Exhibit 4.2
EXECUTION COPY
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CC CREDIT CARD CORPORATION
Transferor
TRAVELERS BANK & TRUST, fsb
Servicer
and
THE BANK OF NEW YORK
Trustee and Securities Intermediary
on behalf of the Series 1998-1 Holders
SERIES 1998-1 SUPPLEMENT
Dated as of March 1, 1998
to
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1998
TRAVELERS BANK CREDIT CARD MASTER TRUST I
SERIES 1998-1
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TABLE OF CONTENTS
Page
ARTICLE I
Creation of the Series 1998-1 Certificates
Section 1.1. Designation .................................................. 2
ARTICLE II
Definitions
Section 2.1. Definitions .................................................. 3
ARTICLE III
Servicer and Trustee
Section 3.1. Servicing Compensation ...................................... 17
ARTICLE IV
Holder and Allocation and Application of Collections
Section 4.1. Collections and Allocations ................................. 18
Section 4.2. Determination of Monthly Interest............................ 21
Section 4.3. Determination of Monthly Principal .......................... 21
Section 4.4. Required Amount ............................................. 22
Section 4.5. Application of Class A Available Funds, Class B Available
Funds, Class C Available Funds and Available Investor
Principal Collections ....................................... 23
Section 4.6. Default Amounts; Investor Charge-Offs ....................... 25
Section 4.7. Excess Spread; Excess Finance Charge Collections; Excess
Transferor Finance Charge Collections ....................... 27
Section 4.8. Reallocated Principal Collections ........................... 28
Section 4.9. Excess Finance Charge Collections and Excess Transferor
Finance Charge Collections .................................. 29
Section 4.10. Shared Principal Collections and Shared Transferor Principal
Collections ................................................. 29
Section 4.11. Principal Funding Account ................................... 30
Section 4.12. Class A Accumulation Period ................................. 32
Section 4.13. Reserve Account ............................................. 33
Section 4.14. Designation of Class B Certificates Terms; Sale of Class B
Certificates ................................................ 35
Section 4.15. Designation of Class C Interests Terms; Sale of Class C
Interests ................................................... 35
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TABLE OF CONTENTS
(continued)
Page
ARTICLE V
Distributions and Reports to Series 1998-1 Certificateholders
Section 5.1. Distributions ............................................... 36
Section 5.2. Certificates and Statements ................................. 37
ARTICLE VI
Additional Pay Out Events
Section 6.1. Additional Pay Out Events ................................... 38
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase ......................................... 39
Section 7.2. Series Termination .......................................... 40
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Certificateholders' Interest Pursuant
to Section 2.06 or 10.01 of the Agreement ................... 40
ARTICLE IX
Certificates
Section 9.1. Book-Entry Certificates ..................................... 41
Section 9.2. Uncertificated Securities ................................... 42
ARTICLE X
Miscellaneous Provisions
Section 10.1. Ratification of Agreement ................................... 42
Section 10.2. Counterparts ................................................ 42
Section 10.3. Governing Law ............................................... 42
Section 10.4. Notices ..................................................... 42
Section 10.5. Amendments .................................................. 42
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SERIES 1998-1 SUPPLEMENT, dated as of March 1, 1998 (the
"Supplement"), among CC CREDIT CARD CORPORATION, a Delaware corporation, as
Transferor (the "Transferor"), TRAVELERS BANK & TRUST, fsb, a federally
chartered savings bank, as Servicer (the "Servicer"), and The Bank of New York,
a New York banking corporation, as Trustee (together with its successors in
trust thereunder as provided in the Pooling and Servicing Agreement referred to
below, the "Trustee") under the Pooling and Servicing Agreement dated as of
March 1, 1998 (the "Agreement") among the Transferor, the Servicer and the
Trustee.
PRELIMINARY STATEMENT
Pursuant to the Agreement, the Transferor has created the Travelers
Bank Master Credit Card Trust I (the "Trust"). Section 6.03 of the Agreement
provides that the Transferor may from time to time direct the Trustee to
authenticate one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are due to be set forth in a Supplement to the Agreement.
Pursuant to this Supplement, the Transferor and the Trustee shall
create a new Series of Investor Certificates and specify the Principal Terms
thereof.
ARTICLE I
Creation of the Series 1998-1 Certificates
Section 1.1. Designation.
(a) There is hereby created a Series of Investor Certificates to be
issued pursuant to the Agreement and this Supplement to be known as "Travelers
Bank Credit Card Master Trust I, Series 1998-1." The Series of Investor
Certificates created hereby shall be issued in three Classes. The first Class
shall be known as the "Class A 6.00% Asset Backed Certificates, Series 1998-1,"
the second Class shall be known as the "Class B Asset Backed Certificates,
Series 1998-1" and the third Class shall be known as the "Class C Asset Backed
Interests, Series 1998-1." Except as expressly provided herein, the Class B
Certificates and the Class C Interests shall be deemed to be "Investor
Certificates" for all purposes under the Agreement and this Supplement and shall
be in uncertificated form. Notwithstanding anything to the contrary in the
Agreement, (i) none of the Class B Certificateholders or the Class C Interest
Holders shall be considered a Series Enhancer for Series 1998-1.
(b) Series 1998-1 shall be included in Group One. Series 1998-1
shall be a Principal Sharing Series with respect to Group One only. Series
1998-1 shall be an Excess Allocation Series with respect to Group One only.
Series 1998-1 shall be entitled to share Excess Transferor Finance Charge
Collections and Shared Transferor Principal Collections. Series 1998-1 shall not
be subordinated to any other Series. Notwithstanding any provision in the
Agreement or in this Supplement to the contrary, the first Distribution Date
with respect to Series 1998-1 shall be the April 15, 1998 Distribution Date, and
references herein to the Monthly
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Period relating to the April 15, 1998 Distribution Date shall mean the period
from the Closing Date through March 31, 1998.
(c) In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern.
(d) The Class B Certificateholders and the Class C Interest Holders,
as holders of an "Investor Certificate" under the Agreement, shall be entitled
to the benefits of the Agreement and this Supplement. Notwithstanding the
foregoing, except as expressly provided herein, the provisions of Article VI and
Article XII of the Agreement relating to the registration, authentication,
delivery, presentation, cancellation and surrender of Registered Certificates
and clauses (a) and (c) of the definition of "Tax Opinion" in Section 1.01 of
the Agreement shall not be applicable to the Class B Certificates or the Class C
Interests.
ARTICLE II
Definitions
Section 2.1. Definitions.
(a) Whenever used in this Supplement, the following words and
phrases shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms.
"Additional Interest" shall mean, at any time of determination, the
Class A Additional Interest and the Class B Additional Interest, if any.
"Available Investor Principal Collections" shall mean, with respect
to any Monthly Period, an amount equal to the sum of (a) (i) an amount equal to
the Principal Allocation Percentage of all Collections of Principal Receivables
received during such Monthly Period, minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period which pursuant to
Section 4.8 are required to fund any deficiency in the amount to be distributed
pursuant to subsections 4.5(a)(i), (ii) and (iii) or subsections 4.5(b)(i) and
(ii) and subsection 4.7(d) for the related Distribution Date, plus (b) any
Shared Principal Collections with respect to other Principal Sharing Series in
Group One (including any amounts on deposit in the Excess Funding Account that
are allocated to Series 1998-1 pursuant to the Agreement for application as
Shared Principal Collections) and any Shared Transferor Principal Collections
that are allocated to Series 1998-1 in accordance with Section 4.04 of the
Agreement and subsection 4.10(a) hereof, plus (c) any other amounts which
pursuant to subsection 4.5(a)(iii) (including any amounts allocated with respect
thereto pursuant to subsection 4.7(a)) and subsections 4.7(b), (d), (e), (h) and
(i) hereof are to be treated as Available Investor Principal Collections with
respect to the related Distribution Date or subsections 4.5(b)(i) and (ii) and
subsection 4.7(d).
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"Average Principal Balance" shall mean, for any Monthly Period in
which an Addition Date or Removal Date occurs, the weighted average of (A) the
sum of (i) the product of (x) the aggregate amount of Principal Receivables in
the Trust and (y) one minus the Discount Percentage and (ii) the principal
amount on deposit in the Excess Funding Account at the end of the day on the
last day of the prior Monthly Period and (B) the sum of (i) the product of (x)
the aggregate amount of Principal Receivables in the Trust and (y) one minus the
Discount Percentage and (ii) the principal amount on deposit in the Excess
Funding Account at the end of the day on the related Addition Date or Removal
Date, weighted, respectively, by a fraction, the numerator of which is the
number of days from and including the first day of such Monthly Period, to but
excluding the related Addition Date or Removal Date, and the denominator of
which is the number of days in such Monthly Period, and by a fraction, the
numerator of which is the number of days from and including the related Addition
Date or Removal Date to and including the last day of such Monthly Period, and
the denominator of which is the number of days in such Monthly Period.
"Base Rate" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is equal
to the sum of the Class A Monthly Interest, the Class B Monthly Interest, if
any, the Class C Monthly Interest, if any, and the Monthly Servicing Fee, each
for the related Distribution Date and the denominator of which is the Investor
Amount as of the last day of the preceding Monthly Period.
"Book-Entry Register" shall mean the register maintained by the
Trustee providing for the registration of the Class B Certificates and the Class
C Interests and transfers thereof.
"Class A Accumulation Period" shall mean, unless a Pay Out Event
with respect to Series 1998-1 shall have occurred prior thereto, the period
commencing on the Controlled Accumulation Date or such later date as is
determined in accordance with Section 4.12 and ending on the first to occur of
(a) the commencement of the Rapid Amortization Period, (b) the payment in full
to the Class A Certificateholders of the Class A Investor Amount or (c) the
Series Termination Date.
"Class A Accumulation Period Length" shall have the meaning
specified in Section 4.12.
"Class A Additional Interest" shall have the meaning specified in
Section 4.2.
"Class A Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) the Class A Floating Percentage of the
Collections of Finance Charge Receivables allocated to Series 1998-1 (including
any amounts that are to be treated as Collections of Finance Charge Receivables
in accordance with the Agreement), (b) the amount of Principal Funding
Investment Proceeds, if any, with respect to such Distribution Date, and (c) the
amount of funds, if any, to be withdrawn from the Reserve Account which,
pursuant to Section 4.13 are required to be included in Class A Available Funds
with respect to such Distribution Date.
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"Class A Certificate Rate" shall mean, 6.00% of per annum.
"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
"Class A Expected Final Distribution Date" shall mean the February
2003 Distribution Date.
"Class A Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Invested
Amount as of the close of business on the last day of the preceding Monthly
Period and the denominator of which is equal to the Invested Amount as of the
close of business on the last day of the preceding Monthly Period; provided,
however, that with respect to the first Monthly Period, the Class A Floating
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Class A Initial Invested Amount and the denominator of which is the
Initial Invested Amount.
"Class A Initial Invested Amount" shall mean $227,500,000.
"Class A Initial Investor Amount" shall mean the aggregate initial
principal balance of the Class A Certificates, which is $227,500,000.
"Class A Interest Shortfall" shall have the meaning specified in
Section 4.2.
"Class A Invested Amount" shall mean, on any date of determination,
an amount equal to (a) the Class A Initial Invested Amount minus (b) the
aggregate amount of principal payments made to the Class A Certificateholders on
or prior to such date, minus (c) the excess, if any, of the aggregate amount of
Class A Investor Charge-Offs for all prior Distribution Dates over the aggregate
amount of Class A Investor Charge-Offs reimbursed pursuant to subsection 4.6(a)
prior to such date minus (d) the Principal Funding Account Balance.
"Class A Investor Amount" shall mean, on any date of determination,
an amount equal to the sum of (a) the Class A Invested Amount and (b) the
Principal Funding Account Balance.
"Class A Investor Charge-Off" shall have the meaning specified in
subsection 4.6(a).
"Class A Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class A Floating Percentage
for such Monthly Period.
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"Class A Monthly Interest" shall have the meaning specified in
Section 4.2.
"Class A Monthly Principal" shall have the meaning specified in
subsection 4.3(a).
"Class A Penalty Rate" shall mean the sum of the Class A Certificate
Rate and 2.0% per annum.
"Class A Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class A Invested Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Invested Amount as of such day and
(ii) during the Controlled Accumulation Period or the Rapid Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class A Invested Amount as of the last
day of the Revolving Period, and the denominator of which is the Invested Amount
as of such last day; provided, however, that with respect to the first Monthly
Period, the Class A Principal Percentage shall mean the percentage equivalent of
a fraction, the numerator of which is the Class A Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class A Required Amount" shall have the meaning specified in
subsection 4.4(a).
"Class A Servicing Fee" shall have the meaning specified in Section
3.1.
"Class B Accumulation Period" shall mean, unless a Pay Out Event
with respect to Series 1998-1 shall have occurred prior thereto, the period
commencing on the first day of the Monthly Period immediately preceding the
Class B Principal Commencement Date and ending on the first to occur thereafter
of (a) the commencement of the Rapid Amortization Period, (b) the payment in
full to the Class B Certificateholders of the Class B Invested Amount or (c) the
Series Termination Date.
"Class B Additional Interest" shall initially mean $0, and if the
Class B Certificates are transferred as provided in Section 4.14, Class B
Additional Interest shall thereafter mean additional interest, if any,
distributable in respect of the Class B Certificates as such additional
interest, if any, may be calculated in a supplemental agreement entered into in
accordance with Section 4.14.
"Class B Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the Class B Floating Percentage of the Collections of
Finance Charge Receivables allocated to Series 1998-1 (including any amounts
that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement).
"Class B Certificate Rate" shall mean, with respect to each Interest
Period, a per annum rate equal to 0%; provided, however, that such interest rate
may be increased pursuant to the terms of a supplemental agreement entered into
in accordance with Section 4.14.
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"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Book-Entry Register, which shall
initially be the Transferor.
"Class B Certificates" shall mean an uncertificated fractional
undivided interest in the Trust that shall consist of the right to receive, to
the extent necessary to make the required payments to the Class B
Certificateholders under this Supplement, the portion of Collections allocable
thereto under the Agreement and this Supplement, and funds on deposit in the
Collection Account allocable thereto pursuant to the Agreement and this
Supplement.
"Class B Expected Final Distribution Date" shall mean the March 2003
Distribution Date.
"Class B Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class B Invested
Amount as of the close of business on the last day of the preceding Monthly
Period and the denominator of which is equal to the Invested Amount as of the
close of business on the last day of the preceding Monthly Period; provided,
however, that with respect to the first Monthly Period, the Class B Floating
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Class B Initial Invested Amount and the denominator of which is the
Initial Invested Amount.
"Class B Initial Invested Amount" shall mean $12,500,000.
"Class B Invested Amount" shall mean, on any date of determination,
an amount equal to (a) the Class B Initial Invested Amount, minus (b) the
aggregate amount of principal payments made to the Class B Certificateholders on
or prior to such date minus (c) the excess, if any, of the aggregate amount of
Class B Investor Charge-Offs for all prior Distribution Dates over the aggregate
amount of any reimbursement of Class B Investor Charge-Offs pursuant to
subsection 4.6(b) for all Distribution Dates preceding such date, minus (d) the
aggregate amount of Reallocated Principal Collections allocated on all prior
Distribution Dates pursuant to subsection 4.8(a) (excluding any Reallocated
Principal Collections that have resulted in a reduction in the Class C Invested
Amount pursuant to subsection 4.6(c)), minus (e) an amount equal to the amount
by which the Class B Invested Amount has been reduced on all prior Distribution
Dates pursuant to subsection 4.6(a) and plus (f) the amount of Excess Spread,
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocated to Series 1998-1 on all prior Distribution Dates pursuant
to subsection 4.7(e) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c), (d) and (e); provided, however, that the Class B
Invested Amount shall not be reduced below zero.
"Class B Investor Charge-Off" shall have the meaning specified in
subsection 4.6(b).
"Class B Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class B Floating Percentage
for such Monthly Period.
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"Class B Monthly Interest" shall initially mean $0, and if the Class
B Certificates are transferred as provided in Section 4.14, Class B Monthly
Interest shall thereafter mean the interest, if any, distributable in respect of
the Class B Certificates as such interest may be calculated in a supplemental
agreement entered into in accordance with Section 4.14.
"Class B Monthly Principal" shall have the meaning specified in
subsection 4.3(b).
"Class B Principal Commencement Date" shall mean the Distribution
Date on which the Class A Investor Amount is paid in full; provided, that if the
Class A Investor Amount is paid in full on the Class A Expected Final
Distribution Date and the Rapid Amortization Period has not commenced, the Class
B Principal Commencement Date shall mean the Class B Expected Final Distribution
Date.
"Class B Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class B Invested Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Invested Amount as of such day and
(ii) during the Controlled Accumulation Period or the Rapid Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class B Invested Amount as of the last
day of the Revolving Period, and the denominator of which is the Invested Amount
as of such last day; provided, however, that with respect to the first Monthly
Period, the Class B Principal Percentage shall mean the percentage equivalent of
a fraction, the numerator of which is the Class B Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class B Required Amount" shall have the meaning specified in
subsection 4.4(b).
"Class B Servicing Fee" shall have the meaning specified in Section
3.1.
"Class C Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the Class C Floating Percentage of the Collections of
Finance Charge Receivables allocated to Series 1998-1 (including any amounts
that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement).
"Class C Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class C Floating Percentage
for such Monthly Period.
"Class C Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class C Invested Amount as of
the close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Invested Amount as of the close of business
on the last day of the preceding Monthly Period; provided, however, that
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with respect to the first Monthly Period, the Class C Floating Percentage shall
mean the percentage equivalent of a fraction, the numerator of which is the
Class C Initial Invested Amount and the denominator of which is the Initial
Invested Amount.
"Class C Initial Invested Amount" shall mean $10,000,000.
"Class C Interests" shall mean an uncertificated fractional
undivided interest in the Trust that shall consist of the right to receive, to
the extent necessary to make the required payments to the Class C Interest
Holder under this Supplement the portion of Collections allocable thereto under
the Agreement and this Supplement, funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Supplement.
"Class C Interest Holder" shall mean the Person in whose name a
Class C Interest is registered in the Book-Entry Register, which initially shall
be the Transferor.
"Class C Interest Rate" shall mean, with respect to each Interest
Period, a per annum rate equal to 0%; provided, however, that such interest rate
may be increased pursuant to the terms of a supplemental agreement entered into
in accordance with Section 4.15.
"Class C Invested Amount" shall mean, for any date of determination,
an amount equal to (a) the Class C Initial Invested Amount, minus (b) an amount
equal to the amount by which the Class C Invested Amount has been reduced on all
prior Distribution Dates pursuant to Section 4.6, minus (c) the aggregate amount
paid pursuant to subsections 4.5(d)(i) and 4.5(e)(iii) prior to such date, and
plus (d) the aggregate amount of Excess Spread, Excess Finance Charge
Collections and Excess Transferor Finance Charge Collections allocated to Series
1998-1 and applied on all prior Distribution Dates pursuant to subsection 4.7(i)
for the purpose of reimbursing amounts deducted pursuant to the foregoing clause
(b); provided, however, that the Class C Invested Amount shall not be reduced
below zero.
"Class C Monthly Interest" shall initially mean $0, and if the Class
C Interests are transferred as provided in Section 4.15, Class C Monthly
Interest shall thereafter mean the interest, if any, distributable in respect of
the Class C Interest as such interest may be calculated in a supplemental
agreement entered into in accordance with Section 4.15.
"Class C Monthly Principal" shall have the meaning specified in
subsection 4.3(c).
"Class C Principal Percentage" shall mean, with respect to any
Monthly Period, a percentage (which shall never exceed 100% or be less than 0%)
equal to the difference between 100% and the sum of the Class A Principal
Percentage and the Class B Principal Percentage for such Monthly Period.
"Class C Servicing Fee" shall have the meaning specified in Section
3.1.
"Closing Date" shall mean March 6, 1998.
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"Controlled Accumulation Amount" shall mean (a) for any Distribution
Date with respect to the Class A Accumulation Period, the Class A Initial
Invested Amount divided by twelve; provided, however, that, if the Class A
Accumulation Period is modified pursuant to Section 4.12, (i) the Controlled
Accumulation Amount for each Distribution Date with respect to the Class A
Accumulation Period shall mean the amount determined in accordance with Section
4.12 on the date on which the Class A Accumulation Period has most recently been
modified and (ii) the sum of the Controlled Accumulation Amounts for all
Distribution Dates with respect to the modified Class A Accumulation Period
shall not be less than the Class A Initial Invested Amount and (b) for any
Distribution Date with respect to the Class B Accumulation Period, the Class B
Initial Invested Amount.
"Controlled Accumulation Date" shall mean the close of business on
January 31, 2002.
"Controlled Accumulation Period" shall mean the Class A Accumulation
Period and the Class B Accumulation Period.
"Controlled Deposit Amount" shall mean, for any Distribution Date
with respect to the Controlled Accumulation Period, an amount equal to the sum
of the Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount from the immediately preceding Distribution Date.
"Covered Amount" shall mean for any Distribution Date with respect
to the Class A Accumulation Period or the first Special Payment Date, if such
Special Payment Date occurs prior to the Class B Principal Commencement Date, an
amount equal to the product of (i) one-twelfth of the Class A Certificate Rate
and (ii) the Principal Funding Account Balance, if any, as of the preceding
Distribution Date.
"Deficit Controlled Accumulation Amount" shall mean (a) on the first
Distribution Date with respect to the Class A Accumulation Period or the Class B
Accumulation Period, the excess, if any, of the Controlled Accumulation Amount
for such Distribution Date over the amount distributed from the Collection
Account as Class A Monthly Principal or Class B Monthly Principal, as the case
may be, for such Distribution Date and (b) on each subsequent Distribution Date
with respect to the Class A Accumulation Period or the Class B Accumulation
Period, the excess, if any, of the Controlled Deposit Amount for such subsequent
Distribution Date over the amount distributed from the Collection Account as the
case may be, for such subsequent Distribution Date.
"Excess Spread" shall mean, with respect to any Distribution Date,
the sum of the amounts, if any, specified pursuant to subsections 4.5(a)(iv),
4.5(b)(iii) and 4.5(c)(ii) with respect to such Distribution Date.
"Finance Charge Shortfall" shall have the meaning specified in
subsection 4.9(a).
"Floating Allocation Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the
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numerator of which is the Invested Amount as of the close of business of the
last day of the preceding Monthly Period (or with respect to the first Monthly
Period, the Initial Invested Amount) and the denominator of which is the greater
of (1) the sum of (x) the product of (a) the total amount of Principal
Receivables in the Trust as of such day (or with respect to the first Monthly
Period, at the end of the day on the Closing Date) and (b) one minus the
Discount Percentage and (y) the principal amount on deposit in the Excess
Funding Account as of the end of the day on such date and (2) the sum of the
numerators used to calculate the Series Percentages (as such term is defined in
the Agreement) with respect to Finance Charge Receivables or Defaulted
Receivables, as applicable, for all Series then outstanding; provided, however,
that, with respect to any Monthly Period in which an Addition Date or a Removal
Date occurs and the Servicer need not make daily deposits of Collections into
the Collection Account, the denominator in (x) above shall be the Average
Principal Balance; provided further, however, that with respect to any Monthly
Period in which an Addition Date or a Removal Date occurs and the Servicer is
required to make daily deposits of Collections into the Collection Account, the
denominator in (x) above shall be (1) for the period from and including the
first day of such Monthly Period to but excluding the related Addition Date or
Removal Date, the product of (a) the aggregate amount of Principal Receivables
in the Trust at the end of the day on the last day of the prior Monthly Period
and (b) one minus the Discount Percentage and (2) for the period from and
including the related Addition Date or Removal Date to and including the last
day of such Monthly Period, the product of (a) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the related Addition Date or
Removal Date and (b) one minus the Discount Percentage.
"Group One" shall mean Series 1998-1 and each other Series hereafter
specified in the related Supplement to be included in Group One.
"Initial Invested Amount" shall mean the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount.
"Initial Investor Amount" shall mean the sum of the Class A Initial
Investor Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount.
"Initial Servicing Fee" shall have the meaning specified in Section
3.1.
"Interest Period" shall mean, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
"Invested Amount" shall mean, as of any date of determination, 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 Amount" shall mean, as of any date of determination, an
amount equal to the sum of (a) the Invested Amount and (b) the Principal Funding
Account Balance.
11
"Investor Charge-Offs" shall mean Class A Investor Charge-Offs and
Class B Investor Charge-Offs.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Defaulted Amount
for the related Monthly Period and (b) the Floating Allocation Percentage for
such Monthly Period.
"Monthly Interest" means, with respect to any Distribution Date, the
Class A Monthly Interest, the Class B Monthly Interest and the Class C Monthly
Interest for such Distribution Date.
"Monthly Servicing Fee" shall have the meaning specified in Section
3.1.
"Net Portfolio Yield" shall mean, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, the numerator of
which is equal to the sum, without duplication, of (a) an amount equal to the
product obtained by multiplying the Floating Allocation Percentage with respect
to such Monthly Period and the amount of Collections of Finance Charge
Receivables with respect to such Monthly Period (including any other amounts
that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement), plus (b) the amount of any Principal Funding
Investment Proceeds for the related Distribution Date, plus (c) the amount of
funds, if any, to be withdrawn from the Reserve Account which, pursuant to
Section 4.13, are required to be included in Class A Available Funds with
respect to such Distribution Date, minus (d) the Investor Default Amount for the
Distribution Date with respect to such Monthly Period, and the denominator of
which is the Investor Amount as of the last day of the preceding Monthly Period.
"Percentage Allocation" shall have the meaning specified in
subsection 4.1(b)(ii).
"Principal Allocation Percentage" shall mean, with respect to any
Monthly Period:
(a) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, (x) the numerator of which is
the Invested Amount as of the close of business on the last day of the
immediately preceding Monthly Period (or, in the case of the first Monthly
Period, the Closing Date) and (y) the denominator of which is the greater of (i)
the sum of (A) the product of (1) the total amount of Principal Receivables in
the Trust as of the last day of the immediately preceding Monthly Period and (2)
one minus the Discount Percentage and (B) the principal amount on deposit in the
Excess Funding Account as of such last day (or, in the case of the first Monthly
Period, the Closing Date) and (ii) the sum of the numerators used to calculate
the Series Percentages applicable to Principal Receivables for all Series
outstanding as of the date as to which such determination is being made;
(b) during the Controlled Accumulation Period or the Rapid
Amortization Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, (x) the numerator of which is the Invested Amount as
of the close of business on the last day of the Revolving Period and (y) the
denominator of which is the greater of (i) the sum of (A) the
12
product of (1) the total amount of Principal Receivables in the Trust as of the
close of business on the last day of the immediately preceding Monthly Period
and (2) one minus the Discount Percentage and (B) the principal amount on
deposit in the Excess Funding Account as of such last day and (ii) the sum of
the numerators used to calculate the Series Percentages applicable to Principal
Receivables for all Series outstanding as of the date as to which such
determination is being made;
provided, however, that with respect to any Monthly Period in which an Addition
Date or a Removal Date occurs and the Servicer need not make daily deposits of
Collections into the Collection Account, the amount in clause (y) (i) of
paragraphs (a) and (b) above shall be the Average Principal Balance; provided
further, however, that with respect to any Monthly Period in which an Addition
Date or a Removal Date occurs and the Servicer is required to make daily
deposits of Collections into the Collection Account, the amount in clause (y)
(i) of paragraphs (a) and (b) above shall be (1) for the period from and
including the first day of such Monthly Period to but excluding the related
Addition Date or Removal Date, the sum of (x) the product of (I) the aggregate
amount of Principal Receivables in the Trust at the end of the day on the last
day of the prior Monthly Period and (II) one minus the Discount Percentage and
(y) the principal amount on deposit in the Excess Funding Account as of such
last day and (2) for the period from and including the related Addition Date or
Removal Date to and including the last day of such Monthly Period, the sum of
(x) the product of (I) the aggregate amount of Principal Receivables in the
Trust at the end of the day on the related Addition Date or Removal Date and
(II) one minus the Discount Percentage and (y) the principal amount on deposit
in the Excess Funding Account at the end of the day on the related Addition Date
or Removal Date.
"Principal Funding Account" shall have the meaning set forth in
subsection 4.11(a)(i).
"Principal Funding Account Balance" shall mean, with respect to any
date of determination during the Controlled Accumulation Period, the principal
amount, if any, on deposit in the Principal Funding Account on such date of
determination.
"Principal Funding Account Investment Account" shall have the
meaning set forth in subsection 4.11(a)(i).
"Principal Funding Cash Subaccount" shall have the meaning set forth
in subsection 4.11(a)(i).
"Principal Funding Investment Proceeds" shall have the meaning
specified in subsection 4.11(a)(ii).
"Principal Shortfall" shall have the meaning specified in Section
4.10.
"Rapid Amortization Period" shall mean, (a) if on the day on which a
Pay Out Event with respect to Series 1998-1 is deemed to have occurred the
Servicer need not make daily deposits into or withdrawals from the Collection
Account pursuant to subsection 4.03(a) of the Agreement, the period commencing
at the close of business on the Business Day immediately
13
preceding the first day of the Monthly Period in which such Pay Out Event is
deemed to have occurred or (b) otherwise, the period commencing at the close of
business on the Business Day immediately preceding the day on which a Pay Out
Event with respect to Series 1998-1 is deemed to have occurred, and ending on
the first to occur of (i) the payment in full to the Class A Certificateholders
and the Class B Certificateholders of the Class A Investor Amount and the Class
B Invested Amount, respectively, and the payment in full to the Class C Interest
Holder of the Class C Invested Amount, if any, or (ii) the Series Termination
Date.
"Reallocated Principal Collections" shall mean, with respect to any
Monthly Period, the product of (a) the Principal Allocation Percentage with
respect to such Monthly Period, (b) the aggregate amount of Collections in
respect of Principal Receivables for such Monthly Period and (c) the sum of the
Class B Principal Percentage and the Class C Principal Percentage with respect
to such Monthly Period.
"Reassignment Amount" shall mean, with respect to any Distribution
Date, after giving effect to any deposits and distributions otherwise to be made
on such Distribution Date, the sum of (i) the Invested Amount on such
Distribution Date, plus (ii) Monthly Interest for such Distribution Date and any
Monthly Interest previously due but not distributed to the Series 1998-1 Holders
on a prior Distribution Date, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but
not distributed to the Series 1998-1 Holders on a prior Distribution Date.
"Required Class C Invested Amount" shall mean, with respect to any
Distribution Date, the greater of (i) the product of (a) the sum of (I) the
Class A Invested Amount and (II) the Class B Invested Amount, each as of such
Distribution Date after taking into account all distributions made on such
Distribution Date, and (b) a fraction, the numerator of which is 4% and the
denominator of which is the excess of 100% over 4% and (ii) the product of (A)
$250,000,000 and (B) 3%; provided, however, that (i) if there are any reductions
in the Class C Invested Amount pursuant to clause (b) of the definition of such
amount, or a Pay Out Event occurs with respect to Series 1998-1 then the
Required Class C Invested Amount for any Distribution Date shall equal the
Required Class C Invested Amount on the Distribution Date immediately preceding
such reduction or Pay Out Event, (ii) in no event shall the Required Class C
Invested Amount exceed the sum of the Class A Invested Amount and the Class B
Invested Amount on any such date, and (iii) the Required Class C Invested Amount
may be reduced without the consent of the Series 1998-1 Holders, if the
Transferors shall have received written notice from each Rating Agency (with a
copy delivered to the Trustee) that such reduction will not result in the
reduction or withdrawal of the then current rating of the Series 1998-1
Certificates and the Transferor shall have delivered to the Trustee an Officer's
Certificate to the effect that, based on the facts known to such officer at such
time, in the reasonable belief of the Transferor, such reduction will not cause
a Pay Out Event or an event that, after the giving of notice or the lapse of
time, would constitute a Pay Out Event, to occur with respect to Series 1998-1.
"Required Reserve Account Amount" shall mean, with respect to any
Distribution Date prior to the Reserve Account Funding Date, $0, and on or after
the Reserve Account Funding Date, an amount equal to (a) the product of (i) 0.5%
of the Class A Investor Amount as
14
of the preceding Distribution Date (after giving effect to all changes therein
on such date) and (ii) a fraction, the numerator of which is the number of
Monthly Periods scheduled to be included in the Class A Accumulation Period as
of such date and the denominator of which is twelve (except that if such
numerator is one, the Required Reserve Account Amount determined pursuant to
this clause (a) shall be $0) or (b) any other amount designated by the
Transferor, provided that, if such designation is of a lesser amount, the
Transferor (i) shall have received written notice from each Rating Agency that
such designation will not result in the reduction or withdrawal of the rating of
the Series 1998-1 Certificates and shall have delivered copies of each such
written notice to the Servicer and the Trustee, and (ii) shall have delivered to
the Trustee a certificate of an authorized officer to the effect that, based on
the facts known to such officer at such time, in the reasonable belief of the
Transferor, such designation will not cause a Pay Out Event or an event that,
after the giving of notice or the lapse of time, would cause a Pay Out Event, to
occur with respect to Series 1998-1.
"Reserve Account" shall have the meaning specified in subsection
4.13(a).
"Reserve Account Cash Subaccount" shall have the meaning specified
in subsection 4.13(a).
"Reserve Account Funding Date" shall mean the Distribution Date with
respect to the Monthly Period which commences three months prior to the Monthly
Period in which, as of the related Determination Date, the Controlled
Accumulation Period is scheduled to commence.
"Reserve Account Investment Account" shall have the meaning
specified in subsection 4.13(a).
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in the Reserve
Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in subsection
4.13(c).
"Revolving Period" shall mean the period beginning on the Closing
Date and ending on the earlier of (a) the close of business on the day preceding
the commencement of the Controlled Accumulation Period and (b) the close of
business on the day preceding the commencement of the Rapid Amortization Period.
"Series Invested Amount" shall mean the Invested Amount.
"Series Investor Amount" shall mean, as of any date of
determination, an amount equal to the numerator of the Principal Allocation
Percentage on such date.
"Series 1998-1" shall mean the Series of Investor Certificates, the
terms of which are specified in this Supplement, and shall include the Class A
Certificates, the Class B Certificates and the Class C Interests.
15
"Series 1998-1 Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder.
"Series 1998-1 Certificate" shall mean a Class A Certificate or a
Class B Certificate.
"Series 1998-1 Holder" shall mean a Class A Certificateholder, a
Class B Certificateholder or a Class C Interest Holder.
"Series Pay Out Event" shall have the meaning, for Series 1998-1,
specified in Section 6.1.
"Series Percentage" shall mean with respect to Finance Charge
Receivables and Defaulted Receivables, the Floating Allocation Percentage, and
with respect to Principal Receivables, the Principal Allocation Percentage.
"Series Termination Date" shall mean the earlier to occur of (i) the
January 2005 Distribution Date and (ii) the termination of the Trust pursuant to
Section 12.01 of the Agreement.
"Servicing Base Amount" shall have the meaning specified in Section
3.1.
"Servicing Fee Rate" shall mean 2.0%.
"Special Payment Date" shall mean each Distribution Date with
respect to the Rapid Amortization Period.
"Subordinate Principal Collections" shall have the meaning specified
in subsection 4.1(a)(ii).
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, the term "Rating Agency" shall mean, whenever used in this
Supplement or the Agreement with respect to Series 1998-1, Moody's and Standard
& Poor's.
(c) All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Supplement shall refer to this Supplement as a
whole and not to any particular provision of this Supplement; references to any
Article, Section or Exhibit are references to Articles, Sections and Exhibits in
or to this Supplement unless otherwise specified; and the term "including" means
"including without limitation."
(e) Unless the context otherwise requires, references in this
Supplement to the Transferor shall initially mean CC Credit Card Corporation in
its capacity as Transferor; and from and after the date any Additional
Transferor is designated pursuant to subsection 2.09(e) of
16
the Agreement, such references shall mean CC Credit Card Corporation in its
capacity as Transferor and any such Additional Transferor(s).
ARTICLE III
Servicer and Trustee
Section 3.1. Servicing Compensation.
The share of the Servicing Fee allocable to the Series 1998-1
Holders with respect to any Distribution Date (the "Monthly Servicing Fee"),
shall be equal to one-twelfth the product of (i) the Servicing Fee Rate and (ii)
the Invested Amount, if any, as of the last day of the Monthly Period preceding
such Distribution Date (the amount calculated pursuant to this clause (ii) is
referred to as the "Servicing Base Amount"); provided, however, with respect to
the April 1998 Distribution Date, the Monthly Servicing Fee (the "Initial
Servicing Fee") shall be $347,222.
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders with respect to any Distribution Date (the "Class A Servicing
Fee"), shall be equal to one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the April 15, 1998 Distribution Date,
the Class A Servicing Fee shall be $315,972. The share of the Monthly Servicing
Fee allocable to the Class B Certificateholders with respect to any Distribution
Date (the "Class B Servicing Fee"), shall be equal to one-twelfth of the product
of (a) the Class B Floating Percentage, (b) the Servicing Fee Rate and (c) the
Servicing Base Amount; provided, however, that with respect to the April 15,
1998 Distribution Date, the Class B Servicing Fee shall be $17,361. The share of
the Monthly Servicing Fee allocable to the Class C Interest Holder with respect
to any Distribution Date (the "Class C Servicing Fee"), shall be equal to
one-twelfth of the product of (a) the Class C Floating Percentage, (b) the
Servicing Fee Rate and (c) the Servicing Base Amount; provided, however, that
with respect to the April 15, 1998 Distribution Date, the Class C Servicing Fee
shall be $13,889. The remainder of the Servicing Fee shall be paid by the
Holders of the Transferor Certificates or the Certificateholders of other Series
(as provided in the related Supplements) and in no event shall the Trust, the
Trustee or the Series 1998-1 Holders be liable for the share of the Servicing
Fee to be paid by the Holders of the Transferor Certificates or the
Certificateholders of any other Series. The Class A Servicing Fee shall be
payable to the Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to subsection 4.5(a)(ii), 4.7(a) or
4.8(a); the Class B Servicing Fee shall be payable solely to the extent amounts
are available for distribution in respect thereof pursuant to subsection
4.5(b)(ii), 4.7(c) or 4.8(b); and the Class C Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsection 4.5(c)(i) or 4.7(g).
17
ARTICLE IV
Rights of Series 1998-1 Certificateholders and Class C Interest
Holder and Allocation and Application of Collections
Section 4.1. Collections and Allocations. Unless the Servicer is
allowed to make a single monthly deposit in the Collection Account as provided
in subsection 4.03(a) of the Agreement, in which case the Servicer will apply,
or will instruct the Trustee to apply, the following amounts for the entire
Monthly Period no later than the related Transfer Date, the Servicer will apply,
or will instruct the Trustee to apply, all collections and other funds on
deposit in the Collection Account that are allocated to the Series 1998-1
Holders as follows:
(a) Daily Allocations During the Revolving Period. During the
Revolving Period, the Servicer shall, on or prior to the close of business on
the second Business Day following any Date of Processing, allocate the following
amounts as set forth below:
(i) Allocate to the Series 1998-1 Holders the product of (x)
the Floating Allocation Percentage on such Date of Processing and
(y) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing, and of that allocation,
deposit and retain in the Collection Account an amount equal to
Monthly Interest for the related Distribution Date (plus, if
Travelers Bank & Trust, fsb is not the Servicer, the Monthly
Servicing Fee for such Monthly Period);
(ii) Allocate to the Series 1998-1 Holders an amount equal to
the product of (A) the Principal Allocation Percentage on such Date
of Processing and (B) the aggregate amount of Collections of
Principal Receivables on such Date of Processing, which amount shall
be first, if any other Principal Sharing Series in Group One is
outstanding and in its Amortization Period or Accumulation Period
(as such terms are defined in the Agreement), retained in the
Collection Account for application, to the extent necessary, as
Shared Principal Collections in accordance with Section 4.04 of the
Agreement to other Series in Group One on the related Distribution
Date, and second paid to the Holders of the Transferor Certificates;
provided however, that the amount to be paid to the Holders of the
Transferor Certificates pursuant to this subsection 4.1(a)(ii) on
any Date of Processing shall be paid to such Holders only if the
Transferor Amount on such Date of Processing is greater than the
Required Transferor Amount and an amount equal to the product of (I)
the aggregate amount of Principal Receivables and (II) one minus the
Discount Percentage is greater than the Required Principal Balance
(after giving effect to all Principal Receivables transferred to the
Trust on such day and any amounts deposited in the Excess Funding
Account on such day) and otherwise shall be deposited in the Excess
Funding Account until the Transferor Amount is greater than the
Required Transferor Amount and an amount equal to the product of (I)
the aggregate amount of Principal Receivables and (II) one minus the
Discount Percentage is greater than the Required Principal Balance
and applied in accordance with Section 4.02 of the Agreement and the
remainder shall
18
be paid to the Holders of the Transferor Certificates; provided
further, however, that if and for so long as the Class C Invested
Amount is less than the Required Class C Invested Amount during a
Monthly Period, an amount equal to the sum of (x) the Class C
Principal Percentage of the product of the Principal Allocation
Percentage and the aggregate amount of Collections of Principal
Receivables and (y) the Class B Principal Percentage of the product
of the Principal Allocation Percentage and the aggregate amount of
Collections of Principal Receivables ("Subordinate Principal
Collections") on each Date of Processing with respect to such
Monthly Period shall be deposited and retained in the Collection
Account during such Monthly Period.
(b) Daily Allocations During the Controlled Accumulation Period.
During the Controlled Accumulation Period, the Servicer shall, prior to the
close of business on the second Business Day following any Date of Processing,
allocate the following amounts as set forth below:
(i) Allocate to the Series 1998-1 Holders and deposit and
retain in the Collection Account an amount equal to the product of
(A) the Floating Allocation Percentage on such Date of Processing
and (B) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing.
(ii) Allocate to the Series 1998-1 Holders and deposit and
retain in the Collection Account an amount equal to the product of
(x) the Principal Allocation Percentage on such Date of Processing
and (y) the aggregate amount of Collections of Principal Receivables
on such Date of Processing (for any such date, a "Percentage
Allocation"); provided, however, that if the sum of such Percentage
Allocations with respect to the same Monthly Period exceeds the
Controlled Deposit Amount for the related Distribution Date, then
such excess shall not be treated as a Percentage Allocation and
shall be first, if any other Principal Sharing Series in Group One
is outstanding and in its Amortization Period or Accumulation Period
(as such terms are defined in the Agreement), retained in the
Collection Account for application, to the extent necessary, as
Shared Principal Collections in accordance with Section 4.04 of the
Agreement to other Series in Group One on the related Distribution
Date, and second paid to the Holders of the Transferor Certificates
only if the Transferor Amount on such Date of Processing is greater
than the Required Transferor Amount and an amount equal to the
product of (I) the aggregate amount of Principal Receivables and
(II) one minus the Discount Percentage is greater than the Required
Principal Balance (after giving effect to all Principal Receivables
transferred to the Trust on such day and any amounts deposited in
the Excess Funding Account on such day) and otherwise shall be
deposited in the Excess Funding Account until the Transferor Amount
is greater than the Required Transferor Amount and an amount equal
to the product of (I) the aggregate amount of Principal Receivables
and (II) one minus the Discount Percentage is greater than the
Required Principal Balance and applied in accordance with Section
4.02 of the Agreement and the remainder shall be paid to the Holders
of the Transferor Certificates; provided further, however,
19
that if and for so long as the Class C Invested Amount is less than
the Required Class C Invested Amount for a Monthly Period,
Subordinate Principal Collections with respect to each Date of
Processing with respect to such Monthly Period shall be retained in
the Collection Account during such Monthly Period.
(c) Daily Allocations During the Rapid Amortization Period. During
the Rapid Amortization Period, the Servicer shall, prior to the close of
business on the second Business Day following any Date of Processing, allocate
the following amounts as set forth below:
(i) Allocate to the Series 1998-1 Holders and deposit and
retain in the Collection Account an amount equal to the product of
(A) the Floating Allocation Percentage on such Date of Processing
and (B) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing.
(ii) Allocate to the Series 1998-1 Holders and deposit and
retain in the Collection Account an amount equal to the product of
(A) the Principal Allocation Percentage on such Date of Processing
and (B) the aggregate amount of Collections of Principal Receivables
on such Date of Processing; provided, however, that after the date
on which an amount of such Collections equal to the Investor Amount
has been deposited into the Collection Account and allocated to the
Series 1998-1 Holders, the amount determined in accordance with this
subparagraph (ii) in excess thereof shall be first, if any other
Principal Sharing Series in Group One is outstanding and in its
Amortization Period or Accumulation Period (as such terms are
defined in the Agreement), retained in the Collection Account for
application, to the extent necessary, as Shared Principal
Collections in accordance with Section 4.04 of the Agreement to
other Series in Group One on the related Distribution Date, and
second paid to the Holders of the Transferor Certificates only if
the Transferor Amount on such Date of Processing is greater than the
Required Transferor Amount and an amount equal to the product of (I)
the aggregate amount of Principal Receivables and (II) one minus the
Discount Percentage is greater than the Required Principal Balance
(after giving effect to all Principal Receivables transferred to the
Trust on such day and any amounts deposited in the Excess Funding
Account on such day) and otherwise shall be deposited in the Excess
Funding Account until the Transferor Amount is greater than the
Required Transferor Amount and an amount equal to the product of (I)
the aggregate amount of Principal Receivables and (II) one minus the
Discount Percentage is greater than the Required Principal Balance
and applied in accordance with Section 4.02 of the Agreement and the
remainder shall be paid to the Holders of the Transferor
Certificates.
(d) Notwithstanding the foregoing, the Servicer shall deposit in the
Collection Account no later than the related Distribution Date an amount equal
to the excess of the amount allocated to Series 1998-1 over the amount allocated
to Series 1998-1 and deposited in the Collection Account to the extent such
amounts are required to be distributed to or for the benefit of the Series
1998-1 Holders or to other Series; provided, that so long as Travelers Bank &
Trust,
20
fsb is the Servicer, Travelers Bank & Trust, fsb, as Servicer and as agent for
the Holders of the Transferor Certificates may make such deposit net of all such
amounts payable to the Servicer or the Holders of the Transferor Certificates.
Section 4.2 Determination of Monthly Interest. The amount of monthly
interest ("Class A Monthly Interest") distributable from the Collection Account
with respect to the Class A Certificates on each Distribution Date shall be an
amount equal to the one-twelfth of the product of (i) the Class A Certificate
Rate and (ii) the outstanding principal amount of the Class A Certificates as of
the close of business on the preceding Record Date; provided, however, with
respect to the first Distribution Date, Class A Monthly Interest shall be equal
to the interest accrued on the Class A Initial Investor Amount at the Class A
Certificate Rate for the period from the Closing Date through April 14, 1998
(assuming that the month of March has 30 days).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the Class A Monthly Interest for such Distribution Date over (y) the
aggregate amount of funds allocated and available to pay such Class A Monthly
Interest on such Distribution Date. If the Class A Interest Shortfall with
respect to any Distribution Date is greater than zero, an additional amount
("Class A Additional Interest") equal to one-twelfth of the product of (i) the
Class A Penalty Rate and (ii) such Class A Interest Shortfall (or the portion
thereof which has not been paid to the Class A Certificateholders) shall be
payable as provided herein with respect to the Class A Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Class A Interest Shortfall is paid to the Class
A Certificateholders. Notwithstanding anything to the contrary herein, Class A
Additional Interest shall be payable or distributed to Class A
Certificateholders only to the extent permitted by applicable law.
Section 4.3. Determination of Monthly Principal.
(a) The amount of monthly principal ("Class A Monthly Principal")
distributable from the Collection Account with respect to the Class A
Certificates on each Distribution Date, beginning with the first Distribution
Date with respect to the Class A Accumulation Period or the Rapid Amortization
Period, shall be equal to the least of (x) the Available Investor Principal
Collections on deposit in the Collection Account with respect to such
Distribution Date, (y) for each Distribution Date with respect to the Class A
Accumulation Period (and on or prior to the Class A Expected Final Distribution
Date), the Controlled Deposit Amount for such Distribution Date and (z) the
Class A Invested Amount on such Distribution Date.
(b) The amount of monthly principal ("Class B Monthly Principal")
distributable from the Collection Account with respect to the Class B
Certificates on each Distribution Date, beginning with the Class B Principal
Commencement Date, shall be equal to the least of (x) the Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Distribution Date), (y)
for each Distribution Date with respect to the Class B Accumulation Period on or
prior to the Class B
21
Expected Final Distribution Date, the Controlled Deposit Amount for such
Distribution Date and (z) the Class B Invested Amount on such Distribution Date.
(c) The amount, if any, of monthly principal ("Class C Monthly
Principal") distributable with respect to the Class C Invested Amount on each
Distribution Date shall equal the following amounts:
(i) on any Distribution Date prior to the Distribution Date on
which the Class B Invested Amount is paid in full, shall be an
amount equal to the lesser of (A) Available Investor Principal
Collections not applied to Class A Monthly Principal or Class B
Monthly Principal on such Distribution Date and (B) the positive
excess, if any, of the Class C Invested Amount over the Required
Class C Invested Amount for such Distribution Date (calculated after
giving effect to all distributions on such Distribution Date but
before giving effect to the payment of Class C Monthly Principal on
such Distribution Date); and
(ii) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount is paid in full, shall be
an amount equal to the Available Investor Principal Collections with
respect to such Distribution Date (minus the portion of such
Available Investor Principal Collections applied to Class A Monthly
Principal and Class B Monthly Principal on such Distribution Date);
provided, however, with respect to any Distribution Date, Class C Monthly
Principal shall not exceed the Class C Invested Amount.
Section 4.4. Required Amount.
(a) With respect to each Distribution Date, on the related
Determination Date, the Servicer shall determine the amount (the "Class A
Required Amount"), if any, by which (a) the sum of (i) Class A Monthly Interest
for such Distribution Date, (ii) any Class A Monthly Interest previously due but
not paid to the Class A Certificateholders on a prior Distribution Date, (iii)
any Class A Additional Interest for such Distribution Date and any Class A
Additional Interest previously due but not paid to the Class A
Certificateholders on a prior Distribution Date, (iv) the Class A Servicing Fee
for such Distribution Date, (v) any Class A Servicing Fee previously due but not
paid to the Servicer and (vi) the Class A Investor Default Amount, if any, for
such Distribution Date exceeds (b) the Class A Available Funds. In the event
that the Class A Required Amount for such Distribution Date is greater than
zero, all or a portion of the Excess Spread, Excess Finance Charge Collections
and Excess Transferor Finance Charge Collections allocated to Series 1998-1 with
respect to the related Monthly Period in an amount equal to the Class A Required
Amount for such Distribution Date shall be distributed from the Collection
Account on such Distribution Date pursuant to subsection 4.7(a). In the event
that the Class A Required Amount for such Distribution Date exceeds the amount
of Excess Spread, Excess Finance Charge Collections and Excess Transferor
Finance Charge Collections allocated to Series 1998-1 with respect to the
related Monthly Period, all or a portion of the Reallocated Principal
Collections with respect to such Monthly Period in an amount equal to such
excess
22
shall be distributed from the Collection Account on such Distribution
Date pursuant to subsection 4.8(a).
(b) With respect to each Distribution Date on the related
Determination Date, the Servicer shall determine the amount (the "Class B
Required Amount") equal to the sum of (I) the amount, if any, by which (a) the
sum of (i) Class B Monthly Interest for such Distribution Date, (ii) any Class B
Monthly Interest previously due but not paid to the Class B Certificateholders
on a prior Distribution Date, (iii) any Class B Additional Interest for such
Distribution Date and any Class B Additional Interest previously due but not
paid to the Class B Certificateholders on a prior Distribution Date, (iv) the
Class B Servicing Fee for such Distribution Date and (v) any Class B Servicing
Fee previously due but not paid to the Servicer exceeds (b) the Class B
Available Funds plus (II) the Class B Investor Default Amount for such
Distribution Date. In the event that the Class B Required Amount for such
Distribution Date is greater than zero, all or a portion of Excess Spread,
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocated to Series 1998-1 (other than Excess Spread, Excess Finance
Charge Collections and Excess Transferor Finance Charge Collections allocated to
Series 1998-1 applied pursuant to subsections 4.7(a) and (b) with respect to
such Distribution Date) with respect to the related Monthly Period shall be
applied to fund the Class B Required Amount. In the event that the Class B
Required Amount for such Distribution Date exceeds the amount of Excess Spread,
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocated to Series 1998-1 with respect to such Monthly Period and
available to fund the Class B Required Amount as provided in the preceding
sentence, all or a portion of the Reallocated Principal Collections allocable to
the Class C Invested Amount available therefor with respect to such Monthly
Period in an amount equal to such excess be distributed from the Collection
Account on such Distribution Date pursuant to subsection 4.8(b).
Section 4.5. Application of Class A Available Funds, Class B
Available Funds, Class C Available Funds and Available Investor Principal
Collections. The Servicer shall apply or shall cause the Trustee to apply, on
each Distribution Date, Class A Available Funds, Class B Available Funds, Class
C Available Funds and Available Investor Principal Collections for the Monthly
Period with respect to such Distribution Date to make the following
distributions:
(a) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders
on a prior Distribution Date, plus the amount of any Class A
Additional Interest, if any, for such Distribution Date and any
Class A Additional Interest previously due but not distributed to
the Class A Certificateholders on a prior Distribution Date, shall
be distributed to the Paying Agent for payment to the Class A
Certificateholders;
(ii) an amount equal to the Class A Servicing Fee for
such Distribution Date, plus the amount of any Class A Servicing Fee
previously due
23
but not distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default
Amount for such Distribution Date shall be treated as a portion of
Available Investor Principal Collections for such Distribution Date;
and
(iv) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section 4.7.
(b) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to the Class B Certificateholders on a
prior Distribution Date, plus the amount of any Class B Additional
Interest for such Distribution Date and any Class B Additional Interest
previously due but not distributed to the Class B Certificateholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to the Class B Certificateholders;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee previously
due but not distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
(c) On each Distribution Date, an amount equal to the Class C
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) if Travelers Bank & Trust, fsb or the Trustee is no longer
the Servicer, an amount equal to the Class C Servicing Fee for such
Distribution Date, plus the amount of any Class C Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer; and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
(d) On each Distribution Date with respect to the Revolving Period,
an amount equal to the Available Investor Principal Collections for the related
Monthly Period shall be distributed in the following order of priority:
24
(i) an amount equal to Class C Monthly Principal for such
Distribution Date, up to the Class C Invested Amount on such
Distribution Date, shall be distributed to the Class C Interest
Holder; and
(ii) the balance, if any, shall be treated as a portion of
Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
(e) On each Distribution Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, an amount equal to the
Available Investor Principal Collections for the related Monthly Period shall be
distributed in the following priority:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date, up to the Class A Invested Amount on such
Distribution Date, shall be deposited in the Principal Funding
Account for payment to the Class A Certificateholders by the Paying
Agent on each Distribution Date beginning on the earlier to occur of
the Class A Expected Final Distribution Date or the first Special
Payment Date;
(ii) for each Distribution Date beginning on the Class B
Principal Commencement Date, an amount equal to Class B Monthly
Principal for such Distribution Date, up to the Class B Invested
Amount on such Distribution Date, shall be distributed to the Paying
Agent for payment to the Class B Certificateholders;
(iii) an amount equal to Class C Monthly Principal for such
Distribution Date, up to the Class C Invested Amount on such
Distribution Date, shall be distributed to the Class C Interest
Holder; and
(iv) for each Distribution Date, after giving effect to
paragraphs (i), (ii) and (iii) above, an amount equal to the
balance, if any, of such Available Investor Principal Collections
then on deposit in the Collection Account shall be treated as Shared
Principal Collections and applied in accordance with Section 4.04 of
the Agreement.
Section 4.6. Default Amounts; Investor Charge-Offs.
(a) On each Determination Date, the Servicer shall calculate the
Class A Investor Default Amount, if any, for the related Distribution Date. If,
on any Distribution Date, the Class A Required Amount for the related Monthly
Period exceeds the sum of (x) the amount of Reallocated Principal Collections
with respect to such Monthly Period and (y) the amount of Excess Spread, Excess
Finance Charge Collections and Excess Transferor Finance Charge Collections
allocable to Series 1998-1 with respect to such Distribution Date, the Class C
Invested Amount shall be reduced by the amount of such excess, but not by more
than the excess of the Class A Investor Default Amount for such Distribution
Date over the amount of Reallocated Principal Collections and Excess Spread,
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocable to Series 1998-1. In the event that such
25
reduction would cause the Class C Invested Amount to be a negative number, the
Class C Invested Amount shall be reduced to zero and the Class B Invested Amount
shall be reduced by the amount by which the Class C Invested Amount would have
been reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Class C Invested Amount with respect to such
Distribution Date and the amount of Reallocated Principal Collections and Excess
Spread, Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocable to Series 1998-1 used to fund the Class A Investor Default
Amount for such Distribution Date. In the event that such reduction would cause
the Class B Invested Amount to be a negative number, the Class B Invested Amount
shall be reduced to zero, and the Class A Invested Amount shall be reduced by
the amount by which the Class B Invested Amount would have been reduced below
zero, but not by more than the excess, if any, of the Class A Investor Default
Amount for such Distribution Date over the aggregate amount of the reductions,
if any, of the Class C Invested Amount and the Class B Invested Amount for such
Distribution Date and the amount of Reallocated Principal Collections and Excess
Spread, Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocable to Series 1998-1 used to fund the Class A Investor Default
Amount for such Distribution Date (a "Class A Investor Charge-Off"). Class A
Investor Charge-Offs shall thereafter be reimbursed and the Class A Invested
Amount increased (but not by an amount in excess of the aggregate unreimbursed
Class A Investor Charge-Offs) on any Distribution Date by the amount of Excess
Spread, Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocable to Series 1998-1 and applied for that purpose pursuant to
subsection 4.7(b).
(b) On each Determination Date, the Servicer shall calculate the
Class B Required Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class B Required Amount for such Distribution Date
exceeds the sum of (x) the amount of Excess Spread, Excess Finance Charge
Collections and Excess Transferor Finance Charge Collections allocable to Series
1998-1 with respect to the related Monthly Period which are not used to fund the
Class A Required Amount and Class A Investor Charge-Offs on the related
Distribution Date and (y) the amount of Reallocated Principal Collections
allocable to the Class C Invested Amount which are available to fund the Class B
Required Amount on such Distribution Date pursuant to subsection 4.8(b), then
the Class C Invested Amount shall be reduced by the amount of such excess, but
not by more than the excess of the Class B Investor Default Amount for such
Distribution Date over the amount of Reallocated Principal Collections and
Excess Spread, Excess Finance Charge Collections and Excess Transferor Finance
Charge Collections allocable to Series 1998-1 used to fund the Class B Investor
Default Amount for such Distribution Date. In the event that such reduction
would cause the Class C Invested Amount to be a negative number, the Class C
Invested Amount shall be reduced to zero, and the Class B Invested Amount shall
be reduced by the amount by which the Class C Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class B
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Class C Invested Amount with respect to such
Distribution Date and the amount of Reallocated Principal Collections and Excess
Spread, Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocable to Series 1998-1 used to fund the Class B Investor Default
Amount for such Distribution Date (a "Class B Investor Charge-Off"). Class B
Investor Charge-Offs shall thereafter be reimbursed and the Class B Invested
Amount
26
increased (but not by an amount in excess of the aggregate unreimbursed Class B
Investor Charge-Offs) on any Distribution Date by the amount of Excess Spread,
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections allocable to Series 1998-1 allocated and available for that purpose
pursuant to subsection 4.7(e).
(c) If, on any Distribution Date, Reallocated Principal Collections
for such Distribution Date are applied pursuant to subsection 4.8(a) or (b), the
Class C Invested Amount shall be reduced by the amount of such Reallocated
Principal Collections. In the event that such reduction would cause the Class C
Invested Amount to be a negative number, the Class C Invested Amount shall be
reduced to zero, and the Class B Invested Amount shall be reduced by the amount
by which the Class C Invested Amount would have been reduced below zero.
(d) If, on any Distribution Date, the Class C Default Amount exceeds
the amount of Excess Spread, Excess Finance Charge Collections and Excess
Transferor Finance Charge Collections allocable to Series 1998-1 available to
fund the Class C Default Amount pursuant to subsection 4.7(h) on such
Distribution Date, then the Class C Invested Amount shall be reduced by the
amount of such excess.
Section 4.7. Excess Spread; Excess Finance Charge Collections;
Excess Transferor Finance Charge Collections. The Servicer shall apply or shall
cause the Trustee to apply, on each Distribution Date, Excess Spread, Excess
Finance Charge Collections and Excess Transferor Finance Charge Collections
allocable to Series 1998-1 for such Distribution Date to make the following
distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date shall be distributed by the Trustee to fund
any deficiency pursuant to subsections 4.5(a)(i), (ii) and (iii), in that order
of priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs that have not been previously reimbursed shall be treated as a
portion of Available Investor Principal Collections for such Distribution Date;
(c) an amount equal to any deficiency in the amounts to be
distributed pursuant to subsections 4.5(b)(i) and (ii) with respect to such
Distribution Date shall be distributed by the Trustee to fund such deficiency in
accordance with the provisions of subsections 4.5(b)(i) and (ii) and in that
order of priority;
(d) an amount equal to the Class B Investor Default Amount for such
Distribution Date shall be treated as a portion of Available Investor Principal
Collections for such Distribution Date;
(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of the
definition of "Class B Invested Amount" in Section 2.1 of this Supplement (but
not in excess of the aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Available Investor
Principal Collections for such Distribution Date;
27
(f) an amount equal to the Class C Monthly Interest, if any, for
such Distribution Date, plus the amount of any Class C Monthly Interest
previously due but not distributed to the Class C Interest Holder on a prior
Distribution Date shall be distributed to the Class C Interest Holder;
(g) an amount equal to the Class C Servicing Fee for such
Distribution Date (or if Travelers Bank & Trust, fsb or the Trustee is no longer
the Servicer, the portion of the Class C Servicing Fee for such Distribution
Date not paid pursuant to subsection 4.5(c)(i)), plus the amount of any Class C
Servicing Fee previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer;
(h) an amount equal to the Class C Default Amount for such
Distribution Date shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(i) an amount equal to the aggregate amount by which the Class C
Invested Amount has been reduced pursuant to clause (b) of the definition of
"Class C Invested Amount" (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated as a
portion of Available Investor Principal Collections with respect to such
Distribution Date;
(j) an amount up to the excess, if any, of the Required Reserve
Account Amount over the amount on deposit therein, shall be deposited into the
Reserve Account;
(k) the balance, if any, shall constitute a portion of "Excess
Finance Charge Collections" available for allocation to other Series in Group
One or to the Holders of the Transferor Certificates for such Distribution Date
as described in Section 4.04 of the Agreement.
Section 4.8. Reallocated Principal Collections. The Servicer shall
apply or shall cause the Trustee to apply on each Distribution Date, Reallocated
Principal Collections (applying all such Collections with respect to the Class C
Invested Amount prior to applying any such Collections with respect to the Class
B Invested Amount and applying no such Collections with respect to the Class B
Invested Amount pursuant to clause (b) below) with respect to such Distribution
Date, to make the following distributions in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread, Excess Finance Charge Collections and Excess Transferor
Finance Charge Collections allocable to Series 1998-1 with respect to the
related Monthly Period shall be distributed by the Trustee to fund any
deficiency pursuant to subsections 4.5(a)(i), (ii) and (iii), in that order of
priority;
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread, Excess Finance Charge Collections and Excess Transferor
Finance Charge Collections allocable to Series 1998-1 and applied to the Class B
Certificates pursuant to subsections 4.7(c) and (d) on
28
such Distribution Date shall be distributed by the Trustee to fund any
deficiency pursuant to subsections 4.5(b)(i) and (ii) and subsection 4.7(d), in
that order of priority; and
(c) the balance, if any, of such Reallocated Principal Collections
shall be treated as a portion of Available Investor Principal Collections.
Section 4.9. Excess Finance Charge Collections and Excess Transferor
Finance Charge Collections.
(a) Subject to subsection 4.04(b) of the Agreement, Excess Finance
Charge Collections with respect to the Series in Group One for any Distribution
Date will be allocated to Series 1998-1 in an amount equal to the product of (x)
the aggregate amount of Excess Finance Charge Collections with respect to all
the Series in Group One for such Distribution Date and (y) a fraction, the
numerator of which is the Finance Charge Shortfall for Series 1998-1 for such
Distribution Date and the denominator of which is the aggregate amount of
Finance Charge Shortfalls (as defined in the related Supplements) for all the
Series in Group One for such Distribution Date. The "Finance Charge Shortfall"
for Series 1998-1 for any Distribution Date shall be equal to the excess, if
any, of (a) the full amount required to be paid, without duplication, pursuant
to subsections 4.5(a), 4.5(b) and 4.5(c) and Section 4.7 (except for subsection
4.7(k)) on such Distribution Date over (b) the sum of Class A Available Funds,
Class B Available Funds and Class C Available Funds with respect to the related
Monthly Period.
(b) Subject to subsection 4.04(c) of the Agreement, Excess
Transferor Finance Charge Collections for any Distribution Date will be
allocated to Series 1998-1 in an amount equal to the product of (x) the Excess
Transferor Finance Charge Collections for such Distribution Date and (y) a
fraction, the numerator of which is the Finance Charge Shortfall for Series
1998-1 for such Distribution Date and the denominator of which is the aggregate
amount of Finance Charge Shortfalls (as defined in the related Supplements) for
all Series entitled to receive Excess Transferor Finance Charge Collections for
such Distribution Date, in each case after applying Excess Finance Charge
Collections, if any, to each such Series (including Series 1998-1).
Section 4.10. Shared Principal Collections and Shared Transferor
Principal Collections.
(a) Subject to subsection 4.04(a) of the Agreement, Shared Principal
Collections with respect to the Series in Group One for any Distribution Date
will be allocated to Series 1998-1 in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series in Group One for such Distribution Date and (y) a fraction, the
numerator of which is the Principal Shortfall for Series 1998-1 for such
Distribution Date and the denominator of which is the aggregate amount of
Principal Shortfalls for all the Series in Group One that are Principal Sharing
Series for such Distribution Date. The "Principal Shortfall" for Series 1998-1
shall be equal to (a) for any Distribution Date with respect to the Revolving
Period, zero, (b) for any Distribution Date with respect to the Controlled
Accumulation Period (on or prior to the Class B Expected Final Distribution
Date), the excess, if any, of the Controlled Deposit Amount with respect to such
Distribution Date over the amount of
29
Available Investor Principal Collections for such Distribution Date (excluding
any portion thereof attributable to Shared Principal Collections or Shared
Transferor Principal Collections) and (c) for each Distribution Date with
respect to the Rapid Amortization Period or the Controlled Accumulation Period
after the Class B Expected Final Distribution Date, the excess, if any, of the
Invested Amount over the amount of Available Investor Principal Collections for
such Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections or Shared Transferor Principal Collections).
(b) Subject to subsection 4.04(d) of the Agreement, Shared
Transferor Principal Collections for any Distribution Date will be allocated to
Series 1998-1 in an amount equal to the product of (x) Shared Transferor
Principal Collections and (y) a fraction, the numerator of which is the
Principal Shortfall for Series 1998-1 and the denominator of which is the
aggregate amount of Principal Shortfalls (as defined in the related Supplements)
for all Series entitled to receive Shared Transferor Principal Collections for
such Distribution Date, in each case after applying Shared Principal
Collections, if any, to each such Series (including Series 1998-1).
Section 4.11. Principal Funding Account.
(a) (i) The Servicer, for the benefit of the Series 1998-1
Certificateholders, shall establish and maintain in the name of the
Trustee, on behalf of the Trust, a Qualified Account with the Securities
Intermediary (the "Principal Funding Account"), bearing a designation
clearly indicating that the funds and other property credited thereto are
held for the benefit of the Series 1998-1 Certificateholders. The
Principal Funding Account shall consist of two segregated subaccounts: (I)
the "Principal Funding Account Investment Account" to which financial
assets credited to the Principal Funding Account shall be credited, and as
to which financial assets the Securities Intermediary undertakes to treat
the Trustee as entitled to exercise the rights that comprise such
financial assets; and (ii) the "Principal Funding Cash Subaccount" to
which money or instruments deposited in the Reserve Account shall be
credited.
(ii) At the written direction of the Servicer, funds on
deposit in the Principal Funding Account shall be invested by the Trustee
or its nominee (including the Securities Intermediary) in Eligible
Investments selected by the Servicer. All such Eligible Investments shall
be held by the Trustee for the benefit of the Series 1998-1
Certificateholders; provided that on each Distribution Date all interest
and other investment income (net of losses and investment expenses )
("Principal Funding Investment Proceeds") on funds on deposit therein
shall be applied as set forth in paragraph (iii) below. All such Eligible
Investments will be held by the Trustee or its nominee (including the
Securities Intermediary) and will be carried in a Primary Funding
Investment Subaccount maintained by the Trustee with the Securities
Intermediary. Funds on deposit in the Principal Funding Account shall be
invested in Eligible Investments that will mature so that such funds will
be available at the close of business on the Transfer Date preceding the
following Distribution Date. No Eligible Investment shall be disposed of
prior to its maturity; provided, however, that the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed in writing
30
by the Servicer, the Servicer having reasonably determined that the
interest of the Series 1998-1 Certificateholders may be adversely affected
if such Eligible Investment is held to its maturity. Unless the Servicer
directs otherwise, funds deposited in the Principal Funding Account on a
Transfer Date (which immediately precedes a Distribution Date) upon the
maturity of any Eligible Investments are not required to be invested
overnight.
(iii) On each Distribution Date, the Servicer shall direct the
Trustee to withdraw from the Principal Funding Account and deposit into
the Collection Account all Principal Funding Investment Proceeds then on
deposit in the Principal Funding Account, and such Principal Funding
Investment Proceeds shall be treated as a portion of Class A Available
Funds for such Distribution Date.
(iv) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to be
principal amounts on deposit therein for purposes of this Supplement.
(b) (i) The Trustee shall possess all right, title and interest in
all funds and other property credited to the Principal Funding Account
from time to time and in all proceeds thereof. The Principal Funding
Account (including the subaccounts therein) shall be under the sole
dominion and control of the Trustee for the benefit of the Series 1998-1
Certificateholders. If, at any time, the Principal Funding Account ceases
to be a Qualified Account, the Trustee shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each
Rating Agency may consent) establish a new Principal Funding Account
meeting the conditions specified in paragraph (a) (i) above as a Qualified
Account and shall transfer any cash and/or any investments to such new
Principal Funding Account. The Securities Intermediary (including The Bank
of New York as initial Securities Intermediary) hereby represents that it
is as of the date hereof and shall be for so long as it is the Securities
Intermediary hereunder a corporation or national bank that (i) in the
ordinary course of its business maintains securities accounts for others
and is a acting in that capacity hereunder and (ii) maintains a
Participant's Securities Account (as defined in the United States
Regulations) with a Federal Reserve Bank. The Securities Intermediary
hereby agrees with the parties hereto that (x) the Principal Funding
Investment Subaccount is a securities account to the which financial
assets may be credited, (y) the Trustee shall be entitled to exercise
rights that comprise such financial assets and to exercise the ordinary
rights of an entitlement holder, (z) the "securities intermediary's
jurisdiction" as defined in the UCC of the Securities Intermediary with
respect to the Eligible Investments credited to the Principal Funding
Investment Subaccount, shall be the State of New York. The Securities
Intermediary represents and covenants that it is not and will not be (as
long as it is the Securities Intermediary hereunder) a party to any
agreement that is inconsistent with the provisions of this Agreement. The
Securities Intermediary covenants that is will not take any action
inconsistent with the provisions of this Agreement applicable to it. It is
the intent of the Trustee, the Servicer and the Transferor that the
Principal Funding Investment Subaccount shall be a securities account of
the Trustee and not an account of the Transferor or the Servicer. If
despite such intent, the Principal Funding Investment Subaccount is
determined to be an account of the Transferor or the Servicer, then the
31
Securities Intermediary agrees to comply with entitlement orders
originated by the Trustee without further consent by the Transferor or the
Servicer.
(ii) Pursuant to the authority granted to the Servicer in
subsection 3.01(b) of the Agreement, the Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments or to instruct
the Trustee to make withdrawals and payments from the Principal Funding
Account for the purposes of carrying out the Servicer's or Trustee's
duties hereunder. Pursuant to the authority granted to the Paying Agent in
Section 5.1 of this Supplement and Section 6.07 of the Agreement, the
Paying Agent shall have the power, revocable by the Trustee, to withdraw
funds from the Principal Funding Account for the purpose of making
distributions to the Series 1998-1 Certificateholders.
Section 4.12. Class A Accumulation Period. The Class A Accumulation
Period is scheduled to commence on the Controlled Accumulation Date; provided,
however, that if the Class A Accumulation Period Length on any Determination
Date (determined as described below) is less than twelve months, upon notice to
the Trustee, the Transferor and each Rating Agency, the Servicer, at its option,
may elect to modify the date on which the Class A Accumulation Period actually
commences to the first day of the month that is a number of months prior to the
month in which the Class A Expected Final Distribution Date occurs at least
equal to the Class A Accumulation Period Length (so that, as a result, the
number of Monthly Periods in the Class A Accumulation Period will at least equal
the Class A Accumulation Period Length); provided, however, that (i) the length
of the Class A Accumulation Period will not be less than one month; and (ii)
notwithstanding any other provision of this Supplement to the contrary, no
election to postpone the commencement of the Class A Accumulation Period shall
be made after a Pay Out Event (as defined in the related Supplement) shall have
occurred and be continuing with respect to any other Series. On each
Determination Date, the Servicer will determine the "Class A Accumulation Period
Length," which will mean a number of months such that the amount available for
distribution of principal on the Class A Certificates on the Class A Expected
Final Distribution Date will equal or exceed the Class A Investor Amount,
assuming for this purpose that (1) the payment rate with respect to Collections
of Principal Receivables remains constant at the lowest level of such payment
rate during the twelve preceding Monthly Periods (or such lower payment rate as
the Servicer may select), (2) the total amount of Principal Receivables in the
Trust (and the principal amount on deposit in the Excess Funding Account, if
any) and the Discount Percentage remains constant at the level on such date of
determination, (3) no Pay Out Event with respect to any Series will subsequently
occur and (4) no additional Series (other than any Series being issued on such
date of determination) will be subsequently issued. Any notice by the Servicer
electing to modify the commencement of the Class A Accumulation Period pursuant
to this Section 4.12 shall specify (i) the Class A Accumulation Period Length,
(ii) the commencement date of the Class A Accumulation Period and (iii) the
Controlled Accumulation Amount with respect to each Monthly Period during the
Class A Accumulation Period.
32
Section 4.13. Reserve Account.
(a) The Servicer shall establish and maintain, in the name of the
Trustee, on behalf of the Trust, for the benefit of the Series 1998-1 Holders, a
Qualified Account (the "Reserve Account") with the Securities Intermediary
bearing a designation clearly indicating that the funds credited thereto are
held for the benefit of the Series 1998-1 Holders. The Reserve Account shall
consist of two segregated subaccounts: (i) the "Reserve Account Investment
Account" to which financial assets credited to the Reserve Account shall be
credited, and as to which financial assets the Securities Intermediary
undertakes to treat the Trustee as entitled to exercise the rights that comprise
such financial assets; and (ii) the "Reserve Account Cash Subaccount" to which
money or instruments deposited in the Reserve Account shall be credited. The
Reserve Account shall initially be established with The Bank of New York. The
Trustee shall possess all right, title and interest in all funds and other
property from time to time in the Reserve Account (including any subaccounts
therein) and in all proceeds thereof. The Reserve Account shall be under the
sole dominion and control of the Trustee for the benefit of the Series 1998-1
Holders. If at any time the Reserve Account ceases to be a Qualified Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Reserve Account meeting the conditions
specified above as a Qualified Account, and shall transfer any cash and/or any
investments to such new Reserve Account. The Trustee, at the direction of the
Servicer, shall (i) make withdrawals from the Reserve Account from time to time
for the purposes set forth in this Supplement, and (ii) on each Distribution
Date (from and after the Reserve Account Funding Date) prior to the termination
of the Reserve Account credit to the Reserve Account in the amount specified in,
and otherwise in accordance with, subsection 4.7(j).
(b) Funds on deposit in the Reserve Account shall be invested at the
written direction of the Servicer by the Trustee in Eligible Investments. All
such Eligible Investments will be held by the Trustee or its nominee (which may
be the Securities Intermediary) and will be credited to the Reserve Account
Investment Subaccount maintained by the Trustee with the Securities
Intermediary. Funds on deposit in the Reserve Account on any Transfer Date,
after giving effect to any withdrawals from the Reserve Account on such Transfer
Date, shall be invested in such investments that will mature so that such funds
will be available for withdrawal on or prior to the immediately succeeding
Transfer Date. The Trustee (or its nominee) shall maintain for the benefit of
the Series 1998-1 Holders possession of the instruments or securities, if any,
evidencing such Eligible Investments. No Eligible Investment shall be disposed
of prior to its maturity; provided, however, that the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Servicer in writing, the Servicer having reasonably determined
that the interest of the Series 1998-1 Holders may be adversely affected if such
Eligible Investment is held to its maturity. On each Distribution Date, all
interest and earnings (net of losses and investment expenses) accrued since the
preceding Distribution Date on funds on deposit in the Reserve Account shall be
retained in the Reserve Account (to the extent that the amount on deposit in the
Reserve Account is less than the Required Reserve Account Amount) and the
balance, if any, shall be deposited in the Collection Account and treated as
Collections of Finance Charge Receivables allocable to Series 1998-1. For
purposes of determining the availability of funds or the balance in the Reserve
Account for any reason
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under this Supplement, except as otherwise provided in the preceding sentence,
investment earnings on such funds shall be deemed not to be available or on
deposit.
(c) On the Determination Date preceding each Distribution Date with
respect to the Controlled Accumulation Period (prior to the Class B Expected
Final Distribution Date) and the first Special Payment Date, the Servicer shall
calculate the "Reserve Draw Amount" which shall be equal to the excess, if any,
of the Covered Amount with respect to such Distribution Date or Special Payment
Date over the Principal Funding Investment Proceeds with respect to such
Distribution Date or Special Payment Date; provided, that such amount will be
reduced to the extent that funds otherwise would be available for deposit in the
Reserve Account under subsection 4.7(j) with respect to such Distribution Date.
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the amount on
deposit in the Reserve Account, shall be withdrawn from the Reserve Account on
the related Transfer Date by the Trustee (acting in accordance with the
instructions of the Servicer), deposited into the Collection Account and
included in Class A Available Funds for such Distribution Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all credits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay to the Holders of the
Transferor Certificates or their designee an amount equal to such Reserve
Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article XII of the Agreement, (ii) the day on which the Class A
Investor Amount is paid in full to the Class A Certificateholders, (iii) if the
Controlled Accumulation Period has not commenced, the occurrence of a Pay Out
Event with respect to Series 1998-1 and (iv) if the Controlled Accumulation
Period has commenced, the earlier of the first Special Payment Date and the
Class A Expected Final Distribution Date, the Trustee, acting in accordance with
the written instructions of the Servicer, after the prior payment of all amounts
owing to the Series 1998-1 Certificateholders which are payable from the Reserve
Account as provided herein, shall withdraw from the Reserve Account and pay to
the Holders of the Transferor Certificates or their designee all amounts, if
any, on deposit in the Reserve Account and the Reserve Account shall be deemed
to have terminated for purposes of this Supplement.
The Securities Intermediary (including The Bank of New York as
initial Securities Intermediary) hereby represents that it is as of the date
hereof and shall be for so long as it is the Securities Intermediary hereunder a
corporation or national bank that (i) in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity
hereunder and (ii) maintains a Participant's Securities Account (as defined in
the United States Regulations) with a Federal Reserve Bank. The Securities
Intermediary hereby agrees with the parties hereto that (x) the Reserve Account
Investment Subaccount is a securities account to which financial assets may be
credited, (y) the Trustee shall be entitled to exercise rights that comprise
such financial assets and to exercise the ordinary rights of an entitlement
holder, (z) the "securities intermediary's jurisdiction" as defined in the UCC
of the Securities
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Intermediary with respect to the Eligible Investments credited to the Reserve
Account Investment Subaccount, shall be the State of New York. The Securities
Intermediary represents and covenants that it is not and will not be (as long as
it is the Securities Intermediary hereunder) a party to any agreement that is
inconsistent with the provisions of this Agreement. The Securities Intermediary
covenants that is will not take any action inconsistent with the provisions of
this Agreement applicable to it. It is the intent of the Trustee, the Servicer
and the Transferor that the Reserve Account Investment Subaccount shall be a
securities account of the Trustee and not an account of the Transferor or the
Servicer. If despite such intent, the Reserve Account Investment Subaccount is
determined to be an account of the Transferor or the Servicer, then the
Securities Intermediary agrees to comply with entitlement orders originated by
the Trustee without further consent by the Transferor or the Servicer.
Section 4.14. Designation of Class B Certificates Terms; Sale of
Class B Certificates. The Transferor may at any time, without the consent of the
Investor Certificateholders, (i) sell or transfer all or a portion of the Class
B Certificates and (ii) in connection with any such sale or transfer, enter into
a supplemental agreement with the Trustee pursuant to which the Transferor and
the Trustee may amend the Class B Certificate Rate, set forth the calculation of
the Class B Monthly Interest and Class B Additional Interest, if any, and
provide for such other provisions with respect to the Class B Certificates as
may be specified in such supplemental agreement; provided that in each case (A)
the Transferor shall have given notice to the Trustee, the Servicer and the
Rating Agencies of such proposed sale or transfer of the Class B 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 Pay Out Event shall have occurred prior to the consummation of
such proposed sale or transfer of Class B Certificates or the execution of such
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; and (E) the Transferor will have delivered
a Tax Opinion, dated the date of such certificate with respect to such action;
provided further, (i) as a condition to the sale or transfer of all or a portion
of the Class B Certificates, the transferee shall be required to agree not to
institute 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 and (ii) the Class B Certificates may not be sold
or transferred, in whole or in part, to Travelers Bank & Trust, fsb or The
Travelers Bank USA.
Section 4.15. Designation of Class C Interests Terms; Sale of Class
C Interests. 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
Interests and (ii) in connection with any such sale or transfer, enter into a
supplemental agreement with the Trustee pursuant to which the Transferor and the
Trustee may amend the Class C Interest Rate, set forth the calculation of the
Class C Monthly Interest, provide for the payment of additional amounts with
respect to the Class C Interests as may be specified in such supplemental
agreement; provided, that in each case (A) the
35
Transferor shall have given notice to the Trustee, the Servicer and the Rating
Agencies of such proposed sale or transfer of the Class C Interests 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 Pay Out Event
shall have occurred prior to the consummation of such proposed sale or transfer
of Class C Interests or the execution of such 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; and
(E) the Transferor will have delivered a Tax Opinion, dated the date of such
certificate with respect to such action; provided further, (i) as a condition to
the sale or transfer of all or a portion of the Class C Interests the transferee
shall be required to agree not to institute 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 and (ii) the Class C Interests may not be
sold or transferred, in whole or in part, to Travelers Bank & Trust, fsb or The
Travelers Bank USA.
ARTICLE V
Distributions and Reports to Series 1998-1 Certificateholders
Section 5.1. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute to
each Class A Certificateholder of record on the related Record Date (other than
as provided in Section 12.02 of the Agreement) such Class A Certificateholder's
pro rata share of the amounts that are allocated and available on such
Distribution Date to pay interest on the Class A Certificates pursuant to this
Supplement.
(b) On each Distribution Date, commencing with the first to occur of
the Class A Expected Final Payment Date and the first Special Payment Date, the
Paying Agent shall distribute to each Class A Certificateholder of record on the
related Record Date (other than as provided in Section 12.02 of the Agreement)
such Class A Certificateholder's pro rata share of the amounts that are
allocated and available on such date to pay principal of the Class A
Certificates pursuant to this Supplement up to a maximum amount on any such date
equal to the Class A Investor Amount on such date (unless there has been an
optional repurchase of the Certificateholders' Interest pursuant to Section
10.01 of the Agreement, in which event the foregoing limitation will not apply).
(c) On each Distribution Date, the Paying Agent shall distribute to
each Class B Certificateholder of record on the related Record Date (other than
as provided in Section 12.02 of the Agreement) such Class B Certificateholder's
pro rata share of the amounts that are
36
allocated and available on such Distribution Date to pay interest on the Class B
Certificates pursuant to this Supplement.
(d) On each Distribution Date, commencing with the Class B Principal
Commencement Date, the Paying Agent shall distribute to each Class B
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class B Certificateholder's pro rata
share of the amounts that are allocated and available on such date to pay
principal of the Class B Certificates pursuant to this Supplement up to a
maximum amount on any such date equal to the Class B Investor Amount on such
date (unless there has been an optional repurchase of the Certificateholders'
Interest pursuant to Section 10.01 of the Agreement, in which event the
foregoing limitation will not apply).
(e) The distributions to be made pursuant to this Section 5.1 are
subject to the provisions of Sections 2.06, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.1 and 8.2 of this Supplement.
(f) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution in respect of the Class A Certificates or the
Class B Certificates, distributions to Series 1998-1 Holders hereunder shall be
made by check mailed to each Series 1998-1 Holder at such Series 1998-1 Holder's
address appearing in the Certificate Register or the Book-Entry Register, as
applicable, without presentation or surrender of any Series 1998-1 Certificate
or the making of any notation thereon; provided, however, that with respect to
Series 1998-1 Certificates registered in the name of a Clearing Agency, such
distributions shall be made to such Clearing Agency in immediately available
funds.
Section 5.2. Certificates and Statements.
(a) Not later than each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent and each Rating Agency, a certificate
substantially in the form of Exhibit B prepared by the Servicer.
(b) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Series 1998-1 Holder a statement substantially in
the form of Exhibit B prepared by the Servicer.
(c) A copy of each statement or certificate provided pursuant to
paragraph (a) or (b) may be obtained by any Series 1998-1 Holder or any
Certificate Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with
calendar year 1999, the Paying Agent, on behalf of the Trustee, shall furnish or
cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 1998-1 Holder, a statement prepared by the Servicer
containing the information which is required to be contained in the statement to
Series 1998-1 Holders, as set forth in paragraph (b) above, aggregated for such
calendar year or the applicable portion thereof during which such Person was a
Series 1998-1 Holder, together with other information as is required to be
provided by an issuer of
37
indebtedness under the Internal Revenue Code. Such obligation of the Servicer
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Paying Agent pursuant to any
requirements of the Internal Revenue Code as from time to time in effect.
ARTICLE VI
Additional Pay Out Events
Section 6.1. Additional Pay Out Events. If any one of the following
events (each, a "Series Pay Out Event") shall occur with respect to Series
1998-1:
(a) failure on the part of the Transferor (A) to make any payment or
deposit required by the terms of the Agreement on or before the date occurring
five Business Days after the date such payment or deposit is required to be made
herein or (B) duly to observe or perform in any material respect any other
covenants or agreements of the Transferor set forth in the Agreement which has a
material adverse effect on the Series 1998-1 Certificateholders (which
determination shall be made, for so long as the Class C Invested Amount is
greater than zero, without reference to whether any funds are available pursuant
to Series Enhancement) and 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 Series 1998-1 Certificateholders aggregating not
less than 50% of the sum of the outstanding principal balance of the Series
1998-1 Certificates;
(b) any representation or warranty made by the Transferor in the
Agreement or any information contained in a computer file or microfiche list
required to be delivered by the Servicer on behalf of the Transferor pursuant to
Section 2.01 or 2.09 of the Agreement (A) 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 Series 1998-1 Certificateholders aggregating not less than 50% of the
sum of the outstanding principal balance of the Series 1998-1 Certificates and
(B) as a result of which the interests of the Series 1998-1 Certificateholders
are materially and adversely affected (which determination shall be made, for so
long as the Class C Invested Amount is greater than zero, without reference to
whether any funds are available pursuant to any Series Enhancement); provided,
however, that a Series Pay Out Event pursuant to this subparagraph (b) shall not
be deemed to occur hereunder if the Transferor shall have accepted reassignment
of the related Receivable, or all of such Receivables, if applicable, during
such period (or such longer period as the Trustee may specify not to exceed 150
days) in accordance with the provisions hereof and of the Agreement;
(c) (1) with respect to the last day of any prior Monthly Period
during which the Transferor Amount is less than the Required Transferor Amount,
the failure of the Transferor to convey on or prior to the Required Designation
Date Receivables in Additional Accounts to the Trust such that the Transferor
Amount shall be at least equal to the Required Transferor
38
Amount as of the close of business on the applicable Addition Date; or (2) with
respect to the last day of any prior Monthly Period during which the product of
(x) the aggregate amount of Principal Receivables and (y) one minus the Discount
Percentage is less than the Required Principal Balance as of such day, the
failure of the Transferor to convey on or prior to the Required Designation Date
Receivables in Additional Accounts to the Trust such that the product of (x) the
aggregate amount of the Principal Receivables and (y) one minus the Discount
Percentage shall be at least equal to the Required Principal Balance as of the
close of business on the applicable Addition Date;
(d) the Net Portfolio Yield averaged over three consecutive Monthly
Periods is less than the Base Rate averaged over such period;
(e) any Servicer Default shall occur which would have a material
adverse effect on the Series 1998-1 Certificateholders (which determination
shall be made, for so long as the Class C Invested Amount is greater than zero,
without reference to whether any funds are available pursuant to any Series
Enhancement); or
(f) the Class A Investor Amount shall not be paid in full on the
Class A Expected Final Distribution Date or the Class B Invested Amount shall
not be paid in full on the Class B Expected Final Distribution Date;
then, in the case of any event described in subparagraph (a), (b) or (e), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Trustee or the Series 1998-1 Holders evidencing more than 50% of the aggregate
unpaid principal amount of the Series 1998-1 Certificates and the Class C
Interests by notice then given in writing to the Transferor and the Servicer
(and to the Trustee if given by the Series 1998-1 Holders) may declare that a
Pay Out Event has occurred with respect to Series 1998-1 as of the date of such
notice, and, in the case of any event described in subparagraph (c), (d) or (f)
a Pay Out Event shall occur with respect to Series 1998-1 without any notice or
other action on the part of the Trustee or the Series 1998-1 Holders immediately
upon the occurrence of such event.
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1. Optional Repurchase. Subject to Section 12.5 of the
Agreement, on any day occurring on or after the date on which the Investor
Amount is reduced to 10% or less of the Initial Investor Amount, the Transferor
shall have the option to purchase the interest of the Series 1998-1 Holders at a
purchase price equal to (i) if such day is a Distribution Date, the Reassignment
Amount for such Distribution Date or (ii) if such day is not a Distribution
Date, the Reassignment Amount for the Distribution Date following such day.
39
Section 7.2. Series Termination.
(a) If, on the November 2004 Distribution Date, the Investor Amount
(after giving effect to all changes therein on such date) would be greater than
zero, the Servicer, on behalf of the Trustee, shall, within the 40-day period
which begins on such Distribution Date, solicit bids for the sale of Principal
Receivables and the related Finance Charge Receivables (or interests therein) in
an amount equal to the Investor Amount and accrued and unpaid interest thereon
at the close of business on the last day of the Monthly Period preceding the
Series Termination Date (after giving effect to all distributions required to be
made on the Series Termination Date, except pursuant to this Section 7.2;
provided, however, that in no event shall such amount exceed the Series
Percentage of Receivables on the Series Termination Date). Such bids shall
require that such sale shall (subject to subsection 7.2(b)) occur on the Series
Termination Date. The Transferor shall be entitled to participate in, and to
receive from the Trustee a copy of each other bid submitted in connection with,
such bidding process.
(b) The Servicer, on behalf of the Trustee, shall sell such
Receivables (or interests therein) on the Series Termination Date to the bidder
who made the highest cash purchase offer. The proceeds of any such sale shall be
treated as Collections on the Receivables allocated to Series 1998-1 pursuant to
the Agreement and this Supplement, provided, however, however, that the Servicer
shall determine conclusively the amount of such proceeds which are allocable to
Finance Charge Receivables and the amount of such proceeds which are allocable
to Principal Receivables. During the period from the November 2004 Distribution
Date to the Series Termination Date, the Servicer shall continue to collect
payments on the Receivables and allocate and deposit such collections in
accordance with the provisions of the Agreement and the Supplements.
ARTICLE VIII
Final Distributions
Section 8.1. Sale of Receivables or Certificateholders' Interest
Pursuant to Section 2.06 or 10.01 of the Agreement.
(a) Purchase Price. The amount to be paid with respect to Series
1998-1 in connection with (i) a reassignment of Receivables to the Transferor
pursuant to Section 2.06 of the Agreement or (ii) a repurchase of the
Certificateholders' Interest pursuant to Section 10.01 of the Agreement shall
equal the Reassignment Amount for the first Distribution Date following the
Monthly Period in which the reassignment obligation arises under the Agreement.
(b) Distributions Pursuant to Section 7.01 or 7.02 of this
Supplement and Section 10.01 of the Agreement. With respect to the Reassignment
Amount deposited into the Collection Account pursuant to Section 7.1 or
8.1(a)(ii) or any amounts allocable to Series 1998-1 deposited into the
Collection Account pursuant to Section 7.2, the Trustee shall, not later than
3:00 p.m. New York City time, on the related Distribution Date, make deposits or
distributions of the following amounts (in the priority set forth below and, in
each case, after
40
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds: (i) (x) the Class A Investor Amount on
such Distribution Date will be distributed to the Paying Agent for payment to
the Class A Certificateholders and (y) an amount equal to the sum of (A) Class A
Monthly Interest for such Distribution Date, (B) any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders on a prior
Distribution Date and (C) the amount of Class A Additional Interest, if any, for
such Distribution Date and any Class A Additional Interest previously due but
not distributed to the Class A Certificateholders on any prior Distribution
Date, will be distributed to the Paying Agent for payment to the Class A
Certificateholders, (ii) (x) the Class B Invested Amount on such Distribution
Date will be distributed to the Paying Agent for payment to the Class B
Certificateholders and (y) an amount equal to the sum of (A) Class B Monthly
Interest for such Distribution Date, (B) any Class B Monthly Interest previously
due but not distributed to the Class B Certificateholders on a prior
Distribution Date and (C) the amount of Class B Additional Interest, if any, for
such Distribution Date and any Class B Additional Interest previously due but
not distributed to the Class B Certificateholders on any prior Distribution
Date, will be distributed to the Paying Agent for payment to the Class B
Certificateholders and (iii) (x) the Class C Invested Amount on such
Distribution Date will be distributed to the Class C Interest Holder and (y) an
amount equal to the sum of (A) Class C Monthly Interest, if any, for such
Distribution Date and (B) any Class C Monthly Interest previously due but not
distributed to the Class C Interest Holders on a prior Distribution Date shall
be distributed to the Class C Interest Holder.
(c) Distributions Pursuant to Section 2.06 of the Agreement. With
respect to any amounts deposited into the Collection Account pursuant to
subsection 8.1(a)(i), the Trustee shall, not later then 12:00 noon, New York
City time, on the related Distribution Date, deposit the principal portion of
such amounts that are allocable to the Series 1998-1 Holders into the
Collections Account.
(d) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to
subsection 8.1(b) for payment to the Series 1998-1 Certificateholders shall be
deemed distributed in full to the Series 1998-1 Certificateholders on the date
on which such funds are distributed to the paying Agent pursuant to this Section
and shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
ARTICLE IX
Certificates
Section 9.1. Book-Entry Certificates. The Class A Certificates shall
be delivered as Book-Entry Certificates. The Clearing Agency for the Class A
Certificates shall be The Depository Trust Company, and the Class A Certificates
shall be initially registered in the name of Cede & Co., its nominee.
41
Section 9.2. Uncertificated Securities. The Class B Certificates and
the Class C Interests shall be delivered in uncertificated form.
ARTICLE X
Miscellaneous Provisions
Section 10.1. Ratification of Agreement. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
Section 10.2. Counterparts. This Supplement may be executed in two
or more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
Section 10.3. Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, 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; PROVIDED,
HOWEVER, THAT THE IMMUNITIES AND STANDARD OF CARE OF THE TRUSTEE IN THE
ADMINISTRATION OF THE TRUST HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
Section 10.4. Notices. All directions, notices and instructions to
the Trustee shall be in writing (which may be facsimile).
Section 10.5. Amendments. This Supplement may be amended by the
Transferor without the consent of the Servicer, the Trustee or any Investor
Certificateholder if the Transferor provides the Trustee with (i) an Opinion of
Counsel to the effect that such amendment or modification would reduce the risk
that the Trust would be treated as taxable as a publicly traded partnership
pursuant to Code section 7704 and (ii) an Officer's Certificate that such
amendment or modification would not materially and adversely affect any Investor
Certificateholder, provided that no such amendment shall be deemed effective
without (i) the Trustee's consent, if the Trustee's rights, duties and
obligations hereunder are thereby modified and (ii) the Trustee having obtained
written assurance that such amendment or modification will not, by itself, lower
the then-current ratings on the Series 1998-1 Certificates. The Transferor shall
provide the Rating Agencies with prior written notice of any such amendment or
modification.
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IN WITNESS WHEREOF, the undersigned have caused this Supplement to
be duly executed and delivered by their respective duly authorized officers on
the day and year first above written.
CC CREDIT CARD CORPORATION
Transferor,
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
TRAVELERS BANK & TRUST, fsb
Servicer,
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: SVP & CFO
THE BANK OF NEW YORK,
Trustee and Securities Intermediary
By: /s/ Wuhan ▇▇▇▇▇▇
--------------------------------
Name: Wuhan ▇▇▇▇▇▇
Title: Assistant Vice President
[Signature Page for Series 1998-1 Supplement]