FIRST BANK OF SOUTH DAKOTA,
as Transferor,
FBS CARD SERVICES, INC.,
as Servicer,
and
CITIBANK, N.A.,
as Trustee
on behalf of the Certificateholders
of the First Bank Corporate Card Master Trust
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS................................................. 1
Section 1.1 Definitions................................................. 1
Section 1.2 Other Definitional Provisions............................... 26
ARTICLE II CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES.................................... 28
Section 2.1 Conveyance of Receivables................................... 28
Section 2.2 Acceptance by Trustee....................................... 30
Section 2.3 Representations and Warranties of the
Transferor............................................... 31
Section 2.4 Representations and Warranties of the
Transferor Relating to the Agreement
and the Receivables...................................... 33
Section 2.5 Covenants of the Transferor................................. 41
Section 2.6 Addition of Accounts........................................ 44
Section 2.7 Removal of Accounts......................................... 49
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES................. 53
Section 3.1 Acceptance of Appointment and Other
Matters Relating to the Servicer......................... 53
Section 3.2 Servicing Compensation...................................... 56
Section 3.3 Representations and Warranties of the
Servicer................................................. 56
Section 3.4 Reports and Records for the Trustee......................... 58
Section 3.5 Annual Servicer's Certificate............................... 59
Section 3.6 Annual Independent Accountants'
Servicing Report......................................... 60
Section 3.7 Tax Treatment............................................... 61
Section 3.8 Notices to the Transferor................................... 62
Section 3.9 Reports to the Commission................................... 62
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ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS ............... 63
Section 4.1 Rights of Certificateholders. .............................. 63
Section 4.2 Establishment of Accounts................................... 63
Section 4.3 Collections and Allocations................................. 67
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE
SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES] .................................. 71
ARTICLE VI THE CERTIFICATES ........................................... 72
Section 6.1 The Certificates............................................ 72
Section 6.2 Authentication of Certificates.............................. 73
Section 6.3 Registration of Transfer and Exchange
of Certificates.......................................... 73
Section 6.4 Mutilated, Destroyed, Lost or Stolen
Certificates............................................. 77
Section 6.5 Persons Deemed Owners....................................... 78
Section 6.6 Appointment of Paying Agent................................. 79
Section 6.7 Access to List of Certificateholders'
Names and Addresses...................................... 80
Section 6.8 Authenticating Agent........................................ 81
Section 6.9 Tender of Transferor Certificate............................ 83
Section 6.10 Book-Entry Certificates..................................... 86
Section 6.11 Notices to Clearing Agency.................................. 87
Section 6.12 Definitive Certificates..................................... 87
Section 6.13 Global Certificate; Euro-Certificate
Exchange Date............................................ 88
Section 6.14 Meetings of Certificateholders.............................. 89
ARTICLE VII OTHER MATTERS RELATING
TO THE TRANSFEROR ....................................... 90
Section 7.1 Liability of the Transferor................................. 90
Section 7.2 Merger or Consolidation of, or
Assumption of the Obligations of,
the Transferor........................................... 90
Section 7.3 Limitation on Liability..................................... 91
Section 7.4 Liabilities................................................. 92
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ARTICLE VIII OTHER MATTERS RELATING TO THE
SERVICER ........................................... 94
Section 8.1 Liability of the Servicer.............................. 94
Section 8.2 Merger or Consolidation of, or
Assumption of the Obligations of,
the Servicer........................................ 94
Section 8.3 Limitation on Liability of the
Servicer and Others................................. 95
Section 8.4 Servicer Indemnification of the Trust
and the Trustee..................................... 96
Section 8.5 The Servicer Not to Resign............................. 96
Section 8.6 Access to Certain Documentation and
Information Regarding the Receivables............... 97
Section 8.7 Delegation of Duties................................... 97
Section 8.8 Examination of Records................................. 98
ARTICLE IX PAY OUT EVENTS ........................................ 99
Section 9.1 Pay Out Events......................................... 99
Section 9.2 Additional Rights Upon the Occurrence
of Certain Events................................... 100
ARTICLE X SERVICER DEFAULTS...................................... 102
Section 10.1 Servicer Defaults...................................... 102
Section 10.2 Trustee to Act; Appointment of
Successor........................................... 105
Section 10.3 Notification to Certificateholders. ................... 107
Section 10.4 Waiver of Past Defaults................................ 108
ARTICLE XI THE TRUSTEE ........................................... 109
Section 11.1 Duties of Trustee...................................... 109
Section 11.2 Certain Matters Affecting the
Trustee............................................. 111
Section 11.3 Trustee Not Liable for Recitals in
Certificates........................................ 113
Section 11.4 Trustee May Own Certificates. ......................... 113
Section 11.5 The Servicer to Pay Trustee's Fees
and Expenses........................................ 113
Section 11.6 Eligibility Requirements for
Trustee............................................. 114
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Section 11.7 Resignation or Removal of
Trustee............................................. 115
Section 11.8 Successor Trustee...................................... 115
Section 11.9 Merger or Consolidation of
Trustee. ........................................... 116
Section 11.10 Appointment of Co-Trustee or Separate
Trustee............................................. 116
Section 11.11 Tax Returns............................................ 118
Section 11.12 Trustee May Enforce Claims without
Possession of Certificates.......................... 119
Section 11.13 Suits for Enforcement.................................. 119
Section 11.14 Rights of Certificateholders to
Direct Trustee...................................... 119
Section 11.15 Representations and Warranties of
Trustee............................................. 120
Section 11.16 Maintenance of Office or Agency. ...................... 120
ARTICLE XII TERMINATION............................................ 121
Section 12.1 Termination of Trust................................... 121
Section 12.2 Optional Purchase...................................... 122
Section 12.3 Final Payment with Respect to any
Series.............................................. 123
Section 12.4 Termination Rights of Holder of
Transferor Certificate.............................. 125
Section 12.5 Defeasance............................................. 126
ARTICLE XIII MISCELLANEOUS PROVISIONS ........................... 128
Section 13.1 Amendment.............................................. 128
Section 13.2 Protection of Right, Title and
Interest to Trust................................... 129
Section 13.3 Limitation on Rights of Certificateholders............. 131
Section 13.4 Governing Law.......................................... 132
Section 13.5 Notices................................................ 132
Section 13.6 Severability of Provisions............................. 133
Section 13.7 Assignment............................................. 133
Section 13.8 Certificates Non-Assessable and
Fully Paid.......................................... 133
Section 13.9 Further Assurances..................................... 134
Section 13.10 No Waiver; Cumulative Remedies. ....................... 134
Section 13.11 Counterparts........................................... 134
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Section 13.12 Third-Party Beneficiaries.............................. 134
Section 13.13 Actions by Certificateholders.......................... 134
Section 13.14 Rule 144A Information.................................. 135
Section 13.15 Merger and Integration................................. 135
Section 13.16 Headings............................................... 135
v
POOLING AND SERVICING AGREEMENT, dated as of January 1, 1997 by and
between FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION), a national banking
association, as Transferor, FBS CARD SERVICES, INC., a Minnesota corporation, as
Servicer, and CITIBANK, N.A., a national banking association, as Trustee.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties and the
Certificateholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Account" shall mean each VISA(R)* charge card account established
pursuant to a Corporate Card Agreement or Purchasing Card Agreement between the
Transferor and any Person identified by its customer account number and by the
Receivable balance as of the Cut Off Date and as of each Addition Date in each
computer file or microfiche list delivered to the Trustee by the Transferor
pursuant to Section 2.1 or 2.6. The definition of Account shall include each
Transferred Account. The term "Account" shall be deemed to refer to an
Additional Account only from and after the Addition Date with respect thereto
and shall be deemed to refer to any Removed Account only prior to the Removal
Date with respect thereto.
"Account Information" shall have the meaning specified in subsection
2.2(b).
"Accumulation Period" shall mean, with respect to any Series, or any
Class within a Series, a period following the Revolving Period, which shall be
the accumulation or other period in which Principal Collections are accumulated
in an account for the benefit of the Investor Certificateholders of such Series,
or a class
--------
* VISA(R) is a registered trademark of
VISA U.S.A., Inc.
within such Series, in each case as defined with respect to such Series in the
related Supplement.
"Addition Date" shall mean each date as of which Additional Accounts
will be included as Accounts pursuant to Section 2.6.
"Additional Accounts" shall have the meaning specified in subsection
2.6(a).
"Adjustment" shall have the meaning specified in subsection 4.3(c).
"Affiliate" of any Person shall mean any other Person controlling,
controlled by or under common control with such Person.
"Aggregate Invested Amount" shall mean, as of any date of
determination, the sum of the Invested Amounts (or adjusted Invested Amounts, as
specified in any Supplement) of all Series of Investor Certificates issued and
outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to Principal
Collections, Yield Collections and Defaulted Receivables, as the case may be,
shall mean, as of any date of determination, the sum of such Investor
Percentages of all Series of Certificates issued and outstanding on such date of
determination; provided, however, that the Aggregate Investor Percentage shall
not exceed 100%.
"Agreement" shall mean this Pooling and Servicing Agreement and all
amendments hereof and supplements hereto, including any Supplement.
"Amortization Period" shall mean, with respect to any Series, or any
Class within a Series, a period following the Revolving Period during which
principal is distributed to Investor Certificateholders, which shall be the
controlled amortization period, the principal amortization period, the early
amortization period or other amortization period, in each case as defined with
respect to such Series in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.7.
2
"Appointment Day" shall have the meaning specified in subsection
9.2(a).
"Assignment" shall have the meaning specified in subsection 2.6
(c)(ii).
"Authorized Newspaper" shall mean the Wall Street Journal or a
newspaper (or newspapers) of general circulation in the Borough of Manhattan,
The City of New York and the City of Sioux Falls, South Dakota printed in the
English language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Bank Portfolio" shall mean the VISA accounts established pursuant
to a Corporate Card Agreement or Purchasing Card Agreement and owned by the
Transferor.
"Bearer Certificates" shall have the meaning specified in Section
6.1.
"Bearer Rules" shall mean the provisions of the Internal Revenue
Code, in effect from time to time, governing the treatment of bearer
obligations, including sections 163(f), 871, 881, 1441, 1442 and 4701, and any
regulations thereunder including, to the extent applicable to any Series,
Proposed or Temporary Regulations.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.10; provided, however, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer authorized and
Definitive Certificates are to be issued to the Certificate Owners, such
certificates shall no longer be "Book-Entry Certificates."
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in New York, New York, Sioux Falls, South
Dakota or Minneapolis, Minnesota (or, with respect to any Series, any additional
city specified in the related Supplement)
3
are authorized or obligated by law or executive order to be closed.
"Cash Advance Fees" shall have the meaning specified in the
Corporate Card Agreement or Purchasing Card Agreement applicable to each Account
for cash advance fees or similar terms.
"CEDEL" shall mean Cedel Bank, societe anonyme.
"Certificate" shall mean any one of the Investor Certificates of
any Series or the Transferor Certificate.
"Certificateholder" or "Holder" shall mean the Person in whose name
a Certificate is registered in the Certificate Register and, if applicable, the
holder of any Bearer Certificate or Coupon, as the case may be or such other
Person deemed to be a "Certificateholder" or "Holder" in any related Supplement.
"Certificate Interest" shall mean interest payable in respect of the
Investor Certificates of any Series pursuant to Article IV of the Supplement for
such Series.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as may be reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly or
as an indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Principal" shall mean principal payable in respect of
the Investor Certificates of any Series pursuant to Article IV of this
Agreement.
"Certificate Rate" shall mean, with respect to any Series of
Certificates (or, for any Series with more than one Class, for each Class of
such Series), the rate (or formula on the basis of which such rate shall be
determined) stated in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant
to Section 6.3, providing for the
4
registration of the Certificates and transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the
classes of Certificates of that Series as specified in the related Supplement.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency or Foreign Clearing Agency effects book-entry transfers and
pledges of securities deposited with the Clearing Agency or Foreign Clearing
Agency.
"Closing Date" shall mean, with respect to any Series, the date of
issuance of such Series of Certificates, as specified in the related Supplement.
"Collateral Invested Amount" shall have the meaning, with respect to
any Series, specified in the related Supplement.
"Collateral Investor Interest" shall have the meaning, with respect
to any Series, specified in the related Supplement.
"Collection Account" shall have the meaning specified in subsection
4.2(a).
"Collection Period" shall mean, unless otherwise defined in any
Supplement, the period from and including the first day of a calendar month to
and including the last day of a calendar month.
"Collections" shall mean all payments (including recoveries on
charged-off Receivables, amounts, if any, paid by corporate clients as
co-obligors under Corporate Card Agreements and Insurance Proceeds) received by
the Servicer in respect of the Receivables, in the form of cash, checks, wire
transfers, ATM transfers or other form of payment in accordance with the
Corporate Card Agreement or Purchasing Card Agreement in effect from time to
time on any Receivables. A Collection
5
processed on an Account in excess of the aggregate amount of Receivables in such
Account as of the Date of Processing of such Collection shall be deemed to be a
Principal Collection to the extent of such excess. Collections with respect to
any Collection Period shall include the amount of Net Interchange (if any)
allocable to any Series of Certificates pursuant to any Supplement with respect
to such Collection Period (to the extent received by the Trust and deposited
into the Collection Account or any Series Account, as the case may be, on the
Transfer Date following such Collection Period) to be applied as if such amount
were Yield Collections for all purposes.
"Corporate Card" shall mean a VISA Corporate Card issued pursuant to
a Corporate Card Agreement.
"Corporate Card Agreement" shall mean the First Bank VISA Corporate
Card Program Agreement and, if applicable, Federal Truth in Lending Statement
for VISA Corporate Card accounts between any Obligor and First Bank of South
Dakota (National Association), as such agreements may be amended, modified or
otherwise changed from time to time.
"Corporate/Purchasing Card Guidelines" shall mean the Transferor's
policies and procedures relating to the operation of its Corporate Card or
Purchasing Card businesses, including, without limitation, the policies and
procedures for determining the creditworthiness of Corporate Card or Purchasing
Card customers, the extension of credit to Corporate Card or Purchasing Card
customers, and relating to the maintenance of Corporate Card or Purchasing Card
accounts and collection of Corporate Card or Purchasing Card receivables, as
such policies and procedures may be amended from time to time.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at ____________________________________________.
"Coupon" shall have the meaning specified in Section 6.1.
"Cut Off Date" shall mean November 30, 1996.
6
"Date of Processing" shall mean, with respect to any transaction,
the date on which such transaction is first recorded on the Servicer's computer
master file of VISA Corporate Card or Purchasing Card accounts (without regard
to the effective date of such recordation).
"Default Amount" shall mean, for any Collection Period and with
respect to any Defaulted Account, the amount of Receivables (other than
Ineligible Receivables) in such Defaulted Account on the day such Account became
a Defaulted Account during such Collection Period minus Recoveries, if any,
received in such Collection Period.
"Defaulted Account" shall mean each Account with respect to which,
in accordance with the Corporate/Purchasing Card Guidelines or the Servicer's
customary and usual servicing procedures for servicing charge card receivables
comparable to the Receivables, the Servicer has charged-off the Receivables in
such Account as uncollectible; an Account shall become a Defaulted Account on
the day on which such Receivables are recorded as charged off as uncollectible
on the Servicer's computer master file of VISA Corporate Card or Purchasing Card
accounts. Notwithstanding any other provision hereof, any Receivables in a
Defaulted Account that are Ineligible Receivables shall be treated as Ineligible
Receivables rather than Receivables in Defaulted Accounts.
"Defaulted Receivables" shall mean, as of any date of determination,
the Receivables in Defaulted Accounts as of such date.
"Definitive Certificate" shall have the meaning specified in Section
6.10.
"Depository" shall have the meaning specified in Section 6.10.
"Depository Agreement" shall mean, with respect to a Series having
Book-Entry Certificates, the agreement among the Transferor, the Trustee and the
Clearing Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean, unless otherwise specified in the
related Series Supplement, the fourth Business Day prior to each Transfer Date.
7
"Distribution Date" shall mean, with respect to each Series, the
dates specified in the related Supplement.
"Dollars," "$" or "U.S. $" shall mean United States dollars.
"Early Amortization Commencement Date" shall mean, (a) with respect
to each Series, the date on which a Trust Early Amortization Event is deemed to
occur pursuant to Section 9.1 or (b) with respect to any Series, the date on
which a Series Early Amortization Event is deemed to occur pursuant to the
Supplement for such Series.
"Early Amortization Event" shall mean, with respect to each Series,
a Trust Pay Out Event or a Series Pay Out Event.
"Eligible Account" shall mean, as of the Cut Off Date (or, with
respect to Additional Accounts, as of the relevant Addition Date) (i) is an
Account and was in existence and owned by the Transferor at the close of
business on the Cut Off Date or Addition Date, as applicable, (ii) is payable in
United States dollars, (iii) the charge card or cards related to which have not
been reported lost or stolen or designated fraudulent, (iv) has not been
identified by the Transferor in its computer files as having been cancelled due
to the Obligor's bankruptcy or insolvency, (v) the receivables in which have not
been written off as uncollectible prior to the Cut Off Date or Addition Date, as
applicable, in accordance with the Account Guidelines, (vi) the receivables in
which have not been assigned, pledged or sold (other than pursuant to this
Agreement), (vii) the obligor of which has provided, as its most recent billing
address, an address in the United States or its territories or possessions and
(viii) is not an account with respect to which the Transferor or any Affiliate
of the Transferor is the Obligor.
"Eligible Institution" shall mean a depository institution, which
may include the Trustee, organized under the laws of the United States or any
one of the States thereof including the District of Columbia, the deposits in
which are insured by the FDIC and which at all times has a short-term unsecured
debt rating of at
8
least A-1+ or P-1 by each Rating Agency; provided, however, that an institution
which shall have corporate trust powers and which maintains the Collection
Account, any principal funding account, any interest funding account or any
other account maintained for the benefit of Certificateholders as a fully
segregated trust account with the trust department of such institution shall not
be required to meet the foregoing rating requirements, and need only at all
times have a long-term unsecured debt rating of at least Baa3 by Moody's so long
as Xxxxx'x is a Rating Agency.
"Eligible Investments" shall mean, unless otherwise provided in the
Supplement with respect to any Series, (a) book-entry securities or negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence (i) obligations of or fully guaranteed by the United States
of America; (ii) time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United States of
America or any state thereof (or domestic branches of foreign depository
institutions or trust companies) and subject to supervision and examination by
federal or state banking or depository institution authorities; provided,
however, that at the time of the Trust's investment or contractual commitment to
invest therein, the certificates of deposit or short-term deposits of such
depository institution or trust company shall have a credit rating from Moody's
and Standard & Poor's of P-1 and A-l+, respectively; (iii) commercial paper
having, at the time of the Trust's investment or contractual commitment to
invest therein, a rating from Moody's and Standard & Poor's of P-1 and A-1+,
respectively; (iv) bankers' acceptances issued by any depository institution or
trust company described in clause (a)(ii) above; and (v) repurchase agreements
transacted with either (A) an entity subject to the United States Bankruptcy
Code or (B) a financial institution insured by the FDIC or a broker-dealer with
retail customers that is under the jurisdiction of the Securities Investors
Protection Corp., in each case having a short-term unsecured rating of A-1+ by
Standard & Poor's and P-1 by Moody's; (b) demand deposits in the name of the
Trust or the Trustee in any depository institution or trust company referred to
in clause (a)(ii) above; (c) any other investment if each Rating Agency confirms
in writing that such investment will not adversely affect its then cur-
9
rent rating of the Investor Certificates, provided that such investment will not
cause the Trust to be treated as an "investment company" within the meaning of
the Investment Company Act.
"Eligible Receivable" shall mean each Receivable:
(i) which has arisen under an Eligible Account;
(ii) which was created in compliance with all applicable
requirements of law and pursuant to an agreement which complies with all
applicable requirements of law in either case the failure to comply with
which would have a material adverse effect upon Certificateholders;
(iii) with respect to which all material consents,
licenses, approvals or authorizations of, or registrations with, any
governmental authority required to be obtained or given by the Transferor
in connection with the creation of such Receivable or the execution,
delivery and performance by the Transferor of the related agreement have
been duly obtained or given and are in full force and effect as of such
date of creation;
(iv) as to which at the time of the transfer of such
Receivable to the Trust, the Trust will have good and marketable title,
free and clear of all liens, encumbrances, charges and security interests
(except those permitted by subsection 2.5(b));
(v) which has been the subject of either a valid
transfer and assignment from the Transferor to the Trust of all of the
Transferor's right, title and interest therein or the grant of a first
priority perfected security interest therein (and in the proceeds thereof
to the extent set forth in Section 9-306 of the UCC as in effect in the
Relevant UCC State), effective until the termination of the Trust;
10
(vi) which will at all times be the legal, valid and
binding payment obligation of the Obligor thereof enforceable against such
Obligor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(vii) which constitutes either an "account" or a
"general intangible" under and as defined in Article 9 of the UCC as then
in effect in the Relevant UCC State;
(viii) which, at the time of its transfer to the Trust,
has not been waived or modified except as permitted hereunder;
(ix) which is not subject to any setoff, right of
rescission, counterclaim or other defense (including the defense of
usury), other than defenses arising out of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general;
(x) as to which the Transferor has satisfied all
obligations to be fulfilled at the time it is transferred to the Trust;
and
(xi) as to which the Transferor has done nothing, at the
time of its transfer to the Trust, to impair the rights of the Trust or
Certificateholders therein.
"Eligible Servicer" shall mean the initial Servicer hereunder, the
Trustee, or Affiliate of the Transferor or the Trustee, or an entity which, at
the time of its appointment as Servicer, (a) is servicing a portfolio of
revolving credit card accounts or other charge accounts, (b) is legally
qualified and has the capacity to service the Accounts, (c) is qualified (or
11
licensed) to use the software that the Servicer is then currently using to
service the Accounts or obtains the right to use, or has its own, software which
is adequate to perform its duties under this Agreement, (d) has, in the
reasonable judgment of the Trustee, demonstrated the ability to professionally
and competently service a portfolio of similar accounts in accordance with
customary standards of skill and care and (e) has a net worth of at least
$50,000,000 as of the end of its most recent fiscal quarter.
"Enhancement" shall mean, with respect to any Series, the
subordination, the cash collateral guaranty or account, collateral investor
interest, letter of credit, surety bond, insurance policy, spread account,
reserve account, cross-support feature or any other contract, agreement or
arrangement for the benefit of the Certificateholders of such Series (or
Certificateholders of a Class within such Series) as designated in the
applicable Supplement.
"Enhancement Invested Amount" shall have the meaning, with respect
to any Series, specified in the related Supplement.
"Enhancement Provider" shall mean, with respect to any Series, the
Person, if any, designated as such in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Euroclear Operator" shall mean Xxxxxx Guaranty Trust Company of New
York, Brussels, Belgium office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in
subsection 4.2(b).
"Excess Funding Amount" shall mean, as of any date of determination,
the principal amount on deposit in the Excess Funding Account.
"Exchange" shall mean either of the procedures described under
Section 6.9.
12
"Exchangeable Transferor Certificate" shall mean the certificate
executed by the Transferor and authenticated by the Trustee, substantially in
the form of Exhibit A and exchangeable as provided in Section 6.9; provided,
however, that at any time there shall be only one Exchangeable Transferor
Certificate.
"Exchange Date" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in Section 6.9.
"Exchange Notice" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in Section 6.9.
"Extended Trust Termination Date" shall have the meaning specified
in subsection 12.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Fitch" shall mean Fitch Investors Service, L.P.
"Floating Allocation Percentage" shall have the meaning specified in
the related Supplement.
"Foreign Clearing Agency" shall mean CEDEL and the Euroclear
Operator.
"Global Certificate" shall have the meaning specified in Section
6.13.
"Governmental Authority" shall mean the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Ineligible Receivable" shall have the meaning specified in
subsection 2.4(d)(iii).
"Initial Closing Date" shall mean January __, 1997.
13
"Initial Invested Amount" shall mean, with respect to any Series of
Certificates, the amount stated in the related Supplement.
"Insolvency Event" shall have the meaning specified in subsection
9.1(a).
"Insolvency Proceeding" shall have the meaning specified in
subsection 9.1(a).
"Insurance Proceeds" shall mean any amounts recovered by the
Servicer pursuant to any credit insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Invested Amount" shall mean, with respect to any Series, the
meaning specified in the applicable Supplement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended from time to time.
"Investor Account" shall mean each of the Collection Account and the
Excess Funding Account.
"Investor Certificate" shall mean any one of the certificates
(including, without limitation, the Bearer Certificates, the Registered
Certificates or the Global Certificates) issued by the Trust, executed by the
Transferor and authenticated by the Trustee substantially in the form (or forms
in the case of a Series with multiple Classes) of the investor certificate
attached to the related Supplement or such other interest in the Trust deemed to
be an "Investor Certificate" in any related Supplement.
"Investor Certificateholder" shall mean the holder of record of an
Investor Certificate.
"Investor Charge-Off" shall have, with respect to each Series, the
meaning specified in the applicable Supplement.
14
"Investor Default Amount" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"Investor Exchange" shall have the meaning specified in subsection
6.9(b).
"Investor Interest" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"Investor Percentage" shall have, with respect to Principal
Receivables, Yield Receivables and Defaulted Receivables, and any Series of
Certificates, the meaning
stated in the related Supplement.
"Investor Servicing Fee" shall have, with respect to each Series,
the meaning specified in Section 3.2.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing; provided, however, that any assignment pursuant to Section 7.2 or
transfer of an interest in the Exchangeable Transferor Certificate in accordance
with subsection 6.3(b) shall not be deemed to constitute a Lien.
"Master File" shall mean the file on the Transferor's computer
system that identifies VISA Corporate Card or Purchasing Card accounts of the
Transferor, which file is designated by the Transferor as its "Master File" or
any other file or record in replacement thereof.
"Minimum Trust Principal Component" shall mean the aggregate of the
amounts set forth in each Supplement
15
for each outstanding Series as the "Minimum Trust Principal Component" for
such Series.
"Minimum Transferor Amount" shall mean the product of (i) the
Minimum Transferor Percentage and (ii) the sum of the Trust Principal Component
for the preceding Collection Period plus the Excess Funding Amount plus the
amount on deposit on any Series Accounts or other accounts specified in a
Supplement as of the end of such Collection Period; provided, however, that the
Transferor may reduce the Minimum Transferor Amount upon (w) delivery to the
Trustee of a Tax Opinion with respect to such reduction, (x) 30 day's prior
notice to the Trustee, each Rating Agency and any Enhancement Provider entitled
to receive such notice pursuant to the relevant Supplement, (y) written
confirmation from the Rating Agency that such reduction will not result in the
reduction or withdrawal of the respective ratings of each Rating Agency for any
Series outstanding and (z) delivery to the Trustee and each such Enhancement
Provider of an Officer's Certificate stating that the Transferor reasonably
believes that such reduction will not, based on the facts known to such officer
at the time of such certification, then or thereafter cause an Early
Amortization Event to occur with respect to any Series; provided further that
the Minimum Transferor Amount shall not at any time be less than __% of the sum
of the Trust Principal Component for the preceding Collection Period plus the
Excess Funding Amount plus the amount on deposit on any Series Accounts or other
accounts specified in a Supplement as of the end of such Collection Period.
"Minimum Transferor Percentage" shall mean the highest percentage
specified as the "Minimum Transferor Percentage" in any Supplement for any
outstanding Series.
"Monthly Servicer Report" shall mean, a report substantially in the
form attached as Exhibit C to this Agreement, with such changes as the Servicer
may determine to be necessary or desirable; provided, however, that no such
change shall serve to exclude information required by the Agreement or any
Supplement.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
16
"Net Interchange" shall mean interchange fees payable to the
Transferor, in its capacity as charge card or credit card issuer, through VISA
U.S.A., Inc. reduced by VISA dues and rebates to corporate customers and travel
agencies. The aggregate amount of Net Interchange allocable to the Trust each
Collection Period shall be equal to the product of (i) the total amount of Net
Interchange paid or payable to the Transferor with respect to such Collection
Period and (ii) a fraction the numerator of which is the aggregate amount of
cardholder charges for goods and services in the Accounts with respect to such
Collection Period and the denominator of which is the aggregate amount of
cardholder charges for goods and services in the Accounts and in the accounts
owned by the Transferor and originated under the Transferor's Corporate Card or
Purchasing Card programs, each with respect to such Collection Period.
"Notice Date" shall have the meaning specified in subsection
2.6(c)(i).
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including any
guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any Vice
President or more senior officer of the Transferor or Servicer and delivered to
the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be counsel for or an employee of the Person providing the opinion, and who
shall be reasonably acceptable to the Trustee; provided, however, that any Tax
Opinion or other opinion relating to federal income tax matters shall be an
opinion of nationally recognized tax counsel.
"Participations" shall have the meaning specified in subsection
2.6(a)(ii).
"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.6 and shall initially be the Trustee.
17
"Person" shall mean any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.
"Principal Collections" shall mean the amount of Collections other
than (i) Yield Collections and (ii) Collections with respect to Defaulted
Receivables.
"Principal Shortfalls" shall mean, with respect to a Transfer Date,
the aggregate amount for all outstanding Series that the related Supplements
specify are "Series Principal Shortfalls" for such Transfer Date.
"Principal Terms" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in subsection 6.9(c).
"Purchasing Card" shall mean a VISA Corporate Card issued pursuant
to a Purchasing Card Agreement.
"Purchasing Card Agreement" shall mean the First Bank VISA
Purchasing Card Agreement and, if applicable, Federal Truth in Lending Statement
for VISA Purchasing Card accounts between any Obligor and First Bank of South
Dakota (National Association), as such agreements may be amended, modified or
otherwise changed from time to time.
"Rating Agency" shall mean, with respect to each Series, the rating
agency or agencies, if any, selected by the Transferor to rate the Certificates,
as specified in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have notified the Transferor or the Trustee in
writing that such action will not result in a withdrawal or reduction of its
rating of any outstanding Series of Certificates with respect to which it is a
Rating Agency.
"Reassignment" shall have the meaning specified in subsection
2.7(b)(ii).
"Reassignment Date" shall have the meaning specified in subsection
2.4(e).
18
"Receivable" shall mean any amount owing by the Obligors under an
Account (including Defaulted Amounts) from time to time, including, without
limitation, amounts owing for the payment of merchandise and services, cash
advances and cash advance fees, access checks, annual cardholder fees, credit
insurance premiums, late fees, overlimit fees, return check fees and all other
fees and charges. A Receivable shall be deemed to have been created at the end
of the day on the Date of Processing of such Receivable. In calculating the
aggregate amount of Receivables on any day, the amount of Receivables shall be
reduced by the aggregate amount of credit balances, and other adjustments stated
in Section 4.3 hereof, in the Accounts on such day. Any Receivables which the
Transferor is unable to transfer as provided in subsection 2.5(d) shall not be
included in calculating the aggregate amount of Receivables.
"Record Date" shall mean, with respect to any Distribution Date, the
last Business Day of the preceding Collection Period.
"Registered Certificates" shall have the meaning specified in
Section 6.1.
"Relevant UCC State" shall mean all jurisdictions where UCC filing
is required to perfect and maintain the security interest of the Trustee.
"Removal Date" shall mean the date on which Receivables in certain
designated Removed Accounts will be reassigned by the Trustee to the Transferor.
"Removal Notice Date" shall have the meaning specified in Section
2.7(a).
"Removed Accounts" shall have the meaning specified in subsection
2.7(a).
"Requirements of Law" for any Person shall mean the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether federal, state or local (including, without
19
limitation, usury laws, the federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System).
"Responsible Officer" shall mean any officer within the Corporate
Trust Office (or any successor group of the Trustee), including any Vice
President, any Assistant Secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any person who at
the time shall be an above-designated officer and also, with respect to a
particular officer to whom any corporate trust matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Revolving Period" shall have, with respect to each Series, the
meaning specified in the related Supplement.
"SAIF" shall mean the Savings Association Insurance Fund
administered by the FDIC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series" shall mean any series of Investor Certificates, which may
include within any such Series a Class or Classes of Investor Certificates
subordinate to another such Class or Classes of Investor Certificates.
"Series Account" shall mean any account or accounts established
pursuant to a Supplement for the benefit of such Series.
"Series Early Amortization Event" shall have, with respect to any
Series, the meaning specified pursuant to the Supplement for the related Series.
"Series Servicing Fee Rate" shall mean, with respect to any Series,
the amount specified in the related Supplement.
"Series Termination Date" shall mean, with respect to any Series of
Certificates, the date stated in the related Supplement.
20
"Servicer" shall mean initially FBS Card Services, Inc., a Minnesota
corporation, and its permitted successors and assigns, and thereafter any Person
appointed as successor as herein provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.1.
"Servicing Fee" shall have the meaning specified in Section 3.2.
"Servicing Officer" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee by
the Servicer, as such list may from time to time be amended.
"Shared Excess Yield Collections" shall mean, with respect to any
Transfer Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Shared Excess Yield Collections" for
such Transfer Date.
"Shared Principal Collections" shall mean, with respect to any
Transfer Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Shared Principal Collections" for such
Transfer Date.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
Division of The XxXxxx-Xxxx Companies, Inc. (by whatever variant appellation it
may be known from time to time).
"Successor Servicer" shall have the meaning specified in subsection
10.2(a).
"Supplement" or "Series Supplement" shall mean, with respect to any
Series, a supplement to this Agreement complying with the terms of Section 6.9
of this Agreement, executed in conjunction with any issuance of any Series of
Certificates (or, in the case of the issuance of Certificates on the Initial
Closing Date, the supplement executed in connection with the issuance of such
Certificates).
21
"Tax Opinion" shall mean with respect to any action, an Opinion of
Counsel to the effect that, for federal income tax purposes, (a) such action
will not adversely affect the tax characterization as debt of Investor
Certificates of any outstanding Series or Class that were characterized as debt
at the time of their issuance, (b) following such action the Trust will not be
deemed to be an association (or publicly traded partnership) taxable as a
corporation and (c) such action will not cause or constitute an event in which
gain or loss would be recognized by any Investor Certificateholder or the Trust.
"Termination Notice" shall have, with respect to any Series, the
meaning specified in subsection 10.1(d).
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.3 and shall initially be the Trustee's Corporate Trust Office.
"Transfer Date" shall mean, unless otherwise specified in the
related Supplement, with respect to any Series, the Business Day immediately
prior to each Distribution Date.
"Transferor" shall mean First Bank of South Dakota (National
Association), a national banking association, and its successors in interest and
permitted assigns.
"Transferor Amount" shall mean, on any date of determination, the
Trust Principal Component plus, the Excess Funding Amount and the principal
amount on deposit in any Principal Funding Account (as defined in any
Supplement) plus the amount on deposit in any Series Account specified in a
Supplement, at the end of the day immediately prior to such date of
determination, minus the Aggregate Invested Amount at the end of such day, minus
the aggregate Enhancement Invested Amounts not included in the Aggregate
Invested Amount, if any, for each Series outstanding at the end of such day,
minus the aggregate Collateral Invested Amounts not included in the Aggregate
Invested Amounts, if any, for each Series outstanding at the end of such day.
22
"Transferor Exchange" shall have the meaning specified in subsection
6.9(b).
"Transferor Participation" shall mean any participation interest or
other similar interest in the Exchangeable Transferor Certificate that is
granted or sold by the Transferor.
"Transferor Percentage" shall mean, on any date of determination,
when used with respect to Principal Collections, Yield Collections and Defaulted
Receivables, a percentage equal to 100% minus the Aggregate Investor Percentage
with respect to such categories of Receivables.
"Transferor Servicing Fee" shall have the meaning specified in
Section 3.2.
"Transferred Account" shall mean an Account with respect to which a
new customer account number has been issued by the Servicer or the Transferor
under circumstances resulting from a lost or stolen charge card or from the
transfer from one program to another program and not requiring standard
application and credit evaluation procedures under the Corporate/Purchasing Card
Guidelines, and which in either case can be traced or identified in the Master
File as a Transferred Account into which an Account has been transferred by
reference to or by way of the computer files or microfiche lists delivered to
the Trustee pursuant to Section 2.1 or 2.6.
"Trust" shall mean the trust created by this Agreement, the corpus
of which shall consist of the Receivables now existing or hereafter created and
arising in connection with the Accounts, all monies due or to become due with
respect to the Receivables, all proceeds (as defined in Section 9-306 of the UCC
as in effect in the Relevant UCC State) of the Receivables and Insurance
Proceeds relating to the Receivables, the right to receive certain amounts paid
or payable as Net Interchange (if provided for in any Supplement), such funds as
from time to time are deposited in the Collection Account, the Excess Funding
Account and any Series Account and the rights to any Enhancement with respect to
any Series.
23
"Trust Early Amortization Event" shall have, with respect to each
Series, the meaning specified in Section 9.1.
"Trustee" shall mean Citibank, N.A., a national banking association,
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee appointed as herein provided.
"Trust Extension" shall have the meaning specified in subsection
12.1(a).
"Trust Principal Component" shall mean, for any Collection Period,
the product of the aggregate amount of Receivables at the end of the prior
Collection Period and one minus the Yield Factor or, for any other date of
determination, the product of the aggregate amount of Receivables as of the date
so specified in this Agreement and one minus the Yield Factor.
"Trust Termination Date" shall mean the earliest to occur of (i)
unless a Trust Extension shall have occurred, the first Business Day after the
Distribution Date on which the Investor Interest, the Collateral Investor
Interest, and any other interest issued by the Trust, as applicable, for each
Series is zero, (ii) if a Trust Extension shall have occurred, the Extended
Trust Termination Date, (iii) _________ __, 20__ and (iv) the date of any
termination pursuant to Section 9.2(b).
"UCC" shall mean the Uniform Commercial Code, as amended from time
to time, as in effect in any specified jurisdiction.
"Undivided Interest" shall mean the undivided interest in the Trust
evidenced by an Investor Certificate.
"Yield Collections" shall mean with respect to any Collection
Period, the sum of (i) the amount of Collections (other than Net Interchange)
for such Collection Period multiplied by the Yield Factor and (ii) the amount of
Net Interchange (if any) allocable to any Series of Certificates pursuant to any
Supplement with respect to such Collection Period (to the extent received by the
Trust and deposited into the Collection Account or any
24
Series Account, as the case may be, on the Transfer Date following such
Collection Period).
"Yield Factor" shall mean ______%.
Section 1.2 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partially defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under generally accepted accounting
principles or regulatory accounting principles, the definitions contained herein
shall control.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or this
Agreement as a whole and not to any particular provision of this Agreement or
any Supplement; and Section, subsection, Schedule and Exhibit references
contained in this Agreement or any Supplement are references to Sections,
subsections, Schedules and Exhibits in or to this Agreement or any Supplement
unless otherwise specified.
[End of Article I]
25
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables. The Transferor does hereby
transfer, assign, set-over, and otherwise convey to the Trust for the benefit of
the Certificateholders, without recourse, all of its right, title and interest
in and to the Receivables now existing and hereafter created and arising in
connection with the Accounts, all monies due or to become due with respect to
such Receivables (including recoveries on any charged-off Receivables and
amounts, if any, paid by corporate clients as co-obligors under Corporate Card
Agreements), all proceeds of such Receivables, Insurance Proceeds relating to
such Receivables and the proceeds thereof.
In connection with such transfer, assignment, set-over and
conveyance, the Transferor agrees to record and file, at its own expense, a
financing statement (including any continuation statements with respect to such
financing statement when applicable) with respect to the Receivables now
existing and hereafter created meeting the requirements of applicable state law
in such manner and in such jurisdictions as are necessary to perfect the
assignment of the Receivables to the Trust, and to deliver a file-stamped copy
of such financing statement or continuation statement or other evidence of such
filing (which may, for purposes of this Section 2.1, consist of telephone
confirmation of such filing) to the Trustee on or prior to the date of issuance
of the Certificates, and in the case of any continuation statements filed
pursuant to this Section 2.1, as soon as practicable after receipt thereof by
the Transferor. The foregoing transfer, assignment, set-over and conveyance to
the Trust shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.
In connection with such transfer, the Transferor agrees, at its own
expense, on or prior to the Initial Closing Date (i) to indicate in the Master
File maintained in its computer files that Receivables created in connection
with the Accounts (other than any Additional Accounts) have been transferred to
the Trust pursuant to
26
this Agreement for the benefit of the Certificateholders by identifying such
Accounts in the Master File with the designation "____" and (ii) to deliver to
the Trustee a computer file or microfiche list containing a true and complete
list of all such Accounts, identified by account number and setting forth the
Receivable balance as of the Cut Off Date. Such file or list shall be marked as
Schedule 1 to this Agreement, delivered to the Trustee as confidential and
proprietary, and is hereby incorporated into and made a part of this Agreement.
The Transferor further agrees not to alter the file designation referenced in
clause (i) of this paragraph with respect to any Account during the term of this
Agreement unless and until such Account becomes a Removed Account. The
Transferor further agrees to deliver to the Trustee as promptly as possible
after the Trustee may at any time request, a computer file or microfiche list
containing a true and complete list of all Accounts (including any Additional
Accounts), each identified by account number, and to deliver to the Trustee as
promptly as possible after the Trustee may at any time request tracing
information with respect to Transferred Accounts. The Transferor shall hold such
information with respect to the Accounts and Transferred Accounts, prior to
delivery thereof to the Trustee, in trust for the benefit of the Trustee, on
behalf of the Trust.
The parties intend that if, and to the extent that, the transfer set
forth above is not deemed to be a sale, the Transferor shall be deemed hereunder
to have granted, and the Transferor does hereby grant, to the Trustee a first
priority perfected security interest in all of the Transferor's right, title and
interest in, to and under the Receivables now existing and hereafter created and
arising in connection with the Accounts, all moneys due or to become due with
respect to such Receivables (including recoveries on any charged-off Receivables
and amounts, if any, paid by corporate clients as co-obligors under Corporate
Card Agreements), all proceeds of such Receivables and all Insurance Proceeds
relating to such Receivables and all proceeds thereof to secure the payment of
the Investor Certificates of each Series, and that this Agreement shall
constitute a security agreement under applicable law.
Pursuant to the request of the Transferor, the Trustee shall cause
Certificates in authorized denomina-
27
tions evidencing the entire interest in the Trust to be duly authenticated and
delivered to or upon the order of the Transferor pursuant to Section 6.2.
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf of the
Trust, of all right, title and interest to the property now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.1, and declares
that it shall maintain such right, title and interest, upon the Trust herein set
forth, for the benefit of all Certificateholders. The Trustee further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Agreement, the Transferor delivered to the Trustee the computer file or
microfiche list described in the third paragraph of Section 2.1.
(b) The Trustee hereby agrees not to disclose to any Person any of
the account numbers or other information contained in the computer files or
microfiche lists delivered to the Trustee by the Transferor pursuant to Sections
2.1, 2.6 and 2.7 ("Account Information") except as is required in connection
with the performance of its duties hereunder or in enforcing the rights of the
Certificateholders or to a Successor Servicer appointed pursuant to Section
10.2, as mandated pursuant to any Requirement of Law applicable to the Trustee
or as requested by any Person in connection with financing statements filed with
the Trust. The Trustee agrees to take such measures as shall be reasonably
requested by the Transferor to protect and maintain the security and
confidentiality of such information, and, in connection therewith, shall allow
the Transferor to inspect the Trustee's security and confidentiality
arrangements from time to time during normal business hours. In the event that
the Trustee is required by law to disclose any Account Information, the Trustee
shall provide the Transferor with prompt written notice, unless such notice is
prohibited by law, of any such request or requirement so that the Transferor may
request a protective order or other appropriate remedy. The Trustee shall make
best efforts to provide the Transferor with written notice no later than five
days prior to any disclosure pursuant to this subsection 2.2(b).
28
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trust as of the Initial Closing
Date:
(a) Organization and Good Standing. The Transferor is a national
banking association duly organized and validly existing in good standing under
the laws of the United States and has full corporate power, authority and legal
right to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and to execute and
deliver to the Trustee the Certificates pursuant hereto.
(b) Due Qualification. The Transferor is duly qualified to do
business and is in good standing (or is exempt from such requirement) in any
state required in order to conduct its business, and has obtained all necessary
licenses and approvals with respect to the Transferor required under federal and
South Dakota law, in each case to the extent required of a national banking
association; provided, however, that no representation or warranty is made with
respect to any qualifications, licenses or approvals which the Trustee would
have to obtain to do business in any state in which the Trustee seeks to enforce
any Receivable.
(c) Due Authorization. The execution and delivery of this Agreement
and the execution and delivery to the Trustee of the Certificates by the
Transferor and the consummation of the transactions provided for in this
Agreement have been duly authorized by the Transferor by all necessary corporate
action on its part and this Agreement is, at the time of its execution, an
official record of the Transferor.
(d) No Conflict. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict with, result
in any breach of any of the material terms
29
and provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which the Transferor is a party or by
which it or any of its properties are bound.
(e) No Violation. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict with or
violate any Requirements of Law applicable to the Transferor.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Transferor, threatened against the
Transferor before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Agreement or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or the Certificates, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Transferor, would materially and adversely
affect the performance by the Transferor of its obligations under this
Agreement, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or the
Certificates or (v) seeking to affect adversely the income tax attributes of the
Trust.
(g) Eligibility of Accounts. As of the Cut Off Date, each Account
was an Eligible Account and no selection procedures adverse to the Investor
Certificateholders have been employed by the Transferor in selecting the
Accounts from among the Eligible Accounts in the Bank Portfolio.
(h) All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery of this Agreement and the
Certificates, the performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof have been obtained.
30
For the purposes of the representations and warranties contained in
this Section 2.3 and made by the Transferor on the Initial Closing Date,
"Certificates" shall mean the Certificates issued on the Initial Closing Date.
The representations and warranties set forth in this Section 2.3 shall survive
the transfer and assignment of the respective Receivables to the Trust, and
termination of the rights and obligations of the Servicer pursuant to Section
10.1. The Transferor hereby represents and warrants to the Trust, with respect
to any Series of Certificates, as of its Closing Date, unless otherwise stated
in such Supplement, that the representations and warranties of the Transferor
set forth in Section 2.3 are true and correct as of such date (for the purposes
of such representations and warranties, "Certificates" shall mean the
Certificates issued on the related Closing Date). Upon discovery by the
Transferor, the Servicer or the Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the others.
Section 2.4 Representations and Warranties of the Transferor
Relating to the Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and Assignment. The
Transferor hereby represents and warrants to the Trust that, as of the Initial
Closing Date:
(i) This Agreement constitutes a legal, valid and binding obligation
of the Transferor, enforceable against the Transferor in accordance with
its terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general and the rights of creditors of national banking associations,
and (B) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(ii) This Agreement constitutes either (A) a valid transfer,
assignment, set-over and conveyance to the Trust of all right, title and
interest of the Transferor in and to the Receivables now existing
31
and hereafter created and arising in connection with the Accounts (other
than Receivables in Additional Accounts), all proceeds of such Receivables
and Insurance Proceeds relating thereto, and such Receivables and all
proceeds thereof and Insurance Proceeds relating thereto will be held by
the Trust free and clear of any Lien of any Person claiming through or
under the Transferor or any of its Affiliates except for (x) Liens
permitted under subsection 2.5(b), (y) the interest of the Transferor as
Holder of the Exchangeable Transferor Certificate (z) the Transferor's
right, if any, to interest accruing on, and investment earnings, if any,
in respect of any Series Account, as provided in this Agreement or any
related Supplement or (B) a grant of a security interest (as defined in
the UCC as in effect in the State of South Dakota) in such property to the
Trust, which is enforceable with respect to the existing Receivables
(other than Receivables in Additional Accounts), the proceeds thereof and
Insurance Proceeds relating thereto upon execution and delivery of this
Agreement, and which will be enforceable with respect to such Receivables
hereafter created, the proceeds thereof and Insurance Proceeds relating
thereto, upon such creation. If this Agreement constitutes the grant of a
security interest to the Trust in such property, upon the filing of the
financing statement described in Section 2.1 and in the case of the
Receivables hereafter created and proceeds thereof and Insurance Proceeds
relating thereto, upon such creation, the Trust shall have a first
priority perfected security interest in such property (subject to Section
9-306 of the UCC as in effect in the State of South Dakota), except for
Liens permitted under subsection 2.5(b). Neither the Transferor nor any
Person claiming through or under the Transferor shall have any claim to or
interest in any Series Account, except for the Transferor's rights to
receive interest accruing on, and investment earnings in respect of any
Series Account as provided in any Supplement and, if this Agreement
constitutes the grant of a security interest in such property, except for
the interest of the Transferor in such property as a debtor for purposes
of the UCC as in effect in the State of South Dakota.
32
(b) Eligibility of Receivables. The Transferor hereby represents and
warrants to the Trust as of the Initial Closing Date and as of the Addition Date
with respect to an Additional Account, as the case may be, that:
(i) Each Receivable is an Eligible Receivable as of the Cut Off Date
or the Addition Date, as applicable.
(ii) Each Receivable then existing has been conveyed to the Trust
free and clear of any Lien of any Person claiming through or under the
Transferor or any of its Affiliates (other than Liens permitted under
subsection 2.5(b)) and in compliance, in all material respects, with all
Requirements of Law applicable to the Transferor.
(iii) With respect to each Receivable then existing, all consents,
licenses, approvals or authorizations of or registrations or declarations
with any Governmental Authority required to be obtained, effected or given
by the Transferor in connection with the conveyance of such Receivable to
the Trust have been duly obtained, effected or given and are in full force
and effect.
(iv) On each day on which any new Receivable is created, the
Transferor shall be deemed to represent and warrant to the Trust that (A)
each Receivable created on such day is an Eligible Receivable, (B) each
Receivable created on such day has been conveyed to the Trust in
compliance, in all material respects, with all Requirements of Law
applicable to the Transferor, (C) with respect to each such Receivable,
all consents, licenses, approvals or authorizations of or registrations or
declarations with, any Governmental Authority required to be obtained,
effected or given by the Transferor in connection with the conveyance of
such Receivable to the Trust have been duly obtained, effected or given
and are in full force and effect and (D) the representations and
warranties set forth in subsection 2.4(a) are true and correct with
respect to each Receivable created on such day as if made on such day.
33
(v) As of the Initial Closing Date, Schedule 1 to this Agreement,
and as of the applicable Addition Date with respect to Additional
Accounts, the related computer file or microfiche list referred to in
Section 2.6, is an accurate and complete listing in all material respects
of all the Accounts as of the Cut Off Date, or with respect to Additional
Accounts, as of the applicable Addition Date, and the information
contained therein with respect to the identity of such Accounts and the
Receivables existing thereunder is true and correct in all material
respects as of the Cut Off Date or such applicable Addition Date. As of
the Cut Off Date, the aggregate amount of Receivables in all the Accounts
was $_____________, of which $_____________ constituted Trust Principal
Component.
(c) Notice of Breach. The representations and warranties set forth
in this Section 2.4 shall survive the transfer and assignment of the respective
Receivables to the Trust. Upon discovery by the Transferor, the Servicer or the
Trustee of a breach of any of the representations and warranties set forth in
this Section 2.4, the party discovering such breach shall give prompt written
notice to the other parties mentioned above. The Transferor agrees to cooperate
with the Servicer and the Trustee in attempting to cure any such breach.
(d) Reassignment of Ineligible Receivables.
(i) Automatic Reassignment. In the event of a breach with respect to
a Receivable of any representations and warranties set forth in subsection
2.4(b)(ii), or in the event that a Receivable is not an Eligible
Receivable, and any of the following three conditions is met: (A) as a
result of such breach or event such Receivable is charged off as
uncollectible or the Trust's rights in, to or under such Receivable or its
proceeds are impaired or the proceeds of such Receivable are not available
for any reason to the Trust free and clear of any Lien; (B) the Lien upon
the subject Receivable (1) arises in favor of the United States of America
or any State or any agency or instrumentality thereof and involves taxes
or liens arising under Title IV of ERISA or (2) has been consented to by
the Transferor; or (C) the unsecured short-term debt rating of
34
the Transferor is not at least P-1 by Xxxxx'x and the Lien upon the
subject Receivable ranks prior to the Lien created pursuant to this
Agreement; then, upon the earlier to occur of the discovery of such breach
or event by the Transferor or the Servicer or receipt by the Transferor of
written notice of such breach or event given by the Trustee, each such
Receivable shall be automatically reassigned from the Trust on the terms
and conditions set forth in subsection 2.4(d)(iii).
(ii) Reassignment After Cure Period. In the event of a breach of any
of the representations and warranties set forth in subsection 2.4(b) other
than a breach or event as set forth in clause (d)(i) above, and as a
result of such breach the related Account becomes a Defaulted Account or
the Trust's rights in, to or under the Receivable or its proceeds are
impaired or the proceeds of such Receivable are not available for any
reason to the Trust free and clear of any Lien, then, upon the expiration
of 60 days (or such longer period as may be agreed to by the Trustee in
its sole discretion, but in no event later than 120 days) from the earlier
to occur of the discovery of any such event by either the Transferor or
the Servicer, or receipt by the Transferor of written notice of any such
event given by the Trustee, each such Receivable shall be reassigned from
the Trust on the terms and conditions set forth in subsection 2.4(d)(iii);
provided, however, that no such reassignment shall be required to be made
if, on any day within such applicable period, such representations and
warranties with respect to such Receivable shall then be true and correct
in all material respects as if such Receivable had been created on such
day.
(iii) Procedures for Reassignment. When the provisions of subsection
2.4(d)(i) or (ii) above require reassignment of a Receivable, then such
Receivable shall be designated an "Ineligible Receivable" and shall be
assigned a balance of zero for the purpose of determining the Trust
Principal Component on any day. On and after the date of its designation
as an Ineligible Receivable, each Ineligible Receivable shall not be given
credit in determining the Trust Principal Component used to calcu-
35
late the Transferor Amount, and the Floating Allocation Percentage and the
Fixed Allocation Percentage applicable to any Series. If, following the
exclusion of such Ineligible Receivables from the calculation of the Trust
Principal Component, the Transferor Amount would be less than the Minimum
Transferor Amount, the Transferor shall make a deposit into the Excess
Funding Account in immediately available funds prior to the next
succeeding Business Day in an amount equal to the amount by which the
Transferor Amount would otherwise be less than the Minimum Transferor
Amount. The payment of such deposit amount in immediately available funds
shall otherwise be considered payment in full of all of the Ineligible
Receivables.
The obligation of the Transferor to make the deposits, if any,
required to be made to the Excess Funding Account as provided in this Section,
shall constitute the sole remedy respecting the event giving rise to such
obligation available to Certificateholders (or the Trustee on behalf of the
Certificateholders) or any Enhancement Provider.
(iv) Proceeds Held by Servicer. For the purposes of subsections
2.4(d)(i) and (ii) above, proceeds of a Receivable shall not be deemed to
be impaired hereunder solely because such proceeds are held by the
Servicer (if the Servicer is the Transferor) for more than the applicable
period under Section 9-306(3) of the UCC as in effect in the Relevant UCC
State.
(e) Reassignment of Trust Portfolio. In the event of a breach of any
of the representations and warranties set forth in subsection 2.4(a), either the
Trustee or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Invested Amount, by notice then given
in writing to the Transferor (and to the Trustee and the Servicer, if given by
the Investor Certificateholders), may direct the Transferor to accept
reassignment of the Receivables within 60 days of such notice (or within such
longer period as may be specified in such notice), and the Transferor shall be
obligated to accept reassignment of such Receivables on a Distribution Date
specified by the Transferor (such Distribution Date, the "Reassignment
36
Date") occurring within such applicable period on the terms and conditions set
forth below; provided, however, that no such reassignment shall be required to
be made if, at any time during such applicable period, the representations and
warranties contained in subsection 2.4(a) shall then be true and correct in all
material respects. The Transferor shall deposit on the Transfer Date (in New
York Clearing House, next day funds) preceding the Reassignment Date an amount
equal to the reassignment deposit amount for such Receivables in the Collection
Account or Series Account, as provided in the related Supplement, for
distribution to the Investor Certificateholders pursuant to Article XII. The
reassignment deposit amount with respect to each Series for such reassignment,
unless otherwise stated in the related Supplement, shall be equal to (i) the
Invested Amount of such Series at the end of the day on the last day of the
Collection Period preceding the Reassignment Date, less the amount, if any,
previously allocated for payment of principal to such Certificateholders on the
related Distribution Date in the Collection Period in which the Reassignment
Date occurs, plus (ii) an amount equal to all interest accrued but unpaid on the
Investor Certificates of such Series at the applicable Certificate Rate through
the Reassignment Date, less the amount, if any, previously allocated for payment
of interest to the Certificateholders of such Series on the related Distribution
Date in the Collection Period in which the Reassignment Date occurs. Payment of
the reassignment deposit amount with respect to each Series, and all other
amounts in the Collection Account or the applicable Series Account in respect of
the preceding Collection Period, shall be considered a prepayment in full of the
Receivables represented by the Investor Certificates. On the Distribution Date
following the Transfer Date on which such amount has been deposited in full into
the Collection Account or the applicable Series Account, the Receivables and all
monies due or to become due with respect to such Receivables and all proceeds of
the Receivables and Insurance Proceeds relating to such Receivables and Net
Interchange (if any) allocated to the Receivables pursuant to any Supplement
shall be released to the Transferor after payment of all amounts otherwise due
hereunder on or prior to such dates and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be prepared by and as are reasonably
requested by the Transferor to vest in the Transfer-
37
or, or its designee or assignee, all right, title and interest of the Trust in
and to the Receivables, all monies due or to become due with respect to such
Receivables and all proceeds of the Receivables and Insurance Proceeds relating
to such Receivables and Net Interchange (if any) allocated to the Receivables
pursuant to any Supplement. If the Trustee or the Investor Certificateholders
give notice directing the Transferor to accept reassignment as provided above,
the obligation of the Transferor to accept reassignment of the Receivables and
pay the reassignment deposit amount pursuant to this subsection 2.4(e) shall
constitute the sole remedy respecting a breach of the representations and
warranties contained in subsection 2.4(a) available to the Investor
Certificateholders or the Trustee on behalf of the Investor Certificateholders.
Section 2.5 Covenants of the Transferor. The Transferor hereby
covenants that:
(a) Receivables to be Accounts. The Transferor will take no action
to cause any Receivable to be evidenced by any instrument (as defined in the UCC
as in effect in the Relevant UCC State). Each Receivable shall be payable
pursuant to a contract which does not create a Lien on any goods purchased
thereunder. The Transferor will take no action to cause any Receivable to be
anything other than an "account" or a "general intangible" (as defined in the
UCC as in effect in the Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder, the
Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter created, or any interest therein; the
Transferor will immediately notify the Trustee of the existence of any Lien on
any Receivable; and the Transferor shall defend the right, title and interest of
the Trust in, to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Transferor; provided, however, that nothing in this subsection 2.5(b) shall
prevent or be deemed to prohibit the Transferor from suffering to exist upon any
of the Receivables any Liens for municipal or other local taxes if such taxes
shall not at the time be due and payable or
38
if the Transferor shall currently be contesting the validity thereof in good
faith by appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto.
(c) Corporate Card Agreements, Purchasing Card Agreements and
Corporate/Purchasing Card Guidelines. The Transferor shall comply with and
perform its obligations under the Corporate Card Agreements or Purchasing Card
Agreements, as the case may be, relating to the Accounts and the
Corporate/Purchasing Card Guidelines and all applicable rules and regulations of
VISA U.S.A., Inc., except insofar as any failure to comply or perform would not
materially and adversely affect the rights of the Trust or the
Certificateholders hereunder or under the Certificates. The Transferor may
change the terms and provisions of the Corporate Card Agreements, Purchasing
Card Agreements or Corporate/Purchasing Card Guidelines in any respect
(including, without limitation, the reduction of the required minimum monthly
payment, the calculation of the amount, or the timing, of charge offs and the
fees and charges to be assessed thereon) only if such change (i) would not, in
the reasonable belief of the Transferor, cause an Early Amortization Event to
occur and (ii) is made applicable to the comparable segment of the charge card
accounts owned and serviced by the Transferor which have characteristics the
same as, or substantially similar to, the Accounts that are the subject of such
change, except as otherwise restricted by an endorsement, sponsorship, or other
agreement between the Transferor and an unrelated third party or by the terms of
the Corporate Card Agreements or Purchasing Card Agreements.
(d) Account Allocations.
(i) In the event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of
this Agreement (including, without limitation, by reason of the
application of the provisions of Section 9.2 or an order by any federal
governmental agency having regulatory authority over the Transferor or any
court of competent jurisdiction that the Transferor not transfer any
additional Receivables to the Trust) then, in any such event, (A) the
Transferor agrees to allocate and pay to the Trust, after the
39
date of such inability, all Principal Collections, and all amounts which
would have constituted Principal Collections but for the Transferor's
inability to transfer such Receivables (up to an aggregate amount equal to
the amount of Receivables in the Trust on such date); (B) the Transferor
agrees to have such amounts applied as Collections in accordance with
Article IV; and (C) for only so long as all Collections and all amounts
which would have constituted Collections are allocated and applied in
accordance with clauses (A) and (B) above, Receivables (and all amounts
which would have constituted Receivables but for the Transferor's
inability to transfer Receivables to the Trust) that are written off as
uncollectible in accordance with this Agreement shall continue to be
allocated in accordance with Article IV, and all amounts that would have
constituted Receivables but for the Transferor's inability to transfer
Receivables to the Trust shall be deemed to be Receivables for the purpose
of calculating (i) the applicable Investor Percentage with respect to any
Series and (ii) the Aggregate Investor Percentage thereunder. If the
Transferor is unable pursuant to any Requirement of Law to allocate
Collections as described above, the Transferor agrees that it shall in any
such event allocate, after the occurrence of such event, payments on each
Account with respect to the balance of such Account first to the oldest
Receivables in such Account and to have such payments applied as
Collections in accordance with Article IV.
(ii) In the event that, pursuant to subsection 2.4(d), the
Transferor accepts reassignment of an Ineligible Receivable as a result of
a breach of the representations and warranties in subsection 2.4(b)
relating to such Receivable, then, in any such event, the Transferor
agrees to account for payments received with respect to such Ineligible
Receivable separately from its accounting for Collections on Receivables
retained by the Trust. If payments received from or on behalf of an
Obligor are not specifically applicable either to an Ineligible Receivable
of such Obligor reassigned to the Transferor or to the Receivables of such
Obligor retained in the Trust, then the Transferor agrees to allocate
payments proportionately based on the total amount
40
of Receivables of such Obligor retained in the Trust and the total amount
owing by such Obligor on any Ineligible Receivables reassigned to the
Transferor, and the portion allocable to any Receivables retained in the
Trust shall be treated as Collections and deposited in accordance with the
provisions of Article IV.
(e) Delivery of Collections. The Transferor agrees to pay to the
Servicer all payments received by the Transferor in respect of the Receivables
as soon as practicable after receipt thereof by the Transferor.
(f) Conveyance of Accounts. The Transferor covenants and agrees that
it will not convey, assign, exchange or otherwise transfer the Accounts to any
Person prior to the termination of this Agreement pursuant to Article XII;
provided, however, that the Transferor shall not be prohibited hereby from
conveying, assigning, exchanging or otherwise transferring the Accounts in
connection with a transaction complying with the provisions of Section 7.2.
Section 2.6 Addition of Accounts.
(a) If, (i) as of the end of any Collection Period, the Transferor
Amount as a percentage of the Trust Principal Component is less than the Minimum
Transferor Percentage specified in the Series Supplement for any Series, the
Transferor shall designate additional eligible VISA accounts from the Bank
Portfolio ("Additional Accounts") to be included as Accounts in a sufficient
amount such that the Transferor Amount after giving effect to such addition will
be at least equal to the Minimum Transferor Amount, or (ii) as of the end of any
Collection Period, the sum of the Trust Principal Component and the Excess
Funding Amount is less than the Minimum Trust Principal Component, the
Transferor shall designate Additional Accounts to be included as Accounts in a
sufficient amount such that the sum of the Trust Principal Component and the
Excess Funding Amount will be equal to or greater than the Minimum Trust
Principal Component. Receivables from such Additional Accounts shall be
transferred to the Trust on or before the tenth Business Day following the end
of such Collection Period.
41
(b) In addition to its obligation under subsection 2.6(a), the
Transferor may, but shall not be obligated to, designate from time to time
Additional Accounts of the Transferor to be included as Accounts to be included
as property of the Trust, as of the applicable Addition Date.
(c) The Transferor agrees that any designation pursuant to
subsection 2.6(a) or (b) shall satisfy the following conditions (to the extent
provided below):
(i) on or before the fifth Business Day prior to the Addition Date
with respect to additions pursuant to subsection 2.6(a) and on or before
the tenth Business Day prior to the Addition Date with respect to
additions pursuant to subsection 2.6(b) (the "Notice Date"), the
Transferor shall give the Trustee, each Rating Agency and the Servicer
written notice that such Additional Accounts will be included, which
notice shall specify the approximate aggregate amount of the Receivables
to be transferred;
(ii) on or before the Addition Date, the Transferor shall have
delivered to the Trustee a written assignment (including an acceptance by
the Trustee on behalf of the Trust for the benefit of the Investor
Certificateholders) in substantially the form of Exhibit B (the
"Assignment") and the Transferor shall have indicated in its computer
files that the Receivables created in connection with the Additional
Accounts have been transferred to the Trust and, within five Business Days
thereafter, or as otherwise agreed upon between the Transferor and the
Trustee, the Transferor shall have delivered to the Trustee a computer
file or microfiche list containing a true and complete list of all
Additional Accounts and identifying each Account by account number and the
aggregate amount of the Receivables in such Additional Accounts, as of the
Addition Date, which computer file or microfiche list shall be as of the
date of such Assignment incorporated into and made a part of such
Assignment and this Agreement;
(iii) the Transferor shall represent and warrant that (x) with
respect to Additional Accounts,
42
each Additional Account is, as of the Addition Date, an Eligible Account,
and each Receivable in such Additional Account is, as of the Addition
Date, an Eligible Receivable, (y) the selection of the Additional Accounts
by the Transferor has been made in a manner which it reasonably believes
will not materially adversely affect the interests of the Investor
Certificateholders, and (z) as of the Addition Date, the Transferor is not
insolvent;
(iv) the Transferor shall represent and warrant that, as of the
Addition Date, the Assignment constitutes either (x) a valid transfer,
assignment, set-over and conveyance to the Trust of all right, title and
interest of the Transferor in and to the Receivables then existing and
thereafter created in connection with the Additional Accounts, all
proceeds (as defined in the UCC as in effect in the State of South Dakota)
of such Receivables and Insurance Proceeds relating thereto, and such
Receivables and all proceeds thereof and Insurance Proceeds relating
thereto will be held by the Trust free and clear of any Lien of any Person
claiming through or under the Transferor or any of its Affiliates, except
for (i) Liens permitted under subsection 2.5(b), (ii) the interest of the
Transferor as Holder of the Exchangeable Transferor Certificate and (iii)
the Transferor's right, if any, to receive interest accruing on, and
investment earnings, if any, in respect of any Account, Series Account, as
provided in any related Supplement or (y) a grant of a security interest
(as defined in the UCC as in effect in the State of South Dakota) in such
property to the Trust, which is enforceable with respect to then existing
Receivables of the Additional Accounts, the proceeds (as defined in the
UCC as in effect in the State of South Dakota) thereof and Insurance
Proceeds relating thereto upon the conveyance of such Receivables to the
Trust, and which will be enforceable with respect to the Receivables
thereafter created in respect of Additional Accounts conveyed on such
Addition Date, the proceeds (as defined in the UCC as in effect in the
State of South Dakota) thereof and Insurance Proceeds relating thereto,
upon such creation; and (z) if the Assignment constitutes the grant of a
security interest to the Trust in such property, upon the filing of a
43
financing statement as described in Section 2.1 with respect to such
Additional Accounts and in the case of the Receivables thereafter created
in such Additional Accounts and the proceeds (as defined in the UCC as in
effect in the State of South Dakota) thereof and Insurance Proceeds
relating thereto, upon such creation, the Trust shall have a first
priority perfected security interest in such property (subject to Section
9-306 of the UCC as in effect in the State of South Dakota), except for
Liens permitted under subsection 2.5(b);
(v) the Transferor shall deliver an Officer's Certificate
substantially in the form of Schedule 2 to Exhibit B to the Trustee
confirming the items set forth in paragraphs (ii), (iii) and (iv) above
and that the Transferor has filed (or will file within the time required
by the applicable UCC) any financing statements required under the
applicable UCC with respect to the Receivables in the Additional Accounts;
and
(vi) the Transferor shall deliver an Opinion of Counsel with respect
to the Receivables in the Additional Accounts to the Trustee (with a copy
to each Rating Agency) substantially in the form of Exhibit E.
Section 2.7 Removal of Accounts.
(a) Subject to the conditions set forth below, the Transferor may,
but shall not be obligated to, designate Receivables from Accounts for deletion
and removal ("Removed Accounts") from the Trust. On or before the fifth Business
Day (the "Removal Notice Date") prior to the date on which the designated
Removed Accounts will be reassigned by the Trustee to the Transferor (the
"Removal Date"), the Transferor shall give the Trustee and the Servicer written
notice that the Receivables from such Removed Accounts are to be reassigned to
the Transferor.
(b) The Transferor shall be permitted to designate and require
reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
44
(i) the removal of any Receivables of any Removed Accounts on any
Removal Date shall not, in the reasonable belief of the Transferor, (a)
cause an Early Amortization Event to occur, (b) cause the Transferor
Amount to be less than the Minimum Transferor Amount on such Removal Date,
(c) cause the sum of the Trust Principal Component and the Excess Funding
Amount to be less than the Minimum Trust Principal Component, or (d)
result in the failure to make any payment specified in the related
Supplement with respect to any Series;
(ii) on or prior to the Removal Date, the Transferor shall have
delivered to the Trustee for execution a written assignment in
substantially the form of Exhibit G (the "Reassignment") and, within five
Business Days (or as otherwise agreed upon between the Transferor and the
Trustee) thereafter, the Transferor shall have delivered to the Trustee a
computer file or microfiche list containing a true and complete list of
all Removed Accounts identified by account number and the aggregate amount
of the Receivables in such Removed Accounts as of the Removal Date, which
computer file or microfiche list shall as of the Removal Date modify and
amend and be made a part of this Agreement;
(iii) the Transferor shall represent and warrant that no selection
procedures reasonably believed by the Transferor to be materially adverse
to the interests of the Certificateholders or any Enhancement Provider
were utilized in selecting the Removed Accounts to be removed from the
Trust;
(iv) on or before the tenth Business Day prior to the Removal Date,
each Rating Agency shall have received notice of such proposed removal of
the Receivables of such Accounts and the Transferor shall have received
written notice prior to the Removal Date from such Rating Agency that such
proposed removal will not result in a downgrade or withdrawal of its then
current rating of any outstanding Class or Series of the Investor
Certificates; and
(v) the Transferor shall have delivered to the Trustee an Officer's
Certificate confirming the
45
items set forth in clauses (i) through (iv) above. The Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver the Reassignment to the Transferor, and the Receivables from the
Removed Accounts shall no longer constitute a part of the Trust.
[End of Article II]
46
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to
the Servicer.
(a) FBS Card Securities, Inc. agrees to act as the Servicer under
this Agreement. The Investor Certificateholders of each Series by their
acceptance of the related Certificates consent to FBS Card Services, Inc. acting
as Servicer.
(b) The Servicer shall service and administer the Receivables and
shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures for servicing charge card receivables
comparable to the Receivables and in accordance with the Corporate/Purchasing
Card Guidelines and shall have full power and authority, acting alone or through
any party properly designated by it hereunder, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing and subject to
Section 10.1, the Servicer is hereby authorized and empowered (i) to make
withdrawals from the Collection Account as set forth in this Agreement, (ii)
unless such power and authority is revoked by the Trustee on account of the
occurrence of a Servicer Default pursuant to Section 10.1, to instruct the
Trustee to make withdrawals and payments, from the Collection Account, the
Excess Funding Account and any Series Account, in accordance with such
instructions as set forth in this Agreement, (iii) unless such power and
authority is revoked by the Trustee on account of the occurrence of a Servicer
Default pursuant to Section 10.1, to give other instructions to the Trustee in
writing, as set forth in this Agreement, (iv) to execute and deliver, on behalf
of the Trust for the benefit of the Certificateholders, any and all instruments
of satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables and (v) to make any
47
filings, reports, notices, applications, registrations with, and to seek any
consents or authorizations from the Securities and Exchange Commission and any
state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements. Subject to the foregoing, the Trustee agrees that it shall
promptly follow the instructions of the Servicer to withdraw funds from the
Collection Account, the Excess Funding Account or any Series Account and to take
any action required under any Enhancement at such time as required under this
Agreement. The Trustee shall execute at the Servicer's written request such
documents prepared by the Transferor and acceptable to the Trustee as may be
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(c) In the event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 9.2 or the order of any federal governmental agency having
regulatory authority over the Transferor or any court of competent jurisdiction
that the Transferor not transfer any additional Receivables to the Trust) then,
in any such event, (A) the Servicer agrees to allocate, after such date, all
Principal Collections and all amounts which would have constituted Principal
Collections but for the Transferor's inability to transfer such Receivables (up
to an aggregate amount equal to the aggregate amount of the Trust Principal
Component as of such date) in accordance with subsection 2.5(d); (B) the
Servicer agrees to apply such amounts as Collections in accordance with Article
IV, and (C) for only so long as all Collections and all amounts which would have
constituted Collections are allocated and applied in accordance with clauses (A)
and (B) above, Receivables and all amounts which would have constituted
Receivables but for the Transferor's inability to transfer Receivables to the
Trust that are written off as uncollectible in accordance with this Agreement
shall continue to be allocated in accordance with Article IV and all amounts
which would have constituted Receivables but for the Transferor's inability to
transfer Receivables to the Trust shall be deemed to be Receivables for the
purpose of calculating the applicable Investor Percentage thereunder. If the
Servicer is unable pursuant
48
to any Requirement of Law to allocate payments on the Accounts as described
above, the Servicer agrees that it shall in any such event allocate, after the
occurrence of such event, payments on each Account with respect to the balance
of such Account first to the oldest Receivables in such Account and to have such
payments applied as Collections in accordance with Article IV.
(d) In the event that pursuant to subsection 2.4(d), the Transferor
accepts reassignment of an Ineligible Receivable as a result of a breach of the
representations and warranties in subsection 2.4(b) relating to such Receivable,
then, in any such event, the Servicer agrees to account for payments received
with respect to such Ineligible Receivable separately from its accounting for
Principal Collections retained by the Trust. If payments received from or on
behalf of an Obligor are not specifically applicable either to an Ineligible
Receivable of such Obligor reassigned to the Transferor or to Receivables of
such Obligor retained in the Trust, then the Servicer agrees to allocate
payments proportionately based on the total amount of Receivables of such
Obligor retained in the Trust and the total amount owing by such Obligor on any
Ineligible Receivables purchased by the Transferor, and the portion allocable to
any Receivables retained in the Trust shall be treated as Collections and
deposited in accordance with the provisions of Article IV.
(e) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other charge card or credit card receivables.
(f) The Servicer shall maintain or cause to be maintained fidelity
bond coverage insuring against losses through wrongdoing of its officers and
employees who are involved in the servicing of charge card receivables covering
such actions and in such amounts as the Servicer believes to be reasonable from
time to time.
Section 3.2 Servicing Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in the immediately following paragraph, the Servicer shall be enti-
49
tled to receive a servicing fee (the "Servicing Fee") prior to the termination
of the Trust pursuant to Section 12.1. The Servicing Fee shall be payable, with
respect to each Series, at the times and in the amounts set forth in the related
Supplement. The Servicing Fee shall be allocated between the Investor
Certificates (the "Investor Servicing Fee") and the Holder of the Transferor
Certificate (the "Transferor Servicing Fee") as specified in the related
Supplements.
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.5 and the reasonable fees and disbursements of
independent public accountants and all other expenses incurred by the Servicer
in connection with its activities hereunder; provided, however, that the
Servicer shall not be liable for any liabilities, costs or expenses of the
Trust, the Investor Certificateholders or the Certificate Owners arising under
any tax law, including without limitation any federal, state or local income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith). The Servicer shall be required to pay such expenses for its own
account and shall not be entitled to any payment therefor other than the
Servicing Fee.
Section 3.3 Representations and Warranties of the Servicer. FBS Card
Services, Inc., as initial Servicer, hereby makes, and any Successor Servicer by
its appointment hereunder shall make (with appropriate modifications to Section
3.3(a) to reflect the Successor Servicer's organization) the following
representations, warranties and covenants on which the Trustee has relied in
accepting the Receivables in trust and in authenticating the Certificates:
(a) Organization and Good Standing. The Servicer have been duly
incorporated and is validly existing as a corporation in good standing under the
laws of State of Minnesota and has full corporate power, authority and legal
right to own its properties and conduct its charge card business as such
properties are presently owned and as such business is presently conducted, and
to execute, deliver and perform its obligations under this Agreement.
50
(b) Due Qualification. The Servicer is not required to qualify nor
register as a foreign corporation in any state in order to service the
Receivables as required by this Agreement and has obtained all licenses and
approvals necessary in order to so service the Receivables as required under
federal and Minnesota law. If the Servicer shall be required by any Requirement
of Law to so qualify or register or obtain such license or approval, then it
shall do so.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer and this Agreement will remain,
from the time of its execution, an official record of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereinafter
in effect, affecting the enforcement of creditors' rights in general or by
general equity principles.
(e) No Violation. The execution and delivery of this Agreement by
the Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the Servicer,
will not conflict with, violate, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any Requirement of Law applicable to the Servicer or
any indenture, contract, agreement, mortgage, deed of trust or other instrument
to which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, seeking any
determination or ruling that, in the reasonable judgment of the Servicer, would
materially and adversely affect the performance by
51
the Servicer of its obligations under this Agreement, or seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement.
(g) Compliance with Requirements of Law. The Servicer shall duly
satisfy all obligations on its part to be fulfilled under or in connection with
each Receivable and the related Account, will maintain in effect all
qualifications required under Requirements of Law in order to service properly
each Receivable and the related Account and will comply in all material respects
with all other Requirements of Law in connection with servicing each Receivable
and the related Account the failure to comply with which would have a material
adverse effect on the Certificateholders or any Enhancement Provider.
Section 3.4 Reports and Records for the Trustee.
(a) Daily Reports. On each Business Day, the Servicer shall, upon
reasonable prior notice, and during normal business hours, prepare and make
available at the office of the Servicer for inspection by the Trustee a record
setting forth (i) the aggregate amount of Collections processed by the Servicer
on the preceding Business Day and (ii) the aggregate amount of Receivables as of
the close of business on the preceding Business Day.
(b) Monthly Servicer's Certificate. Unless otherwise stated in the
related Supplement with respect to any Series, on each Determination Date the
Servicer shall forward, as provided in Section 13.5, to the Trustee, the Paying
Agent, any Enhancement Provider and each Rating Agency, a certificate of a
Servicing Officer in the form of Exhibit C (which includes the Schedule thereto
specified as such in each Supplement) setting forth (i) the aggregate amount of
Collections processed during the preceding Collection Period, (ii) the aggregate
amount of the applicable Investor Percentage of Yield Collections processed by
the Servicer pursuant to Article IV during the preceding Collection Period with
respect to each Series then outstanding, (iii) the aggregate amount of the
applicable Investor Percentage of Principal Collections for the preceding
Collection Period with respect to each Series then outstanding, (iv) the
aggregate
52
amount of Receivables processed as of the end of the last day of the preceding
Collection Period, (v) the balance on deposit in the Collection or any Series
Account applicable to any Series then outstanding on such Determination Date
with respect to Collections processed by the Servicer during the preceding
Collection Period, (vi) the aggregate amount, if any, of withdrawals, drawings
or payments under any Enhancement, if any, for each Series then outstanding
required to be made with respect to the previous Collection Period in the manner
provided in the related Supplement, (vii) the sum of all amounts payable to the
Investor Certificateholders of each Series (or for a Series of more than one
Class, each such Class) on the succeeding Distribution Date in respect of
Certificate Principal and Certificate Interest with respect to such preceding
Collection Period and (viii) such other matters as are set forth in Exhibit C.
Section 3.5 Annual Servicer's Certificate. On or before April 30 of
each calendar year, beginning with April 30, 1998, the Servicer will deliver, as
provided in Section 13.5, to the Trustee, any Enhancement Provider and the
Rating Agency, an officer's Certificate substantially in the form of Exhibit D
stating that (a) a review of the activities of the Servicer during the preceding
calendar year under this Agreement was made under the supervision of the officer
signing such certificate and (b) to the best of such officer's knowledge, based
on such review, the Servicer has fully performed all its obligations under this
Agreement throughout such period, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.6 Annual Independent Accountants' Servicing Report.
(a) On or before April 30 of each calendar year, beginning with
April 30, 1998, the Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other services to
the Servicer or the Transferor) to furnish, as provided in Section 13.5, a
report to the Trustee, any Enhancement Provider and the Rating Agency, to the
effect
53
that such firm has made a study and evaluation, in accordance with generally
accepted auditing standards, of the Servicer's internal accounting controls with
respect to the servicing of Accounts under this Agreement, and that, on the
basis of such study and evaluation, such firm is of the opinion (assuming the
accuracy of any reports generated by the Servicer's third party agents) that the
system of internal accounting controls in effect on the date set forth in such
report, relating to servicing procedures performed by the Servicer, taken as a
whole, was sufficient for the prevention and detection of errors and
irregularities in amounts that would be material to the financial statements of
the Servicer and that such servicing was conducted in compliance with the
sections of this Agreement during the preceding calendar year, except for such
exceptions, errors or irregularities as such firm shall believe to be immaterial
to the financial statements of the Servicer and such other exceptions, errors or
irregularities as shall be set forth in such report. Unless otherwise provided
with respect to any Series in the related Supplement, a copy of such report may
be obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
(b) On or before April 30 of each calendar year, beginning with
April 30, 1998, the Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other services to
the Servicer or the Transferor) to furnish, as provided in Section 13.5, a
report, prepared using generally accepted auditing standards, to the Trustee and
the Rating Agency to the effect that they have compared the mathematical
calculations of each amount set forth in the monthly certificates forwarded by
the Servicer pursuant to subsection 3.4(c) during the preceding calendar year
with the Servicer's computer reports which were the source of such amounts and
that on the basis of such comparison, such firm is of the opinion that such
amounts are in agreement, except for such exceptions as it believes to be
immaterial to the financial statements of the Servicer and such other exceptions
as shall be set forth in such report. A copy of such report may be obtained by
any Investor Certificateholder by a request in writing to the Trustee addressed
to the Corporate Trust Office.
54
Section 3.7 Tax Treatment. The Transferor has structured this
Agreement, the Investor Certificates and any Collateral Investor Interest with
the intention that the Investor Certificates and any Collateral Investor
Interest will qualify under applicable federal, state, local and foreign tax law
as indebtedness of the Transferor secured by the Receivables. The Transferor,
the Servicer, the Holder of the Exchangeable Transferor Certificate or any
interest therein, each Investor Certificateholder, each Certificate Owner, and
each owner of any Collateral Investor Interest or interest therein agree to
treat and to take no action inconsistent with the treatment of the Investor
Certificates and any Collateral Investor Interest (or beneficial interest
therein) as such indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by income.
Each Investor Certificateholder and the Holder of the Exchangeable Transferor
Certificate or any interest therein, by acceptance of its Certificate or
interest therein, each Certificate Owner, by acquisition of a beneficial
interest in a Certificate, and any owner of any Collateral Investor Interest or
interest therein, by acquisition of such interest therein, agree to be bound by
the provisions of this Section 3.7. Each Certificateholder agrees that it will
cause any Certificate Owner acquiring an interest in a Certificate through it,
and each owner of any Collateral Investor Interest or any interest therein
agrees that it will cause any Person acquiring any such interest, to comply with
this Agreement as to treatment as indebtedness under applicable tax law, as
described in this Section 3.7. Notwithstanding this Section 3.7, if the
treatment of any Collateral Investor Interest or interest therein as
indebtedness is challenged by any governmental authority, the Holder of the
Exchangeable Transferor Certificate and any owner of such interest do not intend
to be foreclosed from adopting as a secondary tax position that such interest
constitutes equity in a partnership.
Section 3.8 Notices to the Transferor. In the event that the
Transferor is no longer acting as Servicer, any Successor Servicer appointed
pursuant to Section 10.2 shall deliver or make available to the Transferor each
certificate and report required to be prepared, forwarded or delivered
thereafter pursuant to Sections 3.4, 3.5 and 3.6.
55
Section 3.9 Reports to the Commission. The Servicer shall, on behalf
of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of 1934
and the rules and regulations of the Commission thereunder. The Transferor
shall, at the expense of the Servicer, cooperate in any reasonable request of
the Servicer in connection with such filings.
[End of Article III]
56
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders. Each Series of Investor
Certificates shall represent Undivided Interests in the Trust, including the
benefits of any Enhancement issued with respect to such Series and the right to
receive the Collections and other amounts at the times and in the amounts
specified in this Article IV to be deposited in the Investor Accounts and any
other Series Account (if so specified in the related Supplement) or to be paid
to the Investor Certificateholders of such Series; provided, however, that the
aggregate interest represented by such Certificates at any time in the Principal
Receivables shall not exceed an amount equal to the Invested Amount at such
time. The Exchangeable Transferor Certificate shall represent the remaining
undivided interest in the Trust not allocated to the Investor Certificates and
the other interests issued by the Trust, including the right to receive the
Collections and other amounts at the times and in the amounts specified in this
Article IV to be paid to the Holder of the Transferor Certificate; provided,
however, that the aggregate interest represented by such Exchangeable Transferor
Certificate at any time in the Principal Receivables shall not exceed the
Transferor Amount at such time and such Certificate shall not represent any
interest in the Investor Accounts, except as provided in this Agreement, or the
benefits of any Enhancement issued with respect to any Series.
Section 4.2 Establishment of Accounts.
(a) The Collection Account. The Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, a non-interest bearing segregated account (the "Collection
Account") bearing a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Certificateholders, or shall
cause such Collection Account to be established and maintained, with an office
or branch of (i) the Transferor (so long as the Transferor or First Bank System,
Inc. shall have and maintain a certificate of deposit or commercial paper rating
of P-1 by Moody's and of A-1 by
57
Standard & Poor's) or (ii) an Eligible Institution; provided, however, that upon
the insolvency of the Transferor, the Collection Account shall not be permitted
to be maintained with the Transferor. Pursuant to authority granted to it
pursuant to subsection 3.1(b), the Servicer shall have the revocable power to
withdraw funds from the Collection Account for the purposes of carrying out its
duties hereunder.
(b) The Excess Funding Account. The Trustee, for the benefit of the
Investor Certificateholders, shall establish and maintain with the Trustee, or
cause to be established and maintained with an Eligible Institution, in the name
of the Trust, a segregated trust account (the "Excess Funding Account") bearing
a designation clearly indicating that the funds therein are held for the benefit
of the Investor Certificateholders. The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Excess Funding
Account and in all proceeds thereof. The Excess Funding Account shall be under
the sole dominion and control of the Trustee for the benefit of the Investor
Certificateholders. If, at any time, the institution holding the Excess Funding
Account ceases to be an Eligible Institution, the Trustee shall notify the
Rating Agency and within 10 Business Days establish a new Excess Funding Account
meeting the conditions specified above with an Eligible Institution, and shall
transfer any cash or any investments to such new Excess Funding Account. From
the date such new Excess Funding Account is established, it shall be the "Excess
Funding Account." Pursuant to authority granted to it hereunder, the Servicer
shall have the revocable power to instruct the Trustee to withdraw funds from
the Excess Funding Account for the purpose of carrying out the Servicer's duties
hereunder. The Trustee at all times shall maintain accurate records reflecting
each transaction in the Excess Funding Account and that funds held therein shall
at all times be held in trust for the benefit of the Investor
Certificateholders.
(c) Series Accounts. If so provided in the related Supplement, the
Trustee, for the benefit of the Investor Certificateholders, shall cause to be
established and maintained in the name of the Trust, one or more Series
Accounts. Each such Series Account shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Inves-
58
tor Certificateholders of such Series. Each such Series Account will be a trust
account, if so provided in the related Supplement and will have the other
features and be applied as set forth in the related Supplement.
(d) Administration of the Collection Account and Excess Funding
Account. Funds on deposit in the Collection Account and the Excess Funding
Account shall at all times be invested in Eligible Investments. Any such
investment shall mature and such funds shall be available for withdrawal on or
prior to the Transfer Date related to the Collection Period in which such funds
were processed for collection, or if so specified in the related supplement,
immediately preceding a Distribution Date. The Trustee shall maintain for the
benefit of the Investor Certificateholders possession of the negotiable
instruments or securities evidencing the Eligible Investments described in
clause (a) of the definition thereof from the time of purchase thereof until the
time of sale or maturity; provided, however, that no such investment shall be
disposed of prior to its maturity date. All interest and earnings (net of losses
and investment expenses) on funds on deposit in the Collection Account with
respect to each Collection Period shall be deposited by the Trustee in a
separate deposit account with an Eligible Institution in the name of the
Servicer, or a Person designated in writing by the Servicer, which shall not
constitute a part of the Trust, or shall otherwise be turned over by the Trustee
to the Servicer not less frequently than monthly, and all interest and earnings
(net of losses and investment expenses) on funds on deposit in the Excess
Funding Account with respect to each Collection Period shall be deposited by the
Trustee in the Collection Account on the following Transfer Date for application
as Yield Collections. Subject to the restrictions set forth above, the Servicer,
or a Person designated in writing by the Servicer, of which the Trustee shall
have received written notification thereof, shall have the authority to instruct
the Trustee with respect to the investment of funds on deposit in the Collection
Account and the Excess Funding Account. For purposes of determining the
availability of funds or the balances in the Collection Account and, except as
provided in the second preceding sentence, the Excess Funding Account for any
reason under this Agreement, all investment earnings on such funds shall be
deemed not to be available or on deposit.
59
Section 4.3 Collections and Allocations.
(a) Collections. Except as provided below, the Servicer shall
deposit all Collections in the Collection Account as promptly as possible after
the Date of Processing of such Collections, but in no event later than the
second Business Day following such Date of Processing. In the event of the
insolvency of the Transferor, then, immediately upon the occurrence of such
event and thereafter, the Servicer shall deposit all Collections into the
Collection Account which shall be established and maintained with an Eligible
Institution other than the Transferor in accordance with subsection 4.2(a), and
in no such event shall the Servicer deposit any Collections thereafter into any
account established, held or maintained with the Transferor.
The Servicer shall allocate such amounts to each Series of Investor
Certificates and to the Holder of the Exchangeable Transferor Certificate in
accordance with this Article IV and shall withdraw amounts from the Collection
Account in accordance with this Article IV, as modified by any Supplement. The
Servicer shall make such deposits or payments on the date indicated therein by
wire transfer or as otherwise provided in the Supplement for any Series of
Certificates with respect to such Series.
Notwithstanding anything in this Agreement to the contrary, for so
long as, and only so long as, FBS Card Services, Inc. or other Affiliate of the
Transferor shall remain the Servicer hereunder, and (a)(i) the Servicer provides
to the Trustee a letter of credit or other credit support that satisfies the
Rating Agency Condition or (b) the Transferor or First Bank System, Inc. shall
have and maintain a certificate of deposit or commercial paper rating of P-1 by
Moody's and of A-1 by Standard & Poor's, the Servicer need not deposit
Collections into the Collection Account, the Excess Funding Account or any
Series Account, as provided in any Supplement, or make payments to the Holder of
the Exchangeable Transferor Certificate, on a daily basis as provided in Article
IV, but may make such deposits, payments and withdrawals on each Transfer Date
in an amount equal to the net amount of such deposits, payments and withdrawals
which would have been made but for the provisions of this paragraph. If at any
time the Servicer shall qualify to
60
make deposits on the Transfer Date as provided in this paragraph (or shall cease
to be so qualified) the Servicer shall deliver an Officer's Certificate to the
Trustee stating that the criteria set forth in (a) or (b) of this paragraph have
been satisfied (or have ceased to be satisfied). The Trustee may rely on such
Officer's Certificate without investigation or inquiry.
Notwithstanding anything else in this Agreement to the contrary,
with respect to any Collection Period, whether the Servicer is required to make
monthly or daily deposits into the Collection Account, the Excess Funding
Account or any Series Account, as provided in any Supplement, (i) the Servicer
will only be required to deposit Collections from the Collection Account into
the Excess Funding Account or any Series Account up to the required amount to be
deposited into any such account or, without duplication, distributed on or prior
to the related Distribution Date to Investor Certificateholders or to any
Enhancement Provider pursuant to the terms of any Supplement or agreement
relating to such Enhancement and (ii) if at any time prior to such Distribution
Date the amount of Collections deposited in the Collection Account exceeds the
amount required to be deposited pursuant to clause (i) above, the Servicer will
be permitted to withdraw the excess from the Collection Account.
(b) Allocations for the Exchangeable Transferor Certificate.
Throughout the existence of the Trust, unless otherwise stated in any
Supplement, the Servicer shall allocate to the Holder of the Exchangeable
Transferor Certificate an amount equal to the product of (A) the Transferor
Percentage and (B) the aggregate amount of Principal Collections and Yield
Collections, respectively, in respect of each Collection Period. Notwithstanding
anything in this Agreement to the contrary, unless otherwise stated in any
Supplement, the Servicer need not deposit this amount or any other amounts so
allocated to the Exchangeable Transferor Certificate pursuant to any Supplement
into the Collection Account and shall pay, or be deemed to pay, such amounts as
collected to the Holder of the Exchangeable Transferor Certificate.
(c) Adjustments for Miscellaneous Credits and Fraudulent Charges.
The Servicer shall be obligated to reduce on a net basis each Collection Period
the aggregate amount of Principal Receivables used to calculate
61
the Transferor Amount as provided in this subsection 4.3(c) (an "Adjustment")
with respect to any Principal Receivable (i) which was created in respect of
merchandise refused or returned by the Obligor thereunder or as to which the
Obligor thereunder has asserted a counterclaim or defense, (ii) which is reduced
by the Servicer by any rebate, refund, charge-back or adjustment (including
Servicer errors, but excluding any rebates or refunds relating to any
reward-type program) or (iii) which was created as a result of a fraudulent or
counterfeit charge.
In the event that the inclusion of the amount of an Adjustment in
the calculation of the Transferor Amount would cause the Transferor Amount to be
an amount less than zero, the Transferor shall make a deposit, no later than the
Business Day following the Date of Processing of such Adjustment, in the
Collection Account in immediately available funds in an amount equal to the
amount by which such Adjustment would cause the Transferor Amount to be less
than zero on such Date of Processing.
(d) Operation of Excess Funding Account. On each Determination Date
on which one or more Series is in its Amortization Period or Accumulation
Period, the Servicer shall determine the aggregate amount of Principal
Shortfalls, if any, with respect to each such Series, and the Servicer shall
instruct the Trustee to withdraw such amount (up to the Excess Funding Amount)
from the Excess Funding Account on the next succeeding Transfer Date and deposit
such amount in the Collection Account for allocation among each such Series as
Shared Collections as specified in each related Supplement. On any Business Day
on which the Transferor Amount exceeds the Minimum Transferor Amount, the
Servicer shall instruct the Trustee to withdraw the amount of such excess (up to
the Excess Funding Amount) from the Excess Funding Account on such day and pay
such amount to the Holder of the Exchangeable Transferor Certificate.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL BE SPECIFIED IN
ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article IV]
62
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]
[End of Article V]
63
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. Subject to Sections 6.10 and 6.13, the
Investor Certificates of each Series and any Class thereof may be issued in
bearer form (the "Bearer Certificates") with attached interest coupons and a
special coupon (collectively, the "Coupons") or in fully registered form (the
"Registered Certificates"), and shall be substantially in the form of the
exhibits with respect thereto attached to the related Supplement. The
Exchangeable Transferor Certificate shall be substantially in the form of
Exhibit A. The Investor Certificates and the Exchangeable Transferor Certificate
shall, upon issue pursuant hereto or to Section 6.9 or Section 6.10, be executed
and delivered by the Transferor to the Trustee for authentication and redelivery
as provided in Sections 2.1 and 6.2. Any Investor Certificate shall be issuable
in a minimum denomination of $1,000 Undivided Interest and integral multiples
thereof, unless otherwise specified in any Supplement. The Exchangeable
Transferor Certificate shall be issued as a single certificate. Each Certificate
shall be executed by manual or facsimile signature on behalf of the Transferor
by its President or any Vice President. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Transferor or the Trustee shall
not be rendered invalid, notwithstanding that such individual has ceased to be
so authorized prior to the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. Unless otherwise
provided in the related supplement, no Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein, executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication except Bearer
Certificates which shall be dated the applicable Issuance Date as provided in
the related Supplement.
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Section 6.2 Authentication of Certificates. Contemporaneously with
the initial assignment and transfer of the Receivables, whether now existing or
hereafter created (other than Receivables in Additional Accounts) and the other
components to the Trust, the Trustee shall authenticate and deliver the initial
Series of Investor Certificates, upon the written order of the Transferor,
against payment to the Transferor of the Initial Invested Amount (net of any
discount applicable to the purchase thereof). Upon the receipt of such payment
and the issuance of the Investor Certificates, such Investor Certificates shall
be fully paid and non-assessable. The Trustee shall authenticate and deliver the
Exchangeable Transferor Certificate to the Transferor simultaneously with its
delivery to the Transferor of the initial Series of Investor Certificates. Upon
an Exchange as provided in Section 6.9 and the satisfaction of certain other
conditions specified therein, the Trustee shall authenticate and deliver the
Investor Certificates of additional Series (with the designation provided in the
related Supplement), upon the order of the Transferor, to the Persons designated
in such Supplement. Upon the order of the Transferor, the Certificates of any
Series shall be duly authenticated by or on behalf of the Trustee, in authorized
denominations. If specified in the related Supplement for any Series, the
Trustee shall authenticate and deliver outside the United States the Global
Certificate that is issued upon original issuance thereof, upon the written
order of the Transferor, to the Depository against payment of the purchase price
therefor. If specified in the related Supplement for any Series, the Trustee
shall authenticate Book-Entry Certificates that are issued upon original
issuance thereof, upon the written order of the Transferor, to a Clearing Agency
or its nominee as provided in Section 6.10 against payment of the purchase price
thereof.
Section 6.3 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency to be
maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar"), in accordance with the provisions of Section 11.16, a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Transfer Agent and Registrar shall provide for the
registration of
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the Investor Certificates of each Series (unless otherwise provided in the
related Supplement) and of transfers and exchanges of the Investor Certificates
as herein provided. The Trustee is hereby initially appointed Transfer Agent and
Registrar for the purposes of registering the Investor Certificates and
transfers and exchanges of the Investor Certificates as herein provided. If any
form of Investor Certificate is issued as a Global Certificate, the Trustee may,
or if and so long as any Series of Investor Certificates are listed on the
Luxembourg Stock Exchange and such exchange shall so require, the Trustee shall
appoint a co-transfer agent and co-registrar in Luxembourg or another European
city. Any reference in this Agreement to the Transfer Agent and Registrar shall
include any co-transfer agent and co-registrar unless the context otherwise
requires. The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' written notice to the Servicer. In the event that the
Trustee shall no longer be the Transfer Agent and Registrar, the Trustee shall
appoint a successor Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Certificate at
any office or agency of the Transfer Agent and Registrar, the Transferor shall
execute, subject to the provisions of subsection 6.3(c), and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of like
aggregate Undivided Interests; provided, however, that the provisions of this
paragraph shall not apply to Bearer Certificates.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates of the same Series
in authorized denominations of like aggregate Undivided Interests, upon
surrender of the Investor Certificates to be exchanged at any such office or
agency. At the option of any Holder of Registered Certificates, Registered
Certificates may be exchanged for other Registered Certificates of the same
Series in authorized denominations of like aggregate Undivided Interests in the
Trust, upon surrender of the Registered Certificates to be exchanged at any
office or agency of the Transfer Agent and Registrar maintained for such
purpose. At the option of a Bearer Certificateholder, subject to applicable laws
and regulations (including
66
without limitation, the Bearer Rules), Bearer Certificates may be exchanged for
other Bearer Certificates or Registered Certificates of the same Series in
authorized denominations of like aggregate Undivided Interests in the Trust, in
the manner specified in the Supplement for such Series, upon surrender of the
Bearer Certificates to be exchanged at an office or agency of the Transfer Agent
and Registrar located outside the United States. Each Bearer Certificate
surrendered pursuant to this Section 6.3 shall have attached thereto (or be
accompanied by) all unmatured Coupons, provided that any Bearer Certificate so
surrendered after the close of business on the Record Date preceding the
relevant Distribution Date after the related Series Termination Date need not
have attached the Coupons relating to such Distribution Date.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, the Transferor shall execute, and the Trustee shall authenticate
and (unless the Transfer Agent and Registrar is different than the Trustee, in
which case the Transfer Agent and Registrar shall) deliver, the Investor
Certificates of such Series which the Certificateholder making the exchange is
entitled to receive. Every Investor Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Certificateholder thereof or his
attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding, the
Trustee or the Transfer Agent and Registrar, as the case may be, shall not be
required to register the transfer of or exchange any Investor Certificate of any
Series for a period of 15 days preceding the due date for any payment with
respect to the Investor Certificates of such Series.
Unless otherwise provided in the related Supplement, no service
charge shall be made for any registration of transfer or exchange of
Certificates, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
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All Investor Certificates (together with any Coupons attached to
Bearer Certificates) surrendered for registration of transfer and exchange shall
be canceled by the Transfer Agent and Registrar and disposed of in a manner
satisfactory to the Trustee. The Trustee shall cancel and destroy the Global
Certificates upon its exchange in full for Definitive Certificates and shall
deliver a certificate of destruction to the Transferor. Such certificate shall
also state that a certificate or certificates of each Foreign Clearing Agency to
the effect referred to in Section 6.13 was received with respect to each portion
of the Global Certificate exchanged for Definitive Certificates.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.
(b) Except as provided in Section 6.9 or 7.2 or in any Supplement
(and except upon the Exchange and cancellation of an Exchangeable Transferor
Certificate and the issuance of a reissued Exchangeable Transferor Certificate,
on each Exchange Date), in no event shall the Exchangeable Transferor
Certificate or any interest therein be transferred hereunder, in whole or in
part, unless the Transferor shall have consented in writing to such transfer and
unless the Trustee shall have received (1) confirmation in writing from each
Rating Agency that such transfer will not result in a lowering or withdrawal of
its then existing rating of any Series of Investor Certificates, and (2) an
Opinion of Counsel that such transfer does not adversely affect the conclusions
reached in any of the federal income tax opinions dated the applicable Closing
Date issued in connection with the original issuance of any Series of Investor
Certificates; provided, however, that unless the consent of Holders of Investor
Certificates evidencing more than 50% of the Aggregate Invested Amount is
obtained for such transfer, the Holder of the Exchangeable Transferor
Certificate shall be permitted to transfer the Exchangeable Transferor
Certificate only if the Holder of the Exchangeable Transferor Certificate shall
have provided the Trustee with an Opinion of Counsel to the effect that the
contem-
68
plated transfer would be treated as a financing and not as a sale for federal
income tax purposes.
(c) Unless otherwise provided in the related Supplement,
registration of transfer of Registered Certificates containing a legend relating
to the restrictions on transfer of such Registered Certificates (which legend
shall be set forth in the Supplement relating to such Investor Certificates)
shall be effected only if the conditions set forth in such related Supplement
are satisfied.
Whenever a Registered Certificate containing the legend set forth in
the related Supplement is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall promptly seek
instructions from the Servicer regarding such transfer. The Transfer Agent and
Registrar and the Trustee shall be entitled to receive written instructions
signed by a Servicing Officer prior to registering any such transfer or
authenticating new Registered Certificates, as the case may be. The Servicer
hereby agrees to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by them in reliance on any such written
instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, the City of New York (and subject to this Section 6.3,
if specified in the related Supplement for any Series, any other city designated
in such Supplement) an office or offices or an agency or agencies where Investor
Certificates of such Series may be surrendered for registration of transfer or
exchange.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons, if any, appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer
69
Agent and Registrar and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Transferor shall execute and the Trustee shall authenticate and (unless the
Transfer Agent and Registrar is different from the Trustee, in which case the
Transfer Agent and Registrar shall) deliver (in compliance with applicable law),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate Undivided Interest.
In connection with the issuance of any new Certificate under this Section 6.4,
the Trustee or the Transfer Agent and Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 6.4 shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat a
Certificateholder as the owner of the related Certificate for the purpose of
receiving distributions pursuant to Article V (as described in any Supplement)
and for all other purposes whatsoever, and neither the Trustee, the Paying
Agent, the Transfer Agent and Registrar nor any agent of any of them shall be
affected by any notice to the contrary; provided, however, that in determining
whether the holders of Investor Certificates evidencing the requisite Undivided
Interests have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Investor Certificates owned by the Transferor, the
Servicer or any Affiliate thereof shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Investor Certificates which a Responsible Officer in the
Corporate Trust Office of the Trustee knows to be so
70
owned shall be so disregarded. Investor Certificates so owned that have been
pledged in good faith shall not be disregarded as outstanding, if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Investor Certificates and that the pledgee is not the
Transferor, the Servicer or an Affiliate thereof.
In the case of a Bearer Certificate, the Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
holder of a Bearer Certificate or Coupon as the owner of such Bearer Certificate
or Coupon for the purpose of receiving distributions pursuant to Article IV and
Article XII and for all other purposes whatsoever, and neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary. Certificates so owned which
have been pledged in good faith shall not be disregarded and may be regarded as
outstanding, if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Investor Certificates and that
the pledgee is not the Transferor, the Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the appropriate account or accounts maintained for the
benefit of Certificateholders as specified in this Agreement or the related
Supplement for any Series pursuant to Articles IV and V hereof. Any Paying Agent
shall have the revocable power to withdraw funds from such appropriate account
or accounts for the purpose of making distributions referred to above. The
Trustee (or the Servicer if the Trustee is the Paying Agent) may revoke such
power and remove the Paying Agent, if the Trustee (or the Servicer if the
Trustee is the Paying Agent) determines in its sole discretion that the Paying
Agent shall have failed to perform its obligations under this Agreement in any
material respect or for other good cause. The Trustee (or the Servicer if the
Trustee is the Paying Agent) shall notify Moody's and Standard & Poor's of the
removal of any Paying Agent. The Paying Agent, unless the Supplement with
respect to any Series states otherwise, shall initially be the Trustee. If any
form of Investor
71
Certificate is issued as a Global Certificate, or if and so long as any Series
of Investor Certificates are listed on the Luxembourg Stock Exchange and such
exchange shall so require, the Trustee shall appoint a co-paying agent in
Luxembourg or another European city. The Trustee shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Servicer. In the event that the
Trustee shall no longer be the Paying Agent, the Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company). The
provisions of Sections 11.1, 11.2 and 11.3 shall apply to the Trustee also in
its role as Paying Agent, for so long as the Trustee shall act as Paying Agent.
Any reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long as
the Investor Certificates of such Series are outstanding, the Transferor shall
maintain a co-paying agent in New York City (for Registered Certificates only)
or any other city designated in such Supplement which, if and so long as any
Series of Investor Certificates is listed on the Luxembourg Stock Exchange or
other stock exchange and such exchange so requires, shall be in Luxembourg or
the location required by such other stock exchange.
(b) The Trustee shall cause the Paying Agent (other than itself) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree, and if the Trustee is the Paying Agent it
hereby agrees, that it shall comply with all requirements of the Internal
Revenue Code regarding the withholding by the Trustee of payments in respect of
federal income taxes due from Certificate Owners.
Section 6.7 Access to List of Certificateholders' Names and
Addresses.
The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent, within five Business
Days after receipt by the Trustee of a request therefor from
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the Servicer or the Paying Agent, respectively, in writing, a list in such form
as the Servicer or the Paying Agent may reasonably require, of the names and
addresses of the Investor Certificateholders as of the most recent Record Date
for payment of distributions to Investor Certificateholders. Unless otherwise
provided in the related Supplement, holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 10% of the Invested Amount of the
Investor Certificates of any Series (the "Applicants") may apply in writing to
the Trustee, and if such application states that the Applicants desire to
communicate with other Investor Certificateholders of any Series with respect to
their rights under this Agreement or under the Investor Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Certificateholders held by the Trustee and
shall give the Servicer notice that such request has been made, within five
Business Days after the receipt of such application. Such list shall be as of a
date no more than 45 days prior to the date of receipt of such Applicants'
request. Every Certificateholder, by receiving and holding a Certificate, agrees
with the Trustee that neither the Trustee, the Transfer Agent and Registrar, nor
any of their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was obtained.
Section 6.8 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents with
respect to the Certificates which shall be authorized to act on behalf of the
Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and a certificate of authentication executed
73
on behalf of the Trustee by an authenticating agent. Each authenticating agent
must be acceptable to the Transferor.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Transferor. The Trustee may at
any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Transferor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an authenticating agent shall cease to be acceptable to the Trustee or the
Transferor, the Trustee promptly may appoint a successor authenticating agent.
Any successor authenticating agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating agent.
No successor authenticating agent shall be appointed unless acceptable to the
Trustee and the Transferor.
(d) The Trustee agrees to pay each authenticating agent from time to
time reasonable compensation for its services under this Section 6.8, and the
Trustee shall be entitled to be reimbursed and the Servicer shall reimburse the
Trustee for such reasonable payments actually made, subject to the provisions of
section 11.5.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
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This is one of the certificates described in the Pooling and
Servicing Agreement.
______________________________________________
as Authenticating Agent
for the Trustee,
By:___________________________________________
Authorized Officer
Section 6.9 Tender of Exchangeable Transferor Certificate.
(a) Upon any Exchange, the Trustee shall issue to the Holder of the
Exchangeable Transferor Certificate under Section 6.1, for execution and
redelivery to the Trustee for authentication under Section 6.2, one or more new
Series of Investor Certificates. Any such Series of Investor Certificates shall
be substantially in the form specified in the related Supplement and shall bear,
upon its face, the designation for such Series to which it belongs, as selected
by the Transferor. Except as specified in any Supplement for a related Series,
all Investor Certificates of any Series shall rank pari passu and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Enhancement provided for any Series shall not be available for any other Series)
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the related Supplement.
(b) The Holder of the Exchangeable Transferor Certificate may tender
the Exchangeable Transferor Certificate to the Trustee in exchange for (i) one
or more newly issued Series of Investor Certificates and (ii) a reissued
Exchangeable Transferor Certificate (any such tender, a "Transferor Exchange").
In addition, the Transferor may tender 100% of the Investor Certificates of a
Series and the Exchangeable Transferor Certificate to the Trustee pursuant to
the terms and conditions set forth in such Supplement in exchange for (i) one or
more newly issued Series of Investor Certificates and (ii) a reissued
Exchangeable Transferor Certificate (an "Investor Exchange"). The Transferor
Exchange and Investor Exchange are referred to collectively herein as an "Ex-
75
change." The Holder of the Exchangeable Transferor Certificate may perform an
Exchange by notifying the Trustee, in writing at least three business days in
advance (an "Exchange Notice") of the date upon which the Exchange is to occur
(an "Exchange Date"). Any Exchange Notice shall state the designation of any
Series (and Class thereof, if applicable) to be issued on the Exchange Date and,
with respect to each such Series: (a) its initial Investor Interest (or the
method for calculating such Initial Investor Interest) and (b) its Certificate
Rate (or the method for allocating interest payments or other cash flows to such
Series), if any. On the Exchange Date, the Trustee shall authenticate and
deliver any such Series of Investor Certificates only upon delivery to it of the
following: (a) a Supplement satisfying the criteria set forth in subsection
6.9(c) executed by the Transferor and the Servicer and specifying the Principal
Terms of such Series, (b) the applicable Enhancement, if any, (c) the agreement,
if any, pursuant to which the Enhancement Provider agrees to provide the
Enhancement, if any, (d) (i) an Opinion of Counsel to the effect that, unless
otherwise stated in the related Supplement, the newly issued Series of Investor
Certificates will be treated as debt for federal income tax purposes and (ii) a
Tax Opinion with respect to the issuance of such Series, (e) written
confirmation from each Rating Agency that the Exchange will not result in such
Rating Agency's reducing or withdrawing its rating on any then outstanding
Series as to which it is a Rating Agency, and (f) the existing Exchangeable
Transferor Certificate or applicable Investor Certificates, as the case may be.
Upon satisfaction of such conditions, the Trustee shall cancel the existing
Exchangeable Transferor Certificate or applicable Investor Certificates, as the
case may be, and issue, as provided above, such Series of Investor Certificates
and a new Exchangeable Transferor Certificate, dated the Exchange Date. There is
no limit to the number of Exchanges that may be performed under the Agreement.
(c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect to any
newly issued Series of Investor Certificates, which may include without
limitation: (i) its name or designation, (ii) an Initial Invested Amount or the
method of calculating the Initial Invested Amount, (iii) the method of
determining
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any adjusted Invested Amount, if applicable, (iv) the Certificate Rate (or
formula for the determination thereof), (v) the Closing Date, (vi) each rating
agency rating such Series, (vii) the name of the Clearing Agency, if any, (viii)
the rights of the Holder of the Exchangeable Transferor Certificate that have
been transferred to the Holders of such Series pursuant to such Exchange
(including any rights to allocations of Yield Collections and Principal
Collections), (ix) the interest payment date or dates and the date or dates from
which interest shall accrue, (x) the periods during which or dates on which
principal will be paid or accrued, (xi) the method of allocating Principal
Collections with respect to such Series and, if applicable, with respect to
other Series and the method by which the principal amount of Investor
Certificates of such Series shall amortize or accrete and the method for
allocating Yield Collections and Defaulted Receivables, (xii) any other
Collections with respect to Receivables or other amounts available to be paid
with respect to such Series, (xiii) the names of any accounts to be used by such
Series and the terms governing the operation of any such account and use of
moneys therein, (xiv) the Series Servicing Fee and the Series Servicing Fee
Rate, (xv) the applicable Minimum Transferor Amount and, the Series Termination
Date, (xvi) the terms of any Enhancement with respect to such Series, and the
Enhancement Provider, if applicable, (xvii) the terms on which the Certificates
of such Series may be repurchased or remarketed to other investors, (xviii) any
deposit into any account provided for such Series, (xix) the number of Classes
of such Series, and if more than one Class, the rights and priorities of each
such Class, (xx) whether Net Interchange or other fees will be included in the
funds available to be paid for such Series, (xxi) the priority of any Series
with respect to any other Series, (xxii) the applicable Minimum Trust Principal
Component and (xxiii) any other relevant terms of such Series (including whether
or not such Series will be pledged as collateral for an issuance of any other
securities, including commercial paper) (all such terms, the "Principal Terms"
of such Series). The terms of such Supplement may modify or amend the terms of
this Agreement solely as applied to such new Series. If on the date of the
issuance of such Series there is issued and outstanding one or more Series of
Investor Certificates and no Series of Investor Certificates is currently rated
by a Rating Agency, then as a condition to such Exchange a nationally
77
recognized investment banking firm or commercial bank shall also deliver to the
Trustee an officer's certificate stating, in substance, that the Exchange will
not have an adverse effect on the timing or distribution of payments to such
other Series of Investor Certificates then issued and outstanding.
Section 6.10 Book-Entry Certificates. Unless otherwise provided in
any related Supplement, the Investor Certificates, upon original issuance, shall
be issued in the form of typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the depository specified in such Supplement
(the "Depository") which shall be the Clearing Agency or Foreign Clearing
Agency, by or on behalf of such Series. The Investor Certificates of each Series
shall, unless otherwise provided in the related Supplement, initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency or Foreign Clearing Agency. No Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
related Series of Investor Certificates, except as provided in Section 6.12.
Unless and until definitive, fully registered Investor Certificates of any
Series ("Definitive Certificates") have been issued to Certificate Owners
pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full force and
effect with respect to each such Series;
(ii) the Transferor, the Servicer, the Paying Agent, the Transfer
Agent and Registrar and the Trustee may deal with the Clearing Agency and
the Clearing Agency Participants for all purposes (including the making of
distributions on the Investor Certificates of each such Series) as the
authorized representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.10
conflict with any other provisions of this Agreement, the provisions of
this Section 6.10 shall control with respect to each such Series; and
(iv) the rights of Certificate Owners of each such Series shall be
exercised only through the
78
Clearing Agency or Foreign Clearing Agency and the applicable Clearing
Agency Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency or
Foreign Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Depository Agreement applicable to a Series, unless and until
Definitive Certificates of such Series are issued pursuant to Section
6.12, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Certificates to such Clearing
Agency Participants.
Section 6.11 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate owners
pursuant to Section 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency or Foreign Clearing Agency for distribution
to Holders of Investor Certificates.
Section 6.12 Definitive Certificates. If (i) (A) the Transferor
advises the Trustee in writing that the Clearing Agency or Foreign Clearing
Agency is no longer willing or able to discharge properly its responsibilities
under the applicable Depository Agreement, and (B) the Trustee or the Transferor
is unable to locate a qualified successor, (ii) the Transferor, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or Foreign Clearing Agency with respect to any
Series of Certificates or (iii) after the occurrence of a Servicer Default,
Certificate Owners of a Series representing beneficial interests aggregating not
less than 50% of the Investor Interest of such Series advise the Trustee and the
applicable Clearing Agency or Foreign Clearing Agency through the applicable
Clearing Agency Participants in writing that the continuation of a book-entry
system through the applicable Clearing Agency or Foreign Clearing Agency is no
longer in the best interests of the Certificate Owners, the Trustee shall notify
all Certificate Owners of such Series, through the applicable Clearing Agency
Participants, of the occurrence of any such
79
event and of the availability of Definitive Certificates to Certificate Owners
of such Series requesting the same. Upon surrender to the Trustee of the
Investor Certificates of such Series by the applicable Clearing Agency or
Foreign Clearing Agency, accompanied by registration instructions from the
applicable Clearing Agency or Foreign Clearing Agency for registration, the
Trustee shall issue the Definitive Certificates of such Series. Neither the
Transferor nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates of such Series
all references herein to obligations imposed upon or to be performed by the
applicable Clearing Agency or Foreign Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with respect
to such Definitive Certificates, and the Trustee shall recognize the Holders of
the Definitive Certificates of such Series as Certificateholders of such Series
hereunder.
Section 6.13 Global Certificate; Euro-Certificate Exchange Date. If
specified in the related Supplement for any Series, the Investor Certificates
may be initially issued in the form of a single temporary Global Certificate
(the "Global Certificate") in bearer form, without interest coupons, in the
denomination of the Initial Invested Amount and substantially in the form
attached to the related Supplement. Unless otherwise specified in the related
Supplement, the provisions of this Section 6.13 shall apply to such Global
Certificate. The Global Certificate will be authenticated by the Trustee upon
the same conditions, in substantially the same manner and with the same effect
as the Definitive Certificates. The Global Certificate may be exchanged in the
manner described in the related Supplement for Registered or Bearer Certificates
in definitive form.
Section 6.14 Meetings of Certificateholders. To the extent provided
by the Supplement for any Series issued in whole or in part in Bearer
Certificates, the Servicer of the Trustee may at any time call a meeting of the
Certificateholders of such Series, to be held at such time and at such place as
the Servicer or the Trustee, as the case may be, shall determine, for the
purpose of approving a modification of or amendment to, or obtaining a waiver
of, any covenant or condition set forth in this
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Agreement with respect to such Series or in the Certificates of such Series,
subject to Section 13.1 of the Agreement.
[End of Article VI]
81
ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The Transferor shall be
liable in accordance herewith to the extent of the obligations specifically
undertaken by the Transferor.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor.
(a) The Transferor shall not consolidate with or merge into
any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Transferor substantially as an
entirety shall be, if the Transferor is not the surviving entity,
organized and existing under the laws of the United States of America or
any State or the District of Columbia, and shall be a national banking
association, state banking corporation or other entity which is not
subject to the bankruptcy laws of the United States of America or, subject
to the Rating Agency Condition, any other type of entity, and shall assume
the performance of every covenant and obligation of the Transferor, as
applicable hereunder, and shall benefit from all the rights granted to the
Transferor, as applicable hereunder. To the extent that any right,
covenant or obligation of the Transferor, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity. In
furtherance hereof, in applying this Section 7.2 to a successor entity,
Section 9.2 hereof shall be applied by reference to events of involuntary
liquidation, receivership or conservatorship applicable to such successor
entity as shall be set forth in the officer's certificate described in
subsection 7.2(a)(ii);
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(ii) the Transferor shall have delivered to the Trustee an
Officer's Certificate signed by a Vice President (or any more senior
officer) of the Transferor stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply with this
Section 7.2 and that all conditions precedent herein provided for relating
to such transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding; and
(iii) the Transferor shall have delivered notice to each
Rating Agency of such consolidation, merger, conveyance or transfer.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except for mergers, consolidations, assumptions or transfers in
accordance with the provisions of the foregoing paragraph.
Section 7.3 Limitation on Liability. The directors, officers,
employees or agents of the Transferor shall not be under any liability to the
Trust, the Trustee, the Certificateholders, any Enhancement Provider or any
other Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
any Supplement and the issuance of the Certificates; provided, however, that
this provision shall not protect the officers, directors, employees, or agents
of the Transferor against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. Except as provided in Section 7.4, the Transferor shall not be under
any liability to the Trust, the Trustee, the Certificateholders, any Enhancement
Provider or any other Person for any action taken or for refraining from the
taking of any action in its capacity as Transferor pursuant to this Agreement or
any Supplement whether arising from express or implied duties under this
Agreement or any Supplement; provided, however, that this provision shall not
protect the Transferor against any liability which would otherwise be
83
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Transferor and any director, officer, employee or agent
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
Section 7.4 Liabilities. Notwithstanding Section 7.3 (and
notwithstanding Sections 3.2, 8.3, 8.4 and 11.11), or any other provision
herein, the Transferor by entering into this Agreement, and any holder of an
interest in the Exchangeable Transferor Certificate by its acceptance thereof,
agree to be liable, directly to the injured party, for the entire amount of any
losses, claims, damages or liabilities (other than those that would be incurred
by an Investor Certificateholder if the Investor Certificates were notes secured
by the Receivables, for example, as a result of the performance of the
Receivables, market fluctuations, a shortfall or failure to make payment under
any Enhancement or other similar market or investment risks associated with
ownership of the Investor Certificates) arising out of or based on the
arrangement created by this Agreement (to the extent that, if the Trust assets
at the time the claim is made were used to pay in full all outstanding
Certificates of all Series, the Trust assets that would remain after the
Investor Certificateholders and Enhancement Providers, if any, were paid in full
would be insufficient to pay any such losses, claims, damages or liabilities) as
though this Agreement created a partnership under the Uniform Partnership Law in
which the Transferor and such holder of an interest in the Exchangeable
Transferor Certificate were general partners. The rights created by this Section
7.4 shall run directly to and be enforceable by the injured party subject to the
limitations hereof. To the extent provided in Section 8.4, the Servicer will
(from its own assets and not from the assets of the Trust) indemnify and hold
harmless the Transferor and each holder of an interest in the Exchangeable
Transferor Certificate against and from certain losses, claims, damages and
liabilities of the Transferor as described in this Section arising from the
actions or omissions of the Servicer.
[End of Article VII]
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ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and
shall be a state or national banking association or other entity which is
not subject to the bankruptcy laws of the United States of America or,
subject to the Rating Agency Condition, any other type of entity, and, if
the Servicer is not the surviving entity, shall assume the performance of
every covenant and obligation of the Servicer hereunder (to the extent
that any right, covenant or obligation of the Servicer, as applicable
hereunder, is inapplicable to the successor entity, such successor entity
shall be subject to such covenant or obligation, or benefit from such
right, as would apply, to the extent practicable, to such successor
entity);
(ii) the Servicer shall have delivered to the Trustee an
Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.2 and
that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that such
85
supplemental agreement is legal, valid and binding with respect to the
Servicer; and
(iii) the Servicer shall have delivered notice to the Rating
Agency of such consolidation, merger, conveyance or transfer.
Section 8.3 Limitation on Liability of the Servicer and Others. The
directors, officers, employees or agents of the Servicer shall not be under any
liability to the Trust, the Trustee, the Certificateholders, any Enhancement
Provider or any other Person hereunder or pursuant to any document delivered
hereunder, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Agreement and any Supplement and the issuance of the Certificates;
provided, however, that this provision shall not protect the directors,
officers, employees and agents of the Servicer against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Except as provided in Section 8.4 with respect
to the Trust and the Trustee, its officers, directors, employees and agents, the
Servicer shall not be under any liability to the Trust, the Trustee, its
officers, directors, employees and agents, the Certificateholders or any other
Person for any action taken or for refraining from the taking of any action in
its capacity as Servicer pursuant to this Agreement or any Supplement; provided,
however, that this provision shall not protect the Servicer against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of its
reckless disregard of its obligations and duties hereunder or under any
Supplement. The Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Receivables in accordance with this Agreement which in its
reasonable opinion may involve it in any expense or liability.
86
Section 8.4 Servicer Indemnification of the Trust and the Trustee.
The Servicer shall indemnify and hold harmless the Trust and the Trustee, its
officers, directors, employees and agents, from and against any reasonable loss,
liability, expense, damage or injury suffered or sustained by reason of any acts
or omissions of the Servicer with respect to activities of the Trust or the
Trustee pursuant to this Agreement or any Supplement, including, but not limited
to any judgment, award, settlement, reasonable attorneys' fees and other costs
or expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided, however, that the Servicer shall not
indemnify the Trustee if such acts or omissions constitute or are caused by
fraud, negligence, or willful misconduct by the Trustee; provided further, that
the Servicer shall not indemnify the Trust, the Investor Certificateholders or
the Certificate Owners for any liabilities, costs or expenses of the Trust with
respect to any action taken by the Trustee at the request of the Investor
Certificateholders; provided further, that the Servicer shall not indemnify the
Trust, the Investor Certificateholders or the Certificate Owners as to any
losses claims or damages incurred by any of them in their capacities as
investors, including without limitation losses incurred as a result of Defaulted
Receivables; and provided further, that the Servicer shall not indemnify the
Trust, the Investor Certificateholders or the Certificate Owners for any
liabilities, costs or expenses of the Trust, the Investor Certificateholders or
the Certificate Owners arising under any tax law, including without limitation,
any federal, state, local or foreign income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
the Trust, the Investor Certificateholders or the Certificate Owners in
connection herewith to any taxing authority. Any such indemnification shall not
be payable from the assets of the Trust. The provisions of this indemnity shall
run directly to and be enforceable by an injured party subject to the
limitations hereof and shall survive the termination of this Agreement and the
registration and removal of the Trustee.
Section 8.5 The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (i)
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the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which the Servicer could
take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an Opinion of Counsel and
as to clause (ii) by an Officer's Certificate, each to such effect delivered to
the Trustee. No such resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.2 hereof. If the Trustee is unable
within 120 days of the date of such determination to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer hereunder.
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of the
Investor Certificateholders, or by applicable statutes or regulations, to review
such documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to the
Servicer's normal security and confidentiality procedures and (iv) at offices
designated by the Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of the Trustee, the Transferor or the Servicer to observe any
applicable law prohibiting disclosure of information regarding the obligors and
the failure of the Servicer to provide access as provided in this Section 8.6 as
a result of such obligations shall not constitute a breach of this Section 8.6.
Section 8.7 Delegation of Duties. It is understood and agreed by the
parties hereto that the Servicer may delegate certain of its duties hereunder to
Total Systems Services, Inc. ("TSYS"). In the ordinary course of business, the
Servicer may at any time delegate any duties hereunder to any Person who agrees
to conduct such duties in accordance with the Corporate/Purchasing Card
Guidelines. Any such delegations shall not relieve the Servicer of its liability
and responsibility with respect to such duties, and shall not constitute a
resig-
88
nation within the meaning of Section 8.5 hereof. If any such delegation is to a
party other than TSYS, notification thereof shall be given to each Rating
Agency.
Section 8.8 Examination of Records. The Servicer shall clearly and
unambiguously identify each Account (including any Additional Account designated
pursuant to Section 2.6) in its computer or other records to reflect that the
Receivables arising in such Account have been conveyed to the Trust pursuant to
this Agreement. The Servicer shall, prior to the sale or transfer to a third
party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.
[End of Article VIII]
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ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events
(each, a "Trust Early Amortization Event") shall occur:
(a) the Transferor or any holder of an interest in the
Exchangeable Transferor Certificate shall file a petition to take advantage of
any applicable insolvency or reorganization statute or consent to the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Transferor or any holder of an interest in the
Exchangeable Transferor Certificate or all or substantially all of their
respective property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Transferor or any holder of an interest in the Exchangeable Transferor
Certificate (an "Insolvency Proceeding"); or the Transferor or any holder of an
interest in the Exchangeable Transferor Certificate shall admit in writing its
inability to pay its debts generally as they become due, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its obligations
(any such event, including an Insolvency Proceeding, an "Insolvency Event");
(b) the Transferor shall become unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of this
Agreement; or
(c) the Trust shall become subject to regulation by the
Securities and Exchange Commission as an "investment company" within the meaning
of the Investment Company Act;
then an Early Amortization Event with respect to all Series of Certificates
shall occur without any notice or other action on the part of the Trustee or the
Investor
90
Certificateholders immediately upon the occurrence of such event.
Section 9.2 Additional Rights Upon the Occurrence of Certain Events.
(a) If an Insolvency Event occurs with respect to the
Transferor or any holder of an interest in the Exchangeable Transferor
Certificate, the Transferor shall on the day of such Insolvency Event (the
"Appointment Day") immediately cease to transfer Receivables to the Trust and
shall promptly give notice to the Trustee thereof. Notwithstanding any cessation
of the transfer to the Trust of additional Receivables, Receivables transferred
to the Trust prior to the occurrence of such Insolvency Event and Collections in
respect of such Receivables shall continue to be a part of the Trust, and shall
continue to be allocated and paid in accordance with Article IV. Within 15 days
of the Appointment Day, the Trustee shall (i) publish a notice in an Authorized
Newspaper that an Insolvency Event has occurred, that the Trust has dissolved
and that the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables on commercially reasonable terms and in a commercially reasonable
manner and (ii) send written notice to (w) any Holder of the Exchangeable
Transferor Certificate and any holder of an interest in the Exchangeable
Transferor Certificate with respect to which the Insolvency Event has not
occurred, (x) the Investor Certificateholders, (y) each Enhancement Provider, if
any, and (z) any other Person entitled thereto pursuant any Supplement
describing the provisions of this Section 9.2. Unless within 75 days from the
day notice pursuant to clause (i) above is first published the Trustee shall
have received written instructions from Holders of Investor Certificates
evidencing more than 50% of the Investor Interest of each Series issued and
outstanding (or, if any such Series has two or more Classes, each Class) and
from each person described in (ii)(w), (ii)(y) and (ii)(z) to the effect that
such Persons disapprove of the liquidation of the Receivables, the Trustee shall
promptly sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids. In the event that, in accordance
with the result of the voting procedures set forth above, the Receivables are
not sold at the time of dissolution, the Trustee shall
91
retain the Receivables (and no Receivables shall thereafter be added to the
Trust) and apply Collections thereon in accordance with the provisions in
Article IV. Notwithstanding the foregoing, the Trustee shall cause any remaining
Receivables and Participations to be disposed of in a manner so that the Trust
is liquidated on or prior to the date that is three (3) years after the
Appointment Date. The Trustee may obtain a prior determination from any
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 9.1 and 9.2 shall not be deemed to mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of
the Receivables pursuant to subsection (a) above shall be treated as Collections
on the Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV. On the day following the Distribution Date on which
the proceeds from any sale, disposition or liquidation of the Receivables are
distributed to the Investor Certificateholders of each Series pursuant to
Article IV, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with
its responsibilities pursuant to this Article IX with respect to competitive
bids.
[End of Article IX]
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ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee pursuant to Article
IV or to instruct the Trustee to make any required withdrawal or payment on or
before the date occurring five days after the date such payment, transfer,
deposit, withdrawal or drawing or such instruction or notice is required to be
made or given, as the case may be, under the terms of this Agreement or any
applicable Supplement; provided, however, that any such failure caused by a
nonwillful act of the Servicer shall not constitute a Servicer Default if the
Servicer promptly remedies such failure within five business days after
receiving notice thereof;
(b) failure on the part of the Servicer duly to observe or
perform in any respect any other covenants or agreements of the Servicer set
forth in this Agreement or any Supplement, which has a material adverse effect
on the Investor Certificateholders of any Series (without regard to the amount
of any Enhancement) and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 50% of the Invested Amount of any
Series adversely affected thereby and continues to materially adversely affect
such Investor Certificateholders for such period; or the Servicer shall delegate
its duties under this Agreement, except as permitted by Section 8.7;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Investor Certificateholders of any Series (without regard
to the amount of any Enhancement) and which continues to be incorrect in any
93
material respect for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the Holders of
Investor Certificates evidencing Undivided Interests aggregating not less than
50% of the Invested Amount of any Series adversely affected thereby and
continues to materially adversely affect such Investor Certificateholders for
such period; or
(d) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer, and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or the Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Invested Amount, by notice then given
in writing to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all of the rights
and obligations of the Servicer as Servicer under this Agreement. After receipt
by the Servicer of such Termination Notice, and on the date that a Successor
Servicer shall have been appointed by the Trustee pursuant to Section 10.2, all
authority and power of the Servicer under this Agreement shall pass to and be
vested in a Successor Servicer; and, without limitation, the Trustee is hereby
authorized and empowered (upon the failure of the Servicer to cooperate) to
execute and
94
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such transfer of
servicing rights and obligations. The Servicer agrees to cooperate with the
Trustee and such Successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables provided for under this
Agreement, including, without limitation, all authority over all Collections
which shall on the date of transfer be held by the Servicer for deposit, or
which have been deposited by the Servicer, in the Collection Account, the Excess
Funding Account and any Series Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer and in
enforcing all rights to Insurance Proceeds and Net Interchange (if any)
applicable to the Trust. The Servicer shall promptly transfer its electronic
records or electronic copies thereof relating to the Receivables to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance with this
Section 10.1 shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer reasonably deems to be confidential,
the Successor Servicer shall be required to enter into such customary licensing
and confidentiality agreements as the Servicer shall deem necessary to protect
its interests. The Servicer shall, on the date of any servicing transfer,
transfer all of its rights and obligations under the Enhancement with respect to
any Series to the Successor Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under subsection 10.1(a) for a period of ten (10) Business Days
after the applicable grace period or under subsection 10.1(b) or (c) for a
period of sixty (60) Business Days after the
95
applicable grace period shall not constitute a Servicer Default if such delay or
failure could not be prevented by the exercise of reasonable diligence by the
Servicer and such delay or failure was caused by an act of God or the public
enemy, acts of declared or undeclared war, public disorder, rebellion, riot or
sabotage, epidemics, landslides, lightning, fire, hurricanes, tornadoes,
earthquakes, nuclear disasters or meltdowns, floods, power outages or similar
causes. The preceding sentence shall not relieve the Servicer from using its
best reasonable efforts to perform its obligations in a timely manner in
accordance with the terms of this Agreement and the Servicer shall provide the
Trustee, any Enhancement Provider, the Transferor and the Holders of Investor
Certificates with an Officer's Certificate giving prompt notice of such failure
or delay by it, together with a description of the cause of such failure or
delay and its efforts so to perform its obligations.
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.1, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice, or otherwise specified by the
Trustee, until a date mutually agreed upon by the Servicer and Trustee (not to
exceed 90 days from the date of delivery of such notice). The Trustee shall as
promptly as possible after the giving of a Termination Notice appoint a
successor servicer (the "Successor Servicer"), with the consent of any
Enhancement Provider, and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee, the Transferor and
any Enhancement Provider. The Transferor shall have the right to nominate to the
Trustee the name of a potential successor servicer which nominee shall be
selected by the Trustee as the Successor Servicer, subject to the consent of any
Enhancement Provider. The Trustee may obtain bids from any potential successor
servicer. If the Trustee is unable to obtain any bids from any potential
successor servicer and the Servicer delivers an Officer's Certificate to the
effect that it cannot in good faith cure the Servicer Default
96
which gave rise to a transfer of servicing, then the Trustee shall offer the
Transferor the right to accept reassignment of all the Receivables; provided,
however, that no such reassignment shall occur unless the Transferor shall
deliver to the Trustee and the Rating Agencies an Opinion of Counsel reasonably
acceptable to the Trustee that such reassignment would not constitute a
fraudulent conveyance by the Transferor. The reassignment deposit amount for
such a reassignment shall be equal to the Aggregate Invested Amount (less the
aggregate principal amount on deposit in any principal funding account), plus
(i) an amount equal to all accrued but unpaid interest on the Certificates of
all Series at the applicable Certificate Rates through the end of the applicable
interest accrual periods of such Series and (ii) any unpaid amounts payable to
any Enhancement Provider under the applicable Enhancement agreement. In the
event that a Successor Servicer has not been appointed and has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the Trustee
(as trustee hereunder) without further action shall automatically be appointed
the Successor Servicer. Notwithstanding the above, the Trustee shall, if it is
legally unable so to act, petition a court of competent jurisdiction to appoint
any established financial institution having a net worth of not less than
$50,000,000 and whose regular business includes the servicing of charge card or
revolving credit receivables as the Successor Servicer hereunder.
Notwithstanding anything to the contrary in this Agreement, the entire amount of
the reassignment deposit amount shall be distributed to the Investor
Certificateholders of the related Series on the subsequent Distribution Date for
such Series pursuant to Section 12.3 (except for amounts payable to any
Enhancement Provider under the applicable Enhancement Agreement, which amounts
shall be distributed to such Enhancement Provider.)
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer; provided, however, that, the outgoing
Servicer shall not be relieved of any liability hereunder for its actions prior
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to the transfer of servicing hereunder; and provided further, that, (i) the
outgoing Servicer shall not indemnify the Trust or the Trustee under Section 8.4
for acts, omissions or alleged acts or omissions by a Successor Servicer and
(ii) the outgoing Servicer shall not pay or reimburse the Trustee pursuant to
Section 11.5 for any expense, disbursement or advance of the Trustee related to
or arising as a result of the negligence or bad faith of the Successor Servicer.
Any Successor Servicer, by its acceptance of its appointment, will automatically
agree to be bound by the terms and provisions of any applicable Enhancement
agreement.
(c) In connection with such appointment and assumption, the Trustee
shall be entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Monthly Servicing Fee permitted to the Servicer
pursuant to Section 3.2.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1 and shall pass to and be vested in the Transferor
and, without limitation, the Transferor is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Transferor in effecting the termination of the responsibilities and rights
of the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Transferor in such electronic form as the Transferor may reasonably request
and shall transfer all other records, correspondence and documents to the
Transferor in the manner and at such times as the Transferor shall reasonably
request. To the extent that compliance with this Section 10.2 shall require the
Successor Servicer to disclose to the Transferor information of any kind which
the Successor Servicer deems to be confidential, the Transferor shall be
required to enter into such customary licensing and
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confidentiality agreements as the Successor Servicer shall deem necessary to
protect its interests.
Section 10.3 Notification to Certificateholders. Within two Business
Days after the Servicer becomes aware of any Servicer Default, the Servicer
shall give prompt written notice thereof to the Trustee, each Rating Agency and
any Enhancement Provider, and the Trustee shall give notice to the Investor
Certificateholders at their respective addresses appearing in the Certificate
Register. Upon any termination or appointment of a Successor Servicer pursuant
to this Article X, the Trustee shall give prompt written notice thereof to
Investor Certificateholders at their respective addresses appearing in the
Certificate Register.
Section 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3% of
the Invested Amount of each Series adversely affected by any default by the
Servicer or Transferor may, on behalf of all Certificateholders of such Series,
waive any default by the Servicer or Transferor in the performance of its
obligations hereunder and its consequences, except a default relating to the
failure to make any required deposits or payments of interest or principal
relating to such Series pursuant to Article IV which default does not result
from the failure of the Paying Agent to perform its obligations to make any
required deposits or payments of interest and principal in accordance with
Article IV. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
[End of Article X]
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ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of any Servicer Default and
after the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Responsible Officer has received written notice that a Servicer
Default has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
(c) Subject to subsection 11.1(a), no provision of this Agreement
shall be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing Undivided Interests aggregating more than 50% of the Invested
Amount of any Series relating to the time, method and place of
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conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee in relation to
such Series, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure
by the Servicer referred to in clauses (a) and (b) of Section 10.1 unless
a Responsible Officer of the Trustee obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Servicer or any Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 10% of the Invested Amount of any
Series adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provision contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer under this Agreement, except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of the
Trust in any Receivable now existing or hereafter created or to impair the value
of any Receivable now existing or hereafter created.
(f) Except as provided in this subsection 11.1(f), the Trustee shall
have no power to vary the corpus of the Trust including, without limitation, the
power to (i) accept any substitute obligation for a Receivable initially
assigned to the Trust under Section 2.1 or 2.6 hereof, (ii) add any other
investment, obligation or security to the Trust, except for an addition
permitted under Section 2.6 or (iii) withdraw from the
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Trust any Receivables, except for a withdrawal permitted under Sections 2.7,
9.2, 10.2, 12.1 or 12.2 or subsections 2.4(d), 2.4(e) or Article IV.
(g) Subject to subsection 11.1(d) above, in the event that the
Paying Agent or the Transfer Agent and Registrar (if other than the Trustee)
shall fail to perform any obligation, duty or agreement in the manner or on the
day required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly to perform such obligation, duty or agreement in the manner
so required.
(h) If the Transferor has agreed to transfer any of its charge card
receivables (other than the Receivables) to another Person, upon the written
request of the Transferor, the Trustee will enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights, if any, of the Trust and such other
Person in the Transferor's charge card receivables; provided, however, that the
Trust shall not be required to enter into any intercreditor agreement which
could adversely affect the interests of the Certificateholders and, upon the
request of the Trustee, the Transferor will deliver an Opinion of Counsel on any
matters relating to such intercreditor agreement, reasonably requested by the
Trustee.
Section 11.2 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.1:
(a) the Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accord with, any assignment of Receivables in
Additional Accounts, the initial report, the monthly Servicer's certificate, the
annual Servicer's certificate, the monthly payment instructions and notification
to the Trustee, the monthly Certificateholder's statement, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties;
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(b) the Trustee may consult with counsel of its selection, and any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Enhancement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders or any
Enhancement Provider, pursuant to the provisions of this Agreement, unless such
Certificateholders or Enhancement Provider shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities,
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligations, upon the occurrence of any
Servicer Default (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement and any Enhancement, and to use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into
the facts of matters stated in any assignment of Receivables in Additional
Accounts, the initial report, the monthly Servicer's certificate, the annual
Servicer's certificate, the monthly payment instructions and notification to the
Trustee, the monthly Certificateholder's statement, any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing so to do
by Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series;
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(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and
(g) except as may be required by subsection 11.1(a), the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the
Transferor with its representations and warranties or for any other purpose.
Section 11.3 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
in this Agreement and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor or to the holder of the
Exchangeable Transferor Certificate in respect of the Receivables or deposited
in or withdrawn from the Collection Account or any Series Account by the
Servicer.
Section 11.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the Trustee.
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution
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of the Trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and, subject to Section 8.4, the
Servicer will pay or reimburse the Trustee (without reimbursement from any
Investor Account, any Series Account or otherwise) upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement except any such
expense, disbursement or advance as may arise from its own negligence or bad
faith and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.2, the provisions of this
Section 11.5 shall not apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor Servicer.
The obligations of the Servicer under this Section 11.5 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or any state thereof authorized under
such laws to exercise corporate trust powers, having a long-term unsecured debt
rating of at least Baa3 by Moody's and BBB by Standard & Poor's having, in the
case of an entity that is subject to risk-based capital adequacy requirements,
risk-based capital of at least $50,000,000 or, in the case of an entity that is
not subject to risk-based capital adequacy requirements, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.6, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.6, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.7.
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Section 11.7 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the
Trust hereby created by giving written notice thereof to the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted within thirty (30) days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to resign
after written request therefor by the Transferor, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Transferor may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.8 hereof and any liability of the Trustee arising
hereunder shall survive such appointment of a successor trustee.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.7
hereof shall execute, acknowledge and deliver to the Transferor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor
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Trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Trustee herein. The predecessor Trustee shall deliver to the
successor trustee all documents and statements held by it hereunder, and the
Transferor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 11.8 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 11.6 hereof and shall be an
Eligible Servicer, and, if Standard & Poor's is then a Rating Agency, unless
Standard & Poor's shall have consented to such appointment.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.6 hereof, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee
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shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the trust, or any part thereof, and, subject to the other provisions of
this Section 11.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 11.6 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any laws of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee as its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect to
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be required
to file tax returns, the Trustee, as soon as practicable after it is made aware
of such requirement, shall prepare or cause to be prepared any tax returns
required to be filed by the Trust and, to the extent possible, shall file such
returns at least five days before such returns are due to be filed. The Trustee
is hereby authorized to sign any such return on behalf of the Trust. The
Servicer shall prepare or shall cause to be prepared all tax information
required by law to be distributed to Certificateholders and shall deliver such
information to the Trustee at least five days prior to the date it is required
by law to be distributed to Certificateholders. The Servicer, upon request, will
furnish the Trustee with all such information known to the Servicer as may be
reasonably required in connection with the preparation of all tax returns of the
Trust. In no event shall the Trustee or the Servicer be liable for
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any liabilities, costs or expenses of the Trust, the Investor Certificateholders
or the Certificate Owners arising under any tax law, including without
limitation federal, state, local or foreign income or excise taxes or any other
tax imposed on or measured by income (or any interest or penalty with respect
thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
of Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of any Series of Certificateholders in respect of which such
judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default shall
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.1 and 11.14, proceed to protect and enforce its rights
and the rights of any Series of Certificateholders under this Agreement by a
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement cement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce any
of the rights of the Trustee or any Series of Certificateholders.
Section 11.14 Rights of Certificateholders to Direct Trustee.
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Invested Amount (or, with respect to any remedy, trust
or power that does not relate to all Series, 50% of the Aggregate Invested
Amount of the Investor Certificates of all Series to which such remedy, trust or
power relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
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any trust or power conferred on the Trustee; provided, however, that, subject to
Section 11.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction of such Holders of Investor
Certificates.
Section 11.15 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(i) the Trustee is a banking corporation organized, existing and
authorized to engage in the business of banking under the laws of the
United States;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
and
(iii) this Agreement has been duly executed and delivered by the
Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense in the Borough of Manhattan, the City of New York an
office or offices, or agency or agencies, where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served. The
Trustee's Corporate Trust Office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
shall initially be such office. The Trustee will give prompt written notice to
the Servicer and to Certificateholders (or in the case of Holders of Bearer
Certificates, in the manner provided for in the related Supplement) of any
change in the location of the Certificate Register or any such office or agency.
[End of Article XI]
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ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.
(a) The respective obligations and responsibilities of the
Transferor, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificateholders as hereafter
set forth) shall terminate, except with respect to the duties described in
Section 8.4, Section 11.5 and subsections 2.4(c) and 12.3(b), on the Trust
Termination Date; provided, however, that the Trust shall not terminate on the
date specified in clause (i) of the definition of "Trust Termination Date" if
each of the Servicer and the Holder of the Exchangeable Transferor Certificate
notify the Trustee in writing, not later than five Business Days preceding such
date, that they desire that the Trust not terminate on such date, which notice
(such notice, a "Trust Extension") shall specify the date on which the Trust
shall terminate (such date, the "Extended Trust Termination Date"); provided,
however, that the Extended Trust Termination Date shall be not later than
__________ __, 20__. The Servicer and the Holder of the Exchangeable Transferor
Certificate may, on any date following the Trust Extension, so long as no Series
of Certificates is outstanding, deliver a notice in writing to the Trustee
changing the Extended Trust Termination Date.
(b) All principal and interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in a
Supplement, in the event that the Invested Amount of any Series of Certificates
is greater than zero on its Series Termination Date (after giving effect to all
transfers, withdrawals, deposits and drawings to occur on such date and the
payment of principal to be made on such Series on such date), the Trustee will
sell or cause to be sold, and pay the proceeds first, to all Certificateholders
of such Series in accordance with the priority for each Class within such Series
as provided in the related Supplement, in final payment of all principal of and
accrued interest on such Series of Certificates, and second, as provided in the
related Supplement, an amount
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of Receivables (or interests therein) up to 110% of the sum of the Invested
Amount of such Series plus the Collateral Invested Amount (if not included in
the Invested Amount) of such Series, if any, at the close of business on such
date (but not more than an amount of Receivables equal to the sum of (1) the
product of (A) the Transferor Amount divided by the aggregate amount of Trust
Principal Component plus any Excess Funding Amount, (B) the aggregate amount of
the Trust Principal Component plus any Excess Funding Amount, and (C) a fraction
the numerator of which is the applicable Investor Percentage with respect to
Yield Collections and the denominator of which is the sum of all Investor
Percentages with respect to Yield Collections and (2) the Invested Amount of
such Series plus the Collateral Invested Amount (if not included in the Invested
Amount) of such Series). The Trustee shall notify each Enhancement Provider of
the proposed sale of such Receivables and shall provide each Enhancement
Provider an opportunity to bid on such Receivables. The Transferor shall be
permitted to purchase such Receivables in such case and shall have a right of
first refusal with respect thereto. Any proceeds of such sale in excess of such
principal and interest paid and such other amounts paid pursuant to the related
Supplement shall be paid to the Holder of the Exchangeable Transferor
Certificate. Upon such Series Termination Date with respect to the applicable
Series of Certificates, final payment of all amounts allocable to any Investor
Certificates of such Series shall be made in the manner provided in Section
12.3.
Section 12.2 Optional Purchase. (a) If so provided in any
Supplement, the Transferor may, but shall not be obligated to, cause a final
distribution to be made in respect of the related Series of Certificates on a
Distribution Date specified in such Supplement by depositing into the Collection
Account or the applicable Series Account, not later than the Transfer Date
preceding such Distribution Date, for application in accordance with Section
12.3, the amount specified in such Supplement; provided, however that if the
short-term deposits or long-term unsecured debt obligations of the Transferor
(or, if neither such deposits nor such obligations of the Transferor are rated
by Xxxxx'x, then the short-term deposits or long-term unsecured debt obligations
of the holding company of the Transferor so long as such holding company is
First Bank System, Inc.) are not rated at the
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time of such purchase of Receivables at least P-3 or Baa3, respectively, by
Xxxxx'x, no such event shall occur unless the Transferor shall deliver an
Opinion of Counsel reasonably acceptable to the Trustee that such deposit into
the Collection Account or any Series Account as provided in the related
Supplement would not constitute a fraudulent conveyance of the Transferor.
(b) The amount deposited pursuant to subsection 12.2(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Section 12.3 on the related Distribution Date following the date of such
deposit. All Certificates of a Series which are purchased by the Transferor
pursuant to subsection 12.2(a) shall be delivered by the Transferor upon such
purchase to, and be canceled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Transferor. The
Invested Amount of each Series which is purchased by the Transferor pursuant to
subsection 12.2(a) shall, for the purposes of the definition of "Transferor
Amount," be deemed to be equal to zero on the Distribution Date following the
making of the deposit, and the Transferor Amount shall thereupon be deemed to
have been increased by the Invested Amount of such Series.
Section 12.3 Final Payment with Respect to any Series.
(a) Written notice of any termination, specifying the Distribution
Date upon which the Investor Certificateholders of any Series may surrender
their Certificates for payment of the final distribution with respect to such
Series and cancellation, shall be given (subject to at least two Business Days'
prior notice from the Servicer to the Trustee) by the Trustee to Investor
Certificateholders of such Series mailed not later than the fifth day of the
month of such final distribution (or in the manner provided by the Supplement
relating to such Series) specifying (i) the Distribution Date (which shall be
the Distribution Date in the month (x) in which the deposit is made pursuant to
subsection 2.4(e), 9.2(b), 10.2(a), or subsection 12.2(a) of the Agreement or
such other section as may be specified in the related Supplement, or (y) in
which the related Series Termination Date occurs) upon which final payment of
such Investor Certificates will be made upon presentation and surrender of
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such Investor Certificates at the office or offices therein designated (which,
in the case of Bearer Certificates, shall be outside the United States), (ii)
the amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Investor Certificates at the office or
offices therein specified. The Servicer's notice to the Trustee in accordance
with the preceding sentence shall be accompanied by an Officer's Certificate
setting forth the information specified in Article V of this Agreement covering
the period during the then current calendar year through the date of such notice
and setting forth the date of such final distribution. The Trustee shall give
such notice to the Transfer Agent and Registrar and the Paying Agent at the time
such notice is given to such Investor Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with respect
to any Series, all funds then on deposit in the Collection Account or any Series
Account applicable to the related Series shall continue to be held in trust for
the benefit of the Certificateholders of the related Series and the Paying Agent
or the Trustee shall pay such funds to the Certificateholders of the related
Series upon surrender of their Certificates (which surrenders and payments, in
the case of Bearer Certificates, shall be made only outside the United States).
In the event that all of the Investor Certificateholders of any Series shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice (or, in the case of Bearer Certificates, publication notice) to
the remaining Investor Certificateholders of such Series upon receipt of the
appropriate records from the Transfer Agent and Registrar to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one and one-half years after the second notice with respect
to a Series, all the Investor Certificates of such Series shall not have been
surrendered for cancellation, the Trustee may take appropriate steps or may
appoint an agent to take appropriate steps, to contact the remaining Investor
Certificateholders of such Series concerning surrender of their Certificates,
and the cost thereof
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shall be paid out of the funds in the Collection Account or any Series Account
held for the benefit of such Investor Certificateholders. The Trustee and the
Paying Agent shall pay to the Transferor upon request any monies held by them
for the payment of principal or interest which remains unclaimed for two years.
After such payment to the Transferor, Investor Certificateholders entitled to
any of such monies must look to the Transferor for payment as general creditors
unless an applicable abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
Section 12.4 Termination Rights of Holder of Transferor Certificate.
Upon the termination of the Trust pursuant to Section 12.1, and after payment of
all amounts due hereunder on or prior to such termination and the surrender of
the Exchangeable Transferor Certificate, the Trustee shall execute a written
reconveyance substantially in the form of Exhibit H pursuant to which it shall
reconvey to the Holder of the Exchangeable Transferor Certificate (without
recourse, representation or warranty) all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, all moneys due
or to become due with respect to such Receivables and all proceeds of such
Receivables and Insurance Proceeds relating to such Receivables and Net
Interchange (if any) allocable to the Trust pursuant to any Supplement, except
for amounts held by the Trustee pursuant to subsection 12.3(b). The Trustee
shall execute and deliver such instruments of transfer and assignment, in each
case without recourse, as shall be reasonably requested by the Holder of the
Exchangeable Transferor Certificate to vest in such Holder all right, title and
interest which the Trust had in the Receivables.
Section 12.5 Defeasance.
Notwithstanding anything to the contrary in this Agreement or any
Supplement:
(a) The Transferor may at its option be discharged from its
obligations with respect to all of the
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Investor Certificates issued by the Trust or any specified Series thereof on the
date the applicable conditions set forth in Section 12.5(c) are satisfied
("Defeasance"); provided, however, that the following rights, obligations,
powers, duties and immunities shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of Investor Certificates of the
Trust or any specified Series thereof to receive, solely from the trust fund
provided for in Section 12.5(c), payments in respect of principal of and
interest on such Investor Certificates when such payments are due; (B) the
Transferor's obligations with respect to such Series of Certificates under
Sections 6.3, 6.4 and 12.3; (C) the rights, powers, trusts, duties and
immunities of the Trustee, the Paying Agent and the Transfer Agent and Registrar
hereunder; and (D) this Section 12.5.
(b) Subject to section 12.5(c), the Transferor at its option may use
Collections to purchase Eligible Investments rather than additional Receivables
for transfer to the Trust until such time as no Receivables remain in the Trust.
(c) The following shall be the conditions to Defeasance under
Section 12.5(a): (1) the Transferor irrevocably shall have deposited or caused
to be deposited with the Trustee, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, as trust funds in
trust for making the payments described below (A) Dollars in an amount, or (B)
Eligible Investments which through the scheduled payment or principal and
interest in respect thereof will provide, not later than the due date of payment
thereon, money in an amount, or (C) a combination thereof, in each case
sufficient to pay and discharge, and, which shall be applied by the Trustee to
pay and discharge, all remaining scheduled interest and principal payments on
all outstanding Investor Certificates of the Trust or any specified Series
thereof on the dates scheduled for such payments in this Agreement and the
applicable Supplements and all amounts owed to the Enhancement Provider for any
Series if so provided in the related Supplements or agreements with such
Enhancement Provider; (2) prior to its first exercise of its right to substitute
money or Eligible Investments for Receivables, the Transferor shall deliver to
the Trustee (x) an Opinion of Counsel to the effect that such deposit and
termination of obligations will not
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result in the Trust being required to register as an "investment company" within
the meaning of the Investment Company Act and (y) a Tax Opinion with respect to
such deposit and termination; and (3) such deposit and termination of
obligations will not result in an Early Amortization Event for any Series.
[End of Article XII]
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement or any Supplement may be amended in writing from
time to time by the Servicer, the Transferor and the Trustee without the consent
of any of the Certificateholders, for the purpose of curing any ambiguity,
correcting or supplementing any provision therein which may be inconsistent with
any other provision therein or adding any other provisions with respect to
matters or questions arising under the Agreement which are not inconsistent with
the provisions of the Agreement and enabling the Trust or a portion thereof to
elect to qualify as a financial asset securitization investment trust (or
comparable tax entity for the securitization of financial assets) in accordance
with the Internal Revenue Code; provided, however, that (i) such action shall
not, in the reasonable belief of the Transferor, as evidenced by an Officer's
Certificate, adversely affect in any material respect the interests of any
Investor Certificateholders; (ii) the Transferor shall have delivered a Tax
Opinion to the Trustee and (iii) each Rating Agency shall have notified the
Transferor, the Servicer and the Trustee in writing (which writing need only be
addressed to any one of the Transferor, the Servicer or the Trustee) that such
action will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class to which it is a Rating Agency.
(b) This Agreement or any Supplement may also be amended in writing
from time to time by the Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each outstanding
Series adversely affected by such amendment for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or any Supplement or modifying in any manner the rights of
Investor Certificateholders of any Series then issued and outstanding; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, distributions which are required to be made on any
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Investor Certificates of such Series without the consent of each Investor
Certificateholder of such Series, (ii) change the definition of or the manner of
calculating the Invested Amount, the Investor Percentage or the Investor Default
Amount of such Series without the consent of each Investor Certificateholder of
such Series or (iii) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of each Investor Certificateholder of all
Series adversely affected. The Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise.
(c) Notwithstanding anything in this Section 13.1 to the contrary, a
Supplement with respect to any Series may be amended on the terms in accordance
with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment, the Trustee
shall furnish notification of the substance of such amendment to each Investor
Certificateholder of each Series affected and to each Rating Agency providing a
rating for such Series.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(f) Any Series Supplement executed and delivered pursuant to Section
6.9 and any amendments regarding the addition to or removal of Receivables or
Participations from the Trust as provided in Sections 2.6 and 2.7, executed in
accordance with the provisions hereof, shall not be considered amendments to
this Agreement for the purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, the Trustee may request an
Opinion of Counsel from the Transferor or Servicer to the effect that the
amendment complies with all requirements of this Agreement.
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Section 13.2 Protection of Right, Title and Interest to Trust.
(a) The Servicer shall cause this Agreement, all amendments hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the Certificateholders and the Trustee's right,
title and interest to the Trust to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Certificateholders or the Trustee, as the case
may be, hereunder to all property comprising the Trust. The Servicer shall
deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recordings registration or filing. The Transferor shall cooperate
fully with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this subsection 13.2(a).
(b) Within thirty (30) days after the Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of the UCC as in
effect in the Relevant UCC State, the Transferor shall give the Trustee notice
of any such change and shall file such financing statements or amendments as may
be necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof.
(c) Each of the Transferor and the Servicer will give the Trustee
prompt written notice of any relocation of any office from which it services
Receivables or keeps records concerning the Receivables or of its principal
executive office and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. Each of the Trans-
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feror and the Servicer will at all times maintain each office from which it
services Receivables and its principal executive office within the United States
of America.
(d) The Servicer will deliver to the Trustee on or before
_____________ __ of each year, beginning with _____________ __, 1998, an Opinion
of Counsel, substantially in the form of Exhibit F.
Section 13.3 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except with
respect to the Investor Certificateholders as provided in Section 13.1 hereof)
or in any manner otherwise control the operation and management of the Trust, or
the obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given written notice to the Trustee, and
unless the Holders of Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series which may be adversely
affected but for the institution of such suit, action or proceeding, shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and
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shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and the Trustee, for sixty (60) days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Certificateholders shall
have the right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Certificateholders of any other of the Certificates, or to
obtain or seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 13.3, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 13.4 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, sent by facsimile to, sent by courier at or mailed by
registered mail, return receipt requested, to (a) in the case of the Transferor,
to (b) in the case of the Servicer, to (c) in the case of the Trustee, to the
Corporate Trust Office, (d) in the case of the Enhancement Provider for a
particular Series, the address, if any, specified in the Supplement relating to
such Series and (e) in the case of the Rating Agency for a particular Series,
the address, if any, specified in the Supplement relating to such Series; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party. Unless otherwise provided with respect to
any Series in the related Supplement any notice required or permitted to be
mailed to
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a certificateholder shall be given by first class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register, or with
respect to any notice required or permitted to be made to the Holders of Bearer
Certificates, by publication in the manner provided in the related Supplement.
If and so long as any Series or Class is listed on the Luxembourg Stock Exchange
and such Exchange shall so require, any Notice to Investor Certificateholders
shall be published in an authorized newspaper of general circulation in
Luxembourg within the time period prescribed in this Agreement. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 13.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof.
Section 13.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.2, this Agreement may not be
assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66 2/3% of
the Invested Amount of each Series.
Section 13.8 Certificates Non-Assessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the Undivided Interests
represented by the Certificates shall be non-assessable for any losses or
expenses of the Trust or for any reason whatsoever, and that Certificates upon
authentication thereof by the Trustee pursuant to Sections 2.1 and 6.2 are and
shall be deemed fully paid.
Section 13.9 Further Assurances. The Transferor and the Servicer
agree to do and perform, from time
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to time, any and all acts and to execute any and all further instruments
required or reasonably requested by the Trustee more fully to effect the
purposes of this Agreement, including, without limitation, the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee, any Enhancement Provider
or the Investor Certificateholders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
Section 13.11 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Certificateholders
and, to the extent provided in the related Supplement, to the Enhancement
Provider named therein, and their respective successors and permitted assigns.
Except as otherwise provided in this Article XIII and Section 7.4 hereof, no
other Person will have any right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement a provision is made that an action
may be taken or a notice, demand or instruction given by Investor
Certificateholders, such action, notice or instruction may be taken or given by
any Investor Certificateholder, unless such provision requires a specific
percentage of Investor Certificateholders.
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(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind such Certificateholder and
every subsequent holder of such Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
Section 13.14 Rule 144A Information. For so long as any of the
Investor Certificates of any Series or any Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of the
Transferor, the Servicer, the Trustee and the Enhancement Provider for such
Series agree to cooperate with each other to provide to any Investor
Certificateholders of such Series or Class and to any prospective purchaser of
such Investor Certificates designated by such an Investor Certificateholder upon
the request of such Investor Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Securities Act.
Section 13.15 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.16 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
[End of Article XIII]
126
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers as
of the day and year first above written.
FIRST BANK OF SOUTH DAKOTA
(NATIONAL ASSOCIATION)
Transferor
By:________________________
Name:
Title:
FBS CARD SERVICES, INC.
Servicer
By:________________________
Name:
Title:
CITIBANK, N.A.
Trustee
By:________________________
Name:
Title:
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