by the Holders of Class A Certificates evidencing Undivided
Interests aggregating more than 50% of the Class A Invested Amount or of Class B
Certificates evidencing Undivided Interests aggregating more than 50% of the
Class B Invested Amount, and (ii) as a result of which the interests of the
Series 2002-1 Variable Funding Certificateholders are materially and adversely
affected and continue to be materially and adversely affected for such period;
PROVIDED, HOWEVER, that a Series 2002-1 Pay Out Event pursuant to this
subsection 10(b) shall not be deemed to have occurred hereunder if the
Transferor has accepted reassignment of the related Receivable, or all of such
Receivables, if applicable, during such period in accordance with the provisions
of the Agreement;
(c) the average Portfolio Yield for any three consecutive Monthly Periods
is reduced to a rate which is less than the average of the daily Base Rates for
such period;
(d) (i) the Transferor Amount shall be less than the Minimum Transferor
Amount or (ii) the sum of the amount of Principal Receivables in the Trust and
the amount on deposit in the Excess Funding Account shall be less than the
Minimum Aggregate Principal Receivables, in each case for 15 consecutive days;
(e) any Servicer Default shall occur which would have a material adverse
effect on the Series 2002-1 Variable Funding Certificateholders;
(f) failure on the part of the Servicer to deliver the Daily Report or
Settlement Statement to the Trustee when due, which failure continues for a
period of five Business Days
49
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given by the Trustee to the Servicer;
(g) the Trustee shall have received written notice from the Administrative
Agent that a Termination Event has occurred under the Class A Certificate
Purchase Agreement or the Class B Certificate Purchase Agreement and stating
that such occurrence constitutes a Series 2002-1 Pay Out Event;
(h) failure on the part of the Servicer duly to observe or perform in any
respect any covenants or agreements of the Servicer set forth in the Agreement
(other than those set forth in subsection 10.1(a) or 10.1(f) thereof), which has
a material adverse effect on the Series 2002-1 Variable Funding
Certificateholders and which continues unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to be
remedied, has been given to the Servicer by the Trustee, or to the Servicer and
the Trustee by the Holders of Class A Certificates evidencing Undivided
Interests aggregating more than 50% of the Class A Invested Amount or of Class B
Certificates evidencing Undivided Interests aggregating more than 50% of the
Class B Invested Amount, materially adversely affected thereby and continues to
materially adversely affect such Series 2002-1 Variable Funding
Certificateholders for such period; or the Servicer shall delegate its duties
under the Agreement, except as permitted by Section 8.7 thereof; or any
representation, warranty or certification made by the Servicer in the Agreement
or in any certificate delivered pursuant to the Agreement shall prove to have
been incorrect when made, which has a material adverse effect on the Series
2002-1 Variable Funding Certificateholders and which continues to be incorrect
in any material respect for a period of 45 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Class A Certificates evidencing Undivided Interests aggregating more
than 50% of the Class A Invested Amount or of Class B Certificates evidencing
Undivided Interests aggregating more than 50% of the Class B Invested Amount,
materially adversely affected thereby and continues to materially adversely
affect such Series 2002-1 Variable Funding Certificateholders for such period;
(i) failure on the part of the Originator (i) to make any payment or
deposit required by the terms of the Receivables Purchase Agreement on or before
the date occurring five days after the date such payment or deposit is required
to be made therein or (ii) duly to observe or perform in any material respect
any covenants or agreements of the Originator set forth in the Receivables
Purchase Agreement, which failure has a material adverse effect on the Series
2002-1 Variable Funding Certificateholders and which continues unremedied for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Originator by
the Trustee, or to the Originator and the Trustee by the Holders of Class A
Certificates evidencing Undivided Interests aggregating more than 50% of the
Class A Invested Amount or of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B Invested Amount, and
continues to affect materially and adversely the interests of the Series 2002-1
Variable Funding Certificateholders for such period;
(j) any representation or warranty made by the Originator in the
Receivables Purchase Agreement, or any information contained in a transmittal
list required to be delivered
50
by the Originator pursuant to Section 2.02 thereof, (i) shall prove to have been
incorrect in any material respect when made or when delivered, which continues
to be incorrect in any material respect for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Originator by the Trustee, or to the Originator and
the Trustee by the Holders of Class A Certificates evidencing Undivided
Interests aggregating more than 50% of the Class A Invested Amount or of Class B
Certificates evidencing Undivided Interests aggregating more than 50% of the
Class B Invested Amount, and (ii) as a result of which the interests of the
Series 2002-1 Variable Funding Certificateholders are materially and adversely
affected and continue to be materially and adversely affected for such period;
PROVIDED, HOWEVER, that a Series 2002-1 Pay Out Event pursuant to this
subsection 10(k) shall not be deemed to have occurred hereunder if the
Originator has accepted reassignment of the related Receivable, or all of such
Receivables, if applicable, during such period in accordance with the provisions
of the Receivables Purchase Agreement;
(k) Federated shall cease to own directly or indirectly 100% of the issued
and outstanding capital stock of each of the Transferor and the Originator;
(l) the Originator shall not be in compliance with all minimum ratios of
total capital (and core capital) to risk-weighted-assets required by the
governmental authorities regulating the Originator in accordance with the
implementation by such authorities of the Basle Accord and such noncompliance
shall have continued for a period of 30 days; or
(m) the sum of (i) Transferor's tangible net worth (determined in
accordance with generally accepted accounting principles) plus (ii) to the
extent excluded in determining such tangible net worth, the outstanding
principal amount of, and all accrued and unpaid interest on, the subordinated
promissory note from the Transferor to FCHC referred to in subsection 2.5(1) of
the Agreement, at any time shall be less than $20,000,000, and such condition
shall continue for a period of 30 days;
then, in the case of any event described in subparagraph (a), (b), (e), (f),
(h), (i), (j), (k), (1) or (m) after the applicable grace period, if any, set
forth in such subparagraphs, either the Trustee or the Holders of Class A
Certificates evidencing Undivided Interests aggregating more than 50% of the
Class A Invested Amount or of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B Invested Amount, by notice
then given in writing to the Transferor and the Servicer (and to the Trustee if
given by the Certificateholders) may declare that a pay out event (a "Series
2002-1 Pay Out Event") has occurred as of the date of such notice, and in the
case of any event described in subparagraph (c), (d), (g) or (h), a Series
2002-1 Pay Out Event shall occur without any notice or other action on the part
of the Trustee or the Series 2002-1 Variable Funding Certificateholders
immediately upon the occurrence of such event. The Servicer shall provide prompt
written notice to the Rating Agencies of the occurrence of any Pay Out Event
following the Servicer's obtaining actual knowledge of such event.
SECTION 11. SUCCESSOR SERVICER AND DELEGATION.
(a) Section 10.2 of the Agreement shall read in its entirety as provided in the
Agreement and, in addition, the following sentence should be inserted in the
fifteenth line of Section 10.2(a) between the phrase "acceptable to the
Trustee." and "If such Successor Servicer is" and shall be applicable only with
respect to the Series 2002-1 Certificates: "Any Successor Servicer must
51
either (A) be approved in writing by the Class A Agent and the Class B Agent,
which approvals shall not be unreasonably withheld, or (B) be a Person which (i)
has a net worth of at least $50,000,000, (ii) has serviced at least
$2,000,000,000 of credit or charge card receivables at any one time outstanding
during the previous 12 months and (iii) has a senior long-term debt rating, as
determined by at least one nationally recognized statistical rating
organization, of at least 'BBB' or its equivalent, PROVIDED, that if such
Successor Servicer has no long term debt or such debt is not rated by a
nationally recognized statistical rating organization, the long term debt rating
of its parent must be at least 'BBB' or its equivalent."
(b) The Servicer shall not delegate any significant duties as servicer
under the Agreement pursuant to Section 8.7 thereof to any Person other than an
Affiliate of FDSB except in accordance with such Section and with the prior
written consent of the Administrative Agent acting at the direction of Holders
of Class A Certificates evidencing Undivided Interests aggregating more than 50%
of the Class A Invested Amount or of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B Invested Amount, which
direction shall not be unreasonably withheld.
(c) The Trustee covenants and agrees that, so long as any portion of the
Class A Investor Principal Balance (as defined in the Class A Certificate
Purchase Agreement) or the Class B Investor Principal Balance (as defined in the
Class B Certificate Purchase Agreement) shall remain outstanding or any monetary
obligation arising hereunder or under the Class A Certificate Purchase Agreement
or the Class B Certificate Purchase Agreement to the Class A Agent, the Class B
Agent or any purchaser thereunder shall remain unpaid, unless Holders of Class A
Certificates evidencing Undivided Interests aggregating more than 50% of the
Class A Invested Amount and of Class B Certificates evidencing Undivided
Interests aggregating more than 50% of the Class B Invested Amount, shall
otherwise consent in writing, it shall, for the benefit of the Class A
Certificateholders, the Class A Agent, the Class B Certificateholders and the
Class B Agent, and so long as the Class B Certificate Purchase Agreement or the
Class B Certificate Purchase Agreement, as the case may be, shall be in effect,
use reasonable efforts to consult with the Class A Agent and the Class B Agent
prior to any appointment of any Successor Servicer pursuant to Section 10.2 of
the Agreement; PROVIDED that the consent of the Class A Certificateholders or
the Class B Certificateholders to the appointment of a Successor Servicer shall
only be required if otherwise required under the terms of the Agreement.
SECTION 12. SUCCESSOR TRUSTEE. Section 11.6 of the Agreement shall read in
its entirety as provided in the Agreement and, in addition, the following
sentence shall be added to the end of subsection 11.6(c) of the Agreement and
shall be applicable only to the Series 2002-1 Certificates: "Any successor
trustee appointed pursuant to this Section 11.6 shall be subject to the written
consent of the Administrative Agent (which consent shall not be unreasonably
withheld)."
SECTION 13. NOTICES TO ADMINISTRATIVE AGENT. A copy of each notice,
demand, direction, report, Officer's Certificate or other certificate, election
and opinion required to be sent or delivered pursuant to Section or subsection
1.2(d), 2.3, 2.4(b), 2.4(d), 2.5(f), 2.6(d), 2.6(e), 2.7, 3.5, 3.6, 6.3(b), 6.9,
6.14, 7.2, 8.2, 8.7, 9.2, 10.1, 10.2, 10.3, 10.4, 11.6, 11.9, 11.15, 12.1, 12.2
or 13.2 of the Agreement shall also be sent or delivered and, in the case of
52
opinions, shall be addressed to the Administrative Agent. The Trustee shall also
promptly furnish to the Administrative Agent a copy of any notice delivered to
it by any Holder of Investor Certificates (other than notices which relate
solely to a Series of Investor Certificates other than the Series 2002-1
Certificates or in connection with transfers of Certificates).
The Transferor shall give prompt notice to the Administrative Agent (if
not otherwise provided for in the Agreement or this Variable Funding Supplement)
of any deposit made pursuant to subsection 2.4(c) or 3.8(a) of the Agreement,
any change in Charge Account Agreements or the Credit and Collection Policy
pursuant to subsection Section 2.5(c) of the Agreement or Section 14 of this
Variable Funding Supplement that constitutes a change to the Charge Account
Agreements, any transfer pursuant to subsection 2.5(f) of the Agreement and any
circumstance contemplated by subsection 3.1(c) of the Agreement. The Servicer
shall give prompt notice to the Administrative Agent of any change in the
depositary holding the Collection Account pursuant to subsection 4.2(a) of the
Agreement, and the Trustee shall give prompt notice to the Administrative Agent
of the appointment or change of any Paying Agent pursuant to Section 6.6 of the
Agreement and any merger, conversion or consolidation of the Trustee as
contemplated by Section 11.9 of the Agreement.
SECTION 14. CHARGE ACCOUNT AGREEMENTS AND CREDIT AND COLLECTION POLICIES.
Section 2.5(c) of the Agreement shall read in its entirety as set forth below
and as so amended and restated shall be applicable only with respect to the
Series 2002-1 Certificates: "The Transferor shall comply with and perform its
obligations and shall cause the Originator to comply with and perform their
obligations under the Charge Account Agreements relating to the Accounts and the
Credit and Collection Policy except insofar as any failure to comply or perform
would not materially and adversely affect the rights of the Trust or the
Certificateholders hereunder or under the Certificates. The Transferor may
change the terms and provisions of the Charge Account Agreements or the Credit
and Collection Policy in any respect (including, without limitation, the
reduction of the required minimum monthly payment, the calculation of the
amount, or the timing, of charge offs and the periodic finance charges and other
fees to be assessed thereon) only if such change (i) would not, in the
reasonable belief of the Transferor, cause, immediately or with the passage of
time, a Series 2002-1 Pay Out Event to occur, (ii) (A) if it owns a comparable
segment of charge card accounts, such change is made applicable to the
comparable segment of the revolving credit card accounts owned by the
Transferor, if any, which have characteristics the same as, or substantially
similar to, the Accounts that are the subject of such change and (B) if it does
not own such a comparable segment, it will not make any such change with the
intent to materially benefit the Transferor or the Originator over the Investor
Certificateholders, except as otherwise restricted by an endorsement,
sponsorship, or other agreement between the Transferor and an unrelated third
party or by the terms of the Charge Account Agreements, and (iii) if the
Servicer is servicing charge card accounts owned by an unrelated third party,
such change would not result in the Servicer's applying a materially higher
standard of care to the servicing of such accounts than it applies under this
Agreement. Notwithstanding the Credit and Collection Policy, in the event that
(i) a Servicer Default shall have occurred, or (ii) any event or circumstance
described in subsection 9.1(a) of the Agreement shall have occurred with respect
to Federated, the Servicer shall promptly take all steps necessary to cause the
availability of In-Store Payments to cease and shall indemnify and hold the
Trust harmless from any loss resulting from any further In-Store
53
Payments which for any reason are not available for application as Collections
as provided in the Agreement."
SECTION 15. MINIMUM DENOMINATIONS. The Series 2002-1 Certificates shall
initially be issued in the principal amounts of $88,000,000 Class A Variable
Funding Certificates, $11,000,000 Class B Variable Funding Certificates and
$11,000,000 Class C Certificates. There shall be no minimum denomination for the
Series 2002-1 Certificates and the principal amount thereof shall equal on any
day the principal amount thereof reflected on the then most recently issued
Daily Report.
SECTION 16. CASH EQUIVALENTS. No investment of any amounts on deposit in
any account established pursuant to this Series 2002-1 Variable Funding
Supplement which is not otherwise a Cash Equivalent (i) issued by an investment
company described in subclause (x) of clause (c) of the definition of Cash
Equivalents or (ii) described in clause (d) or (e) of the definition of Cash
Equivalent shall constitute a Cash Equivalent without the written approval of
the Administrative Agent.
SECTION 17. AUTOMATIC ADDITIONAL ACCOUNTS. The Transferor shall not elect
to terminate or suspend the inclusion of Automatic Additional Accounts without
the prior written consent of the Administrative Agent acting on behalf of the
Holders of Series 2002-1 Variable Funding Certificates as provided in Section 19
of this Variable Funding Supplement; PROVIDED, that if, on any Distribution Date
immediately following a Determination Date on which an AAA Reserve Account
Trigger occurred, the amount on deposit in the Reserve Account (without giving
effect to any amounts deposited therein as a result of the Enhancement
Percentage being greater than zero on such Determination Date) is less than the
product of (i) the Automatic Addition Percentage on such Distribution Date,
times (ii) during the Revolving Period, the Invested Amount on such Distribution
Date or, during the Amortization Period, the Invested Amount on the last day of
the Revolving Period (a "Suspension Event"), the Transferor will, in accordance
with Section 2.6 of the Agreement, declare a Suspension Date; PROVIDED, FURTHER,
that, if either (x) on any subsequent day the amount on deposit in the Reserve
Account (without giving effect to any amounts deposited therein as a result of
the Enhancement Percentage being greater than zero) is at least equal to the
product of clauses (i) and (ii) above, or (y) on any subsequent Determination
Date no AAA Reserve Account Trigger is continuing, the Transferor may, in its
sole discretion, declare a Resumption Date.
SECTION 18. SERIES 2002-1 TERMINATION. The right of the Series 2002-1
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 2002-1 Termination Date.
SECTION 19. ACTIONS BY ADMINISTRATIVE AGENT. The Administrative Agent
shall have no obligation hereunder to grant any consent or approval, to give any
direction or to take any discretionary action unless and until it has been
directed to do so by the Class A Certificateholders as provided in the Class A
Certificate Purchase Agreement or by the Class B Certificateholders as provided
in the Class B Certificate Purchase Agreement.
SECTION 20. PERIODIC FINANCE CHARGES AND OTHER FEES. The Transferor hereby
agrees that, except as otherwise required by any Requirement of Law, or as is
54
deemed by the Transferor to be necessary in order for the Transferor to maintain
its credit card business, based upon a good faith assessment by the Transferor,
in its sole discretion, of the nature of the competition in the credit card
business, it shall not at any time reduce the Periodic Finance Charges assessed
on any Receivable or other fees on any Account if, as a result of such
reduction, the Transferor's reasonable expectation of the Portfolio Yield as of
such date would be less than the Base Rate.
SECTION 21. RATING AGENCY CONDITION. Any requirement set forth in the
Agreement that, with respect to any action or series of related actions or
proposed transaction or series or related proposed transactions, each Rating
Agency shall have determined and notified the Trustee, the Transferor or the
Servicer in writing that such action or series of related actions or proposed
transaction or series or related proposed transactions will not result in a
reduction or withdrawal of the rating of any Series of Investor Certificates (or
any similar requirement), shall mean with respect to the Series 2002-1, that the
Rating Agency Condition has been satisfied with respect to such action or series
of related actions or proposed transaction or series or related proposed
transactions.
SECTION 22. DISTRIBUTION ACCOUNT. There shall be no Distribution Account
for Series 2002-1.
SECTION 23. CERTIFICATE PURCHASE AGREEMENTS. The Trustee hereby
acknowledges receipt of copies of the Class A Certificate Purchase Agreement and
the Class B Certificate Purchase Agreement and agrees to be bound by the
provisions of subsection 9.12 (b) and Sections 9.14 and 9.15 of each such
agreement applicable to it. The Servicer hereby agrees to provide the Trustee
with a copy of any amendment or other modification to either such agreement.
SECTION 24. RATIFICATION OF AGREEMENT. As supplemented by this Variable
Funding Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Variable Funding Supplement shall be
read, taken, and construed as one and the same instrument.
SECTION 25. COUNTERPARTS. This Variable Funding Supplement may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all of such counterparts shall together constitute but one and
the same instrument.
SECTION 26. GOVERNING LAW. THIS VARIABLE FUNDING SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 27. THE TRUSTEE. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the sufficiency of this Variable Funding
Supplement or for in respect of the Preliminary Statement contained herein, all
of which recitals are made solely by the Transferor. Anything in the Agreement
to the contrary notwithstanding, in no event shall the Trustee be liable for
special, indirect or consequential loss or damage of any kind whatsoever
55
(including but not limited to lost profits), even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
SECTION 28. INSTRUCTIONS IN WRITING. All instructions given by the
Servicer to the Trustee pursuant to this Variable Funding Supplement shall be in
writing, and may be included in a Daily Report or Settlement Statement.
56
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Series 2002-1 Variable Funding Supplement to be duly executed by
their respective officers as of the day and year first above written.
PRIME II RECEIVABLES CORPORATION
Transferor
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
FDS BANK
Servicer
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
JPMORGAN CHASE BANK
Trustee
By:/s/ Wen ▇▇▇ ▇▇▇▇
-----------------
Name: Wen ▇▇▇ ▇▇▇▇
Title: Asst. Vice President
57
EXHIBIT A-1
[FORM OF CLASS A VARIABLE FUNDING CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PU
RSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
(B) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. NEITHER THE TRANSFEROR
NOR THE TRUSTEE IS OBLIGATED TO REGISTER THE CERTIFICATES UNDER THE SECURITIES
ACT OR ANY OTHER SECURITIES OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST THEREIN, BY ACCEPTING AND
HOLDING THIS CERTIFICATE, IS DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS
NOT (I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF ERISA) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (III) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY.
No. % Percentage Interest
------ -----
PRIME CREDIT CARD MASTER TRUST II
CLASS A VARIABLE FUNDING CERTIFICATE,
SERIES 2002-1
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from a portfolio of consumer revolving credit card accounts generated or to be
generated by FDS BANK ("FDSB") and other assets and interests constituting the
Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or a recourse obligation of Prime II Receivables
Corporation, FDSB or any affiliate of either of them.)
This certifies that ______________________ (the "Certificateholder") is
the registered owner of a fractional undivided interest in the Prime Credit Card
Master Trust II (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of January 22, 1997 (the "Pooling and Servicing Agreement,"
such term to include any amendment or Supplement thereto) by and among Prime II
Receivables Corporation, as Transferor (the "Transferor"), FDSB, successor in
interest to FDS National Bank, as Servicer (the "Servicer"), and JPMorgan Chase
Bank, successor in interest to The Chase Manhattan Bank, as Trustee (the
"Trustee"), and
the Series 2002-1 Variable Funding Supplement, dated as of November 6, 2002 (the
"Supplement"), among the Transferor, the Servicer and the Trustee. The corpus of
the Trust consists of all of the Transferor's right, title and interest in, to
and under the Trust Property. The Certificateholder is entitled to payments from
time to time as provided in the Pooling and Servicing Agreement.
The holder of this Certificate on any Business Day is entitled to payment
in an amount equal to its pro rata share (as provided in the Pooling and
Servicing Agreement) of (a) the Class A Initial Invested Amount PLUS (b) an
amount equal to the aggregate principal amount of any VFC Additional Class A
Invested Amount purchased by the Class A Certificateholders through the end of
the preceding Business Day pursuant to Section 6.15 of the Pooling and Servicing
Agreement MINUS (c) the aggregate amount of principal payments made to the Class
A Certificateholders prior to such Business Day.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Pooling and Servicing Agreement may be requested from
the Trustee by writing to the Trustee at ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Structured Finance Administration. To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Pooling and Servicing Agreement. This Certificate is one of a series
of Certificates entitled "Prime Credit Card Master Trust II Class A Variable
Funding Certificates, Series 2002-1" (the "Class A Variable Funding
Certificates"), each of which represents a fractional undivided interest in the
Trust, and is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Series 2002-1 Certificates are issued in three classes, the Class A
Variable Funding Certificates (of which this certificate is one), the Class B
Variable Funding Certificates, which are subordinated to the Class A Variable
Funding Certificates in certain rights of payment as described in the Agreement
and the Class C Certificates, which are subordinated to the Class A Variable
Funding Certificates and Class B Variable Funding Certificates in certain rights
of payment as described in the Agreement.
A portion of the aggregate Receivables in the Trust as determined pursuant
to the Pooling and Servicing Agreement will be treated as Finance Charge
Receivables. Such amount may be adjusted from time to time pursuant to the
Supplement. The remainder of such Receivables will be treated as Principal
Receivables.
Each holder of a Class A Variable Funding Certificate (a "Class A
Certificateholder") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class A Variable Funding Certificates
for purposes of federal, state and local franchise taxes and any other tax
imposed on or measured by income, as indebtedness of the Transferor to the
extent permitted by law.
A-1-2
The Trust's assets are allocated in part to the holders of the Investor
Certificates (the "Investor Certificateholders") with the remainder allocated to
holders of other Series of Certificates issued by the Trust, if any, and to the
Transferor. In addition to the Investor Certificates, an Exchangeable Transferor
Certificate will be issued pursuant to the Pooling and Servicing Agreement and
will represent the Transferor's Interest in the Trust. The Exchangeable
Transferor Certificate will represent the interest in the Receivables not
Certificates or any other Series of Certificates. Certificate may be exchanged
by the Transferor Servicing Agreement for one or more Series of Exchangeable
Transferor Certificate upon the Pooling and Servicing Agreement. In addition, to
the extent permitted for any Series of Certificates by the related Supplement,
the Certificateholders of such Series may tender their Certificates and the
Transferor may tender the Exchangeable Transferor Certificate in exchange for
one or more Series of Certificates and a reissued Exchangeable Transferor
Certificate.
The aggregate interest in the Trust represented by the Investor
Certificates at any time shall not exceed an amount equal to the Invested Amount
at such time. The Initial Invested Amount is $__________. The aggregate interest
in the Trust represented by the Class A Variable Funding Certificates at any
time shall not exceed an amount equal to the Class A Invested Amount at such
time. The Class A Initial Invested Amount is $__________.
Interest will accrue on the unpaid principal amount of the Class A
Variable Funding Certificates at a per annum rate equal to the Class A
Certificate Rate and will be calculated on each Business Day based on the
product of the Class A Certificate Rate and the outstanding principal balance of
the Class A Variable Funding Certificates on such Business Day.
If on any Determination Date the sum of (i) aggregate Investor Default
Amount and (ii) the aggregate Investor Uncovered Dilution Amount, if any, for
each Business Day in the preceding Monthly Period exceeded the aggregate amount
of Finance Charge Collections applied to the payment thereof and the Available
Reserve Amount, and the amount of Excess Finance Charge Collections and
Reallocated Class C Principal Collections allocated pursuant thereto, then a
portion of the Class C Invested Amount will be reduced by an amount equal to
such insufficiency (but not in excess of the sum of (i) aggregate Investor
Default Amount and (ii) the aggregate Investor Uncovered Dilution Amount for
such Monthly Period) to avoid a charge-off with respect to the Class A Variable
Funding Certificates or Class B Variable Funding Certificates. If the Class C
Invested Amount is reduced to zero, then a portion of the Class B Invested
Amount will be reduced by an amount by which the Class C Invested Amount would
have been reduced below zero (but not in excess of aggregate Investor Default
Amount for such Monthly Period). If the Class B Invested Amount is reduced to
zero, then a portion of the Class A Invested Amount will be reduced by an amount
by which the Class B Invested Amount would have been reduced below zero (but not
in excess of aggregate Investor Default Amount for such Monthly Period).
The Servicer, is entitled to receive as servicing compensation a servicing
fee in an amount equal to, with respect to each Series, the product of (i) a
fraction, the numerator of which is the actual number of days in the measuring
period specified in the applicable Series Supplement and the denominator of
which is the actual number of days in the year, (ii) the applicable Series
Servicing Fee Percentage and (iii) the Adjusted Invested Amount as of the end
A-1-3
of the date of determination for such payment as specified in the applicable
Series Supplement. The share of the Servicing Fee allocable to the Investor
Certificates for any Business Day is equal to the product of (i) a fraction, the
numerator of which is the actual number of days from and including the preceding
Business Day to but excluding such Business Day and the denominator of which is
the actual number of days in the year, (ii) 2.0% per annum and (iii) the
Invested Amount as of the end of the preceding Business Day (the "Servicing
Fee"). The Servicing Fee will be paid in the manner set forth in the Pooling and
Servicing Agreement. The remainder of the servicing compensation will be
allocable to the Transferor Amount and the Certificateholders of all other
Series, and the Trustee and the Investor Certificateholders will not have any
obligation to pay such portion of the servicing compensation.
As described in the Pooling and Servicing Agreement, Principal Collections
with respect to any Business Day will be allocated on the basis of the aggregate
Investor Percentage of all Series and the Transferor Percentage with respect to
the Principal Collections.
Subject to the Pooling and Servicing Agreement and the Supplement,
payments of principal are limited to the unpaid Class A Invested Amount of the
Class A Variable Funding Certificates, which may be less than the unpaid balance
of the Class A Variable Funding Certificates pursuant to the terms of the
Pooling and Servicing Agreement and the Supplement. All principal of and
interest on the Class A Variable Funding Certificates is due and payable no
later than November 3, 2007, unless a different date shall be set forth in an
Extension Notice (the "Series Termination Date"). After the Series Termination
Date, neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class A Variable Funding Certificates.
In the event that the Class A Invested Amount is greater than zero on the Series
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of Principal Receivables and the related Finance Charge
Receivables (or, in some cases, interests therein) up to 110% of the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount at
the close of business on such date (but not more than the total amount of
Receivables allocable to the Investor Certificates determined pursuant to the
Pooling and Servicing Agreement), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A Variable Funding
Certificates, then to the Class B Variable Funding Certificateholders pro rata
in final payment of the Class B Variable Funding Certificates and then to the
Class C Certificateholders pro rata in final payment of the Class C
Certificates.
The transfer of this Certificate shall be registered in the Certificate
Register upon surrender of this Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder or such
Certificateholder's attorney-in-fact duly authorized in writing, and thereupon
one or more new Class A Variable Funding Certificates of authorized
denominations and for the same aggregate fractional Undivided Interests will be
issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and certain limitations
therein and herein set forth, Class A Variable Funding Certificates are
exchangeable for new Class A Variable Funding Certificates evidencing like
aggregate fractional undivided interests,
A-1-4
as requested by the Class A Certificateholder surrendering such Class A Variable
Funding Certificates. No service charge may be imposed for any such exchange but
the Transfer Agent and Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
The Trustee, the Paying Agent and the Transfer Agent and Registrar, and
any agent of any of them, may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Paying Agent and the Transfer Agent and Registrar, nor any agent of any of them
or of any such agent shall be affected by notice to the contrary except in
certain circumstances described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement and the Supplement may be amended from
time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class A Certificateholders, to cure any ambiguity, to
revise any exhibits or schedules (other than Schedule 1) of the Pooling and
Servicing Agreement, to correct or supplement any provisions therein which may
be inconsistent with any other provisions therein or to add any other provisions
with respect to matters or questions raised under the Pooling and Servicing
Agreement or the Supplement which shall not be inconsistent with the provisions
of the Pooling and Servicing Agreement or the Supplement; PROVIDED, HOWEVER,
that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any of the Investor
Certificateholders. Additionally, the Pooling and Servicing Agreement and the
Supplement may be amended from time to time by the Servicer, the Transferor and
the Trustee, without the consent of any of the Class A Certificateholders, to
add to or change any of the provisions of the Pooling and Servicing Agreement
(i) to provide that Bearer Certificates may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of (or premium,
if any) or any interest on Bearer Certificates to comply with the Bearer Rules,
to permit Bearer Certificates to be issued in exchange for Registered
Certificates (if then permitted by the Bearer Rules), to permit Bearer
Certificates to be issued in exchange for Bearer Certificates of other
authorized denominations or to permit the issuance of Certificates in
uncertificated form or (ii) to restrict or eliminate in any way the Transferor's
right to designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables in such
Removed Accounts pursuant to Section 2 of the Pooling and Servicing Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's rights, duties or immunities under the Pooling and
Servicing Agreement or otherwise.
The Pooling and Servicing Agreement (and any schedule or exhibit thereto)
and the Supplement (and any schedule or exhibit thereto) may also be amended
from time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class A Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Pooling and Servicing Agreement or the Supplement, or of modifying in any
manner the rights of the Holders of the Class A Variable Funding Certificates;
provided that (i) the Servicer shall have provided an Officer's Certificate to
the Trustee to the effect that such amendment will not materially and adversely
affect the interests of the Certificateholders, (ii) such amendment shall not,
as evidenced by an Opinion of Counsel, cause the Trust to be characterized for
U.S. federal income tax purposes as an association taxable as a corporation or
otherwise have any material adverse impact on the U.S. federal income
A-1-5
taxation of the Class A Variable Funding Certificates or the Class A
Certificateholders and (iii) the Servicer shall have provided at least ten
Business Days prior written notice to each Rating Agency of such amendment and
shall have received written confirmation from each Rating Agency to the effect
that the then current rating of any Series or any Class of any Series will not
be reduced or withdrawn as a result of such amendment; PROVIDED, FURTHER, that
such amendment shall not reduce in any manner the amount of, or delay the timing
of, distributions which are required to be made on any Class A Variable Funding
Certificate without the consent of the related Class A Certificateholder, change
the definition of or the manner of calculating the interest of any Investor
Certificateholder of such Series without the consent of the related Investor
Certificateholder or reduce the percentage pursuant to the next succeeding
paragraph required to consent to any such amendment, in each case without the
consent of all such Class A Certificateholders.
The Pooling and Servicing Agreement and the Supplement may also be amended
from time to time by the Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each and every
Series adversely affected, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the Investor
Certificateholders of any Series then issued and outstanding; PROVIDED, HOWEVER,
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, distributions which are required to be made on any Investor
Certificate of any Series without the consent of the related Investor
Certificateholders; (ii) change the definition of or the manner of calculating
the interest of any Investor Certificateholder of any Series without the consent
of the related Investor Certificateholder or (iii) reduce the aforesaid
percentage required to consent to any such amendment, in each case without the
consent of all such Investor Certificateholders; PROVIDED, FURTHER, that for the
purposes of the Officer's Certificate referred to in clause (i) above, any
action taken in order to enable the Trust or a portion thereof to elect to
qualify as a FASIT (or comparable tax entity for the securitization of financial
assets) in accordance with the Internal Revenue Code of 1986, as amended, shall
be deemed not to materially and adversely affect the Certificateholders.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.
A-1-6
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed under its official seal.
PRIME II RECEIVABLES CORPORATION
By:
-------------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Variable Funding Certificates referred to in
the within-mentioned Pooling and Servicing Agreement.
JPMorgan Chase Bank,
as Trustee
By:
-------------------------------------
Authorized Signatory
EXHIBIT A-2
[FORM OF CLASS B VARIABLE FUNDING CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, (B) IN A TRANSACTION TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. NEITHER THE THE
TRUSTEE IS OBLIGATED TO REGISTER THE CERTIFICATES UNDER THE OR ANY OTHER
SECURITIES OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST THEREIN, BY ACCEPTING AND
HOLDING THIS CERTIFICATE, IS DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS
NOT (I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF ERISA) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (III) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY.
No. % Percentage Interest
-------- --------
PRIME CREDIT CARD MASTER TRUST II
CLASS B VARIABLE FUNDING CERTIFICATE,
SERIES 2002-1
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from a portfolio of consumer revolving credit card accounts generated or to be
generated by FDS BANK ("FDSB") and other assets and interests constituting the
Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or a recourse obligation of Prime II Receivables
Corporation, FDSB or any affiliate of either of them.)
This certifies that (the "Certificateholder") is the registered
owner of a fractional undivided interest in the Prime Credit Card Master Trust
II (the "Trust") issued pursuant to the Pooling and Servicing Agreement, dated
as of January 22, 1997 (the "Pooling and Servicing Agreement," such term to
include any amendment or Supplement thereto) by and among Prime II Receivables
Corporation, as Transferor (the "Transferor"), FDSB, successor in interest to
FDS National Bank, as Servicer (the "Servicer"), and JPMorgan Chase Bank,
successor in interest to The Chase Manhattan Bank, as Trustee (the "Trustee"),
and the Series 2002-1 Variable Funding Supplement, dated as of November 6, 2002
(the "Supplement"), among the Transferor, the Servicer and the Trustee. The
corpus of the Trust
consists of all of the Transferor's right, title and interest in, to and under
the Trust Property. The Certificateholder is entitled to payments from time to
time as provided in the Pooling and Servicing Agreement.
The holder of this Certificate on any Business Day is entitled to payment
in an amount equal to its pro rata share (as provided in the Pooling and
Servicing Agreement) of (a) the Class B Initial Invested Amount PLUS (b) an
amount equal to the aggregate principal amount of any VFC Additional Class B
Invested Amount purchased by the Class B Certificateholders through the
preceding Business Day pursuant to Section 6.15 of the Pooling Agreement MINUS
(c) the aggregate amount of principal payments made B Certificateholders prior
to such Business Day.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Pooling and Servicing Agreement may be requested from
the Trustee by writing to the Trustee at ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Structured Finance Administration. To the extent
not defined herein, the capitalized terms used herein have the meanings ascribed
to them in the Pooling and Servicing Agreement. This Certificate is one of a
series of Certificates entitled "Prime Credit Card Master Trust II Class B
Variable Funding Certificates, Series 2002-1" (the "Class B Variable Funding
Certificates"), each of which represents a fractional undivided interest in the
Trust, and is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Series 2002-1 Certificates are issued in three classes, the Class A
Variable Funding Certificates, the Class B Variable Funding Certificates (of
which this certificate is one), which are subordinated to the Class A Variable
Funding Certificates in certain rights of payment as described in the Agreement
and the Class C Certificates, which are subordinated to the Class A Variable
Funding Certificates and Class B Variable Funding Certificates in certain rights
of payment as described in the Agreement.
A portion of the aggregate Receivables in the Trust as determined pursuant
to the Pooling and Servicing Agreement will be treated as Finance Charge
Receivables. Such amount may be adjusted from time to time pursuant to the
Supplement. The remainder of such Receivables will be treated as Principal
Receivables.
Each holder of a Class B Variable Funding Certificate (a "Class B
Certificateholder") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class B Variable Funding Certificates
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness of the Transferor to the
extent permitted by law.
The Trust's assets are allocated in part to the holders of the Investor
Certificates (the "Investor Certificateholders") with the remainder allocated to
holders of
A-2-2
other Series of Certificates issued by the Trust, if any, and to the Transferor.
In addition to the Investor Certificates, an Exchangeable Transferor Certificate
will be issued pursuant to the Pooling and Servicing Agreement and will
represent the Transferor's Interest in the Trust. The Exchangeable Transferor
Certificate will represent the interest in the Receivables not Certificates or
any other Series of Certificates. Certificate may be exchanged by the Transferor
Servicing Agreement for one or more Series of Exchangeable Transferor
Certificate upon the Pooling and Servicing Agreement. In addition, to the extent
permitted for any Series of Certificates by the related Supplement, the
Certificateholders of such Series may tender their Certificates and the
Transferor may tender the Exchangeable Transferor Certificate in exchange for
one or more Series of Certificates and a reissued Exchangeable Transferor
Certificate.
The aggregate interest in the Trust represented by the Investor
Certificates at any time shall not exceed an amount equal to the Invested Amount
at such time. The Initial Invested Amount is $__________. The aggregate interest
in the Trust represented by the Class B Variable Funding Certificates at any
time shall not exceed an amount equal to the Class B Invested Amount at such
time. The Class B Initial Invested Amount is $__________.
Interest will accrue on the unpaid principal amount of the Class B
Variable Funding Certificates at a per annum rate equal to the Class B
Certificate Rate and will be calculated on each Business Day based on the
product of the Class B Certificate Rate and the outstanding principal balance of
the Class B Variable Funding Certificates on such Business Day.
If on any Determination Date the sum of (i) aggregate Investor Default
Amount and (ii) the aggregate Investor Uncovered Dilution Amount, if any, for
each Business Day in the preceding Monthly Period exceeded the aggregate amount
of Finance Charge Collections applied to the payment thereof and the Available
Reserve Amount, and the amount of Excess Finance Charge Collections and
Reallocated Class C Principal Collections allocated pursuant thereto, then a
portion of the Class C Invested Amount will be reduced by an amount equal to
such insufficiency (but not in excess of the sum of (i) aggregate Investor
Default Amount and (ii) the aggregate Investor Uncovered Dilution Amount for
such Monthly Period) to avoid a charge-off with respect to the Class A Variable
Funding Certificates or Class B Variable Funding Certificates. If the Class C
Invested Amount is reduced to zero, then a portion of the Class B Invested
Amount will be reduced by an amount by which the Class C Invested Amount would
have been reduced below zero (but not in excess of aggregate Investor Default
Amount for such Monthly Period). If the Class B Invested Amount is reduced to
zero, then a portion of the Class A Invested Amount will be reduced by an amount
by which the Class B Invested Amount would have been reduced below zero (but not
in excess of aggregate Investor Default Amount for such Monthly Period).
The Servicer, is entitled to receive as servicing compensation a servicing
fee in an amount equal to, with respect to each Series, the product of (i) a
fraction, the numerator of which is the actual number of days in the measuring
period specified in the applicable Series Supplement and the denominator of
which is the actual number of days in the year, (ii) the applicable Series
Servicing Fee Percentage and (iii) the Adjusted Invested Amount as of the end of
the date of determination for such payment as specified in the applicable Series
Supplement. The share of the Servicing Fee allocable to the Investor
Certificates for any Business Day is
A-2-3
equal to the product of (i) a fraction, the numerator of which is the actual
number of days from and including the preceding Business Day to but excluding
such Business Day and the denominator of which is the actual number of days in a
year, (ii) 2.0% per annum and (iii) the Invested Amount as of the end of the
preceding Business Day (the "Servicing Fee"). The Servicing Fee will be paid in
the manner set forth in the Pooling and Servicing Agreement. The remainder of
the servicing compensation will be allocable to the Transferor Amount and the
Certificateholders of all other Series, and the Trustee and the Investor
Certificateholders will not have any obligation to pay such portion of the
servicing compensation.
As described in the Pooling and Servicing Agreement, Principal Collections
with respect to any Business Day will be allocated on the basis of the aggregate
Investor Percentage of all Series and the Transferor Percentage with respect to
the Principal Collections.
Subject to the Pooling and Servicing Agreement and the Supplement,
payments of principal are limited to the unpaid Class B Invested Amount of the
Class B Variable Funding Certificates, which may be less than the unpaid balance
of the Class B Variable Funding Certificates pursuant to the terms of the
Pooling and Servicing Agreement and the Supplement. All principal of and
interest on the Class B Variable Funding Certificates is due and payable no
later than November 3, 2007, unless a different date shall be set forth in an
Extension Notice (the "Series Termination Date"). After the Series Termination
Date, neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class B Variable Funding Certificates.
In the event that the Class B Invested Amount is greater than zero on the Series
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of Principal Receivables and the related Finance Charge
Receivables (or, in some cases, interests therein) up to 110% of the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount at
the close of business on such date (but not more than the total amount of
Receivables allocable to the Investor Certificates determined pursuant to the
Pooling and Servicing Agreement), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A Variable Funding
Certificates, then to the Class B Variable Funding Certificateholders pro rata
in final payment of the Class B Variable Funding Certificates and then to the
Class C Certificateholders pro rata in final payment of the Class C
Certificates.
The transfer of this Certificate shall be registered in the Certificate
Register upon surrender of this Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder or such
Certificateholder's attorney-in-fact duly authorized in writing, and thereupon
one or more new Class B Variable Funding Certificates of authorized
denominations and for the same aggregate fractional Undivided Interests will be
issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and certain limitations
therein and herein set forth, Class B Variable Funding Certificates are
exchangeable for new Class B Variable Funding Certificates evidencing like
aggregate fractional undivided interests, as requested by the Class B
Certificateholder surrendering such Class B Variable Funding Certificates. No
service charge may be imposed for any such exchange but the Transfer Agent
A-2-4
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Trustee, the Paying Agent and the Transfer Agent and Registrar, and
any agent of any of them, may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Paying Agent and the Transfer Agent and Registrar, nor any agent of any of them
or of any such agent shall be affected by notice to the contrary except in
certain circumstances described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement and the Supplement may be amended from
time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class B Certificateholders, to cure any ambiguity, to
revise any exhibits or schedules (other than Schedule 1) of the Pooling and
Servicing Agreement, to correct or supplement any provisions therein which may
be inconsistent with any other provisions therein or to add any other provisions
with respect to matters or questions raised under the Pooling and Servicing
Agreement or the Supplement which shall not be inconsistent with the provisions
of the Pooling and Servicing Agreement or the Supplement; PROVIDED, HOWEVER,
that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any of the Investor
Certificateholders. Additionally, the Pooling and Servicing Agreement and the
Supplement may be amended from time to time by the Servicer, the Transferor and
the Trustee, without the consent of any of the Class B Certificateholders, to
add to or change any of the provisions of the Pooling and Servicing Agreement
(i) to provide that Bearer Certificates may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of (or premium,
if any) or any interest on Bearer Certificates to comply with the Bearer Rules,
to permit Bearer Certificates to be issued in exchange for Registered
Certificates (if then permitted by the Bearer Rules), to permit Bearer
Certificates to be issued in exchange for Bearer Certificates of other
authorized denominations or to permit the issuance of Certificates in
uncertificated form or (ii) to restrict or eliminate in any way the Transferor's
right to designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables in such
Removed Accounts pursuant to Section 2 of the Pooling and Servicing Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's rights, duties or immunities under the Pooling and
Servicing Agreement or otherwise.
The Pooling and Servicing Agreement (and any schedule or exhibit thereto)
and the Supplement (and any schedule or exhibit thereto) may also be amended
from time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class B Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Pooling and Servicing Agreement or the Supplement, or of modifying in any
manner the rights of the Holders of the Class B Variable Funding Certificates;
provided that (i) the Servicer shall have provided an Officer's Certificate to
the Trustee to the effect that such amendment will not materially and adversely
affect the interests of the Certificateholders, (ii) such amendment shall not,
as evidenced by an Opinion of Counsel, cause the Trust to be characterized for
U.S. federal income tax purposes as an association taxable as a corporation or
otherwise have any material adverse impact on the U.S. federal income taxation
of the Class B Variable Funding Certificates or the Class B Certificateholders
and (iii) the Servicer shall have provided at least ten Business Days prior
written notice to each
A-2-5
Rating Agency of such amendment and shall have received written confirmation
from each Rating Agency to the effect that the then current rating of any Series
or any Class of any Series will not be reduced or withdrawn as a result of such
amendment; PROVIDED, FURTHER, that such amendment shall not reduce in any manner
the amount of, or delay the timing of, distributions which are required to be
made on any Class B Variable Funding Certificate without the consent of the
related Class B Certificateholder, change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such Series
without the consent of the related Investor Certificateholder or reduce the
percentage pursuant to the next succeeding paragraph required to consent to any
such amendment, in each case without the consent of all such Class B
Certificateholders.
The Pooling and Servicing Agreement and the Supplement may also be amended
from time to time by the Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each and every
Series adversely affected, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the Investor
Certificateholders of any Series then issued and outstanding; PROVIDED, HOWEVER,
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, distributions which are required to be made on any Investor
Certificate of any Series without the consent of the related Investor
Certificateholders; (ii) change the definition of or the manner of calculating
the interest of any Investor Certificateholder of any Series without the consent
of the related Investor Certificateholder or (iii) reduce the aforesaid
percentage required to consent to any such amendment, in each case without the
consent of all such Investor Certificateholders; PROVIDED, FURTHER, that for the
purposes of the Officer's Certificate referred to in clause (i) above, any
action taken in order to enable the Trust or a portion thereof to elect to
qualify as a FASIT (or comparable tax entity for the securitization of financial
assets) in accordance with the Internal Revenue Code of 1986, as amended, shall
be deemed not to materially and adversely affect the interest of the
Certificateholders.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.
A-2-6
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed under its official seal.
PRIME II RECEIVABLES CORPORATION
By:
---------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Variable Funding Certificates referred to in
the within-mentioned Pooling and Servicing Agreement.
JPMorgan Chase Bank,
as Trustee
By:
---------------------------------
Authorized Signatory
EXHIBIT A-3
[FORM OF CLASS C CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE AND APPLICABLE
STATE SECURITIES OR "BLUE SKY" LAWS. NEITHER THE THE TRUSTEE IS OBLIGATED TO
REGISTER THE CERTIFICATES UNDER THE OR ANY OTHER SECURITIES OR "BLUE SKY" LAW.
EACH HOLDER OF THIS CERTIFICATE OR AN INTEREST THEREIN, BY ACCEPTING AND
HOLDING THIS CERTIFICATE, IS DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS
NOT (I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF ERISA) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (III) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY.
No. % Percentage Interest
-------- --------
PRIME CREDIT CARD MASTER TRUST
II CLASS C CERTIFICATE,
SERIES 2002-1
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from a portfolio of consumer revolving credit card accounts generated or to be
generated by FDS BANK ("FDSB") and other assets and interests constituting the
Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or a recourse obligation of Prime II Receivables
Corporation, FDSB or any affiliate of either of them.)
This certifies that (the "Certificateholder") is the
registered owner of a fractional undivided interest in the Prime Credit Card
Master Trust II (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of January 22, 1997 (the "Pooling and Servicing Agreement,"
such term to include any amendment or Supplement thereto) by and among Prime II
Receivables Corporation, as Transferor (the "Transferor"), FDSB, successor in
interest to FDS National Bank, as Servicer (the "Servicer"), and JPMorgan Chase
Bank, successor in interest to The Chase Manhattan Bank, as Trustee (the
"Trustee"), and the Series 2002-1 Variable Funding Supplement, dated as of
November 6, 2002 (the "Supplement"), among the Transferor, the Servicer and the
Trustee. The corpus of the Trust
consists of all of the Transferor's right, title and interest in, to and under
the Trust Property. The Certificateholder is entitled to payments from time to
time as provided in the Pooling and Servicing Agreement.
The holder of this Certificate on any Business Day is entitled to payment
in an amount equal to its pro rata share (as provided in the Pooling and
Servicing Agreement) of (a) the Class C Initial Invested Amount PLUS (b) an
amount equal to the aggregate principal amount of any VFC Additional Class C
Invested Amount purchased by the Class C Certificateholders through the end of
the preceding Business Day pursuant to Section 6.15 of the Pooling and Servicing
Agreement MINUS (c) the aggregate amount of principal payments to the Class C
Certificateholders prior to such Business Day.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Pooling and Servicing Agreement may be requested from
the Trustee by writing to the Trustee at ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Structured Finance Administration. To the extent
not defined herein, the capitalized terms used herein have the meanings ascribed
to them in the Pooling and Servicing Agreement. This Certificate is one of a
series of Certificates entitled "Prime Credit Card Master Trust II Class C
Certificates, Series 2002-1" (the "Class C Certificates"), each of which
represents a fractional undivided interest in the Trust, and is issued under and
is subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement, as amended from time to
time, the Certificateholder by virtue of the acceptance hereof assents and by
which the Certificateholder is bound.
The Series 2002-1 Certificates are issued in three classes, the Class A
Variable Funding Certificates, the Class B Variable Funding Certificates, which
are subordinated to the Class A Variable Funding Certificates in certain rights
of payment as described in the Agreement and the Class C Certificates (of which
this certificate is one), which are subordinated to the Class A Variable Funding
Certificates and Class B Variable Funding Certificates in certain rights of
payment as described in the Agreement.
A portion of the aggregate Receivables in the Trust as determined pursuant
to the Pooling and Servicing Agreement will be treated as Finance Charge
Receivables. Such amount may be adjusted from time to time pursuant to the
Supplement. The remainder of such Receivables will be treated as Principal
Receivables.
Each holder of a Class C Certificate (a "Class C Certificateholder") or
any interest therein by acceptance of its Certificate or any interest therein,
agrees to treat the Class C Certificates for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness of the Transferor to the extent permitted by law.
The Trust's assets are allocated in part to the holders of the Investor
Certificates (the "Investor Certificateholders") with the remainder allocated to
holders of other Series of
A-3-2
Certificates issued by the Trust, if any, and to the Transferor. In addition to
the Investor Certificates, an Exchangeable Transferor Certificate will be issued
pursuant to the Pooling and Servicing Agreement and will represent the
Transferor's Interest in the Trust. The Exchangeable Transferor Certificate will
represent the interest in the Receivables not Certificates or any other Series
of Certificates. Certificate may be exchanged by the Transferor Servicing
Agreement for one or more Series of Exchangeable Transferor Certificate upon the
Pooling and Servicing Agreement. In addition, to the extent permitted for any
Series of Certificates by the related Supplement, the Certificateholders of such
Series may tender their Certificates and the Transferor may tender the
Exchangeable Transferor Certificate in exchange for one or more Series of
Certificates and a reissued Exchangeable Transferor Certificate.
The aggregate interest in the Trust represented by the Investor
Certificates at any time shall not exceed an amount equal to the Invested Amount
at such time. The Initial Invested Amount is $__________. The aggregate interest
in the Trust represented by the Class C Certificates at any time shall not
exceed an amount equal to the Class C Invested Amount at such time. The Class C
Initial Invested Amount is $__________.
Interest will accrue on the unpaid principal amount of the Class C
Certificates at a per annum rate equal to the Class C Certificate Rate and will
be calculated on each Business Day based on the product of the Class C
Certificate Rate and the outstanding principal balance of the Class C
Certificates on such Business Day.
If on any Determination Date the sum of (i) aggregate Investor Default
Amount and (ii) the aggregate Investor Uncovered Dilution Amount, if any, for
each Business Day in the preceding Monthly Period exceeded the aggregate amount
of Finance Charge Collections applied to the payment thereof and the Available
Reserve Amount, and the amount of Excess Finance Charge Collections and
Reallocated Class C Principal Collections allocated pursuant thereto, then a
portion of the Class C Invested Amount will be reduced by an amount equal to
such insufficiency (but not in excess of the sum of (i) aggregate Investor
Default Amount and (ii) the aggregate Investor Uncovered Dilution Amount for
such Monthly Period) to avoid a charge-off with respect to the Class A Variable
Funding Certificates or Class B Variable Funding Certificates. If the Class C
Invested Amount is reduced to zero, then a portion of the Class B Invested
Amount will be reduced by an amount by which the Class C Invested Amount would
have been reduced below zero (but not in excess of aggregate Investor Default
Amount for such Monthly Period). If the Class B Invested Amount is reduced to
zero, then a portion of the Class A Invested Amount will be reduced by an amount
by which the Class B Invested Amount would have been reduced below zero (but not
in excess of aggregate Investor Default Amount for such Monthly Period).
The Servicer, is entitled to receive as servicing compensation a servicing
fee in an amount equal to, with respect to each Series, the product of (i) a
fraction, the numerator of which is the actual number of days in the measuring
period specified in the applicable Series Supplement and the denominator of
which is the actual number of days in the year, (ii) the applicable Series
Servicing Fee Percentage and (iii) the Adjusted Invested Amount as of the end of
the date of determination for such payment as specified in the applicable Series
Supplement. The share of the Servicing Fee allocable to the Investor
Certificates for any Business Day is equal to the product of (i) a fraction, the
numerator of which is the actual number of days from
A-3-3
and including the preceding Business Day to but excluding such Business Day and
the denominator of which is the actual number of days in a year, (ii) 2.0% per
annum and (iii) the Invested Amount as of the end of the preceding Business Day
(the "Servicing Fee"). The Servicing Fee will be paid in the manner set forth in
the Pooling and Servicing Agreement. The remainder of the servicing compensation
will be allocable to the Transferor Amount and the Certificateholders of all
other Series, and the Trustee and the Investor Certificateholders will not have
any obligation to pay such portion of the servicing compensation.
As described in the Pooling and Servicing Agreement, Principal Collections
with respect to any Business Day will be allocated on the basis of the aggregate
Investor Percentage of all Series and the Transferor Percentage with respect to
the Principal Collections.
Subject to the Pooling and Servicing Agreement and the Supplement,
payments of principal are limited to the unpaid Class C Invested Amount of the
Class C Certificates, which may be less than the unpaid balance of the Class C
Certificates pursuant to the terms of the Pooling and Servicing Agreement and
the Supplement. All principal of and interest on the Class C Certificates is due
and payable no later than November 3, 2007, unless a different date shall be set
forth in an Extension Notice (the "Series Termination Date"). After the Series
Termination Date, neither the Trust nor the Transferor will have any further
obligation to distribute principal or interest on the Class C Certificates. In
the event that the Class C Invested Amount is greater than zero on the Series
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of Principal Receivables and the related Finance Charge
Receivables (or, in some cases, interests therein) up to 110% of the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount at
the close of business on such date (but not more than the total amount of
Receivables allocable to the Investor Certificates determined pursuant to the
Pooling and Servicing Agreement), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A Variable Funding
Certificates, then to the Class B Variable Funding Certificateholders pro rata
in final payment of the Class B Variable Funding Certificates and then to the
Class C Certificateholders pro rata in final payment of the Class C
Certificates.
The transfer of this Certificate shall be registered in the Certificate
Register upon surrender of this Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder or such
Certificateholder's attorney-in-fact duly authorized in writing, one or more new
Class C Certificates of authorized denominations same aggregate fractional
Undivided Interests will be issued to transferee or transferees.
As provided in the Pooling and Servicing Agreement and certain limitations
therein and herein set forth, Class C Certificates are exchangeable for new
Class C Certificates evidencing like aggregate fractional undivided interests,
as requested by the Class C Certificateholder surrendering such Class C
Certificates. No service charge may be imposed for any such exchange but the
Transfer Agent and Registrar may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith.
A-3-4
The Trustee, the Paying Agent and the Transfer Agent and Registrar, and
any agent of any of them, may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Paying Agent and the Transfer Agent and Registrar, nor any agent of any of them
or of any such agent shall be affected by notice to the contrary except in
certain circumstances described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement and the Supplement may be amended from
time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class C Certificateholders, to cure any ambiguity, to
revise any exhibits or schedules (other than Schedule 1) of the Pooling and
Servicing Agreement, to correct or supplement any provisions therein which may
be inconsistent with any other provisions therein or to add any other provisions
with respect to matters or questions raised under the Pooling and Servicing
Agreement or the Supplement which shall not be inconsistent with the provisions
of the Pooling and Servicing Agreement or the Supplement; PROVIDED, HOWEVER,
that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any of the Investor
Certificateholders. Additionally, the Pooling and Servicing Agreement and the
Supplement may be amended from time to time by the Servicer, the Transferor and
the Trustee, without the consent of any of the Class C Certificateholders, to
add to or change any of the provisions of the Pooling and Servicing Agreement
(i) to provide that Bearer Certificates may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of (or premium,
if any) or any interest on Bearer Certificates to comply with the Bearer Rules,
to permit Bearer Certificates to be issued in exchange for Registered
Certificates (if then permitted by the Bearer Rules), to permit Bearer
Certificates to be issued in exchange for Bearer Certificates of other
authorized denominations or to permit the issuance of Certificates in
uncertificated form or (ii) to restrict or eliminate in any way the Transferor's
right to designate Removed Accounts and to remove from the Trust all of the
Trust's right, title and interest in, to and under the Receivables in such
Removed Accounts pursuant to Section 2 of the Pooling and Servicing Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's rights, duties or immunities under the Pooling and
Servicing Agreement or otherwise.
The Pooling and Servicing Agreement (and any schedule or exhibit thereto)
and the Supplement (and any schedule or exhibit thereto) may also be amended
from time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Class C Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Pooling and Servicing Agreement or the Supplement, or of modifying in any
manner the rights of the Holders of the Class C Certificates; provided that (i)
the Servicer shall have provided an Officer's Certificate to the Trustee to the
effect that such amendment will not materially and adversely affect the
interests of the Certificateholders, (ii) such amendment shall not, as evidenced
by an Opinion of Counsel, cause the Trust to be characterized for U.S. federal
income tax purposes as an association taxable as a corporation or otherwise have
any material adverse impact on the U.S. federal income taxation of the Class C
Certificates or the Class C Certificateholders and (iii) the Servicer shall have
provided at least ten Business Days prior written notice to each Rating Agency
of such amendment and shall have received written confirmation from each Rating
Agency to the effect that the then current rating of any Series or any Class of
any Series will not be reduced or withdrawn as a result of such amendment;
PROVIDED, FURTHER, that such amendment shall not reduce in any manner the
A-3-5
amount of, or delay the timing of, distributions which are required to be made
on any Class C Certificate without the consent of the related Class C
Certificateholder, change the definition of or the manner of calculating the
interest of any Investor Certificateholder of such Series without the consent of
the related Investor Certificateholder or reduce the percentage pursuant to the
next succeeding paragraph required to consent to any such amendment, in each
case without the consent of all such Class C Certificateholders.
The Pooling and Servicing Agreement and the Supplement may also be amended
from time to time by the Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each and every
Series adversely affected, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the Investor
Certificateholders of any Series then issued and outstanding; PROVIDED, HOWEVER,
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, distributions which are required to be made on any Investor
Certificate of any Series without the consent of the related Investor
Certificateholders; (ii) change the definition of or the manner of calculating
the interest of any Investor Certificateholder of any Series without the consent
of the related Investor Certificateholder or (iii) reduce the aforesaid
percentage required to consent to any such amendment, in each case without the
consent of all such Investor Certificateholders; PROVIDED, FURTHER, that for the
purposes of the Officer's Certificate referred to in clause (i) above, any
action taken in order to enable the Trust or a portion thereof to elect to
qualify as a FASIT (or comparable tax entity for the securitization of financial
assets) in accordance with the Internal Revenue Code of 1986, as amended, shall
be deemed not to materially and adversely affect the interest of the
Certificateholders.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.
A-3-6
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed under its official seal.
PRIME II RECEIVABLES CORPORATION
By:
---------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
JPMORGAN CHASE BANK,
as Trustee
By:
---------------------------------
Authorized Signatory
EXHIBIT B
FORM OF EXTENSION NOTICE
PRIME CREDIT CARD MASTER TRUST II, SERIES 2002-1
The undersigned, a duly authorized representative of Prime II Receivables
Corporation, a Delaware corporation the "Transferor"), as Transferor pursuant to
the Pooling and Servicing Agreement dated as of January 22, 1997 (the "Pooling
and Servicing Agreement"), by and between the Transferor, as transferor, FDS
BANK, successor in interest to FDS National Bank, as Servicer (the "Servicer"),
and JPMorgan Chase Bank, successor in interest to The Chase Manhattan Bank, as
trustee (the "Trustee"), as supplemented by the Series 2002-1 Supplement, dated
November 6, 2002 (the "Series 2002-1 Supplement"), by and between the
Transferor, the Servicer and the Trustee, (the Pooling and Servicing Agreement,
as supplemented by the Series 2002-1 Supplement, or as the Pooling and Servicing
Agreement may from time to time be amended, supplemented, or modified, the
"Agreement"), does hereby notify the Trustee (or any successor Trustee) and the
Investor Certificateholders:
A. Capitalized terms used but not defined in this Certificate shall have
the respective meanings set forth in the Agreement. References herein to certain
sections and subsections are references to the respective sections and
subsections of the Agreement.
B. The undersigned is a Treasurer, Vice President or more senior officer
of the Transferor who is duly authorized to execute and deliver this Certificate
on behalf of the Transferor.
C. This Certificate is being delivered pursuant to Section 6.16(a) of the
Agreement.
D. The Transferor is the Transferor under the Agreement.
E. No Pay Out Event has occurred that has not been remedied pursuant to
the provisions of the Agreement.
F. The Certificate is being delivered to the Trustee on or before the date
specified in subsection 6.16(a) for such delivery.
G. NOTIFICATION OF EXTENSION.
Pursuant to subsection 6.16(a) and in respect of [ , ] (the "Current
Extension Date"), the Transferor hereby notifies the Trustee and the Investor
Certificateholders of the Transferor's intention to extend the Revolving Period
in respect of Series 2002-1 on the Current Extension Date pursuant to the
provisions of Section 6.16, until the date set forth below (such extension, the
"Extension").
H. REQUIREMENTS TO COMPLETE EXTENSION
(1) Annexed hereto is an election notice (an "Election Notice")
to be returned by any Investor Certificateholder electing to approve the
Extension. No Extension shall occur unless Investor Certificateholders holding
at least the aggregate principal amount of Class A Certificates and Class B
Certificates set forth below, respectively, shall return properly executed
Election Notices approving the Extension by the Election Date (as defined
below). Any Investor Certificateholder electing to approve the Extension must
deliver a properly executed Election Notice at the office of the Trustee,
[address] on or before 3:00 p.m.,
[New York City] time, on [ , ] (the "Election Date"). Any Investor
Certificateholder may withdraw any Election Notice delivered by it to the
Trustee by notifying the Trustee in writing at the address set forth in the
previous sentence on or prior to the Election Date.
(2) The minimum principal amount of Class A Certificates that
must approve of the Extension before such Extension may occur shall equal
$ .
(3) The minimum principal amount of Class B Certificates that
must approve of the Extension before such Extension may occur shall equal
$ .
(4) THE EXTENSION SHALL NOT OCCUR UNTIL PRIOR SATISFACTION OF
CERTAIN CONDITIONS PRECEDENT BY THE CLOSE OF BUSINESS ON THE ELECTION DATE,
INCLUDING THE APPROVAL OF SUCH EXTENSION BY THE INVESTOR CERTIFICATEHOLDERS
HOLDING THE REQUIRED AGGREGATE PRINCIPAL AMOUNT OF CLASS A AND CLASS B
CERTIFICATES, THAT NO PAY OUT EVENT SHALL HAVE OCCURRED AND BE CONTINUING, AND
THAT CERTAIN LEGAL OPINIONS AND RATING AGENCY CONFIRMATIONS SHALL HAVE BEEN
DELIVERED TO THE TRANSFEROR AND THE TRUSTEE PURSUANT TO SECTION 6.16(b). THE
TRANSFEROR MAY IN ITS SOLE DISCRETION WITHDRAW THIS EXTENSION NOTICE AT ANY TIME
ON OR PRIOR TO THE ELECTION DATE BY DELIVERING NOTICE OF SUCH WITHDRAWAL IN
WRITING TO THE TRUSTEE. IF ANY SUCH NOTICE OF WITHDRAWAL SHALL BE SO DELIVERED,
NO EXTENSION SHALL OCCUR.
I. NEW PROVISIONS TO BECOME EFFECTIVE ON THE EXTENSION DATE.
(1) The new Amortization Period Commencement Date shall be the
earlier of (a) [ (b) the Pay Out Commencement Date.
(2) The new Extension Date shall be [ , ].
(3) [The new Scheduled Series 2002-1 Termination Date shall be
[ , ].]
(4) [The following are additional provisions that will apply to
the Investor Certificates on and after the Extension Date:
INSERT PROVISIONS]
B-2
J. Annexed hereto are the following:
(1) the form of Extension Tax Opinion.
(2) the form of Extension Opinion.
(3) the Election Notice. IN WITNESS WHEREOF, the undersigned has
duly-executed this certificate this [ ] day of [ , ].
PRIME II RECEIVABLES CORPORATION
By:
---------------------------------
Name:
Title:
B-3
EXHIBIT C
FORM OF INVESTOR CERTIFICATEHOLDER ELECTION NOTICE
Chase Manhattan Bank ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank
West 33rd Street ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Structured Finance
Re: Prime Credit Card Master Trust II:
Election Notice to Extend Series 2002-1
Ladies and Gentlemen:
The undersigned hereby elects to approve the extension of the Revolving
Period for Series 2002-1 until the Amortization Period Commencement Date set
forth in the Extension Notice dated [ , ] (the "Extension Notice") and delivered
to the undersigned pursuant Section 6.16(a) of the Pooling and Servicing
Agreement, dated as of January 22, 1997 including the Series 2002-1 Supplement
thereto, each by and among Prime II Receivables Corporation, as transferor, FDS
BANK, successor in interest to FDS National Bank, as Servicer, and JPMorgan
Chase Bank, successor in interest to The Chase Manhattan Bank, as trustee (the
"Pooling and Servicing Agreement"). The undersigned hereby acknowledges that
commencing on the Current Extension Date (as defined in the Extension Notice),
the terms and provisions of the Pooling and Servicing Agreement shall be
modified as set forth in the Extension Notice.
IN WITNESS WHEREOF, the undersigned registered owner(s) has [have]
executed this Election Notice as of the date set forth below.
Dated: Name (s):
------------------------------------
Address:
--------------------------------------
(Please Print)
Signature (s):
--------------------------------
EXHIBIT D
FORM OF INVESTMENT LETTER
(Class C Certificates, Series 2002-1)
[Date]
Re: Prime Credit Card Master Trust II
Class C Certificates, Series 2002-1
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by the undersigned (the
"Purchaser") pursuant to Section 6.17 of the Series 2002-1 Variable Funding
Supplement, dated as of November 6, 2002 (the "Supplement"), among Prime II
Receivables Corporation, as Transferor (the "Transferor"), FDS BANK, successor
in interest to FDS National Bank, as Servicer (the "Servicer"), and JPMorgan
Chase Bank, successor in interest to The Chase Manhattan Bank, as Trustee (the
"Trustee"), which supplements the Pooling and Servicing Agreement, dated as of
January 22, 1997, among the Transferor, the Servicer and the Trustee, in
connection with the Purchaser's acquisition of Class C Certificates or an
interest therein. Capitalized terms used herein without definition shall have
the meanings set forth in the Supplement. The Purchaser represents to and agrees
with the Transferor and the Trustee as follows:
(a) The Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Series C Certificates and is able to bear the economic risk of
such investment. The Purchaser has independently and based on such documents and
information as it has deemed appropriate, made is own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Trust, the Transferor and the Servicer and
made its own decision to purchase its interest in the Series C Certificates, and
will, independently and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis, appraisals and
decisions in taking or not taking action under the Supplement, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Trust, the Transferor and the Servicer.
(b) The Purchaser is an "accredited investor", as defined in Rule 501,
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), or is a
sophisticated institutional investor. The Purchaser understands that the
offering and sale of the Series C Certificates has not been and will not be
registered under the Securities Act and has not and will not be registered or
qualified under any applicable "Blue Sky" law, and that the offering and sale of
the Series C Certificates has not been reviewed by, passed on or submitted to
any federal or state agency or commission, securities exchange or other
regulatory body.
(c) The Purchaser is acquiring an interest in Series C Certificates
without a view to any distribution, resale or other transfer thereof except,
with respect to any Series C Certificates or any interest or participation
therein, as contemplated in the following sentence. The Purchaser will not
resell or otherwise transfer any interest or participation in the Series C
Certificates, except in accordance with Section 6.17 of the Supplement and (i)
in a transaction exempt from the registration requirements of the Securities Act
of 1933, as amended, and applicable state securities or "blue sky" laws; (ii) to
the Transferor or any affiliate of the Transferor; or (iii) to a person who the
Purchaser reasonably believes is a qualified institutional buyer (within the
meaning thereof in Rule 144A under the Securities Act) that is aware that the
resale or other transfer is being made in reliance upon Rule 144A. In connection
therewith, the Purchaser hereby agrees that it will not resell or otherwise
transfer the Series C Certificates or any interest therein unless the purchaser
thereof provides to the addressee hereof a letter substantially in the form
hereof.
(d) The Purchaser hereby certifies to the Transferor, the Servicer and the
Trustee that it has neither acquired nor will it sell, trade or transfer any
interest in a Class C Certificate or cause an interest in a Class C Certificate
to be marketed on or through an "established securities market" within the
meaning of Section final treasury an system that The Purchaser long as it holds
a partnership Subchapter S corporation or grantor trust for U.S. federal income
tax purposes. The Purchaser acknowledges that the Opinion of Counsel to the
effect that the Trust will not be treated as a publicly traded partnership
taxable as a corporation is dependent in part on the accuracy of the
certifications described in this paragraph 7704(b)(1) of the Code and any
proposed, temporary or regulation thereunder, including, without limitation,
over-the-counter market or an interdealer quotation regularly disseminates firm
buy or sell quotations. hereby further certifies that it is not and, for so any
interest in a Class C Certificate, will not become a partnership, Subchapter S
corporation or grantor trust for U.S. federal income tax purposes. The Purchaser
acknowledges that the Opinion of Counsel to the effect that the Trust will not
be treated as a publicly traded partnership taxable as a corporation is
dependent in part on the accuracy of the certifications described in this
paragraph.
(e) Pursuant to subsection 6.17(c) of the Supplement, the Purchaser hereby
agrees not to institute against, or join any other Person in instituting
against, or join any other Person in instituting against, the Trust or the
Transferor any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any federal or state
bankruptcy or similar law, for one year and one day after all Investor
Certificates are paid in full.
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(f) This Investment Letter has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles affecting the enforcement of
creditors' rights generally and general principles of equity.
Very truly yours,
[NAME OF PURCHASER]
By:
---------------------------------
Name:
Title:
ACKNOWLEDGED AS OF THE DATE FIRST ABOVE WRITTEN:
PRIME II RECEIVABLES
CORPORATION
By:
-----------------------------------
Name:
Title:
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EXHIBIT E
PRIME CREDIT CARD MASTER TRUST II
FORM OF MONTHLY CERTIFICATEHOLDERS' STATEMENT
[Attached hereto]
