EXHIBIT 4.2
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PEOPLE'S BANK
Transferor and Servicer
and
BANKERS TRUST COMPANY
Trustee
on behalf of the Series 1997-2 Investor Certificateholders
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SERIES 1997-2 SUPPLEMENT
Dated as of [September __, 1997]
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of [September __, 1997]
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[$ ]
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PEOPLE'S BANK CREDIT CARD MASTER TRUST
[$ ] Floating Rate Class A
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Asset Backed Certificates, Series 1997-2
[$ ] Floating Rate Class B
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Asset Backed Certificates, Series 1997-2
[$ ] Collateral Interest, Series 1997-2
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TABLE OF CONTENTS
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Page
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RECITALS ................................................................. 1
SECTION 1. Designation. .................................................. 1
SECTION 2. Definitions. .................................................. 2
SECTION 2.1 Other Definitional Provisions. ................................ 27
SECTION 3. Conveyance of Interest in Series Accounts. .................... 27
SECTION 4. Minimum Seller Interest, Minimum Aggregate
Principal Receivables and Removal of Accounts. .............. 27
SECTION 5. Reassignment and Transfer Terms. .............................. 28
SECTION 6. Delivery and Payment for the Series 1997-2
Certificates. ............................................... 28
SECTION 7. Depositary; Form of Delivery of Series 1997-2
Certificates. ............................................... 29
SECTION 8. Enhancement. .................................................. 29
SECTION 9. Article IV of Agreement. ...................................... 29
SECTION 9.A Series 1997-2 Pay Out Events. ................................. 74
SECTION 10. Series 1997-2 Termination. .................................... 76
SECTION 11. Ratification and Reaffirmation of Pooling and
Servicing Agreement. ........................................ 77
SECTION 12. Ratification and Reaffirmation of
Representations and Warranties. ............................. 77
SECTION 13. [RESERVED] ................................................... 77
SECTION 14. No Subordination. ............................................ 77
SECTION 15. Repurchase of the Series 1997-2 Certificates. ................ 78
SECTION 16. Counterparts. ................................................ 79
SECTION 17. Additional Covenants of Transferor. .......................... 79
SECTION 18. Series 1997-2 Investor Exchange. ............................. 79
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Page
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SECTION 19. Governing Law. ............................................... 80
SECTION 20. Notification to Luxembourg Stock Exchange. ................... 80
EXHIBIT 1-A Form of Class A Investor Certificate
EXHIBIT 1-B Form of Class B Investor Certificate
EXHIBIT 2 Form of Monthly Certificateholders' Statement
EXHIBIT 3 DTC Letter of Representations
EXHIBIT 4 Form of Monthly Payment Instructions to Trustee
EXHIBIT 5 Form of Notice to Trustee Regarding Completion of
Required Deposits and Withdrawals
EXHIBIT 6 Form of Notification to Trustee Regarding Failure
to Make Payment
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SERIES 1997-2 SUPPLEMENT, dated as of [September , 1997] (as the same may
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be amended, supplemented or otherwise modified from time to time in accordance
with the Pooling and Servicing Agreement referenced below, this "Series
Supplement") by and between PEOPLE'S BANK, a Connecticut capital stock savings
bank, as Transferor and Servicer, and BANKERS TRUST COMPANY, a banking
corporation organized and existing under the laws of the State of New York, not
in its individual capacity but solely as Trustee under the Amended and Restated
Pooling and Servicing Agreement dated as of March 18, 1997 between People's Bank
and the Trustee (as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms, the "Pooling and Servicing
Agreement").
RECITALS:
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1. Section 6.9(b) of the Pooling and Servicing Agreement provides,
among other things, that the Transferor and the Trustee may at any time and from
time to time enter into a Supplement to the Pooling and Servicing Agreement for
the purpose of authorizing the delivery by the Trustee to the Transferor for the
execution and redelivery to the Trustee for authentication of one or more Series
of Investor Certificates.
2. Pursuant to this Series Supplement, the Transferor and the
Trustee on behalf of the Trust shall create a new Series of Investor
Certificates and shall specify the Principal Terms thereof.
SECTION 1. Designation. (a) The Series 1997-2 Investor Certificates
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shall be issued in two Classes, which shall be designated generally as the
Floating Rate Class A Asset Backed Certificates, Series 1997-2 and the Floating
Rate Class B Asset Backed Certificates, Series 1997-2. In addition, there is
hereby authorized a third Class which constitutes an uncertificated interest in
the Trust, which shall be deemed to be an "Investor Certificate" for all
purposes under the Pooling and Servicing Agreement and this Series Supplement,
except as expressly provided herein, and shall be known as the Collateral
Interest, Series 1997-2 and have the rights assigned to the Collateral Interest
in this Series Supplement.
(b) The Collateral Interest Holder, as holder of an "Investor Certificate"
under the Pooling and Servicing Agreement, shall be entitled to the benefits of
the Pooling and Servicing Agreement and this Series Supplement upon payment by
the Collateral Interest Holder of amounts owing on the Closing Date pursuant to
the Loan Agreement. Notwithstanding the foregoing, except as expressly provided
herein, (i) the provisions of Article VI and Article XII of the Pooling and
Servicing Agreement relating to the registration, authentication, delivery,
presentation, cancellation and surrender of Registered Certificates shall not be
applicable to the Collateral Interest and (ii) the Opinion of Counsel specified
in clause (d) of the sixth sentence of subsection 6.9(h) of the Agreement shall
not be required with respect to the Collateral Interest.
SECTION 2. Definitions. In the event that any term or provision
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contained herein shall conflict with or be inconsistent with any provision
contained in the Pooling and Servicing Agreement, the terms and provisions of
this Series Supplement shall govern. All capitalized terms not otherwise
defined herein are defined in the Pooling and Servicing Agreement. All Article,
Section or subsection references herein shall mean Article, Section or
subsections of the Pooling and Servicing Agreement except as otherwise provided
herein. Each capitalized term used or defined herein shall relate only to the
Series 1997-2 Investor Certificates and to no other Series of Certificates
issued by the Trust.
"Accumulation Shortfall" shall mean (a) with respect to the Transfer Date
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occurring immediately prior to the Initial Class A Accumulation Date, zero, and
(b) with respect to each Transfer Date thereafter during the Controlled
Accumulation Period occurring prior to the Class A Scheduled Payment Date, the
excess, if any, of the applicable Controlled Deposit Amount for the immediately
preceding Transfer Date over the amount deposited into the Principal Funding
Account pursuant to subsection 4.8(a)(ii)(A) on such preceding Transfer Date.
"Adjusted Investor Interest" shall mean, on any date of determination, an
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amount equal to the sum of (a) the Class A Adjusted Investor Interest, (b) the
Class B Investor Interest and (c) the Collateral Interest, in each case as of
such date of determination.
"Agent" shall have the meaning specified in the Loan Agreement.
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"Agreement" shall mean the Pooling and Servicing Agreement, as the same may
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be amended, supplemented or otherwise modified from time to time in accordance
with its terms, including by this Series Supplement thereto.
"Available Investor Principal Collections" shall mean, with respect to any
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Monthly Period, an amount equal to (a) Principal Collections processed on any
Date of Processing during such Monthly Period, which were allocated to the
Investor Interest and were deposited in the Principal Account pursuant to
subsection 4.4(c)(ii), 4.4(d)(ii) or 4.4(e)(ii) (or which will be deposited in
the Collection Account on the Transfer Date following such Monthly Period
pursuant to the fourth paragraph of subsection
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4.2(a) of the Agreement and will be allocated to the Investor Interest pursuant
to subsection 4.4(c)(ii), 4.4(d)(ii) or 4.4(e)(ii) as if they had been deposited
in the Collection Account during such Monthly Period), plus (b) the sum of the
amounts allocated on such related Transfer Date to Investor Default Amounts and
Investor Charge-Offs pursuant to subsections 4.6(a)(iii), 4.6(a)(iv),
4.6(b)(iii), 4.6(b)(iv), 4.6(d)(i), 4.6(d)(ii), 4.6(d)(ix), 4.6(d)(x) and 4.12,
as applicable, minus (c) the amount of Reallocated Principal Collections with
respect to such Monthly Period which pursuant to Section 4.12 are required to
fund the Class A Required Amount and the Class B Required Amount (other than any
portions thereof that are applied pursuant to (x) subsection 4.6(a)(iii),
4.6(a)(iv), 4.6(b)(iii) or 4.6(b)(iv) and (y) subsection 4.6(d)(i) or 4.6(d)(ii)
(to the extent such portions pursuant to subsection 4.6(d)(i) or 4.6(d)(ii) are
available to pay Investor Default Amounts or Investor Charge-Offs), which shall,
without duplication, be included as Available Investor Principal Collections
pursuant to clause (b) above), plus (d) Available Shared Principal Collections
with respect to such Monthly Period.
"Available Reserve Account Amount" shall mean, as to any Transfer Date, the
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lesser of (a) the amount on deposit in the Reserve Account on such date (after
taking into account any interest and earnings retained in the Reserve Account
pursuant to subsection 4.9(b) on such date, but before giving effect to any
deposit made or to be made pursuant to subsection 4.6(d)(xi) to the Reserve
Account on such date) and (b) the Required Reserve Account Amount.
"Available Shared Principal Collections" shall mean, with respect to any
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Monthly Period, Shared Principal Collections available to be allocated to the
Series 1997-2 Investor Certificates from each other Series.
"Base Rate" shall mean, with respect to any Monthly Period, the Certificate
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Rate plus 2.00% per annum.
"Calculation Period" shall have the meaning specified in the applicable
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Interest Rate Cap.
"Certificate Rate" shall mean, with respect to the Series 1997-2 Investor
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Certificates and any Monthly Period, the weighted average of (i) the lesser of
the Class A Certificate Rate and the Class A Cap Rate, (ii) the lesser of the
Class B Certificate Rate and the Class B Cap Rate and (iii) the Collateral Rate
(weighted based on the Class A Investor Interest, the Class B Investor Interest
and the Collateral Interest, respectively, as of the last day of the preceding
Monthly Period).
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"Class A Adjusted Investor Interest" shall mean, on any date of
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determination, an amount equal to the Class A Investor Interest minus the
Principal Funding Account Balance on such date of determination.
"Class A Available Funds" shall mean, with respect to any Monthly Period,
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an amount equal to the sum of (a) the Class A Floating Allocation of Finance
Charge Collections (other than the proceeds of the sale of any Interest Rate Cap
pursuant to Section 4.11(g)) processed on any Date of Processing during such
Monthly Period, which are allocated to the Investor Interest and deposited in
the Finance Charge Account pursuant to Article IV (or which will be deposited in
the Collection Account on the Transfer Date following such Monthly Period
pursuant to the fourth paragraph of subsection 4.2(a) of the Agreement and will
be allocated to the Investor Interest pursuant to subsection 4.4(c)(i),
4.4(d)(i) or 4.4(e)(i) as if they had been deposited in the Collection Account
during such Monthly Period), (b) the Principal Funding Investment Proceeds, if
any, arising pursuant to subsection 4.3(c) with respect to the related Transfer
Date which are to be applied as Class A Available Funds pursuant to such
subsection (or which will be required to be deposited in the Finance Charge
Account pursuant to such subsections on the related Transfer Date), (c) amounts,
if any, to be withdrawn from the Reserve Account which will be deposited into
the Finance Charge Account on the related Transfer Date pursuant to subsections
4.9(b) and 4.9(d) and (d) the proceeds from the sale of all or any portion of
the Class A Interest Rate Cap deposited into the Collection Account during such
Monthly Period pursuant to subsection 4.11(g).
"Class A Cap Rate" shall mean [ %] per annum.
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"Class A Certificate Rate" shall mean, with respect to the period from and
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including the Closing Date through and including October 14, 1997, [ %] per
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annum, and with respect to each Interest Accrual Period thereafter, a per annum
rate equal to [ %]in excess of LIBOR as determined on the related LIBOR
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Determination Date.
"Class A Certificateholder" shall mean the Person in whose name a Class A
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Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any of the Floating Rate Class A Asset
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Backed Certificates, Series 1997-2, executed by the Transferor and authenticated
by or on behalf of the Trustee, substantially in the form of Exhibit 1-A hereto.
"Class A Covered Amount" shall mean an amount determined as of each
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Transfer Date with respect to any Interest Accrual Period
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as the product of (a) a fraction, the numerator of which is the actual number of
days in such Interest Accrual Period and the denominator of which is 360, (b)
the Class A Certificate Rate in effect with respect to such Interest Accrual
Period, and (c) the Principal Funding Account Balance as of the Distribution
Date preceding such Transfer Date after giving effect to all payments, deposits
and withdrawals on such Distribution Date.
"Class A Excess Interest" shall mean, with respect to any Distribution
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Date, an amount equal to the product of (a) the amount by which the Class A
Certificate Rate exceeds the Class A Cap Rate with respect to the immediately
preceding Interest Accrual Period, (b) the Class A Excess Principal, if any, as
of the preceding Distribution Date (after giving effect to all payments,
deposits and withdrawals on such Distribution Date), and (c) the actual number
of days in such Interest Accrual Period divided by 360.
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"Class A Excess Principal" shall mean on any date of determination, the
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amount by which the Class A Investor Interest exceeds the Expected Class A
Principal after giving effect to all payments, deposits and withdrawals on such
date.
"Class A Floating Allocation" shall mean, with respect to any Monthly
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Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class A Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Adjusted Investor Interest as of the close
of business on such day; provided that, with respect to the first Monthly
Period, the Class A Floating Allocation means the percentage equivalent of a
fraction, the numerator of which is the Class A Initial Investor Interest and
the denominator of which is the Initial Investor Interest.
"Class A Initial Investor Interest" shall mean, on any date of
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determination, the aggregate initial principal amount of the Class A
Certificates on the Closing Date, which is [$ ], less the portion of
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such amount represented by Class A Certificates tendered and canceled pursuant
to any Series 1997-2 Investor Exchange occurring prior to such date of
determination.
"Class A Interest Rate Cap" shall mean the master agreement dated as of
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[September , 1997] between the Trustee and the Interest Rate Cap Provider, as
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supplemented by the schedule attached thereto and the confirmation dated
[September , 1997] between the Trustee and the Interest Rate Cap Provider,
--
relating to the Class A Certificates and for the exclusive benefit of the Class
A Certificateholders, or (unless context requires otherwise) any Replacement
Interest Rate Cap or Qualified Substitute Arrangement with respect thereto, as
the same may in
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each case be amended, supplemented or otherwise modified from time to time in
accordance with its terms upon ratings confirmation by the Rating Agency.
"Class A Investor Charge-Offs" shall have the meaning specified in
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subsection 4.5(a).
"Class A Investor Default Amount" shall mean, (i) with respect to the
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period from and including the Closing Date through and including [September 30,
1997], an amount equal to the Class A Investor Default Amount (calculated
pursuant to clause (ii) of this definition) for the full [September 1997]
Monthly Period, multiplied by [ /30], and (ii) with respect to each Monthly
--
Period thereafter, an amount equal to the product of (a) the Investor Default
Amount for such Monthly Period and (b) the Class A Floating Allocation for such
Monthly Period.
"Class A Investor Interest" shall mean, on any date of determination, an
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amount equal to (a) the Class A Initial Investor Interest, minus (b) the
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aggregate amount of payments of principal paid to the Class A Certificateholders
pursuant to Section 4.8 prior to such date of determination, minus (c) the
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excess, if any, of the aggregate amount of Class A Investor Charge-Offs over
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Class A Investor Charge-Offs reimbursed pursuant to subsections 4.6(a)(iv),
4.6(d)(i) and 4.6(e) prior to such date of determination; provided, however,
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that upon the tender and cancellation of any Class A Certificates pursuant to a
Series 1997-2 Investor Exchange, the amounts stated in clauses (b) and (c) shall
be computed with respect to the Class A Certificates not tendered or canceled
pursuant to such Series 1997-2 Investor Exchange; provided further, however,
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that such Class A Investor Interest may not be reduced below zero.
"Class A Monthly Cap Rate Interest" shall mean, with respect to any
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Distribution Date, an amount equal to the product of (a) the lesser of the Class
A Certificate Rate and the Class A Cap Rate with respect to the immediately
preceding Interest Accrual Period, (b) the Class A Adjusted Investor Interest as
determined as of the preceding Distribution Date or, for the initial Interest
Accrual Period, the Closing Date (after giving effect to all payments, deposits
and withdrawals on such Distribution Date or Closing Date, as applicable) and
(c) the actual number of days in such Interest Accrual Period divided by 360.
"Class A Monthly Interest" shall mean, with respect to any Distribution
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Date, an amount equal to the sum of (a) the product of (i) the Class A
Certificate Rate with respect to the immediately preceding Interest Accrual
Period and (ii) the lesser of the Class A Adjusted Investor Interest as of the
preceding Distribution Date (after giving effect to all payments, deposits and
withdrawals on such Distribution Date) and the Expected Class
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A Principal as of the preceding Distribution Date, or, for the first
Distribution Date, the Class A Initial Investor Interest, and (iii) the actual
number of days in such Interest Accrual Period divided by 360, (b) the Class A
Covered Amount for such Interest Accrual Period, and (c) the product of (i) the
Class A Excess Principal as of such preceding Distribution Date, (ii) the lesser
of the Class A Certificate Rate and Class A Cap Rate with respect to such
Interest Accrual Period and (iii) the actual number of days in such Interest
Accrual Period divided by 360.
"Class A Monthly Principal" shall mean, with respect to each Transfer Date
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relating to the Controlled Accumulation Period or the Rapid Amortization Period,
prior to the payment in full of the Class A Investor Interest, an amount equal
the least of (i) Available Investor Principal Collections on deposit in the
Principal Account with respect to such Transfer Date, (ii) for each Transfer
Date with respect to the Controlled Accumulation Period, prior to the Class A
Scheduled Payment Date, the applicable Controlled Deposit Amount for such
Transfer Date, and (iii) the Class A Adjusted Investor Interest prior to any
deposits on such Transfer Date.
"Class A Monthly Servicing Fee" shall mean (a) with respect to the first
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Transfer Date, an amount equal to the Class A Monthly Servicing Fee (calculated
pursuant to clause (b) of this definition) for the full [September 1997] Monthly
Period, multiplied by [ /30], and (b) with respect to any subsequent Transfer
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Date, one-twelfth of the product of 2.00% and the Class A Adjusted Investor
Interest on the last day of the preceding Monthly Period.
"Class A Notional Amount" shall mean, on any date of determination, the
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notional amount of the Class A Interest Rate Cap on such date, which shall be an
amount equal to the Expected Class A Principal with respect to such date of
determination, calculated based upon a Controlled Accumulation Period commencing
[ ] (with a Controlled Accumulation Period Length of four months),
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less the aggregate notional amount of any portions of the Class A Interest Rate
Cap sold on or prior to such date pursuant to Section 4.11(g).
"Class A Required Amount" shall have the meaning specified in subsection
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4.6(e).
"Class A Scheduled Payment Date" shall mean the [August 2002] Distribution
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Date.
"Class B Available Funds" shall mean, with respect to any Monthly Period,
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an amount equal to the sum of (a) the Class B Floating Allocation of Finance
Charge Collections (other than the proceeds of the sale of any Interest Rate Cap
pursuant to Section
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4.11(g)) processed on any Date of Processing during such Monthly Period, which
are allocated to the Investor Interest and deposited in the Finance Charge
Account pursuant to Article IV (or which will be deposited in the Collection
Account on the Transfer Date following such Monthly Period pursuant to the
fourth paragraph of subsection 4.2(a) of the Agreement and will be allocated to
the Investor Interest pursuant to subsection 4.4(c)(i), 4.4(d)(i) or 4.4(e)(i)
as if they had been deposited in the Collection Account during such Monthly
Period) and (b) the proceeds from the sale of all or any portion of the Class B
Interest Rate Cap deposited into the Collection Account during such Monthly
Period pursuant to subsection 4.11(g).
"Class B Cap Rate" shall mean [ %] per annum.
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"Class B Certificate Rate" shall mean, with respect to the period from and
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including the Closing Date through and including October 14, 1997, [ %] per
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annum, and with respect to each Interest Accrual Period thereafter, a per annum
rate equal to [ ]% in excess of LIBOR, as determined on the related LIBOR
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Determination Date.
"Class B Certificateholder" shall mean the Person in whose name a Class B
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Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean any of the Floating Rate Class B Asset
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Backed Certificates, Series 1997-2, executed by the Transferor and authenticated
by or on behalf of the Trustee, substantially in the form of Exhibit 1-B hereto.
"Class B Excess Interest" shall mean, with respect to any Distribution
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Date, an amount equal to the product of (a) the amount by which the Class B
Certificate Rate exceeds the Class B Cap Rate with respect to the immediately
preceding Interest Accrual Period, (b) the Class B Excess Principal, if any, as
of the preceding Distribution Date (after giving effect to all payments,
deposits and withdrawals on such Distribution Date), and (c) the actual number
of days in such Interest Accrual Period divided by 360.
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"Class B Excess Principal" shall mean on any date of determination the
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amount by which the Class B Investor Interest exceeds the Expected Class B
Principal after giving effect to all payments, deposits and withdrawals on such
date.
"Class B Fixed Allocation" shall mean, with respect to any Monthly Period
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following the Revolving Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class B
Investor Interest as of the close of business on the last day of the Revolving
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Period and the denominator of which is equal to the Investor Interest as of the
close of business on such day.
"Class B Floating Allocation" shall mean, with respect to any Monthly
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Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class B Investor Interest as of the
close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Adjusted Investor Interest as of the close
of business on such day; provided that, with respect to the first Monthly
Period, the Class B Floating Allocation means the percentage equivalent of a
fraction, the numerator of which is the Class B Initial Investor Interest and
the denominator of which is the Initial Investor Interest.
"Class B Initial Investor Interest" shall mean, on any date of
---------------------------------
determination, the aggregate initial principal amount of the Class B
Certificates on the Closing Date, which is [$ ], less the portion of
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such amount represented by Class B Certificates tendered and canceled pursuant
to any Series 1997-2 Investor Exchange occurring prior to such date of
determination.
"Class B Interest Rate Cap" shall mean the master agreement dated as of
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[September , 1997] between the Trustee and the Interest Rate Cap Provider, as
--
supplemented by the schedule attached thereto and the confirmation dated
[September __, 1997] between the Trustee and the Interest Rate Cap Provider,
relating to the Class B Certificates and for the exclusive benefit of the Class
B Certificateholders, or (unless context requires otherwise) any Replacement
Interest Rate Cap or Qualified Substitute Arrangement with respect thereto, as
the same may in each case be amended, supplemented or otherwise modified from
time to time in accordance with its terms upon ratings confirmation by the
Rating Agency.
"Class B Investor Allocation" shall mean, with respect to any Monthly
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Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time and Principal Receivables during the Revolving Period, the Class B
Floating Allocation, and (b) with respect to the Principal Receivables during
the Controlled Accumulation Period or Rapid Amortization Period, the Class B
Fixed Allocation.
"Class B Investor Charge-Offs" shall have the meaning specified in
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subsection 4.5(b).
"Class B Investor Default Amount" shall mean, (i) with respect to the
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period from and including the Closing Date through and including [September 30,
1997], an amount equal to the Class B Investor Default Amount (calculated
pursuant to clause (ii) of this definition) for the full [September 1997]
Monthly Period,
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multiplied by [ /30], and (ii) with respect to each Monthly Period thereafter,
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an amount equal to the product of (a) the Investor Default Amount for such
Monthly Period and (b) the Class B Floating Allocation for such Monthly Period.
"Class B Investor Interest" shall mean, on any date of determination, an
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amount equal to (a) the Class B Initial Investor Interest, minus (b) the
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aggregate amount of payments of principal paid to the Class B Certificateholders
pursuant to Section 4.8 prior to such date of determination, minus (c) the
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aggregate amount of Reallocated Class B Principal Collections allocated on all
prior Transfer Dates pursuant to Section 4.12 with respect to which the
Collateral Interest was not reduced pursuant to such Section 4.12, minus (d) the
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aggregate amount of Class B Investor Charge-Offs with respect to all prior
Transfer Dates, minus (e) the amount by which the Class B Investor Interest has
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been reduced on all prior Transfer Dates pursuant to the third sentence of
subsection 4.5(a) plus (f) the aggregate amount allocated and available on all
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prior Transfer Dates for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c), (d) and (e); provided, however, that upon the tender
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and cancellation of any Class B Certificates pursuant to a Series 1997-2
Investor Exchange, the amounts stated in clauses (b), (c), (d), (e) and (f)
shall be computed with respect to the Class B Certificates not tendered or
canceled pursuant to such Series 1997-2 Investor Exchange; provided further,
----------------
however, that such Class B Investor Interest may not be reduced below zero.
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"Class B Monthly Cap Rate Interest" shall mean, with respect to any
---------------------------------
Distribution Date, an amount equal to the product of (a) the lesser of the Class
B Certificate Rate and the Class B Cap Rate with respect to the immediately
preceding Interest Accrual Period, (b) the Class B Investor Interest as
determined as of the preceding Distribution Date or, for the initial Interest
Accrual Period, the Closing Date (after giving effect to all payments, deposits
and withdrawals on such Distribution Date or Closing Date) and (c) the actual
number of days in such preceding Interest Accrual Period divided by 360.
"Class B Monthly Interest" shall mean, with respect to any Distribution
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Date, an amount equal to the sum of (a) the product of (i) the Class B
Certificate Rate with respect to the immediately preceding Interest Accrual
Period, (ii) the lesser of the Class B Investor Interest as of the preceding
Distribution Date (after giving effect to all payments, deposits and withdrawals
on such Distribution Date) and the Expected Class B Principal as of the
preceding Distribution Date, or, for the first Distribution Date, the Class B
Initial Investor Interest, and (iii) the actual number of days in such Interest
Accrual Period divided by 360 and (b) the product of (i) the Class B
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Excess Principal as of such preceding Distribution Date,(ii) the lesser of the
Class B Certificate Rate and the Class B Cap Rate with respect to such Interest
Accrual Period and (iii) the actual number of days in such Interest Accrual
Period divided by 360.
"Class B Monthly Principal" shall mean, with respect to each Transfer Date
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relating to the Controlled Accumulation Period immediately following the Class A
Scheduled Payment Date, or with respect to any Transfer Date relating to the
Rapid Amortization Period, beginning with the Transfer Date on which the Class A
Investor Interest has been paid in full (after taking into account payments to
be made on the related Distribution Date), an amount equal to the lesser of (i)
Available Investor Principal Collections on deposit in the Principal Account
(minus the portion of such Available Investor Principal Collections applied to
Class A Monthly Principal on such Transfer Date) and (ii) the Class B Investor
Interest for such Transfer Date.
"Class B Monthly Servicing Fee" shall mean (a) with respect to the first
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Transfer Date, an amount equal to the Class B Monthly Servicing Fee (calculated
pursuant to clause (b) of this definition) for the full [September 1997] Monthly
Period, multiplied by [ /30], and (b) with respect to any subsequent Transfer
--
Date, one-twelfth of the product of 2.00% and the Class B Investor Interest on
the last day of the preceding Monthly Period.
"Class B Notional Amount" shall mean, on any date of determination, the
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notional amount of the Class B Interest Rate Cap on such date, which shall be an
amount equal to the Expected Class B Principal with respect to such date of
determination, less the aggregate notional amount of any portions of the Class B
Interest Rate Cap sold on or prior to such date pursuant to Section 4.11(g).
"Class B Payment Commencement Date" shall mean either the Distribution Date
---------------------------------
on which the Class A Investor Interest is reduced to zero or, if the Class A
Investor Interest is paid in full on the Class A Scheduled Payment Date and the
Rapid Amortization Period has not commenced, the Distribution Date following the
Class A Scheduled Payment Distribution Date.
"Class B Required Amount" shall have the meaning specified in subsection
-----------------------
4.6(f).
"Class B Scheduled Payment Date" shall mean the [September 2002]
------------------------------
Distribution Date.
"Closing Date" shall mean [September , 1997].
------------ --
-11-
"Collateral Allocation" shall mean, with respect to any Monthly Period, (a)
---------------------
with respect to Default Amounts and Finance Charge Receivables at any time and
Principal Receivables during the Revolving Period, the Collateral Floating
Allocation, and (b) with respect to Principal Receivables during the Controlled
Accumulation Period or Rapid Amortization Period, the Collateral Fixed
Allocation.
"Collateral Available Funds" shall mean, with respect to any Monthly
--------------------------
Period, the Collateral Floating Allocation of Finance Charge Collections
processed on any Date of Processing during such Monthly Period, which are
allocated to the Investor Interest and deposited in the Finance Charge Account
pursuant to Article IV (or which will be deposited in the Collection Account on
the Transfer Date following such Monthly Period pursuant to the fourth paragraph
of subsection 4.2(a) of the Agreement and will be allocated to the Investor
Interest pursuant to subsection 4.4(c)(i), 4.4(d)(i) or 4.4(e)(i) as if they had
been deposited in the Collection Account during such Monthly Period).
"Collateral Default Amount" shall mean, (i) with respect to the period from
-------------------------
and including the Closing Date through and including [September 30, 1997], an
amount equal to the Collateral Default Amount (calculated pursuant to clause
(ii) of this definition) for the full [September 1997] Monthly Period,
multiplied by [ /30], and (ii) for each Monthly Period thereafter, an amount
--
equal to the product of (a) the Investor Default Amount for such Monthly Period
and (b) the Collateral Floating Allocation for such Monthly Period.
"Collateral Fixed Allocation" shall mean, with respect to any Monthly
---------------------------
Period following the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Collateral Interest as of the close of business on the last day of the Revolving
Period and the denominator of which is equal to the Investor Interest as of the
close of business on such day.
"Collateral Floating Allocation" shall mean, with respect to any Monthly
------------------------------
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Collateral Interest as of the close of
business on the last day of the preceding Monthly Period and the denominator of
which is equal to the Adjusted Investor Interest as of the close of business on
such day; provided that, with respect to the first Monthly Period, the
Collateral Floating Allocation means the percentage equivalent of a fraction,
the numerator of which is the Initial Collateral Interest and the denominator of
which is the Initial Investor Interest.
-12-
"Collateral Interest" shall mean, on any date of determination, a
-------------------
fractional undivided interest in the Trust which shall consist of the right to
receive, to the extent necessary to make the required payments to the Collateral
Interest Holder under this Series Supplement, the portion of Collections
allocable thereto under the Agreement and this Series Supplement, and funds on
deposit in the Collection Account allocable thereto pursuant to the Agreement
and this Series Supplement. On any date of determination, for purposes of all
calculations in the Agreement and this Series Supplement, the amount of the
Collateral Interest shall be an amount equal to (a) the Initial Collateral
Interest, minus (b) the aggregate amount of payments of principal paid to the
-----
Collateral Interest Holder pursuant to Section 4.8 prior to such date of
determination, minus (c) the aggregate amount of Reallocated Principal
-----
Collections allocated on all prior Transfer Dates pursuant to Section 4.12,
minus (d) the aggregate amount of Collateral Interest Charge-Offs with respect
-----
to all prior Transfer Dates, minus (e) the amount by which the Collateral
-----
Interest has been reduced on all prior Transfer Dates pursuant to the second
sentence of subsection 4.5(a) plus (f) the aggregate amount allocated and
----
available on all prior Transfer Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (c), (d) and (e); provided, however,
-------- -------
that such Collateral Interest may not be reduced below zero.
"Collateral Interest Charge-Offs" shall have the meaning specified in
-------------------------------
subsection 4.5(c).
"Collateral Interest Holder" shall mean the entity so designated in the
--------------------------
Loan Agreement.
"Collateral Interest Monthly Servicing Fee" shall mean (a) with respect to
-----------------------------------------
the first Transfer Date, an amount equal to the Collateral Interest Monthly
Servicing Fee (calculated pursuant to clause (b) of this definition) for the
full [September 1997] Monthly Period, multiplied by [ /30], and (b) with
--
respect to any subsequent Transfer Date, one-twelfth of the product of 2.00% and
the Collateral Interest on the last day of the preceding Monthly Period.
"Collateral Interest Surplus" shall mean, with respect to any date of
---------------------------
determination, the amount, if any, by which the Collateral Interest as of such
date (after giving effect to reductions in the Collateral Interest for any
Collateral Interest Charge-Offs and Reallocated Principal Collections and any
further adjustments to the Collateral Interest for the benefit of the Class A
Certificateholders and the Class B Certificateholders as of such date) exceeds
the Required Collateral Interest as of such date.
-13-
"Collateral Monthly Interest" shall mean, with respect to any Transfer
---------------------------
Date, an amount equal to the product of (i) the Collateral Rate with respect to
the related Interest Accrual Period, (ii) the Collateral Interest as of the
preceding Distribution Date (after giving effect to all payments, deposits and
withdrawals on such Distribution Date) or, for the first Distribution Date, the
Initial Collateral Interest, and (iii) the actual number of days in the related
Interest Accrual Period divided by 360.
"Collateral Monthly Principal" shall mean (a) with respect to any Transfer
----------------------------
Date relating to the Revolving Period, following any reduction of the Required
Collateral Interest effected as described in clause (x) of the proviso of the
definition of "Required Collateral Interest", an amount equal to the lesser of
(x) the Collateral Interest Surplus as of such Transfer Date and (y) the
Available Investor Principal Collections on such Transfer Date, (b) with respect
to any Transfer Date relating to the Controlled Accumulation Period or the Rapid
Amortization Period, as the case may be, an amount equal to the lesser of (x)
the Collateral Interest Surplus as of such Transfer Date and (y) the excess, if
any of (i) the Available Investor Principal Collections over (ii) the sum of the
Class A Monthly Principal and the Class B Monthly Principal on such Transfer
Date.
"Collateral Rate" shall mean for any Interest Accrual Period, the rate
---------------
specified in the Loan Agreement.
"Controlled Accumulation Amount" shall mean (a) for any Transfer Date with
------------------------------
respect to the Controlled Accumulation Period prior to the payment in full of
the Class A Investor Interest, [$ ]; provided that if the Controlled
-----------
Accumulation Period Length is modified pursuant to subsection 4.8(d), (i) the
Controlled Accumulation Amount for each Transfer Date with respect to the
Controlled Accumulation Period shall mean the amount determined in accordance
with subsection 4.8(d) on the date on which the Controlled Accumulation Period
has most recently been modified and (ii) the sum of the Controlled Accumulation
Amounts for all Transfer Dates with respect to the modified Controlled
Accumulation Period shall not be less than the Class A Investor Interest, and
(b) for any Transfer Date with respect to the Controlled Accumulation Period
after the payment in full of the Class A Investor Interest, an amount equal to
the Class B Investor Interest on such Transfer Date.
"Controlled Accumulation Date" shall mean June 2001.
----------------------------
"Controlled Accumulation Period" shall mean, unless a Pay Out Event has
------------------------------
occurred prior to such date, a period commencing on the Controlled Accumulation
Date or such later day as is determined in accordance with subsection 4.8(d) and
continuing
-14-
to, but not including, a Pay Out Commencement Date or to, and including, (i) the
date of termination of the Trust pursuant to Section 12.1 of the Agreement or
(ii) the Series 1997-2 Termination Date.
"Controlled Accumulation Period Length" shall have the meaning specified in
-------------------------------------
subsection 4.8(d).
"Controlled Deposit Amount" shall mean, with respect to any Transfer Date,
-------------------------
the sum of (a) the Controlled Accumulation Amount for such Transfer Date and (b)
the Accumulation Shortfall, if any, as of such date.
"Definitive Certificates" shall have the meaning specified in Section 6.11
-----------------------
of the Agreement.
"Discount Option" shall have the meaning specified in Section 4.14.
---------------
"Discounted Percentage" shall have the meaning specified in Section 4.14.
---------------------
"Distribution Account" shall have the meaning specified in subsection
--------------------
4.3(b).
"Distribution Date" shall mean [October 15, 1997] and the fifteenth day of
-----------------
each calendar month thereafter, or, if such fifteenth day is not a Business Day,
the next succeeding Business Day; provided, however, that no Distribution Date
-------- -------
shall occur after the earliest to occur of (x) the Distribution Date on which
the Investor Interest has been paid in full, (y) the date of termination of the
Trust pursuant to Section 12.1 of the Agreement, and (z) the Series 1997-2
Termination Date.
"Enhancement" shall mean, with respect to the Series 1997-2 Investor
-----------
Certificates, the subordination of the Collateral Interest to the extent
provided herein, the Interest Rate Caps and, with respect to the Class A
Certificates, the funds and securities on deposit in the Reserve Account, up to
the Available Reserve Account Amount, and the subordination of the Class B
Certificates to the extent provided herein.
"Enhancement Provider" shall mean, with respect to the Series 1997-2
--------------------
Certificates, the Collateral Interest Holder, and with respect to any other
Series, the applicable provider of credit enhancement, if any.
"Excess Principal Funding Investment Proceeds" shall mean, with respect to
--------------------------------------------
each Transfer Date relating to the Controlled Accumulation Period, the amount,
if any, by which the Principal
-15-
Funding Investment Proceeds for such Transfer Date exceed the Covered Amount
determined on such Transfer Date.
"Excess Spread" shall mean the sum of the amounts specified pursuant to
-------------
subsections 4.6(a)(v), 4.6(b)(v) and 4.6(c)(ii).
"Expected Class A Principal" shall mean, with respect to any date of
--------------------------
determination, (a) on each date to but excluding the Initial Class A
Accumulation Date, the Class A Initial Investor Interest, (b) on each date
thereafter to but not including the Class A Scheduled Payment Date, the Class A
Initial Investor Interest less the product of (i) the Controlled Accumulation
Amount and (ii) the number of Distribution Dates that have occurred from and
including the Initial Class A Accumulation Date, and (c) on each date
thereafter, zero.
"Expected Class B Principal" shall mean, with respect to any date of
--------------------------
determination, (a) on each date to but excluding the Class B Scheduled Payment
Date, the Class B Initial Investor Interest, and (b) on each date thereafter,
zero.
"Finance Charge Account" shall have the meaning specified in Section
----------------------
4.3(a).
"Finance Charge Collections" shall mean Collections in respect of Finance
--------------------------
Charge Receivables.
"Fitch" shall mean Fitch Investors Service, L.P.
-----
"Fixed Investor Percentage" shall mean, with respect to any date of
-------------------------
determination, the percentage equivalent of a fraction, the numerator of which
is the Investor Interest as of the close of business on the last day of the
Revolving Period (or, if there has been an Investor Exchange with respect to the
Certificates after the end of the Revolving Period, the Investor Interest as of
the end of the Revolving Period will be reduced ratably to reflect the amount of
Certificates tendered and canceled pursuant to any Investor Exchange) and the
denominator of which is the greater of (a) the Aggregate Principal Receivables
as of such date of determination and (b) the sum of the numerators used to
calculate the Investor Percentages for all outstanding Series with respect to
Principal Receivables on such date of determination.
"Floating Investor Percentage" shall mean, with respect to any date of
----------------------------
determination, the percentage equivalent of a fraction, the numerator of which
is the Adjusted Investor Interest determined as of the close of business on the
last day of the Monthly Period immediately preceding such date of determination
(or with respect to the first Monthly Period, the Initial Investor Interest) and
the denominator of which is the
-16-
greater of (a) the Aggregate Principal Receivables as of such date of
determination (or with respect to the first Monthly Period, the aggregate amount
of Principal Receivables in the Trust as of the beginning of the day on the
Closing Date), and (b) the sum of the numerators used to calculate the Investor
Percentages for all outstanding Series on such date of determination with
respect to Finance Charge Receivables, Default Amounts or Principal Receivables,
as applicable, on such date of determination.
"Initial Class A Accumulation Date" shall mean the first Distribution Date
---------------------------------
occurring after the Monthly Period in which the Controlled Accumulation Period
commences.
"Initial Collateral Interest" shall mean the aggregate initial principal
---------------------------
amount of the Collateral Interest on the Closing Date, which is [$ ].
----------
"Initial Investor Interest" shall mean the sum of the Class A Initial
-------------------------
Investor Interest, the Class B Initial Investor Interest and the Initial
Collateral Interest.
"Interest Accrual Period" shall mean, with respect to any Distribution
-----------------------
Date, the period beginning on and including the Distribution Date occurring in
the preceding calendar month (or, in the case of the first Distribution Date,
from and including the Closing Date) through and including the day preceding the
current Distribution Date.
"Interest Rate Cap Payment" shall mean, with respect to any Distribution
-------------------------
Date, any payment required to be made by the Interest Rate Cap Provider to the
Trust pursuant to an Interest Rate Cap with respect to such Distribution Date.
"Interest Rate Cap Provider" shall mean [ ] in its capacity as
-------------------------- -------------
obligor under the Interest Rate Caps, or if any Replacement Interest Rate Cap or
Qualified Substitute Arrangement is obtained pursuant to Section 4.11, any
obligor with respect to such Replacement Interest Rate Cap or Qualified
Substitute Arrangement.
"Interest Rate Caps" shall mean, collectively, the Class A Interest Rate
------------------
Cap and the Class B Interest Rate Cap.
"Investor Accounts" shall mean the Series 1997-2 Collection Subaccount
------------------
established under Section 4.2B, the Principal Account, the Principal Funding
Account and the Finance Charge Account established under subsection 4.3(a), the
Distribution Account established under subsection 4.3(b) and the Reserve Account
established under subsection 4.9(a).
-17-
"Investor Charge-Offs" shall mean, with respect to any Transfer Date, the
--------------------
sum of the Class A Investor Charge-Offs, the Class B Investor Charge-Offs and
the Collateral Interest Charge-Offs, in each case with respect to such Transfer
Date.
"Investor Default Amount" shall mean, with respect to any Monthly Period,
-----------------------
an amount equal to the product of (a) the sum of the Default Amounts for all
Defaulted Accounts during such Monthly Period and (b) the Floating Investor
Percentage for such Monthly Period.
"Investor Interest" shall mean for any date of determination, the sum of
-----------------
the Class A Investor Interest, the Class B Investor Interest and the Collateral
Interest, each as of such date.
"Investor Percentage" shall mean, for any date of determination, (a) with
-------------------
respect to Finance Charge Receivables and Default Amounts at any time and
Principal Receivables during the Revolving Period, the Floating Investor
Percentage and (b) with respect to Principal Receivables during the Controlled
Accumulation Period or the Rapid Amortization Period, the Fixed Investor
Percentage.
"LIBOR" shall mean, for any Interest Accrual Period, the London interbank
-----
offered quotations rate for one-month Dollar deposits determined for each
Interest Accrual Period in accordance with the provisions of Section 4.13.
"LIBOR Determination Date" shall mean (a) for the initial Interest Period,
------------------------
[September , 1997] (for the period from and including the Closing Date through
--
and including October 14, 1997) and (b) for each subsequent Interest Accrual
Period, the second London Banking Day preceding the first day of such Interest
Accrual Period.
"Loan Agreement" shall mean the agreement among the Transferor, the
--------------
Servicer, the Trustee, the Agent and the other financial institutions party
thereto, dated as of [September , 1997], as such agreement may be amended,
--
supplemented or otherwise modified from time to time in accordance with its
terms.
"London Banking Day" shall mean any day on which commercial banks are open
------------------
for business (including dealings in foreign exchange and deposits in U.S.
dollars) in London.
"Minimum Aggregate Principal Receivables" shall have the meaning specified
---------------------------------------
in Section 4 hereof.
-18-
"Minimum Seller Interest" shall have the meaning specified in Section 4
-----------------------
hereof.
"Monthly Investor Servicing Fee" shall mean (a) with respect to the first
------------------------------
Monthly Period, an amount equal to the Monthly Investor Servicing Fee
(calculated pursuant to clause (b) of this definition) for the full [September
1997] Monthly Period, multiplied by [ /30], and (b) with respect to each
--
subsequent Monthly Period, an amount equal to one twelfth of the product of
2.00% and the Adjusted Investor Interest as of the last day of the preceding
Monthly Period.
"Monthly Total Principal Allocation" shall mean (a) with respect to any day
----------------------------------
in a Monthly Period, the Principal Allocation for such day plus the sum of all
Principal Allocations on each prior day of such Monthly Period or (b) with
respect to any Monthly Period, the Principal Allocation, if any, for the last
day of such Monthly Period plus the sum of all Principal Allocations on each
prior day of such Monthly Period.
"Pay Out Commencement Date" shall mean, with respect to the Series 1997-2
-------------------------
Investor Certificates, the date on which a Trust Pay Out Event is deemed to
occur or occurs pursuant to Section 9.1 of the Agreement or a Series 1997-2 Pay
Out Event is deemed to occur or occurs pursuant to Section 9A hereof.
"Permitted Investments" shall mean with respect to the Investor Accounts,
---------------------
(a) negotiable instruments or securities either represented by instruments in
bearer or registered form or book-entry form at a federal reserve bank or held
by a clearing corporation which are registered in the name of the Trustee upon
books maintained for that purpose by or on behalf of the issuer thereof and
identified on books maintained for that purpose by the Trustee and held for the
benefit of the Trust or the Certificateholders and which evidence (i) direct
obligations of the United States of America or any agency or instrumentality
thereof the full and timely payment of which is guaranteed by the full faith and
credit of the United States of America; (ii) demand deposits, time deposits or
certificates of deposit of, or bankers' acceptances issued by, any depositary
institution or trust company incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal or state banking or depositary 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, if any, of
such depositary institution or trust company shall have a credit rating from
Standard & Poor's of A-1+ and from Fitch (if rated by Fitch) of F-1, and either
such certificates of deposit or short-term deposits shall have a credit rating
from Xxxxx'x of P-1 or the long-term unsecured debt obligations of such
depositary
-19-
institution or trust company (other than such obligations whose rating is based
on collateral or on the credit of a Person other than such institution or trust
company) shall have a rating from Xxxxx'x of at least Aa3, and the amount of
such time deposits, demand deposits or certificates of deposit are fully insured
within the limits of insurance set by the FDIC and the combined capital, surplus
and undivided profits of such depositary institution or trust company is not
less than $3 million; (iii) certificates of deposit having, at the time of the
Trust's investment or contractual commitment to invest therein, a rating from
Xxxxx'x, Standard & Poor's and Fitch (if rated by Fitch) of P-1 and A-1+ and F-
1, respectively; (iv) commercial paper having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating from Xxxxx'x,
Standard & Poor's and Fitch (if rated by Fitch) of P-1, A-1+ and F-1,
respectively; or (v) investments in money market funds registered under the
Investment Company Act rated in each case in the highest investment category by
Standard & Poor's, Xxxxx'x and Fitch (if rated by Fitch), or otherwise approved
in writing by the Rating Agency and acceptable to the Enhancement Provider; and
(b) demand deposits in the name of the Trust or the Trustee, on behalf of the
Trust, in any depositary institution or trust company referred to in clause
(a)(ii) above; provided, however, that with respect to any of the Permitted
-------- -------
Investments referred to herein, if requested by the Enhancement Provider, the
Servicer shall furnish to the Enhancement Provider an Opinion of Counsel, in
form and substance satisfactory to the Enhancement Provider and from counsel
reasonably acceptable to it, to the effect that, upon conveyance of possession
or registered ownership to the Trustee or its agent, nominee or custodian, on
behalf of the Trust, of such Permitted Investment, the Trustee, on behalf of the
Trust, will have a perfected first priority security interest in and to such
Permitted Investment for the benefit of the Series 1997-2 Investor
Certificateholders. Such opinion will be required only with respect to
Permitted Investments of a type that have not previously been the subject of
such an opinion or that have been the subject of a change in law.
Notwithstanding the foregoing, if the Rating Agency rating the Series 1997-2
Investor Certificates is not Standard & Poor's, Xxxxx'x or Fitch, any
investments specified in this definition of "Permitted Investments" as requiring
a specific credit rating from Standard & Poor's, Xxxxx'x or Fitch (if rated by
Fitch) must also have a comparable credit rating from, or otherwise be
acceptable to, the Rating Agency rating the Series 1997-2 Investor Certificates,
as confirmed to the Trustee in writing by such Rating Agency, and any
investments specified in this definition of "Permitted Investments" as requiring
written approval from Standard & Poor's, Xxxxx'x or Fitch must also receive
written approval from such other Rating Agency.
-20-
"Pool Amount" shall mean, with respect to any Monthly Period, the aggregate
-----------
amount of Principal Receivables as of the close of business on the last day of
such Monthly Period.
"Pool Factor" shall mean, with respect to any Record Date, a number carried
-----------
out to seven decimal places representing the ratio of the Investor Interest as
of the end of the last day of the preceding Monthly Period (determined after
taking into account any increases or decreases in the Investor Interest which
will occur on the following Distribution Date) to the Initial Investor Interest.
"Pooling and Servicing Agreement" shall have the meaning specified in the
-------------------------------
preamble to this document.
"Portfolio Yield" shall mean, with respect to the Series 1997-2 Investor
---------------
Certificates and any Monthly Period, the annualized percentage equivalent of a
fraction the numerator of which is equal to the sum of (i) the lesser of (x) the
Finance Charge Receivables allocable to the Investor Interest for such Monthly
Period, calculated on a billed basis, after subtracting therefrom an amount
equal to the Investor Default Amount with respect to such Monthly Period, and
(y) the aggregate amount of Collections with respect to such Monthly Period,
(ii) the Principal Funding Investment Proceeds deposited into the Finance Charge
Account on the Transfer Date related to such Monthly Period, (iii) the amount of
the Reserve Draw Amount (up to the Available Reserve Account Amount), if any,
with respect to such Monthly Period, and (iv) any amounts of interest and
earnings described in Section 4.9, each deposited or required to be deposited
into the Finance Charge Account on the Transfer Date relating to such Monthly
Period (without duplication of amounts referenced in clauses (i), (ii) and (iii)
above), and the denominator of which is the Investor Interest as of the last day
of the preceding Monthly Period.
"Principal Account" shall have the meaning specified in subsection 4.3(a).
-----------------
"Principal Allocation" shall have the meaning specified in subsection
--------------------
4.4(d)(ii).
"Principal Collections" shall mean Collections in respect of Principal
---------------------
Receivables.
"Principal Funding Account" shall have the meaning specified in subsection
-------------------------
4.3(a).
"Principal Funding Account Balance" shall mean, with respect to any date of
---------------------------------
determination, the amount of funds, if any, on
-21-
deposit in the Principal Funding Account on such date of determination (other
than Principal Funding Investment Proceeds).
"Principal Funding Investment Proceeds" shall mean, with respect to each
-------------------------------------
Transfer Date, the investment earnings on funds in the Principal Funding Account
(net of investment expenses and losses) for the period from and including the
immediately preceding Transfer Date to but excluding such Transfer Date.
"Principal Funding Investment Shortfall" shall mean, with respect to each
--------------------------------------
Transfer Date relating to the Controlled Accumulation Period, the amount, if
any, by which the Principal Funding Investment Proceeds for such Transfer Date
are less than the Class A Covered Amount determined as of such Transfer Date.
"Principal Shortfall" shall mean (i) on any Date of Processing for the
-------------------
Series 1997-2 Investor Certificates, the excess of (x) an amount equal to the
sum of (A) during the Controlled Accumulation Period, the Controlled Deposit
Amount, and during the Rapid Amortization Period, the Investor Interest, in each
case with respect to the related Monthly Period, and (B) at any time, the
Collateral Interest Surplus with respect to the related Monthly Period over (y)
the Monthly Total Principal Allocation for such Date of Processing, or (ii) for
any other Series the amounts specified as such in the Supplement for such other
Series.
"Qualified Substitute Arrangement" shall have the meaning specified in
--------------------------------
subsection 4.11(b).
"Qualified Trust Institution" shall mean a depository institution or trust
---------------------------
company having corporate trust powers under applicable federal and state laws
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia; provided, however, that the long-
-------- -------
term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of such depository institution or trust company shall have a
credit rating from Xxxxx'x, Standard & Poor's and Fitch (if rated by Fitch) of
at least Baa3, BBB- and BBB-, respectively, and the deposits in whose accounts
are insured to the limits provided by law and as required by the FDIC.
"Rapid Amortization Period" shall mean an Amortization Period commencing on
-------------------------
the Pay Out Commencement Date and ending on the earlier to occur of (i) the date
of termination of the Trust pursuant to Section 12.1 or (ii) the Series 1997-2
Termination Date.
-22-
"Rating Agency" shall mean, with respect to the Series 1997-2 Certificates,
-------------
each of Xxxxx'x, Standard & Poor's and Fitch, and with respect to the Collateral
Interest means Fitch.
"Reallocated Class B Principal Collections" shall mean, with respect to any
-----------------------------------------
Transfer Date, Principal Collections (including amounts specified pursuant to
subsections 4.6(b)(iii) and (iv), 4.6(d)(ii) and 4.6(f) to be treated as
Available Investor Principal Collections) applied in accordance with subsection
4.12(a) in an amount not to exceed the product of (a) the Class B Investor
Allocation for the Monthly Period relating to such Transfer Date, (b) the
Investor Percentage for the Monthly Period relating to such Transfer Date and
(c) the amount of Principal Collections for the Monthly Period relating to such
Transfer Date; provided, that such amount shall not exceed the Class B Investor
Interest after giving effect to any Class B Investor Charge-Offs for such
Transfer Date.
"Reallocated Collateral Principal Collections" shall mean, with respect to
--------------------------------------------
any Transfer Date, Principal Collections (including amounts specified pursuant
to subsections 4.6(d)(ix) and (x) to be treated as Available Investor Principal
Collections) applied in accordance with subsections 4.12(a) and (b) in an amount
not to exceed the product of (a) the Collateral Allocation for the Monthly
Period relating to such Transfer Date, (b) the Investor Percentage for the
Monthly Period relating to such Transfer Date and (c) the amount of Principal
Collections for the Monthly Period relating to such Transfer Date; provided,
--------
that such amount shall not exceed the Collateral Interest after giving effect to
any Collateral Interest Charge-Offs for such Transfer Date.
"Reallocated Principal Collections" shall mean, with respect to any
---------------------------------
Transfer Date, the sum of (a) the Reallocated Class B Principal Collections and
(b) the Reallocated Collateral Principal Collections with respect to such
Transfer Date.
"Reference Banks" shall mean four major banks in the London interbank
---------------
market selected by the Trustee.
"Replacement Interest Rate Cap" shall mean, with respect to the Class A
-----------------------------
Interest Rate Cap or the Class B Interest Rate Cap, any substitute interest rate
cap having substantially the same terms and conditions as such Interest Rate Cap
and with respect to which the Interest Rate Cap Provider party thereto (a) is
reasonably acceptable to the Trustee, (b) has either (i) a counterparty rating
of at least Aa3 by Xxxxx'x and AAA by Standard & Poor's, or (ii) if not a
counterparty rating, a long term unsecured debt or long term certificate of
deposit rating of at least Aa3 by Xxxxx'x and a short term unsecured debt or
short
-23-
term certificate of deposit rating of A-1+ by Standard & Poor's, and (c) is
acceptable to Xxxxx'x and Standard & Poor's.
"Required Collateral Interest" shall mean, (a) with respect to the Closing
----------------------------
Date, the Initial Collateral Interest and (b) with respect to any Transfer Date
thereafter, an amount equal to the product of (1) the Required Collateral
Percentage and (2) the Adjusted Investor Interest on such Transfer Date after
taking into account all deposits in the Principal Funding Account on such date
and payments to be made on the related Distribution Date, but not less than
[$ ]; provided that (x) if either (i) there is a reduction in the
---------- --------
Collateral Interest pursuant to clause (c), (d) or (e) of the definition of such
term or (ii) a Pay Out Event with respect to the Series 1997-2 Investor
Certificates has occurred, the Required Collateral Interest for any Transfer
Date shall (subject to clause (y) below) equal the Required Collateral Interest
for the Transfer Date immediately preceding such reduction or Pay Out Event and
(y) in no event shall the Required Collateral Interest exceed the sum of the
outstanding principal amounts of (i) the Class A Certificates and (ii) the Class
B Certificates, each as of the last day of the Monthly Period preceding such
Transfer Date, less cash held in the Principal Funding Account as of such
Transfer Date, in each case after taking into account deposits, withdrawals and
payments to be made on the related Distribution Date.
"Required Collateral Percentage" shall mean, with respect to any Transfer
------------------------------
Date, [ %] or, at the Transferor's option, a lesser percentage if on or prior
----
to such Transfer Date the Transferor, the Servicer, the Agent and the Trustee
shall each have received a copy of a written notice from the Rating Agency to
the effect that such action will not result in such Rating Agency reducing or
withdrawing its then existing rating of the Class A Certificates or the Class B
Certificates.
"Required Reserve Account Amount" shall mean, with respect to any Transfer
-------------------------------
Date on or after the Reserve Account Funding Date, an amount equal to (a)
[____%] of the Class A Investor Interest or (b) any other amount designated by
the Transferor; provided that if such designation is less than the amount
--------
determined pursuant to clause (a), Transferor shall (i) provide the Servicer,
the Collateral Interest Holder and the Trustee with notification in writing by
the Rating Agency addressed to the Transferor, the Servicer and the Trustee that
such action will not result in such Rating Agency reducing or withdrawing its
then existing rating of the Class A Certificates or the Class B Certificates and
(ii) deliver to the Trustee a certificate of an authorized officer to the effect
that, based on the facts known to such officer at such time, in the reasonable
belief of the Transferor, such designation will not cause a Pay Out Event or an
-24-
event that, after the giving of notice or the lapse of time, would cause a Pay
Out Event to occur with respect to the Series 1997-2 Investor Certificates.
"Reserve Account" shall have the meaning specified in subsection 4.9(a).
---------------
"Reserve Account Funding Date" shall mean the Transfer Date which occurs
----------------------------
not later than the earliest of (a) the Transfer Date with respect to the Monthly
Period which commences no later than three months prior to the commencement of
the Controlled Accumulation Period, or such earlier date as the Servicer may
determine, (b) the first Transfer Date for which the Portfolio Yield is less
than 2.00%, but in such event the Reserve Account Funding Date shall not be
required to occur earlier than the Transfer Date with respect to the Monthly
Period which commences twelve months prior to the commencement of the Controlled
Accumulation Period, (c) the first Transfer Date for which the Portfolio Yield
is less than 3.00%, but in such event the Reserve Account Funding Date shall not
be required to occur earlier than the Transfer Date with respect to the Monthly
Period which commences six months prior to the commencement of the Controlled
Accumulation Period and (d) the first Transfer Date for which the Portfolio
Yield is less than 4.00%, but in such event the Reserve Account Funding Date
shall not be required to occur earlier than the Transfer Date with respect to
the Monthly Period which commences four months prior to the commencement of the
Controlled Accumulation Period.
"Reserve Account Surplus" shall mean, as of any Transfer Date following the
-----------------------
Reserve Account Funding Date, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in subsection
-------------------
4.9(c).
"Revolving Period" shall mean the period from and including the Closing
----------------
Date to, but not including, the earlier of (a) the day the Controlled
Accumulation Period commences and (b) the Pay Out Commencement Date.
"Scheduled Series 1997-2 Termination Date" shall mean the [April 2005]
----------------------------------------
Distribution Date.
"Series 1997-2" shall mean the Series represented by the Series 1997-2
-------------
Investor Certificates.
"Series 1997-2 Certificates" shall mean the Class A Certificates and the
--------------------------
Class B Certificates.
-25-
"Series 1997-2 Collection Subaccount" shall have the meaning specified in
-----------------------------------
Section 4.2B.
"Series 1997-2 Investor Certificateholders" shall mean the Class A
-----------------------------------------
Certificateholders, the Class B Certificateholders and the Collateral Interest
Holder.
"Series 1997-2 Investor Certificates" shall mean the Class A Certificates,
-----------------------------------
the Class B Certificates and the Collateral Interest.
"Series 1997-2 Investor Exchange" shall mean an Investor Exchange pursuant
-------------------------------
to Section 6.9(b) of the Agreement and Section 18 hereof.
"Series 1997-2 Pay Out Event" shall have the meaning specified in Section
---------------------------
9A hereof.
"Series 1997-2 Termination Date" shall mean the earlier to occur of (i) the
------------------------------
day after the Distribution Date on which the Series 1997-2 Investor Certificates
are paid in full or (ii) the Scheduled Series 1997-2 Termination Date.
"Series Servicing Fee Percentage" shall mean 2.00%.
-------------------------------
"Series Supplement" shall have the meaning specified in the preamble to
-----------------
this document.
"Shared Finance Charge Collections" shall mean, with respect to any
---------------------------------
Transfer Date, as the context requires, either (a) the amount described in
subsection 4.6(d)(xv) allocated to the Series 1997-2 Investor Certificates but
available to cover shortfalls, if any, in amounts paid from Finance Charge
Collections for other Series, or (b) the aggregate amount allocated to Investor
Certificates of all other Series which the related Supplements specify are to be
treated as "Shared Finance Charge Collections" and which are available for
application pursuant to subsections 4.6(e), 4.6(f) and 4.6(g) on such Transfer
Date.
"Shared Principal Collections" shall mean, as the context requires, either
----------------------------
(a) the amounts allocated to the Series 1997-2 Investor Certificates which, in
accordance with subsections 4.4(c)(ii), 4.4(d)(ii) and 4.4(e)(ii), may be
applied to Principal Shortfalls with respect to other outstanding Series or (b)
the amounts allocated to the investor certificates (which are not retained by
the Transferor) of other Series which the applicable Supplements for such Series
specify are to be treated as "Shared Principal Collections" and which may be
applied to cover Principal Shortfalls with respect to the Series 1997-2 Investor
Certificates.
-26-
"Telerate Page 3750" shall mean the display page currently so designated on
------------------
the Dow Xxxxx Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Transferor" shall mean People's Bank, a Connecticut capital stock savings
----------
bank, the Seller under the Agreement.
SECTION 2.1 Other Definitional Provisions. Whenever a determination is
-----------------------------
to be made under the Agreement as to whether a given action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Trust or the Series 1997-2 Investor Certificateholders (or any similar or
analogous determination), such determination shall be made without giving effect
to the Enhancement.
SECTION 3. Conveyance of Interest in Series Accounts. (a) The
-----------------------------------------
Transferor and the Trustee intend that the Series Accounts and all property
credited thereto be the property of the Trust for the benefit of the
Certificateholders. If and to the extent the Series Accounts and the property
credited thereto are characterized as property of the Transferor, the Transferor
hereby assigns, sets-over, conveys, pledges and grants a security interest and
lien (free and clear of all other Liens) to the Trustee for the benefit of the
Certificateholders, in all of the Transferor's right, title and interest (if
any) in and to the Series Accounts and the amounts on deposit in the Series
Accounts and all property now or hereafter credited thereto, including but not
limited to Permitted Investments, together with all proceeds thereof, as
collateral security for the amounts payable from time to time to the Trustee,
for the benefit of the Certificateholders.
(b) The Series Accounts shall be established at a depository institution
which agrees in writing as follows: (i) all money, securities, instruments and
other property credited to any such account shall be treated as "financial
assets" within the meaning of Section 8-102(a)(9) of the 1994 Official Text of
the Uniform Commercial Code and (ii) such depository institution will comply
with "entitlement orders" (within the meaning of Section 8-102(a)(8) of the 1994
Official Text of the Uniform Commercial Code) issued by the Trustee and relating
to such account without further consent by the Transferor or any other person.
SECTION 4. Minimum Seller Interest, Minimum Aggregate Principal
----------------------------------------------------
Receivables and Removal of Accounts. (a) The Minimum Seller Interest
-----------------------------------
applicable to the Series 1997-2 Investor Certificates on any date of
determination shall be 7% of the average Aggregate Principal Receivables for
such date of determination. The Minimum Aggregate Principal Receivables shall
-27-
be the sum of the numerators used to calculate the Investor Percentage with
respect to Principal Receivables for all Series then outstanding. Upon final
payment of the Series 1997-2 Investor Certificates, the Minimum Aggregate
Principal Receivables shall be computed in a manner consistent with the
Agreement or any future Supplement, as appropriate.
(b) In addition to the requirements contained in subsections 2.7(a) and
(b) of the Agreement with respect to the removal of Accounts, pursuant to
subsection 2.7(b)(iii)(c) of the Agreement, the removal of any Receivables of
any Removed Accounts on any Removal Date shall not, in the reasonable belief of
the Transferor, result in the failure to make a deposit of a Controlled Deposit
Amount or a payment of Collateral Monthly Principal.
SECTION 5. Reassignment and Transfer Terms. The Series 1997-2 Investor
-------------------------------
Certificates shall be subject to transfer to the Transferor at its option, in
accordance with the terms specified in subsection 12.2(a) of the Agreement, on
any Distribution Date on or after the Distribution Date on which the Investor
Interest is reduced to an amount less than or equal to [ %] of the Initial
----
Investor Interest. The Series 1997-2 Investor Certificates shall be subject to
mandatory transfer to the Transferor, in accordance with the terms specified in
subsection 12.2(a) of the Agreement, on the Distribution Date immediately
preceding the Scheduled Series 1997-2 Termination Date if the Investor Interest
is reduced to an amount less than or equal to 5% of the Initial Investor
Interest and the conditions specified in the proviso to Section 12.2(a) of the
Agreement shall have been satisfied. The deposit required in connection with
any such purchase shall be equal to (a) the Investor Interest, plus (b) accrued
----
and unpaid interest (other than Class A Excess Interest or Class B Excess
Interest, as the case may be) on the Series 1997-2 Investor Certificates through
and including the day preceding the day on which such purchase occurs, plus (c)
all additional amounts then due and payable to the Collateral Interest Holder
under the Loan Agreement, less (d) the amount on deposit in the Finance Charge
----
Account which will be transferred to the Distribution Account pursuant to
Section 4.6 on the related Transfer Date, less (e) the amount on deposit in the
----
Principal Account which will be transferred to the Distribution Account pursuant
to the second paragraph of Subsection 4.8(a) on the related Transfer Date. The
mandatory purchase requirement is in addition to any other provisions and
remedies provided by the Agreement and shall not serve to relieve any party of
obligations it may otherwise have or waive any remedy that is otherwise provided
in the Agreement.
SECTION 6. Delivery and Payment for the Series 1997-2 Certificates. The
-------------------------------------------------------
Transferor shall execute and deliver the
-28-
Series 1997-2 Certificates to the Trustee for authentication in accordance with
Section 6.1 of the Agreement. The Trustee shall deliver the Series 1997-2
Certificates when authenticated in accordance with Section 6.2 of the Agreement.
SECTION 7. Depositary; Form of Delivery of Series 1997-2 Certificates.
----------------------------------------------------------
(a) The Series 1997-2 Certificates shall be delivered as Book-Entry
Certificates as provided in Sections 6.1, 6.2, 6.9 and 6.11 of the Agreement.
(b) The depositary for the Series 1997-2 Certificates shall be The
Depository Trust Company, and the Class A Certificates and the Class B
Certificates shall be initially registered in the name of CEDE & Co., its
nominee.
(c) For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Series 1997-2 Investor Certificates, Class A Certificates or Class B
Certificates having Undivided Interests aggregating a specified percentage, such
direction or consent, with respect to the Class A Certificates and the Class B
Certificates, may be given by Certificate Owners having interests in the
requisite percentage of Series 1997-2 Certificates, Class A Certificates or
Class B Certificates, as the case may be, acting through the Clearing Agency and
the Clearing Agency Participants; provided, however, that so long as the Class A
-------- -------
Certificates and Class B Certificates are in book-entry form, the Trustee shall
only be obligated to follow such directions or consents from the depositary or
Clearing Agency.
SECTION 8. Enhancement. Enhancement for the Series 1997-2 Certificates
-----------
shall be the subordination of the Collateral Interest to the extent provided
herein, the Interest Rate Caps and, with respect to the Class A Certificates,
the subordination of the Class B Certificates to the extent provided herein.
SECTION 9. Article IV of Agreement. Any provision of Article IV of the
-----------------------
Agreement which distributes Collections to the Holder of the Exchangeable Seller
Certificate on the basis of the Seller Percentage shall continue to apply
irrespective of the issuance of the Series 1997-2 Investor Certificates.
Sections 4.1 and 4.2 of the Agreement shall be read in their entirety as
provided in the Agreement. Article IV of the Agreement (except for Sections 4.1
and 4.2 thereof) shall read in its entirety as follows and shall be applicable
only to the Series 1997-2 Investor Certificates:
-29-
ARTICLE IV
RIGHTS OF SERIES 1997-2 INVESTOR CERTIFICATEHOLDERS
AND ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.2A Rights of Series 1997-2 Investor Certificateholders.
---------------------------------------------------
The Series 1997-2 Investor Certificates shall represent fractional
Undivided Interests in the Trust, consisting of the right to receive, to
the extent necessary to make the required payments with respect to such
Series 1997-2 Investor Certificates at the times and in the amount
specified in this Agreement, (a) the related Investor Percentage of
Collections received with respect to the Receivables, (b) funds on deposit
in the Collection Account and the Excess Funding Account allocable to the
Series 1997-2 Investor Certificates, (c) funds and securities on deposit in
the Finance Charge Account, the Principal Account, the Distribution Account
and the Series 1997-2 Collection Subaccount, (d) with respect to the Class
A Certificates only, funds and securities on deposit in the Reserve
Account, up to the Available Reserve Account Amount, and the Principal
Funding Account and (e) with respect to the Class A Certificates and the
Class B Certificates only, the right to receive payments pursuant to the
Interest Rate Caps in accordance with Section 4.11. The Collateral
Interest shall be subordinate to the Class A Certificates and the Class B
Certificates to the extent described herein. The Class B Certificates
shall be subordinate to the Class A Certificates to the extent described
herein. The Exchangeable Seller Certificate shall represent the ownership
interest in the Trust Assets not allocated to the Series 1997-2 Investor
Certificates or any other Series outstanding; provided, however, the
-------- -------
ownership interest represented by the Exchangeable Seller Certificate and
any other Series outstanding shall not represent any interest in the Series
1997-2 Collection Subaccount, the Principal Funding Account, the Reserve
Account or the Interest Rate Caps, except as specifically provided in this
Article IV.
SECTION 4.2B The Series 1997-2 Collection Subaccount. Pursuant to
---------------------------------------
Section 4.1 of the Agreement, the Servicer, on behalf of the Trustee, shall
establish and maintain a subaccount of the Collection Account to be
maintained with a Qualified Trust Institution, which shall initially be
Bankers Trust Company, for the benefit of the Series 1997-2 Investor
Certificateholders, bearing a designation clearly
-30-
indicating that the funds therein are held in trust for the benefit of the
Series 1997-2 Investor Certificateholders (the "Series 1997-2 Collection
Subaccount"). Funds allocable to the Series 1997-2 Investor Certificates
which are deposited into the Collection Account will be transferred to the
Series 1997-2 Collection Subaccount prior to further application.
References in this Series Supplement to deposits of such funds into the
Collection Account should be read to include such transfers. The Servicer,
on behalf of the Trustee, at all times shall maintain accurate records
reflecting each transaction in the Series 1997-2 Collection Subaccount and
that funds held therein shall at all times be held in trust for the benefit
of the Series 1997-2 Investor Certificateholders. Pursuant to the
authority granted to it pursuant to subsection 3.1(b), the Servicer shall
have the power, revocable by the Trustee, to withdraw funds, and to
instruct the Trustee to withdraw funds, from the Series 1997-2 Collection
Subaccount for the purpose of carrying out its duties hereunder. All such
instructions from the Servicer to the Trustee shall be in writing;
provided, however, that the Servicer is entitled to give instructions to
-------- -------
the Trustee by facsimile. Funds on deposit in the Series 1997-2 Collection
Subaccount (not required to be deposited in the Finance Charge Account or
the Principal Account pursuant to Section 4.4 hereof) shall at all times be
invested by the Trustee, at the direction of the Servicer, in Permitted
Investments. Any such investment shall mature and such funds shall be
available for withdrawal, on the Transfer Date following the Monthly Period
in which such funds were processed for collection; provided, however, that
-------- -------
any Permitted Investment in short term U.S. treasury securities may mature
one day after such Transfer Date and may be sold on such Transfer Date.
All interest and earnings (net of losses and investment expenses) on funds
on deposit in the Series 1997-2 Collection Subaccount shall be deposited by
the Trustee in a separate deposit account with a Qualified Trust
Institution in the name of the Transferor, which shall not constitute a
part of the Trust, or shall otherwise be turned over to the Transferor not
less frequently than monthly; provided, however, that following the failure
-------- -------
of the Servicer to make a payment or deposit, which failure results in the
occurrence of a Servicer Default with respect to the Series 1997-2 Investor
Certificates, such interest and earnings shall not be paid to the
Transferor or deposited in such separate deposit account during the period
such Servicer Default
-31-
is continuing, but shall be retained in, or deposited into, the Finance
Charge Account and shall be treated as Finance Charge Collections allocable
to the Series 1997-2 Investor Certificateholders. The Qualified Trust
Institution shall maintain, either on its own or through its nominee or
custodian for the benefit of the Series 1997-2 Investor Certificateholders,
possession of any certificated negotiable instrument or security (other
than certificated securities held by a clearing corporation) evidencing the
Permitted Investments described in clause (a) of the definition thereof
relating to the Collection Account from the time of purchase thereof until
the time of maturity. Subject to the restrictions set forth above, the
Servicer, or a Person designated in writing by the Servicer, shall instruct
the Trustee in writing with respect to the investment of funds on deposit
in the Series 1997-2 Collection Subaccount. For purposes of determining
the availability of funds or the balances in the Series 1997-2 Collection
Subaccount for any reason under this Agreement, all investment earnings on
such funds (net of losses and expenses) shall be deemed not to be available
or on deposit so long as a Servicer Default shall not be continuing
pursuant to this Section 4.2B. Permitted Investments shall not be disposed
of prior to their maturity other than as provided above with respect to
short term U.S. treasury securities.
SECTION 4.3 Establishment of Series 1997-2 Investor Accounts. (a)
------------------------------------------------
The Finance Charge Account, the Principal Account and the Principal Funding
---------------------------------------------------------------------------
Account. The Servicer, for the benefit of the Series 1997-2 Investor
-------
Certificateholders, shall establish and maintain with a Qualified Trust
Institution, initially Bankers Trust Company, in the name of the Trustee,
on behalf of the Trust, three segregated trust accounts maintained in the
corporate trust department of such Qualified Trust Institution, and held in
trust by such Qualified Trust Institution (the "Finance Charge Account" and
the "Principal Account", and the "Principal Funding Account",
respectively), bearing a designation clearly indicating that the funds
therein are held in trust for the benefit of the Series 1997-2 Investor
Certificateholders. The Servicer, on behalf of the Trustee (or the Trustee
so long as the Finance Charge Account, the Principal Account or the
Principal Funding Account, are established with the Trustee) at all times
shall maintain accurate records reflecting each transaction in the
Principal Account, the Finance Charge Account and the Principal Funding
Account, and that funds held therein shall at all times be held in
-32-
trust for the benefit of the Series 1997-2 Investor Certificateholders.
Pursuant to the authority granted to it pursuant to subsection 3.1(b), the
Servicer shall have the power, revocable by the Trustee, to withdraw funds,
and to instruct the Trustee to withdraw funds, from the Finance Charge
Account, Principal Account and the Principal Funding Account for the
purpose of carrying out its duties hereunder. All such instructions from
the Servicer to the Trustee shall be in writing; provided, however, that
-------- -------
the Servicer is entitled to give instructions to the Trustee by facsimile.
(b) The Distribution Account. The Servicer, for the benefit of the
------------------------
Series 1997-2 Investor Certificateholders, shall cause to be established
and maintained in the name of the Trustee, on behalf of the Trust, with an
office or branch of a Qualified Trust Institution (other than the
Transferor), initially Bankers Trust Company, a non-interest bearing
segregated demand deposit account maintained in the corporate trust
department of such Qualified Trust Institution, and held in trust by such
Qualified Trust Institution (the "Distribution Account") bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Series 1997-2 Investor Certificateholders. The
Paying Agent shall have the revocable authority to make withdrawals from
the Distribution Account. Funds on deposit in the Distribution Account
shall not be invested.
(c) Administration of the Finance Charge Account, Principal Account and
-------------------------------------------------------------------
Principal Funding Account.
-------------------------
(i) Funds on deposit in the Finance Charge Account, the Principal
Account and the Principal Funding Account shall at all times be invested
by the Trustee at the direction of the Servicer in Permitted
Investments. Any such investment shall mature and such funds shall be
available for withdrawal on or prior to the Transfer Date following the
Monthly Period in which such funds were processed for collection. The
Qualified Trust Institution which holds the Finance Charge Account, the
Principal Account and the Principal Funding Account shall maintain
either on its own or through its nominee or custodian for the benefit of
the Series 1997-2 Investor Certificateholders, possession of any
certificated negotiable instrument or security (other than certificated
securities held by a clearing
-33-
corporation) evidencing the Permitted Investments relating to the
Principal Account, the Finance Charge Account or the Principal Funding
Account, as the case may be, described in clause (a) of the definition
of Permitted Investments from the time of purchase thereof until the
time of maturity; provided, however, that any Permitted Investment in
-------- -------
short term U.S. treasury securities may mature one day after such
Transfer Date and may be sold on such Transfer Date. Subject to the
restrictions set forth above, the Servicer, or a Person designated in
writing by the Servicer, shall instruct the Qualified Trust Institution
which holds the Finance Charge Account, the Principal Account and the
Principal Funding Account in writing with respect to the investment of
funds on deposit in the Finance Charge Account and the Principal
Account. Permitted Investments shall not be disposed of prior to their
maturity other than as provided above with respect to short term U.S.
treasury securities.
(ii) At the end of each month, all interest and earnings (net of
losses and investment expenses) on funds on deposit in the Finance
Charge Account and the Principal Account shall be deposited by the
Trustee in a separate deposit account with a Qualified Trust Institution
in the name of the Transferor, or a Person designated in writing by the
Transferor, which shall not constitute a part of the Trust, or shall
otherwise be turned over by the Trustee to the Transferor not less
frequently than monthly. For purposes of determining the availability of
funds or the balances in the Finance Charge Account or the Principal
Account for any reason under this Agreement, all investment earnings on
such funds (net of losses and expenses) shall be deemed not to be
available or on deposit.
(iii) On the Transfer Date occurring in the month following the
commencement of the Controlled Accumulation Period and on each Transfer
Date thereafter with respect to the Controlled Accumulation Period,
prior to the Class A Scheduled Payment Date, the Trustee, acting at the
Servicer's direction given on or before such Transfer Date, shall
transfer from the Principal Funding Account to the Finance Charge
Account the Principal Funding Investment Proceeds on deposit in the
Principal Funding Account, but not in
-34-
excess of the Class A Covered Amount, for application as Class A
Available Funds applied pursuant to subsection 4.6(a). Any Excess
Principal Funding Investment Proceeds shall be paid to the Holder of the
Exchangeable Seller Certificate on each Transfer Date. An amount equal
to any Principal Funding Investment Shortfall will be deposited in the
Finance Charge Account on each Transfer Date from the Reserve Account to
the extent funds are available pursuant to subsection 4.9. Except as
otherwise provided in this subsection 4.3(c)(iii), Principal Funding
Investment Proceeds (including reinvested interest) shall not be
considered part of the amounts on deposit in the Principal Funding
Account for purposes of this Agreement.
(d) Termination of Qualified Trust Institution. If the entity with which
------------------------------------------
any of the accounts established pursuant to this Section 4.3 ceases to be a
"Qualified Trust Institution," then such entity shall (i) provide the
Trustee and the Servicer with prompt written notice that it is no longer a
"Qualified Trust Institution" and (ii) transfer the funds deposited in each
of the accounts in the manner directed by the Servicer within 10 Business
Days of the day on which such entity ceased to be a "Qualified Trust
Institution."
SECTION 4.4 Allocations.
-----------
(a) [Reserved]
(b) [Reserved]
(c) Allocations During the Revolving Period. During the
---------------------------------------
Revolving Period, the Servicer shall, prior to the close of business on the
day any Collections are deposited in the Collection Account, direct the
Trustee to transfer from the Collection Account (or, if applicable, the
Principal Account or the Principal Funding Account) the following amounts
as set forth below:
(i) Deposit in the Finance Charge Account an amount equal to the sum
of (x) the product of (A) the Floating Investor Percentage on the Date
of Processing of such Collections and (B) the aggregate amount of
Finance Charge Collections processed on such
-35-
Date of Processing and (y) the proceeds of the sale of any Interest Rate
Cap pursuant to subsection 4.11(g) on such Date of Processing; provided,
--------
however, that with respect to the initial Interest Accrual Period an
-------
additional amount of [$___________] shall be deposited in the Finance
Charge Account from proceeds of the sale of the Series 1997-2 Investor
Certificates, and such deposit shall be deemed to have been made
pursuant to subsection 4.4(c)(i)(x) for all purposes under this
Agreement.
(ii) Deposit in the Principal Account an amount equal to the product
of (A) the Floating Investor Percentage on the Date of Processing of
such Collections and (B) the aggregate amount of such Principal
Collections processed on such Date of Processing; provided, however,
-------- -------
that if the amount deposited into the Principal Account pursuant to this
subsection 4.4(c)(ii) exceeds the Collateral Interest Surplus, if any,
as of such Date of Processing, then such excess shall not be treated as
a Principal Allocation and shall be treated as Shared Principal
Collections allocable to other Series and applied in accordance with
Section 4.2(e) of the Agreement; provided further that, if on any Date
-------- -------
of Processing the aggregate amount of Collections deposited in the
Principal Account on such Date of Processing pursuant to this subsection
4.4(c)(ii) is less than an amount equal to the Collateral Interest
Surplus, then Shared Principal Collections from other Series, if any,
allocable to the Series 1997-2 Investor Certificates will be deposited
to the Principal Account in accordance with subsection 4.2(e) to the
extent of such shortfall.
(d) Allocations During the Controlled Accumulation Period.
-----------------------------------------------------
During the Controlled Accumulation Period, the Servicer shall, prior
to the close of business on the day any Collections are deposited in
the Collection Account, direct the Trustee to transfer from the
Collection Account (or, if applicable, the Principal Account or the
Principal Funding Account) the following amounts as set forth below:
-36-
(i) Deposit in the Finance Charge Account an amount equal to the sum
of (x) the product of (A) the Floating Investor Percentage on the Date
of Processing of such Collections and (B) the aggregate amount of
Collections processed in respect of Finance Charge Receivables on such
Date of Processing and (y) the proceeds of the sale of any Interest Rate
Cap pursuant to subsection 4.11(g) on such Date of Processing.
(ii) Deposit in the Principal Account an amount, if any,
equal to the product of (A) the Fixed Investor Percentage on the Date of
Processing of such Collections and (B) the aggregate amount of such
Principal Collections processed on such Date of Processing (for any such
Date of Processing, a "Principal Allocation"); provided, however, that
-------- -------
if the Monthly Total Principal Allocation on such Date of Processing
exceeds an amount equal to the sum of (x) the Controlled Deposit Amount,
if such Date of Processing is during the Controlled Accumulation Period
prior to the beginning of the Monthly Period in which the Class A
Scheduled Payment Date occurs, or the Class B Investor Interest if such
Date of Processing is in the Controlled Accumulation Period thereafter,
and (y) the Collateral Interest Surplus as of such Date of Processing,
then such excess shall not be treated as a Principal Allocation and
shall be treated as Shared Principal Collections and applied in
accordance with Section 4.2(e) of the Agreement; provided, further, that
-------- -------
if on any Date of Processing the aggregate Principal Allocation for such
Date of Processing and for each prior Date of Processing in such Monthly
Period is less than an amount equal to the sum of the Controlled Deposit
Amount and the Collateral Interest Surplus, then Shared Principal
Collections from other Series, if any, allocable to the Series 1997-2
Investor Certificates will be deposited to the Principal Account in
accordance with Section 4.2(e) of the Agreement to the extent of such
shortfall.
(e) Allocations During the Rapid Amortization Period.
------------------------------------------------
During the Rapid
-37-
Amortization Period, the Servicer shall, prior to the close of business on
the day any Collections are deposited in the Collection Account, direct the
Trustee to transfer from the Collection Account the following amounts as
set forth below:
(i) Deposit in the Finance Charge Account an amount equal to the sum
of (x) the product of (A) the Floating Investor Percentage on the Date
of Processing of such Collections and (B) the aggregate amount of such
Collections processed in respect of Finance Charge Receivables on such
Date of Processing and (y) the proceeds of the sale of any Interest Rate
Cap pursuant to subsection 4.11(g).
(ii) Deposit in the Principal Account an amount equal to the
Principal Allocation; provided, however, that if the Principal
-------- -------
Allocation on any date exceeds the Investor Interest, the amount of such
excess shall be treated as Shared Principal Collections allocable to
other Series and applied in accordance with Section 4.2(e) of the
Agreement; provided, further, that if on any Date of Processing the
-------- -------
Monthly Total Principal Allocation for such Date of Processing in such
Monthly Period is less than the aggregate outstanding principal amount
of the Series 1997-2 Investor Certificates, then Shared Principal
Collections from other Series, if any, allocable to the Series 1997-2
Investor Certificates pursuant to Section 4.2(e) of the Agreement will
be deposited in the Principal Account to the extent of such shortfall.
SECTION 4.5 Defaulted Accounts and Charge-Offs.
----------------------------------
(a) On each Determination Date, the Servicer shall calculate the Class A
Investor Default Amount for the preceding Monthly Period. If on the
related Transfer Date, the Class A Investor Default Amount for such
Determination Date exceeds the sum of the amounts allocated with respect
thereto pursuant to subsections 4.6(a)(iii), 4.6(d)(i), 4.6(e) and 4.12(a)
with respect to such preceding Monthly Period, then the Collateral Interest
(after giving effect to reductions for
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any Collateral Interest Charge-Offs and any Reallocated Principal
Collections on such Transfer Date) will be reduced by the amount of such
excess, but not by more than the Class A Investor Default Amount for such
Transfer Date. If such reduction would cause the Collateral Interest to be
a negative number, the Collateral Interest will be reduced to zero, and the
Class B Investor Interest (after giving effect to reductions for any Class
B Investor Charge-Offs and any Reallocated Class B Principal Collections on
such Transfer Date) will be reduced by the amount by which the Collateral
Interest would have been reduced below zero. If such reduction would cause
the Class B Investor Interest to be a negative number, the Class B Investor
Interest will be reduced to zero, and the Class A Investor Interest will be
reduced by the amount by which the Class B Investor Interest would have
been reduced below zero (a "Class A Investor Charge-Off"). If the Class A
Investor Interest has been reduced by the amount of any Class A Investor
Charge-Offs, it will be reimbursed on any Distribution Date (but not by an
amount in excess of the aggregate Class A Investor Charge-Offs) by the
amounts allocated and available for such purpose pursuant to subsections
4.6(a)(iv), 4.6(d)(i), 4.6(e) and 4.12(a).
(b) On each Determination Date, the Servicer shall calculate the Class B
Investor Default Amount for the preceding Monthly Period. If on any
Determination Date, the Class B Investor Default Amount for such
Determination Date exceeds the amount allocated and available to fund such
amount pursuant to subsections 4.6(b)(iii), 4.6(d)(ii), 4.6(f) and 4.12(b),
the Collateral Interest (after giving effect to reductions for any
Collateral Interest Charge-Offs and any Reallocated Principal Collections
on such Transfer Date and any adjustments with respect thereto as described
in subsection 4.5(a)) will be reduced by the amount of such excess but not
by more than the Class B Investor Default Amount for such Transfer Date.
If such reduction would cause the Collateral Interest to be a negative
number, the Collateral Interest shall be reduced to zero and the Class B
Investor Interest shall be reduced by the amount by which the Collateral
Interest would have been reduced below zero (a "Class B Investor Charge-
Off"). The Class B Investor Interest will
-39-
also be reduced by the amount of Reallocated Principal Collections in
excess of the Collateral Interest pursuant to subsection 4.12(a) and the
amount of any portion of the Class B Investor Interest allocated to the
Class A Certificates to avoid a reduction in the Class A Investor Interest
pursuant to subsection 4.5(a). The Class B Investor Interest will
thereafter be reimbursed (but not in the excess of the unpaid principal
balance of the Class B Certificates) on any Transfer Date by amounts
allocated and available for that purpose as described under subsections
4.6(b)(iv), 4.6(d)(ii) and (v), 4.6(f) and 4.12(b).
(c) On each Determination Date, the Servicer shall calculate the
Collateral Default Amount for the preceding Monthly Period. If on any
Determination Date, the Collateral Default Amount for such Determination
Date exceeds the amount allocated and available to fund such amount
pursuant to subsections 4.6(d)(ix), (x) and (xii) and 4.6(g), the
Collateral Interest will be reduced by the amount of such excess but not by
more than the lesser of the Collateral Default Amount and the Collateral
Interest for such Transfer Date (a "Collateral Interest Charge-Off"). The
Collateral Interest will also be reduced by the amount of Reallocated
Principal Collections pursuant to subsections 4.12(a) and (b) and the
amount of any portion of the Collateral Interest allocated to the Class A
Certificates or the Class B Certificates to avoid a reduction in the Class
A Investor Interest, pursuant to subsection 4.5(a), or the Class B Investor
Interest, pursuant to subsection 4.5(b), respectively. The Collateral
Interest will thereafter be reimbursed (but not in the excess of the unpaid
principal balance of the Collateral Interest) on any Transfer Date by
amounts allocated and available for that purpose as described under
subsections 4.6(d)(ix) and (x) and 4.6(g).
SECTION 4.6 Monthly Payments. On each Determination Date, the Servicer
----------------
shall notify the Trustee that the Servicer will withdraw, or shall instruct
the Trustee to withdraw, and the Trustee acting in accordance with such
instructions shall withdraw, on the succeeding Transfer Date, the amounts
required to be withdrawn from the Finance Charge
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Account (or from the finance charge accounts for other Series, as applicable)
pursuant to subsections 4.6(a), (b), (c), (d), (e), (f) and (g). On each
Determination Date, the Servicer shall also notify the Trustee of the amounts
to be withdrawn by the Trustee, acting on instructions from the Servicer, from
the Principal Funding Account and the Reserve Account, pursuant to subsections
4.6(c), 4.9(b) and 4.9(d).
(a) On each Transfer Date, an amount equal to the Class A Available
Funds will be distributed in the following priority:
(i) Class A Monthly Cap Rate Interest and the Class A Covered Amount.
----------------------------------------------------------------
On each Transfer Date, the Servicer or the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw from the Finance
Charge Account and deposit to the Distribution Account, to the extent
funds are available from Class A Available Funds (i) first, an amount
equal to the sum of the Class A Monthly Cap Rate Interest and the Class
A Covered Amount for the related Distribution Date; and (ii) then, an
amount equal to the amount of any overdue Class A Monthly Cap Rate
Interest and overdue Class A Covered Amount, for which a payment has not
been made under this subsection 4.6(a)(i) or otherwise pursuant to this
Agreement; provided, however, that with respect to the first
-------- -------
Distribution Date relating to the Series 1997-2 Investor Certificates,
the amount of Class A Monthly Cap Rate Interest referred to in (i) above
shall be [$____________] (reflecting an initial period of [_________]
days).
(ii) Class A Monthly Servicing Fee. On each Transfer Date, the
-----------------------------
Servicer or the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Finance Charge Account, to the extent
funds are available from Class A Available Funds after giving effect to
the withdrawals pursuant to subsection 4.6(a)(i), an amount equal to the
Class A Monthly Servicing Fee accrued in respect of the preceding
Monthly Period, plus all accrued and unpaid Class A Monthly Servicing
Fees in respect of previous Monthly Periods, and the
41-
Servicer or the Trustee, as the case may be, shall pay such amount to
the Servicer.
(iii) Class A Investor Default Amount. On each Transfer Date, the
-------------------------------
Servicer or the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Finance Charge Account, to the extent
funds are available from Class A Available Funds after giving effect to
the withdrawal pursuant to subsections 4.6(a)(i) and (ii), an amount
equal to the Class A Investor Default Amount, if any, for the preceding
Monthly Period, and the Servicer or the Trustee, as the case may be,
shall apply such amount, subject to Section 4.12, in accordance with
Section 4.8 as Available Investor Principal Collections.
(iv) Reimbursement of Class A Investor Charge-Offs. On each Transfer
---------------------------------------------
Date, the Servicer or the Trustee, acting in accordance with
instructions of the Servicer, shall withdraw from the Finance Charge
Account, to the extent funds are available from Class A Available Funds
after giving effect to the withdrawals and transfers pursuant to
subsections 4.6(a)(i) through (iii), an amount equal to the aggregate
amount of Class A Investor Charge-Offs, if any, which have not
theretofore been reimbursed pursuant to this subsection 4.6(a)(iv) or
otherwise pursuant to the Agreement and shall apply such amount, subject
to Section 4.12, in accordance with Section 4.8 as Available Investor
Principal Collections. On the date of any such reimbursement, the Class
A Investor Interest shall be increased by the amount of such
reimbursement of Class A Investor Charge-Offs.
(v) Excess Spread. The remaining Class A Available Funds, if any,
-------------
shall constitute Excess Spread and shall be allocated and distributed as
set forth in subsection 4.6(d).
(b) On each Transfer Date, an amount equal to Class B Available Funds
will be distributed in the following priority:
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(i) Class B Monthly Cap Rate Interest. On each Transfer Date,
---------------------------------
the Servicer or the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Finance Charge Account and deposit
to the Distribution Account, to the extent funds are available from
Class B Available Funds, (i) first, an amount equal to the Class B
Monthly Cap Rate Interest for the related Distribution Date; and (ii)
then, an amount equal to the amount of any overdue Class B Monthly Cap
Rate Interest, for which a payment has not been made under this
subsection 4.6(b)(i) or otherwise pursuant to the Agreement; provided,
--------
however, that with respect to the first Distribution Date
-------
relating to the Series 1997-2 Investor Certificates, the amount referred
to in (i) above shall be [$___________] (reflecting an initial period of
[_______] days).
(ii) Class B Monthly Servicing Fee. On each Transfer Date, the
-----------------------------
Servicer or the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Finance Charge Account, to the extent
funds are available from Class B Available Funds after giving effect to
the withdrawals pursuant to subsection 4.6(b)(i), an amount equal to the
Class B Monthly Servicing Fee accrued in respect of the preceding
Monthly Period, plus all accrued and unpaid Class B Monthly Servicing
Fees in respect of previous Monthly Periods, and the Servicer or the
Trustee, as the case may be, shall pay such amount to the Servicer.
(iii) Class B Investor Default Amount. On each Transfer Date, the
-------------------------------
Servicer or the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Finance Charge Account, to the extent
funds are available from Class B Available Funds after giving effect to
the withdrawal pursuant to subsections 4.6(b)(i) and (ii), an amount
equal to the Class B Investor Default Amount, if any, for the preceding
Monthly Period, and the Servicer or the Trustee, as the case may be,
shall apply such amount, subject to Section 4.12, in
-43-
accordance with Section 4.8 as Available Investor Principal Collections.
(iv) Reimbursement of Class B Investor Charge-Offs. On each Transfer
---------------------------------------------
Date, the Servicer or the Trustee, acting in accordance with
instructions of the Servicer, shall withdraw from the Finance Charge
Account, to the extent funds are available from Class B Available Funds
after giving effect to the withdrawals and transfers pursuant to
subsections 4.6(b)(i) through (iii), an amount equal to the aggregate
amount of Class B Investor Charge-Offs, if any, which have not
theretofore been reimbursed pursuant to this subsection 4.6(b)(iv) or
otherwise pursuant to this Agreement and shall apply such amount,
subject to Section 4.12, in accordance with Section 4.8 as Available
Investor Principal Collections. On the date of any such reimbursement,
the Class B Investor Interest shall be increased by the amount of such
reimbursement of Class B Investor Charge-Offs.
(v) Excess Spread. The remaining Class B Available Funds, if any,
-------------
shall constitute Excess Spread and shall be allocated and distributed as
set forth in subsection 4.6(d).
(c) On each Transfer Date, an amount equal to the Collateral Available
Funds will be distributed in the following priority:
(i) Collateral Monthly Servicing Fee. On each Transfer Date, the
--------------------------------
Servicer or the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Finance Charge Account, to the extent
funds are available from Collateral Available Funds, an amount equal to
the Collateral Interest Monthly Servicing Fee accrued in respect of the
preceding Monthly Period plus all accrued and unpaid Collateral Interest
Monthly Servicing Fees in respect of previous Monthly Periods, and the
Servicer or the Trustee, as the case may be, shall pay such amount to
the Servicer.
-44-
(ii) Excess Spread. The remaining Collateral Available Funds,
-------------
if any, shall constitute Excess Spread and shall be allocated and
distributed as set forth in subsection 4.6(d).
(d) On each Transfer Date, Excess Spread will be distributed in the
following priority:
(i) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread, an amount equal to the Class A Required Amount, if any, with
respect to the related Distribution Date, to be applied, with respect to
each of the components thereof, in accordance with Section 4.6(a).
(ii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread, after giving effect to the withdrawal pursuant to subsection
4.6(d)(i), an amount equal to the Class B Required Amount, if any, with
respect to the related Distribution Date, to be applied, with respect to
each of the components thereof, in accordance with Section 4.6(b).
(iii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) and (ii), and shall deposit in the Distribution Account for
distribution to the Class A Certificateholders on the next succeeding
Distribution Date pursuant to Section 4.7, an amount equal to the amount
of any accrued and unpaid interest on any overdue Class A Monthly
Interest, calculated on the basis of (x) a default rate of interest
equal to the Class A Certificate Rate plus 0.5% and (y) the actual
number of days such Class A
-45-
Monthly Interest is or was at any time overdue, divided by 360.
(iv) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (iii), and shall deposit in the Distribution Account
for distribution to the Class B Certificateholders on the next
succeeding Distribution Date pursuant to Section 4.7, an amount equal to
the amount of any accrued and unpaid interest on any overdue Class B
Monthly Interest, calculated on the basis of (x) a default rate of
interest equal to the Class B Certificate Rate plus 0.5% and (y) the
actual number of days such Class B Monthly Interest is or was at any
time overdue, divided by 360.
(v) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (iv), an amount equal to any unreimbursed reductions
in the Class B Investor Interest in connection with the payment of the
Class A Required Amount, to reinstate the Class B Investor Interest to
the extent of any such reduction, which amount shall be applied, subject
to Section 4.12, in accordance with Section 4.8 as Available Investor
Principal Collections.
(vi) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, and pay to the Collateral Interest Holder in
accordance with the Loan Agreement, to the extent funds are available
from Excess Spread after giving effect to the withdrawals pursuant to
subsections 4.6(d)(i) through (v), an amount equal to the sum of (x) the
Collateral Monthly Interest for the related
-46-
Monthly Period and (y) the amount of any accrued and unpaid Collateral
Monthly Interest for any prior Monthly Periods.
(vii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (vi), and shall deposit in the Distribution Account
for distribution to the Class A Certificateholders on the next
succeeding Distribution Date pursuant to Section 4.7, an amount equal to
the amount by which the Class A Monthly Interest for the related
Interest Accrual Period exceeds the Class A Monthly Cap Rate Interest
(other than Class A Excess Interest), to the extent such amount is not
paid by the Interest Rate Cap Provider pursuant to the Class A Interest
Rate Cap in accordance with Section 4.11(a), plus any such amounts
accrued and unpaid for prior Interest Accrual Periods.
(viii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (vii), and shall deposit in the Distribution Account
for distribution to the Class B Certificateholders on the next
succeeding Distribution Date pursuant to Section 4.7, an amount equal to
the amount by which the Class B Monthly Interest for the related
Interest Accrual Period exceeds the Class B Monthly Cap Rate Interest
(other than Class B Excess Interest), to the extent such amount is not
paid by the Interest Rate Cap Provider pursuant to the Class B Interest
Rate Cap in accordance with Section 4.11(a), plus any such amounts
accrued and unpaid for prior Interest Accrual Periods.
(ix) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall
-47-
withdraw from the Finance Charge Account, to the extent funds are
available from Excess Spread after giving effect to the withdrawals
pursuant to subsections 4.6(d)(i) through (viii), an amount equal to the
Collateral Default Amount for the preceding Monthly Period, which amount
shall be applied, subject to Section 4.12, in accordance with Section
4.8 as Available Investor Principal Collections.
(x) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (ix), an amount equal to the aggregate amount by which
the Collateral Interest has been reduced below the Required Collateral
Interest for reasons other than the payment of principal to the
Collateral Interest Holder (but not in excess of the aggregate amount of
such reductions which have not been previously reimbursed), which amount
shall be applied, subject to Section 4.12, in accordance with Section
4.8 as Available Investor Principal Collections.
(xi) On each Transfer Date from and after the Reserve Account Funding
Date to but excluding the date on which the Reserve Account shall
terminate pursuant to subsection 4.9(f), the Servicer or the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw
from the Finance Charge Account, to the extent funds are available from
Excess Spread after giving effect to the withdrawals pursuant to
subsections 4.6(d)(i) through (x), and shall deposit in the Reserve
Account, an amount equal to the excess, if any, of the Required Reserve
Account Amount over the Available Reserve Account Amount (without giving
effect to any deposit made on such date hereunder).
(xii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall
-48-
withdraw from the Finance Charge Account, to the extent funds are
available from Excess Spread after giving effect to the withdrawals
pursuant to subsections 4.6(d)(i) through (xi), an amount equal to the
aggregate amount of any additional amounts due and payable under the
Loan Agreement, which amount shall be applied and distributed in
accordance with and to the extent specified in the Loan Agreement.
(xiii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (xii), and shall deposit in the Distribution Account
for distribution to the Class A Certificateholders on the next
succeeding Distribution Date pursuant to Section 4.7, an amount equal to
the amount of any Class A Excess Interest which accrued during the
related Interest Accrual Period.
(xiv) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (xiii), and shall deposit in the Distribution Account
for distribution to the Class B Certificateholders on the next
succeeding Distribution Date pursuant to Section 4.7, an amount equal to
the amount of any Class B Excess Interest which accrued during the
related Interest Accrual Period.
(xv) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (xiv), and shall make such amounts available to be
applied as Shared Finance Charge Collections to pay to
Certificateholders of
-49-
other Series to the extent of shortfalls, if any, in amounts payable to
such Certificateholders from Finance Charge Collections allocated to
such other Series in accordance with the related Supplements.
(xvi) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account, to the extent funds are available from Excess
Spread after giving effect to the withdrawals pursuant to subsections
4.6(d)(i) through (xv), the amounts of any accrued and unpaid expenses
of the Trust specified in writing by the Trustee to the Servicer, and
shall make such amounts available to the Trustee to pay such accrued and
unpaid expenses of the Trust, if any, not otherwise paid pursuant to
this Section 4.6.
(xvii) On each Transfer Date, the Servicer or the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Finance Charge Account the remaining Excess Spread after giving effect
to the withdrawals pursuant to subsections 4.6(d)(i) through (xvi), and
shall pay such amount to the holder of the Exchangeable Seller
Certificate.
(e) With respect to each Distribution Date, on the related Determination
Date, the Servicer shall determine the amount (the "Class A Required
Amount"), if any, by which the sum of (i) Class A Monthly Cap Rate Interest
for such Distribution Date, (ii) any Class A Monthly Cap Rate Interest
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) the Class A Covered Amount for such Distribution
Date and Class A Covered Amounts previously due but not paid to the Class A
Certificateholders on a prior Distribution Date, (iv) the Class A Monthly
Servicing Fee for the related Distribution Date and any accrued and unpaid
Class A Monthly Servicing Fees from prior Monthly Periods, (v) the Class A
Investor Default Amount, if any, for the related Monthly Period and (vi)
the unreimbursed Class A Investor Charge-Offs, exceeds the Class A
Available Funds deposited in the Finance Charge Account for the
-50-
related Monthly Period. In the event that the Class A Required Amount for
such Distribution Date is greater than zero, the Servicer shall give
written notice to the Trustee of such positive Class A Required Amount on
the related Determination Date and all or a portion of the Excess Spread
with respect to the related Monthly Period in an amount up to the Class A
Required Amount for such Distribution Date shall be distributed from the
Finance Charge Account on the related Transfer Date pursuant to subsection
4.6(d)(i). In the event that the Class A Required Amount for such
Distribution Date exceeds the amount of Excess Spread with respect to the
related Monthly Period, then the Trustee shall, in accordance with the
related Supplements, withdraw on such Transfer Date from the finance charge
accounts for other Series the amounts of Shared Finance Charge Collections
with respect to the related Monthly Period, if any, allocable to the Series
1997-2 Investor Certificates from other Series, in an amount up to the
remaining Class A Required Amount, and such amount shall be deposited into
the Distribution Account on such Transfer Date for distribution on the
related Distribution Date in accordance with the priorities set forth in
subsections 4.6(a)(i) through (iv). In the event that the Class A Required
Amount for such Distribution Date exceeds the amount of Excess Spread and
Shared Finance Charge Collections allocable to the Class A Certificates,
all or a portion of the Reallocated Principal Collections with respect to
such Monthly Period in an amount up to such excess shall be distributed on
such Transfer Date pursuant to subsection 4.12(a).
(f) With respect to each Distribution Date, on the related Determination
Date, the Servicer shall determine the amount (the "Class B Required
Amount"), if any, by which the sum of (i) Class B Monthly Cap Rate Interest
for such Distribution Date, (ii) any Class B Monthly Cap Rate Interest
previously due but not paid to the Class B Certificateholders on a prior
Distribution Date, (iii) the Class B Monthly Servicing Fee for the related
Distribution Date and any accrued and unpaid Class B Monthly Servicing Fees
from prior Monthly Periods, (iv) the Class B Investor Default Amount, if
any, for the related Monthly Period, and (v) the unreimbursed Class B
Investor Charge-
-51-
Offs, exceeds the Class B Available Funds deposited in the Finance Charge
Account for the related Monthly Period. In the event that the Class B
Required Amount for the related Transfer Date is greater than zero, the
Servicer shall give written notice to the Trustee of such positive Class B
Required Amount on the related Determination Date and all or a portion of
Excess Spread (other than Excess Spread applied to fund the Class A
Required Amount with respect to such Distribution Date) with respect to the
related Monthly Period shall be distributed from the Finance Charge Account
on such Distribution Date pursuant to subsection 4.6(d)(ii). In the event
that the Class B Required Amount for such Distribution Date exceeds the
amount of Excess Spread with respect to such Monthly Period remaining after
application thereof to fund the Class A Required Amount, then the Trustee
shall, in accordance with the related Supplements, withdraw on such
Transfer Date from the finance charge accounts for other Series the amounts
of Shared Finance Charge Collections with respect to the related Monthly
Period, if any, allocable to the Series 1997-2 Investor Certificates from
other Series, after the application thereof pursuant to subsection 4.6(e),
in an amount up to the remaining Class B Required Amount, and such amount
shall be deposited to the Distribution Account on such Transfer Date on the
related Distribution Date in accordance with the priorities set forth in
subsections 4.6(b)(i) through (iv). In the event that the Class B Required
Amount for such Distribution Date exceeds the amount of Excess Spread and
Shared Finance Charge Collections allocable to the Class B Certificates on
such Transfer Date, all or a portion of the Reallocated Collateral
Principal Collections with respect to such Monthly Period, if any,
remaining after the application thereof pursuant to Section 4.6(e), in an
amount up to such excess, shall be distributed on such Transfer Date
pursuant to Section 4.12(b).
(g) On each Transfer Date, in the event that the amounts due on such
Transfer Date pursuant to subsections 4.6(c)(i) and 4.6(d)(v) through (xii)
exceed in whole or in part the Excess Spread allocable thereto on to such
Transfer Date, then the Trustee shall, in accordance with the related
Supplements, withdraw on such Transfer Date from the finance charge
accounts for other Series the
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amounts of Shared Finance Charge Collections with respect to the related
Monthly Period, if any, allocable to the Series 1997-2 Investor
Certificates from other Series, after the application thereof pursuant to
subsections 4.6(e) and (f), in an amount up to such excess or such lesser
amount as may be available after the application thereof pursuant to
subsections 4.6(e) and (f), and such amount shall be distributed to the
Servicer on such Transfer Date in accordance with Section 4.6(c)(i) and
then applied in accordance with the priorities set forth in subsections
4.6(d)(v) through (xii).
SECTION 4.7 Payment of Investor Certificate Interest. On each
----------------------------------------
Distribution Date, the Paying Agent shall pay in accordance with Section
5.1, (a) to the Class A Certificateholders from the Distribution Account
the amount deposited into the Distribution Account and allocated to the
Class A Certificates pursuant to subsections 4.6(a)(i), 4.6(d)(i), (iii),
(vii) and (xiii), 4.6(e), 4.11(a) and 4.12(a) on the related Transfer Date
and (b) to the Class B Certificateholders from the Distribution Account the
amount deposited into the Distribution Account and allocated to the Class B
Certificates pursuant to subsections 4.6(b)(i), 4.6(d)(ii), (iv), (viii)
and (xiv), 4.6(f), 4.11(a) and 4.12(b) on the related Transfer Date.
SECTION 4.8 Payment of Investor Certificate Principal.
-----------------------------------------
(a) On each Determination Date, the Servicer shall instruct the Trustee
to withdraw, and the Trustee, acting in accordance with such instructions,
shall withdraw on such Transfer Date or the related Distribution Date, as
applicable, to the extent of available funds, the amounts required to be
withdrawn from the Finance Charge Account, the Principal Account, the
Principal Funding Account and the Distribution Account as follows:
(i) on each Transfer Date with respect to the Revolving Period, an
amount equal to the Available Investor Principal Collections for the
related Monthly Period shall be distributed on each Transfer Date, to
the extent available, in the following priority:
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(A) an amount equal to the Collateral Monthly Principal with
respect to such Transfer Date shall be distributed to the
Collateral Interest Holder in accordance with the Loan Agreement;
and
(B) the remaining Available Investor Principal Collections, if
any, shall constitute Shared Principal Collections to be deposited
and applied in the manner specified in subsection 4.2(e) of the
Agreement.
(ii) on each Transfer Date with respect to the Controlled
Accumulation Period (beginning on the first Transfer Date following the
Monthly Period in which the Controlled Accumulation Period commences),
to the extent available, in the following priority:
(A) on each Transfer Date occurring prior to the Class A Scheduled
Payment Date, an amount equal to the Class A Monthly Principal shall
be deposited into the Principal Funding Account;
(B) on the Transfer Date immediately following the payment in full
of the Class A Investor Interest on the Class A Scheduled Payment
Date, an amount equal to the Class B Monthly Principal with respect
to such Transfer Date will be deposited in the Distribution Account;
(C) on each Transfer Date after giving effect to the distribution
referred to in clauses (A) and (B), if a reduction in the Required
Collateral Interest has occurred on or prior to such Transfer Date,
an amount equal to the Collateral Monthly Principal with respect to
such Transfer Date will be paid to the Collateral Interest Holder in
accordance with the Loan Agreement; and
(D) the remaining Available Investor Principal Collections, if any,
shall constitute Shared Principal Collections to be deposited and
applied in the
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manner specified in subsection 4.2(e) of the Agreement.
(iii) on each Transfer Date with respect to the Rapid Amortization
Period (beginning on the first Transfer Date following the Monthly
Period in which the Rapid Amortization Period commences), to the extent
available, in the following priority:
(A) an amount equal to the Class A Monthly Principal with respect
to such Transfer Date will be deposited in the Distribution Account;
(B) upon payment of the Class A Investor Interest in full, an
amount equal to the Class B Monthly Principal with respect to such
Transfer Date will be deposited in the Distribution Account;
(C) upon payment of the Class B Investor Interest in full, an
amount equal to the Collateral Monthly Principal with respect to such
Transfer Date will be paid to the Collateral Interest Holder in
accordance with the Loan Agreement; and
(D) the remaining Available Investor Principal Collections, if any,
shall constitute Shared Principal Collections to be deposited and
applied in the manner specified in subsection 4.2(e) of the
Agreement;
provided, further, that on each Transfer Date in the Controlled
-------- -------
Accumulation Period, the Servicer shall withdraw, or instruct the Trustee
to withdraw, and on such Transfer Date the Trustee shall withdraw, from the
Excess Funding Account and deposit to the Principal Funding Account, an
amount equal to the lesser of (x) the amount on deposit therein (exclusive
of investment earnings) and (y) the amount by which the Controlled Deposit
Amount exceeds the Available Investor Principal Collections on such
Transfer Date; provided, further, that on the first Transfer Date in the
-------- -------
Rapid Amortization Period, the Servicer shall withdraw, or instruct the
Trustee to withdraw, and
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on such Transfer Date the Trustee shall withdraw, from the Excess Funding
Account and deposit to the Distribution Account, any amount on deposit
therein (exclusive of investment earnings).
(b)(i) On the earlier to occur of (i) the first Transfer Date with
respect to the Rapid Amortization Period and (ii) the Transfer Date
immediately preceding the Class A Scheduled Payment Date, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw
from the Principal Funding Account and deposit in the Distribution Account
the amount on deposit in the Principal Funding Account.
(ii) On the Determination Date preceding the Transfer Date
immediately prior to the Series 1997-2 Termination Date, the Servicer
shall determine the amounts to be deposited pursuant to this sentence
and on the final Transfer Date: (x) the Servicer shall, or shall
instruct the Trustee to, and the Trustee shall, withdraw from the
Principal Account and deposit into the Distribution Account, an amount
which is no greater than the Investor Interest as of the immediately
preceding Distribution Date, after giving effect to all payments,
deposits and withdrawals made on such date; and (y) the Servicer shall,
or shall instruct the Trustee to, and the Trustee shall, withdraw from
the Principal Account and deposit into the Collection Account, for
allocation to other Series as Principal Collections pursuant to Article
IV, the amount, if any, remaining in the Principal Account after giving
effect to the withdrawals made pursuant to clause (x).
(c) On each Distribution Date occurring after a deposit is made to the
Distribution Account pursuant to subsection 4.8(a) or (b) of the Agreement
or Section 5 or 15 of the Series Supplement, the Paying Agent shall pay, in
accordance with Section 5.1 to the Series 1997-2 Investor
Certificateholders from the Distribution Account, the amount so deposited
into the Distribution Account.
(d) The Controlled Accumulation Period is scheduled to commence at the
close of business on the Controlled Accumulation Date; provided that if the
Controlled Accumulation Period Length
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(determined as described below) on any Determination Date on or after the
Determination Date preceding the Reserve Account Funding Date is less than
fourteen months, the Servicer, at its option, may elect to modify the date
on which the Controlled Accumulation Period actually commences to the first
day of the month that is a number of months prior to the month in which the
Class A Scheduled Payment Date occurs at least equal to the Controlled
Accumulation Period Length (so that, as a result of such election, the
number of Monthly Periods in the Controlled Accumulation Period will at
least equal the Controlled Accumulation Period Length) and shall provide
prompt written notice of such action to the Trustee; provided that (i) the
length of the Controlled Accumulation Period will not be less than four
months; (ii) such determination of the Controlled Accumulation Period
Length shall be made on each Determination Date prior to the commencement
of the Controlled Accumulation Period, and any election to shorten the
Controlled Accumulation Period shall be subject to the subsequent
lengthening of the Controlled Accumulation Period to the Controlled
Accumulation Period Length determined on any subsequent Determination Date,
but the Controlled Accumulation Period shall in no event commence prior to
the Controlled Accumulation Date, and (iii) notwithstanding any other
provision of this Series Supplement to the contrary, no election to
postpone the commencement of the Controlled Accumulation Period shall be
made after a Pay Out Event shall have occurred and be continuing with
respect to any other Series. The "Controlled Accumulation Period Length"
will mean a number of months such that the amount available for
distribution of principal on the Class A Certificates on the Class A
Scheduled Payment Date is expected to equal or exceed the Class A Investor
Interest, assuming for this purpose that (1) the payment rate with respect
to Principal Collections remains constant at the lowest level of such
payment rate during the twelve preceding Monthly Periods (or such lower
payment rate as Servicer may select), (2) the total amount of Principal
Receivables in the Trust (and the principal amount on deposit in the Excess
Funding Account, if any) remains constant at the level on such date of
determination, (3) no Pay Out Event with respect to any Series will
subsequently occur
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during the Controlled Accumulation Period and (4) no additional Series
(other than any Series being issued on such date of determination) will
subsequently be issued during the Controlled Accumulation Period.
SECTION 4.9 Establishment of the Reserve Account
------------------------------------
(a) Reserve Account. The Servicer, for the benefit of the Class A
---------------
Certificateholders, shall establish and maintain or cause to be established
and maintained with a Qualified Trust Institution (other than the Servicer)
in the name of the Trustee, on behalf of the Class A Certificateholders,
the "Reserve Account", which shall be a segregated trust account with the
corporate trust department of such Qualified Trust Institution, and held in
trust by such Qualified Trust Institution bearing a designation clearly
indicating that the funds deposited therein are held by the Trustee, on
behalf of the Class A Certificateholders. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. If, at any time, the
institution holding the Reserve Account ceases to be a Qualified Trust
Institution, the Servicer shall within 20 Business Days establish a new
Reserve Account meeting the conditions specified above with a Qualified
Trust Institution and shall transfer any cash and/or any investments that
are on deposit in the existing Reserve Account to such new Reserve Account.
From the date such new Reserve Account is established, it shall be the
"Reserve Account." The Trustee, acting in accordance with instructions
from the Servicer, shall (i) make withdrawals from the Reserve Account from
time to time in an amount up to the Available Reserve Account Amount at
such time, for the purposes set forth in this Series Supplement, and (ii)
on each Transfer Date (from and after the Reserve Account Funding Date)
prior to the termination of the Reserve Account pursuant to Section 4.9(f)
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.6(d)(xi).
(b) Administration of the Reserve Account. Funds on deposit in the
-------------------------------------
Reserve Account on any Transfer Date, after giving effect to any deposits
to or withdrawals from the Reserve Account on such
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Transfer Date, shall be invested by the Trustee at the direction of the
Servicer in Permitted Investments that will mature so that such funds will
be available for withdrawal on or prior to the following Transfer Date; and
provided, further, that each Permitted Investment shall mature such that
-------- -------
such Permitted Investment shall be available for withdrawal on or prior to
the following Transfer Date. The Trustee shall maintain, either on its own
behalf or through its nominee or custodian, on behalf of the Class A
Certificateholders, possession of any certificated negotiable instrument or
security (other than certificated securities held by a clearing
corporation) evidencing the Permitted Investments made pursuant to this
subsection 4.9(b) described in clause (a) of the definition of "Permitted
Investments" from the time of purchase thereof until the time of sale or
maturity. No Permitted Investment shall be disposed of prior to its
maturity. On each Transfer Date, all interest and earnings (net of losses
and investment expenses) accrued since the preceding Transfer Date on funds
on deposit in the Reserve Account shall be retained in the Reserve Account
to the extent that the Available Reserve Account Amount is less than the
Required Reserve Account Amount; and the balance, if any, shall be
deposited into the Finance Charge Account and included in Class A Available
Funds for such Transfer Date. For purposes of determining the availability
of funds or the balances in the Reserve Account for any reason under this
Agreement, except as otherwise provided in the preceding paragraph, all
investment earnings on such funds shall be deemed not to be available or on
deposit.
(c) Calculation of Reserve Draw Amount. On or before each Transfer Date
----------------------------------
with respect to the Controlled Accumulation Period prior to the payment in
full of the Class A Investor Interest and on or before the first Transfer
Date with respect to the Rapid Amortization Period, the Servicer shall
calculate the "Reserve Draw Amount" which shall be equal to the Principal
Funding Investment Shortfall with respect to each Transfer Date with
respect to the Controlled Accumulation Period or the first Transfer Date
with respect to the Rapid Amortization Period less, in each case, the
amount of funds deposited into the Finance
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Charge Account on such Transfer Date pursuant to subsection 4.9(b).
(d) Withdrawal of Reserve Draw Amount. If the Reserve Draw Amount for
---------------------------------
any Transfer Date is greater than zero, the Trustee, acting in accordance
with the instructions of the Servicer, shall withdraw from the Reserve
Account an amount equal to the lesser of (x) such Reserve Draw Amount and
(y) the Available Reserve Account Amount as of such Transfer Date, and
shall deposit such amount into the Finance Charge Account and included in
Class A Available Funds for such Transfer Date.
(e) Withdrawal of Reserve Account Surplus. If the Reserve Account
-------------------------------------
Surplus for any Transfer Date, after giving effect to all deposits to and
withdrawals from the Reserve Account with respect to such Transfer Date, is
greater than zero, the Trustee, acting in accordance with the instructions
of the Servicer, shall withdraw from the Reserve Account not later than
1:00 p.m. (New York City time) on such Transfer Date an amount equal to the
Reserve Account Surplus and pay such amount in accordance with the Loan
Agreement.
(f) Termination of the Reserve Account. Upon the earliest to occur of
----------------------------------
(i) the termination of the Trust pursuant to Article XII of the Agreement,
(ii) if the Controlled Accumulation Period has not commenced, the first
Transfer Date relating to the Rapid Amortization Period, and if the
Controlled Accumulation Period has commenced, the earlier to occur of (I)
the first Transfer Date with respect to the Rapid Amortization Period and
(II) the Transfer Date immediately preceding the Class A Scheduled Payment
Date, the Trustee, acting in accordance with the instructions of the
Servicer, after the prior payment of all amounts owing to the Class A
Certificateholders that are payable from the Reserve Account as provided in
this Series Supplement, shall withdraw from the Reserve Account and pay in
accordance with the Loan Agreement, all amounts, if any, on deposit in the
Reserve Account and the Reserve Account shall be deemed to have terminated
for purposes of this Series Supplement.
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SECTION 4.10 Transferor's or Servicer's Failure to Make a Deposit or
-------------------------------------------------------
Payment.
-------
(a) If the Servicer fails to make, or to give instructions to make, any
payment or deposit (other than as required by subsection 2.4(d) (except as
provided in the immediately following paragraph), 2.4(e), 2.4(f), 3.3, 9.2,
10.2, or 12.2(a) of the Agreement, or Sections 4 or 15 of this Series
Supplement (collectively, "Excluded Payments")) relating to the Series
1997-2 Investor Certificates required to be made or given by the Servicer
on the related Transfer Date at the time specified in the Agreement
(including applicable grace periods), the Trustee shall make such payment
or deposit from the applicable Investor Account without instruction from
the Servicer. The Trustee shall be required to make any such payment,
deposit or withdrawal hereunder only to the extent that it has sufficient
information to allow the Trustee to determine the amount thereof; provided,
--------
however, that the Trustee shall in all cases be deemed to have sufficient
-------
information to determine the amount of interest (i) required to be paid or
provided for under subsections 4.6(a)(i), (b)(i) and (d)(vi) on each
Transfer Date, and (ii) payable to the Series 1997-2 Investor
Certificateholders on each Distribution Date. The Servicer shall, upon
request of the Trustee, promptly provide the Trustee with all information
necessary to allow the Trustee to make such a payment or withdrawal. Such
funds or the proceeds of such withdrawal shall be applied by the Trustee in
the manner in which such payment or deposit should have been made by the
Transferor or the Servicer, as the case may be.
SECTION 4.11 Interest Rate Caps.
------------------
(a) The Trustee hereby acknowledges that the Class A Interest Rate Cap
has been obtained for the benefit of the Class A Certificateholders and the
Class B Interest Rate Cap for the benefit of the Class B
Certificateholders. Each of the Interest Rate Caps provides that (i) the
Trust shall not be required to make any payments thereunder and (ii) the
Trust shall be entitled to receive a payment (determined in accordance with
the respective Interest Rate Cap) from the Interest Rate Cap Provider on or
prior to each Transfer Date if LIBOR plus [ %] for the
----
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related Interest Accrual Period exceeds the Class A Cap Rate or LIBOR plus
[____%] for the related Interest Accrual Period exceeds the Class B Cap
Rate. The Interest Rate Cap Provider will make a payment on or prior to
each Transfer Date to the Trustee, on behalf of the Trust, in an amount
equal to the product of (i) the amount by which, in the case of the Class A
Interest Rate Cap, LIBOR plus [____%] exceeds the Class A Cap Rate or, in
the case of the Class B Interest Rate Cap, LIBOR plus [____%] exceeds the
Class B Cap Rate, as applicable, (ii) the Class A Notional Amount or the
Class B Notional Amount, as applicable, for the related Calculation Period,
and (iii) the actual number of days in such Calculation Period divided by
360. Payments pursuant to the Class A Interest Rate Cap will be deposited
in the Distribution Account for payment to the Class A Certificateholders
on the following Distribution Date. Payments pursuant to the Class B
Interest Rate Cap will be deposited in the Distribution Account for payment
to the Class B Certificateholders on the following Distribution Date.
(b) In the event that the counterparty rating of the Interest Rate Cap
Provider is withdrawn or reduced below Aa3 by Moody's or below AAA by
Standard & Poor's or, with respect only to an Interest Rate Cap Provider
for a Replacement Interest Rate Cap, (i) the long term unsecured debt or
long term certificate of deposit rating of such Interest Rate Cap Provider
is withdrawn or reduced below Aa3 by Moody's or (ii) the short term
unsecured debt or short term certificate of deposit rating of the Interest
Rate Cap Provider is withdrawn or reduced below A-1+ by Standard & Poor's,
then within 30 days after such withdrawal or reduction (notice of which the
Interest Rate Cap Provider is required, under each Interest Rate Cap, to
provide to the Trustee, Moody's and Standard & Poor's promptly upon
obtaining knowledge thereof), the Interest Rate Cap Provider, at its own
expense, is required, under each Interest Rate Cap, either to (x) obtain a
Replacement Interest Rate Cap for each such Interest Rate Cap to which it
is then currently a party or (y) enter into or establish, with respect to
each such Interest Rate Cap, any other arrangement satisfactory to Moody's
and Standard & Poor's, including collateral, guarantees or
-62-
letters of credit, which arrangement will result in Moody's and Standard &
Poor's not reducing or withdrawing the ratings of the Class A Certificates
or the Class B Certificates in effect immediate prior to the ratings
downgrade of the Interest Rate Cap Provider (a "Qualified Substitute
Arrangement"). Upon receipt of notice of any such reduction or withdrawal,
the Trustee, at the direction of the Servicer, shall, unless such a
Replacement Interest Rate Cap Provider or Qualified Substitute Arrangement
has theretofore been established or obtained, use its best efforts to
establish or obtain or cause the Interest Rate Cap Provider to establish or
obtain, with respect to each such Interest Rate Cap, a Replacement Interest
Rate Cap or Qualified Substitute Arrangement; provided, however, that in
-------- -------
the event at any time any Qualified Substitute Arrangement established
pursuant to this Section 4.11 or pursuant to the applicable Interest Rate
Cap shall cease to be satisfactory to the Rating Agency or shall terminate
prior to the Class A Scheduled Payment Date (in the case of a Qualified
Substitute Arrangement with respect to the Class A Interest Rate Cap) or
the Class B Scheduled Payment Date (in the case of a Qualified Substitute
Arrangement with respect to the Class B Interest Rate Cap), then the
provisions of this Section 4.11(b) shall again be applied and in connection
therewith the 30-day period referred to above shall commence on the date
the Servicer receives notice of such cessation or termination, as the case
may be. Subject to Section 4.11(c) below, the Trustee shall, with respect
to any Interest Rate Cap for which a Replacement Interest Rate Cap or
Qualified Substitute Arrangement has been or (with respect to clauses (A),
(C) and (D) below) will be obtained, (A) timely provide any written notice
required thereby to the Interest Rate Cap Provider of its intention to
terminate the Interest Rate Cap within such 30-day period, (B) terminate
such Interest Rate Cap within such 30-day period, (C) request the payment
to it of all amounts due to the Trust under such Interest Rate Cap through
the termination date and (D) deposit any such amounts so received, on the
day of receipt, to the Collection Account for application as Finance Charge
Receivables for the benefit of the applicable Class of Certificateholders.
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(c) The Trustee shall not at any time terminate any Interest Rate Cap
(including any Replacement Interest Rate Cap or Qualified Substitute
Arrangement with respect thereto) unless, prior to or simultaneously with
the termination thereof, the Interest Rate Cap Provider, the Trustee or the
Servicer has obtained or shall obtain (i) a Replacement Interest Rate Cap
or Qualified Substitute Arrangement with respect thereto, (ii) to the
extent applicable, an Opinion of Counsel as to the due authorization,
execution, delivery, validity and enforceability of such Replacement
Interest Rate Cap or Qualified Substitute Arrangement, as the case may be,
and (iii) a letter from each of Moody's and Standard & Poor's confirming
that the termination of such Interest Rate Cap and its replacement with
such Replacement Interest Rate Cap or Qualified Substitute Arrangement will
not result in a reduction or withdrawal of its rating of the Class A
Certificates or the Class B Certificates. Notwithstanding anything to the
contrary in Section 4.11(b) above, the Trustee shall not at any time
terminate any such Interest Rate Cap (or such Replacement Interest Rate Cap
or Qualified Substitute Arrangement with respect thereto) that comprises
all or a portion of any Qualified Substitute Arrangement established
pursuant to subsection 4.11(b) unless the latter Qualified Substitute
Arrangement has been or is required to be terminated pursuant to this
Section 4.11.
(d) The Servicer shall notify the Trustee, the Rating Agency and the
Collateral Interest Holder within five Business Days after obtaining
knowledge that the long term unsecured debt or the long term certificate of
deposit rating of the Interest Rate Cap Provider has been withdrawn or
reduced by Moody's or Standard & Poor's.
(e) Notwithstanding the foregoing, the Servicer may at any time obtain a
Replacement Interest Rate Cap, provided that the Servicer delivers to the
Trustee (i) an Opinion of Counsel as to the due authorization, execution
and delivery and validity and enforceability of such Replacement Interest
Rate Cap and (ii) a letter from each of Moody's and Standard & Poor's
confirming that the termination of the then current Interest Rate Cap and
its replacement with such Replacement Interest Rate Cap will not
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adversely affect its rating of the Class A Certificates or the Class B
Certificates.
(f) The Trustee hereby appoints the Interest Rate Cap Provider to
perform the duties of the calculation agent under the Interest Rate Cap,
subject to the terms of the Interest Rate Cap and to any subsequent
replacement of the Interest Rate Cap pursuant to this Section 4.11, and the
Interest Rate Cap Provider accepts such appointment. The Trustee shall, at
the direction of the Servicer, request a copy of the audited annual
consolidated financial statements of the Interest Cap Provider, prepared in
accordance with accounting principles that are generally accepted in its
place of domicile.
(g) The Trustee, on behalf of the Certificateholders, shall have the
right to, and upon notification from the Servicer shall, sell all or a
portion of the Interest Rate Caps subject to the following conditions
having been met:
(i) The Notional Amount of the unsold portion of each Interest Rate
Cap remaining as an asset of the Trust shall at least equal the Class A
Adjusted Investor Interest, in the case of the Class A Interest Rate
Cap, and the Class B Investor Interest, in the case of the Class B
Interest Rate Cap, outstanding as of the date of such sale; and
(ii) The Trustee shall have received written confirmation from the
Rating Agency that such sale will not result in a reduction or
withdrawal of the then current rating on the relevant class of
Certificates by the Rating Agency.
(h) The Servicer shall have the duty of (i) obtaining a fair market value
price for the sale of the Trust's rights under any portion of an Interest
Rate Cap sold pursuant to the subsection 4.11(g), (ii) notifying the
Trustee of prospective purchasers and bids, (iii) selecting the purchaser
of such portion of the Interest Rate Cap, and
(iv) instructing the selected purchaser (and/or the Trustee) to
deposit the purchase price therefor into the Collection Account. The
Trustee, upon receipt of the purchase price into the Collection Account,
shall execute all
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documentation, prepared by the Servicer, necessary to effect the transfer
of the Trust's rights under such portion of the Interest Rate Cap and to
release the lien of the Trustee thereon and proceeds thereof.
Funds deposited in the Collection Account in respect of the sale of all
or a portion of a Class A Interest Rate Cap or a Class B Interest Rate Cap
shall be applied on the next Transfer Date as, respectively, Class A
Available Funds or Class B Available Funds in accordance with subsections
4.6(a) and (b).
SECTION 4.12 Reallocated Principal Collections. On each Transfer Date,
---------------------------------
the Servicer shall apply, or shall cause the Trustee to apply, the
Reallocated Principal Collections (applying all Reallocated Collateral
Principal Collections in accordance with subsections 4.12(a) and (b) prior
to applying any Reallocated Class B Principal Collections in accordance
with subsection 4.12(a) for any amounts still owing after the application
of Reallocated Collateral Principal Collections) with respect to such
Transfer Date, to make the following distributions on each Transfer Date in
the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread and Shared Finance Charge Collections from other Series with
respect to the related Monthly Period, shall be applied pursuant to
subsections 4.6(a)(i) through (iv); and
(b) an amount equal to the excess, if any, of (i) the Class B Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread and Shared Finance Charge Collections from other Series
allocated and available to the Class B Certificates pursuant to subsection
4.6(d)(ii) and 4.6(f) on such Transfer Date shall be applied pursuant to
subsections 4.6(b)(i) through (iv).
On each Transfer Date, the Collateral Interest shall be reduced by the
amount of Reallocated Collateral Principal Collections and by the amount of
Reallocated Class B Principal Collections applied pursuant to subsections
4.12(a) and/or (b) on such Transfer Date. If such reduction would cause the
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Collateral Interest (after giving effect to any Collateral Interest Charge-
Offs for such Transfer Date) to be a negative number, the Collateral
Interest (after giving effect to any Collateral Interest Charge-Offs for
such Transfer Date) shall be reduced to zero and the Class B Investor
Interest shall be reduced by the amount by which the Collateral Interest
would have been reduced below zero. If the reallocation of Reallocated
Principal Collections would cause the Class B Investor Interest (after
giving effect to any Class B Investor Charge-Offs for such Transfer Date)
to be a negative number on any Transfer Date, Reallocated Principal
Collections shall be reallocated on such Transfer Date in an aggregate
amount not to exceed the amount which would cause the Class B Investor
Interest (after giving effect to any Class B Investor Charge-Offs for such
Transfer Date) to be reduced to zero.
SECTION 4.13 Determination of LIBOR. "LIBOR" shall mean, for a
----------------------
specific Interest Accrual Period (other than the initial Interest Accrual
Period), the rate for deposits in United States dollars for one month
(commencing on the first day of the relevant Interest Accrual Period) which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on the LIBOR
Determination Date for such Interest Accrual Period. If such rate does not
appear on Telerate Page 3750, the rate for such Interest Accrual Period
will be determined on the basis of the rates at which deposits in the
United States dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on such LIBOR Determination Date to prime banks in
the London interbank market for a period equal to one month (commencing on
the first day of Interest Accrual Period). The Trustee will request the
principal London office of each such bank to provide a quotation of its
rate. If at least two such quotations are provided, the rate for such
Interest Accrual Period will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for such
Interest Accrual Period will be the arithmetic mean of the rates quoted by
four major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m., New York City time, on the first day of such
Interest Accrual Period for loans in United States dollars to leading
European banks for a period equal to one month (commencing on the first day
of such Interest Accrual Period).
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SECTION 4.14 Discount Option.
---------------
(a) The Transferor may at its option (the "Discount Option"), at any
time, upon not less than 20 Business Days prior written notice to the
Servicer, the Trustee, the Interest Rate Cap Provider, the Collateral
Interest Holder, and each Rating Agency, designate a percentage, which may
be a fixed percentage or a variable percentage based on a formula (the
"Discounted Percentage"), of the amount of Principal Receivables in
Accounts designated in such notice to be treated on and after such
designation, or for the period specified in such notice, as Finance Charge
Receivables (it being understood and agreed that an increase in the
Discount Percentage shall constitute a new exercise of the Discount
Option); provided, however, that no such designation shall become effective
-------- -------
on the date specified in such written notice unless the following
conditions have been satisfied:
(i) on or before the date specified in the written notice, the
Transferor shall have received written confirmation from each Rating
Agency which is then rating an outstanding Series of Certificates that
such designation will not result in a withdrawal or reduction of its
rating of such Series of Certificates;
(ii) such exercise of the Discount Option shall not, in the
reasonable belief of the Transferor, cause a Pay Out Event to occur or
cause an event which with notice or the lapse of time or both would
constitute a Pay Out Event;
(iii) the Transferor shall have delivered to the Trustee an Officer's
Certificate confirming the items set forth in clauses (i) and (ii)
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.
On and after the date of satisfaction of each of the above conditions, in
processing Collections of the Principal Receivables of the Accounts
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designated pursuant to such notice, the Servicer shall deem the product of
the Discount Percentage and Collections of such Principal Receivables as
Finance Charge Collections.
(b) The Transferor may at its option, at any time, upon not less than 20
Business Days prior written notice to the Servicer, the Trustee, the
Collateral Interest Holder, and each Rating Agency, suspend or terminate
the Discount Option or reduce the Discount Percentage to a percentage
specified in such notice; provided, however, that such notice shall specify
-------- -------
the period of time for which the Discount Option shall be suspended, the
effective date of the termination of the Discount Option or the percentage
to which the Discount Option shall be reduced, as the case may be.
(c) Each Certificateholder by its acceptance of a beneficial interest in
a Certificate and the Collateral Interest Holder by its acceptance of the
Collateral Interest shall be deemed to have consented to the exercise by
the Transferor of the Discount Option at such time as the Transferor
determines to exercise such options.
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
[THE FOLLOWING PORTION OF THIS
ARTICLE IS APPLICABLE ONLY TO SERIES 1997-2]
SECTION 5.1 Distributions.
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(a) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the certificate delivered by the Servicer to the Trustee
pursuant to subsection 3.4(b)) to each Class A Certificateholder of record
on the immediately preceding Record Date (other than as provided in
subsection 2.4(e) or Section 12.3 respecting a final distribution) such
Class A Certificateholder's pro rata share (based on the aggregate
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Undivided Interests represented by Class A Certificates held by such Class
A Certificateholder) of amounts on deposit in the Distribution Account as
are payable to the Class A Certificateholders pursuant to Sections 4.7 and
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4.8 hereof by check mailed to each Class A Certificateholder except that,
with respect to Class A Certificates registered in the name of the nominee
of a Clearing Agency, such distribution shall be made in immediately
available funds.
(b) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the certificate delivered by the Servicer to the Trustee
pursuant to subsection 3.4(b)) to each Class B Certificateholder of record
on the immediately preceding Record Date (other than as provided in
subsection 2.4(e) or Section 12.3 respecting a final distribution) such
Class B Certificateholder's pro rata share (based on the aggregate
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Undivided Interests represented by Class B Certificates held by such Class
B Certificateholder) of amounts on deposit in the Distribution Account as
are payable to the Class B Certificateholders pursuant to Sections 4.7 and
4.8 hereof by check mailed to each Class B Certificateholder except that,
with respect to Class B Certificates registered in the name of the nominee
of a Clearing Agency, such distribution shall be made in immediately
available funds.
SECTION 5.2 Monthly Certificateholders' Statement.
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(a) On or before each Distribution Date, the Paying Agent shall forward
to each Series 1997-2 Investor Certificateholder of record on the
immediately preceding Record Date and the Rating Agencies a statement
substantially in the form of Exhibit 2 to the Series Supplement relating to
Series 1997-2 and the Collateral Interest prepared by the Servicer setting
forth among other things the following information (which, in the case of
subclauses (i), (ii) and (iii) below, shall be stated on the basis of an
original principal amount of $1,000 per Certificate and, in the case of
subclauses (viii) and (ix) shall be stated on an aggregate basis and on the
basis of an original principal amount of $1,000 per Certificate):
(i) the total amount distributed to the Class A Certificateholders and
the Class B Certificateholders, respectively, on such Distribution Date,
and to the Collateral Interest Holder on the preceding Transfer Date;
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(ii) the amount of such distribution, if any, allocable to principal
with respect to the Class A Certificates, the Class B Certificates and the
Collateral Interest, respectively;
(iii) the amount of such distribution allocable to Class A Monthly
Interest, Class B Monthly Interest, and Collateral Monthly Interest,
respectively;
(iv) the amount of Principal Collections processed during the preceding
Monthly Period, as appropriate, and allocated in respect of the Class A
Certificates, the Class B Certificates and the Collateral Interest,
respectively;
(v) the aggregate amount of Principal Receivables, the Investor Interest,
the Adjusted Investor Interest, the Class A Investor Interest, the Class A
Adjusted Investor Interest, the Class B Investor Interest, the Collateral
Interest, the Class B Fixed Allocation, the Collateral Fixed Allocation,
the Floating Investor Percentage, the Class A Floating Allocation, the
Class B Floating Allocation, the Collateral Floating Allocation and the
Fixed Investor Percentage, in each case as of the close of business on the
last day of the preceding Monthly Period;
(vi) the aggregate outstanding balance of Accounts which are up to 30,
31-60 and 61 or more days delinquent in accordance with the Servicer's then
existing Account Guidelines by class of delinquency as of the close of
business on the last day of the preceding Monthly Period;
(vii) the Class A Investor Default Amount, the Class B Investor Default
Amount and the Collateral Default Amount for the preceding Monthly Period;
(viii) the aggregate amount of Class A Investor Charge-Offs, Class B
Investor Charge-Offs and Collateral Interest Charge-Offs for the preceding
Monthly Period;
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(ix) the aggregate amount of Investor Charge-Offs reimbursed to
the Class A Certificateholders, the Class B Certificateholders and the
Collateral Interest Holder on the Transfer Date immediately preceding such
Distribution Date;
(x) the amount of the Class A Monthly Servicing Fee, the Class B Monthly
Servicing Fee and the Collateral Interest Monthly Servicing Fee for the
preceding Monthly Period;
(xi) the Principal Funding Account Balance as of the related
Transfer Date;
(xii) the Accumulation Shortfall with respect to the related
Transfer Date;
(xiii) the amount of the Principal Funding Investment Proceeds
transferred to the Finance Charge Account on the related Transfer Date;
(xiv) the Class A Principal Funding Investment Shortfall on the
related Transfer Date;
(xv) the amount of Class A Available Funds, Class B Available
Funds and Collateral Available Funds on deposit in the Finance Charge
Account on the related Transfer Date;
(xvi) the Pool Factor as of the end of the last day of the preceding
Monthly Period;
(xvii) the aggregate amount of Finance Charge Collections during the
preceding Monthly Period (including amounts arising from the sale of either
Interest Rate Cap to be treated as Finance Charge Collections), as
appropriate, and allocated in respect of the Series 1997-2 Investor
Certificates;
(xviii) the Class A Required Amount, the Class B Required Amount, the
amount of Reallocated Collateral Principal Collections and Reallocated
Class B Principal Collections, if any, to be applied with respect to the
Required Amounts, and the amount of any reductions in the Collateral
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Interest and the Class B Investor Interest, if any, to satisfy the Required
Amounts, in each case with respect to the preceding Monthly Period;
(xix) the Reserve Account Draw and the Available Reserve Account
Amount with respect to the related Transfer Date; and
(xx) the ratio of the Collateral Interest to the Investor Interest as of
the last day of the preceding Monthly Period.
The Monthly Certificateholders' Statement shall be substantially in the
form of Exhibit 2, with such changes as the Servicer may determine to be
necessary or desirable; provided, however, that no such change shall serve
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to exclude information required by this subsection 5.2(a). The Servicer
shall, upon making such determination, deliver to the Trustee and the
Rating Agency an Officer's Certificate to which shall be annexed the form
of Exhibit 2, as so changed. Upon the delivery of such Officer's
Certificate to the Trustee, Exhibit 2, as so changed, shall for all
purposes of this Agreement constitute Exhibit 2. The Trustee may
conclusively rely upon such Officer's Certificate as to such change
conforming to the requirements of this Agreement.
(b) On or before January 31 of each calendar year, beginning with
calendar year 1998, the Servicer shall furnish to the Paying Agent, who
shall distribute to each Person who at any time during the preceding
calendar year was a Series 1997-2 Certificateholder, a statement prepared
by the Servicer containing the information required to be contained in the
regular monthly report to Series 1997-2 Investor Certificateholders, as set
forth in subclauses (i), (ii) and (iii) above, aggregated for such calendar
year or the applicable portion thereof during which such Person was a
Series 1997-2 Investor Certificateholder, together with such other
customary information (consistent with the treatment of the Certificate as
debt) as the Trustee or the Servicer deems necessary or desirable to enable
the Series 1997-2 Investor Certificateholders to prepare their tax returns.
Such obligations of the Paying Agent shall be deemed to have been satisfied
to the extent that
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substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code.
SECTION 9.A Series 1997-2 Pay Out Events. If any one of the following
----------------------------
events shall occur during the Revolving Period or the Controlled Accumulation
Period with respect to the Series 1997-2 Investor Certificates:
(a) failure on the part of the Transferor or the Holder of the
Exchangeable Seller Certificate (i) to make any payment or deposit required by
the terms of (A) the Agreement relating to the Series 1997-2 Investor
Certificates, or (B) this Series Supplement, in each case on or before the date
occurring five Business Days after the date such payment or deposit is required
to be made herein or (ii) duly to observe or perform in any material respect any
covenants or agreements of the Transferor set forth in the Agreement, which
failure has a material adverse effect on the Series 1997-2 Investor
Certificateholders (which determination shall be made without regard to whether
any funds are available pursuant to the Interest Rate Caps) and which continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Transferor by the Trustee, or to the Transferor and the Trustee by the Holders
of Series 1997-2 Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of each of the Class A Investor Interest, the
Class B Investor Interest and the Collateral Interest, and continues to affect
materially and adversely the interests of the Series 1997-2 Investor
Certificateholders for such period;
(b) any representation or warranty made by the Transferor in the
Agreement, including this Series Supplement, or any information contained in a
computer file or microfiche list required to be delivered by the Transferor
pursuant to Section 2.1, 2.6 or 3.4(c) of the Agreement, (i) shall prove to have
been incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 60 days, after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of the Series 1997-2 Investor
Certificates evidencing Undivided Interests aggregating not less than 50% of
each of the Class A Investor Interest, the Class B Investor Interest and the
Collateral Interest, and (ii) as a result of which the interests of the Series
1997-2 Investor Certificateholders are materially and adversely affected (which
determination
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shall be made without regard to whether any funds are available pursuant to the
Interest Rate Caps) and continue to be materially and adversely affected for
such period; provided, however, that a Series 1997-2 Pay Out Event pursuant to
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this subsection 9A(b) shall not be deemed to have occurred hereunder if the
Transferor has accepted reassignment of the related Receivable, or all of such
Receivables, if applicable, during such period in accordance with the provisions
hereof;
(c) with respect to any Determination Date, the average of the Portfolio
Yields for the three consecutive Monthly Periods preceding such Determination
Date is a rate which is less than the average of the Base Rates for such Monthly
Periods;
(d) the Transferor shall fail to convey Receivables arising under
Additional Accounts to the Trust, as required by subsection 2.6(e) of the
Agreement;
(e) any Servicer Default shall occur which would have a material adverse
effect on the Series 1997-2 Investor Certificateholders (which determination
shall be made without regard to the subordination of the Collateral Interest or
whether funds are available pursuant to the Enhancement or the Interest Rate
Caps);
(f) failure to pay the Class A Certificates in full on the Class A
Scheduled Payment Date;
(g) failure to pay the Class B Certificates in full on the Class B
Scheduled Payment Date; or
(h) failure of the Interest Rate Cap Provider to make any payment under
the Class A Interest Rate Cap or the Class B Interest Rate Cap within five days
of the date on which such payment was due;
then, in the case of any event described in subparagraphs (a), (b) or (e), after
the applicable grace period set forth in such subparagraphs, either the Trustee
or the Holders of Series 1997-2 Investor Certificates evidencing Undivided
Interests aggregating more than 50% of each of the Class A Investor Interest,
the Class B Investor Interest and the Collateral Interest by notice then given
in writing to the Transferor and the Servicer (and to the Trustee if given by
the Certificateholders and the Collateral Interest Holder) may declare that a
pay out event (a "Series 1997-2 Pay Out Event") has occurred as of the date of
such notice, and in the case of any event described in subparagraphs (c), (d),
(f), (g) or (h) a Series 1997-2 Pay Out Event shall occur without any notice or
other action on the part of the
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Trustee or the Series 1997-2 Investor Certificateholders immediately upon the
occurrence of such event.
Notwithstanding the foregoing, any failure of performance under Section
9A(a)(i) for a period of up to 60 calendar days with respect to an event
described in clause (i) below or up to 15 calendar days with respect to an event
described in clause (ii) below (in addition to the five Business Days provided
above) shall not constitute a Pay Out Event for purposes of this sentence until
the expiration of such period, if such failure could not be prevented by the
exercise of reasonable diligence by the Transferor and such failure was caused
by (i) an act of God or the public enemy, acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes or (ii) computer malfunction,
communication malfunction or other electronic system malfunction; the preceding
clause shall not relieve the Transferor from using its best efforts to perform
its respective obligations in a timely manner in accordance with the terms of
this Agreement and any Supplement and the Transferor shall provide the Trustee,
each Rating Agency, the Collateral Interest Holder, and each of the
Certificateholders with an Officer's Certificate giving prompt notice of such
failure, together with a description of its efforts to so perform its
obligations. Notice of any such Pay Out Event shall be given by the Servicer to
the Rating Agencies.
SECTION 10. Series 1997-2 Termination. All principal or interest with
-------------------------
respect to the Series 1997-2 Investor Certificates shall be due and payable no
later than the Scheduled Series 1997-2 Termination Date. In the event that the
Investor Interest is greater than zero on the Scheduled Series 1997-2
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
the Certificates on such date, the Trustee will sell or cause to be sold, and
pay the proceeds to the Series 1997-2 Investor Certificateholders pro rata in
final payment of all principal of and accrued interest on the Series 1997-2
Investor Certificates, an amount of Principal Receivables and the related
Finance Charge Receivables (or interests therein) up to 110% of the Investor
Interest 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 Seller Percentage,
(B) the aggregate outstanding Principal Receivables and (C) a fraction the
numerator of which is the related Investor Percentage of Finance Charge
Collections and the denominator of which is the sum of all Investor Percentages
with respect to Finance Charge Collections of all Series outstanding and (2) the
Investor Interest of such Series). The Transferor or any of its Affiliates
shall be permitted to bid for such Receivables. In addition, the Transferor or
any of its Affiliates shall have the
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right to match any bid by a third person and be granted the right to purchase
the Receivables at such matched bid price. Any proceeds of such sale in excess
of such principal and interest paid shall be paid to the Collateral Interest
Holder to satisfy any amounts owing under the Loan Agreement and thereafter paid
to the Holder of the Exchangeable Seller Certificate. Upon such Scheduled
Series 1997-2 Termination Date, final payment of all amounts allocable to the
Certificates shall be made in the manner provided in Section 12.3 of the
Agreement.
SECTION 11. Ratification and Reaffirmation of Pooling and Servicing
-------------------------------------------------------
Agreement. As supplemented by this Series Supplement, the Agreement is in all
---------
respects ratified and confirmed and the Agreement as so supplemented by this
Series Supplement shall be read, taken, and construed as one and the same
instrument.
SECTION 12. Ratification and Reaffirmation of Representations and
-----------------------------------------------------
Warranties. Except as otherwise provided in the Agreement, each of the
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Transferor, the Servicer and the Trustee hereby ratify and reaffirm its
representations and warranties contained in the Agreement as follows: (a) with
respect to the Transferor, the representations and warranties contained in (i)
Section 2.3 of the Agreement, (ii) Section 2.4(a) of the Agreement (with respect
to the Agreement as supplemented by this Series Supplement) and (iii) Section
2.4(b) of the Agreement, (b) with respect to the Servicer, the representations
and warranties contained in Section 3.3 of the Agreement and (c) with respect to
the Trustee, the representations and warranties contained in Section 11.15 of
the Agreement, as though such representations and warranties were made by such
party as of the Closing Date.
SECTION 13. [RESERVED]
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SECTION 14. No Subordination. Notwithstanding the provisions contained
----------------
in Section 13.1 of the Agreement to the contrary, the Agreement may also be
amended from time to time by the Servicer, the Transferor and the Trustee with
the consent of the Series 1997-2 Investor Certificateholders evidencing
Undivided Interests aggregating not less than 100% of the Investor Interest for
the purpose of (i) adding any provisions to or changing in any manner or
eliminating any of the provisions of this Series Supplement or (ii) modifying in
any manner the rights of the Series 1997-2 Investor Certificateholders which
would, in either case, result in the subordination of the rights of the Series
1997-2 Investor Certificateholders to the rights of the Holders of any other
Series.
SECTION 15. Repurchase of the Series 1997-2 Certificates. In the event of
--------------------------------------------
a breach of any of the representations and warranties set forth in Section
12(a)(ii) hereof, either the
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Trustee or the Holders of Series 1997-2 Certificates evidencing Undivided
Interests aggregating more than 50% of each of the Class A Investor Interest and
the Class B Investor Interest, by notice then given in writing to the Transferor
(and to the Trustee and the Servicer, if given by the Series 1997-2
Certificateholders), may direct the Transferor to purchase the Series 1997-2
Investor Certificates (as specified below) within 60 days of such notice, or
within such longer period as may be specified in such notice, which period shall
not exceed 120 days, and the Transferor shall be obligated to purchase on a
Distribution Date specified by the Transferor (such Distribution Date, the
"Repurchase Date") occurring within such applicable period on the terms and
conditions set forth below; provided, however, that no such purchase shall be
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required to be made if, at any time during such applicable period, the
representations and warranties contained in Section 12(a)(ii) hereof, 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) immediately
preceding such Repurchase Date, an amount equal to the reassignment deposit
amount for such Series 1997-2 Investor Certificates in the Distribution Account,
for distribution to the Series 1997-2 Investor Certificateholders pursuant to
Article XII of the Agreement and Section 10 hereof. The reassignment deposit
amount for such reassignment shall be equal to the sum of (i) the Investor
Interest at the end of the day on the last day of the Monthly Period preceding
the Repurchase Date, less the amount on deposit in the Principal Account which
will be transferred to the Distribution Account pursuant to 4.8(b)(ii) on the
related Transfer Date, (ii) an amount equal to all interest accrued but unpaid
on the Series 1997-2 Investor Certificates through and including the last day of
the Interest Accrual Period in which such Transfer Date occurs, less the amount
on deposit in the Finance Charge Account and, with respect to the Class A
Certificates, Principal Funding Investment Proceeds and amounts available to be
withdrawn from the Reserve Account on the related Transfer Date, which will be
transferred to the Distribution Account to pay interest pursuant to subsections
4.6(a) through (d), as applicable, on such Transfer Date and (iii) any
additional amounts owing to the Collateral Interest Holder pursuant to the Loan
Agreement. The deposit into the Distribution Account of the reassignment
deposit amount shall be considered a prepayment in full of the Series 1997-2
Investor Certificates. The Series 1997-2 Termination Date shall be deemed to
have occurred on the Repurchase Date as long as such amount was deposited in
full into the Distribution Account on such Transfer Date. If the Trustee or the
Series 1997-2 Investor Certificateholders give notice directing the Transferor
to purchase the Series 1997-2 Investor Certificates as provided above, the
obligation of the Transferor to purchase the Series 1997-2 Investor Certificates
and to pay the reassignment deposit amount pursuant to this Section 15 shall
constitute the
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sole remedy respecting a breach of the representations and warranties referenced
in Section 12(a)(ii) hereof available to the Series 1997-2 Investor
Certificateholders or the Trustee on behalf of the Series 1997-2 Investor
Certificateholders.
SECTION 16. Counterparts. This Series Supplement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 17. Additional Covenants of Transferor. People's Bank, in its
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capacity as Transferor, hereby covenants that following the occurrence of a
Series Pay Out Event described in Section 9A(c) hereof, except as otherwise
required by any Requirements of Law, it will not reduce the Periodic Finance
Charges assessed on any Receivable, or other fees on any Account, if the
Transferor reasonably believes that, as a result of such reduction, (i) the
weighted average of the Periodic Finance Charges on the last day of the Monthly
Period during which such reduction will be effective (weighted based on the
Transferor's reasonable belief as to the Principal Receivables which will be
outstanding on such last day) will be less than (ii) the sum of (1) 2.00% and
(2) the weighted average of the Certificates Rates of each Series that will be
outstanding on such last day (weighted based on the Transferor's reasonable
belief as to (x) the amount of the Investor Interest of each Series that will be
outstanding on such last day, (y) in the case of Series for which the
Certificate Rate is a floating rate, the Certificate Rate with respect to such
Monthly Period).
SECTION 18. Series 1997-2 Investor Exchange. Pursuant to subsection
-------------------------------
6.9(b) of the Agreement, the Series 1997-2 Investor Certificateholders may
tender their Series 1997-2 Investor Certificates, and the Holders of the
Exchangeable Seller Certificate may tender the Exchangeable Seller Certificate,
in exchange for (i) one or more newly issued Series of Series 1997-2 Investor
Certificates and (ii) a reissued Exchangeable Seller Certificate in accordance
with the terms and conditions contained in a notice of exchange delivered to the
Series 1997-2 Investor Certificateholders. Such notice of exchange will
specify, among other things: (a) the amount of Series 1997-2 Investor
Certificates that may be tendered, (b) the Certificate Rate with respect to the
new Series, (c) the term of the Series, (d) the method of computing the investor
percentage, (e) the manner of Enhancement, if any, with respect to the Series
and (f) the time and the manner of the tender and cancellation of the Series
1997-2 Investor Certificates and the issuance of the new Series of Certificates
will be effectuated. Upon satisfaction of the conditions contained in
subsections 6.9(b) and 6.9(c) of the Agreement, and the receipt by the Trustee
of the Exchange Notice and the related Supplement, the Trustee shall cancel the
existing
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Exchangeable Seller Certificate and the applicable Series 1997-2 Investor
Certificates, and shall issue such Series of Series 1997-2 Investor Certificates
and a new Exchangeable Seller Certificate, each dated the Exchange Date.
SECTION 19. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
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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 20. Notification to Luxembourg Stock Exchange. On or prior to
-----------------------------------------
each Distribution Date the Servicer shall, or shall cause the Trustee to, send
written notice to the Luxembourg Stock Exchange specifying (i) the Class A
Certificate Rate for the immediately following Distribution Date, (ii) the
amount of interest to be distributed in respect of the Class A Certificates for
the immediately following Distribution Date and (iii) the Class A Investor
Interest on the Distribution Date on or prior to which such report is being
furnished (after giving effect to all payments of principal to be made on such
Distribution Date). Promptly following each Distribution Date the Servicer shall
cause a notice to be published in a daily newspaper, which initially shall be
the Luxemburger Wort, specifying the information described in clauses (i) and
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(ii) of the preceding sentence.
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IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Series Supplement to be duly executed by their respective officers
as of the day and year first above written.
PEOPLE'S BANK,
Transferor and Servicer
By:
-----------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in
its individual capacity but
solely as Trustee
By:
-----------------------------------------
Name:
Title:
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EXHIBIT 1-A
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FORM OF CLASS A INVESTOR CERTIFICATE
$
------------
No. 1 CUSIP No.
------------
PEOPLE'S BANK CREDIT CARD MASTER TRUST FLOATING RATE
CLASS A ASSET BACKED CERTIFICATE, SERIES 1997-2
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists of a portfolio of selected VISA/1/ and MasterCard/1/ credit card
receivables generated or to be generated by People's Bank.
(Not an interest in or obligation of
People's Bank
or any Affiliate thereof.)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO PEOPLE'S BANK
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
This certifies that CEDE & CO. (CEDE & CO. or any successors or assigns of
CEDE & CO. with respect to this certificate, the "Class A Investor
Certificateholders") is the registered owner of the undivided interest in
certain assets of a trust (the "Trust"), the corpus of which consists of a
portfolio of Receivables (the "Receivables") now existing or hereafter created
under selected VISA and MasterCard credit card accounts (the "Accounts") of
People's Bank, a Connecticut stock savings bank, all Receivables in Automatic
Additional Accounts and Additional Accounts added to the Trust from time to
time, all monies due or to become due in payment of the Receivables (including
all Finance Charge Receivables), and the other assets and interests
---------------------
/1/ VISA and MasterCard are registered trademarks of VISA USA, Inc., and
MasterCard International Incorporated, respectively.
constituting the Trust pursuant to an Amended and Restated Pooling and Servicing
Agreement, dated as of March 18, 1997, as supplemented by the Series 1997-2
Supplement dated as of [September __, 1997] (collectively, the "Agreement"), by
and between People's Bank, as Transferor and Servicer, and Bankers Trust
Company, as Trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth herein below.
The Transferor has structured the Agreement and the Investor Certificates
with the intention that the Investor Certificates will qualify under applicable
tax law as indebtedness, and the Transferor, the Holder of the Exchangeable
Seller Certificate, the Servicer and each Investor Certificateholder (or
Certificate Owner) by acceptance of its Certificate (or, in the case of a
Certificate Owner, by virtue of such Certificate Owner's acquisition of a
beneficial interest therein), agrees to treat the Investor Certificates (or a
beneficial interest therein) consistently with, and to take no action
inconsistent with, the treatment of the Investor Certificates (or beneficial
interest therein) for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness. Each Certificateholder agrees that it will cause any Certificate
Owner acquiring an interest in a Certificate through it to comply with this
Agreement as to treatment as indebtedness under applicable tax law.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound. Although a summary of certain
provisions of the Agreement is set forth below, this Class A Certificate does
not purport to summarize the Agreement and reference is made to the Agreement
for information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Trustee. To the extent not defined herein, capitalized terms used herein
have the meanings assigned in the Agreement.
THE AGREEMENT AND THE CERTIFICATES CREATED THEREUNDER 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.
The Receivables consist of Principal Receivables which arise from the
purchase of goods, services and cash advances and of Finance Charge Receivables
which arise generally from Periodic Finance Charges and other fees and charges
as fully specified in the Agreement. The assets of the Trust in which this
Certificate represents an interest, consist of (i)(a) the Receivables now
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existing and hereafter created and arising in connection with the Accounts, and
all Receivables in the Automatic Additional Accounts and Additional Accounts
added to the Trust from time to time (b) all monies due or to become due with
respect thereto (including all Finance Charge Receivables), (c) all proceeds (as
defined in Section 9-306 of the UCC as in effect in the State of New York) of
such Receivables, (d) proceeds of insurance policies relating to the
Receivables, and (e) Interchange and Recoveries pursuant to subsections 2.5(k)
and (l) of the Agreement, (ii) such funds as from time to time are deposited in
the Collection Account, the Excess Funding Account, and the Investor Accounts,
and (iii) the benefit of the Class A Interest Rate Cap between the Trustee and
the Interest Rate Cap Provider.
This Certificate is one of the People's Bank Credit Card Master Trust
[$___________] Floating Rate Class A Asset Backed Certificates, Series 1997-2
(the "Class A Certificates"), each of which represents an undivided interest in
certain assets of the Trust, including the right to receive Collections
allocable to the Class A Certificates and other amounts at the times and in the
amounts specified in the Agreement to be deposited in the Investor Accounts or
paid to the Investor Certificateholders. The aggregate interest represented by
the Class A Certificates at any time in the Principal Receivables in the Trust
will not exceed an amount equal to the Class A Investor Interest at such time.
The Class A Initial Investor Interest is [$___________] minus the retirement of
any Class A Certificates pursuant to an Investor Exchange. The Class A Investor
Interest on any date of determination will be an amount equal to (a) the Class A
Initial Investor Interest, minus (b) the aggregate amount of payments of
Certificate Principal paid to the Class A Certificateholders prior to such date
of determination, minus (c) the excess, if any, of the aggregate amount of Class
A Investor Charge-Offs over Class A Investor Charge-Offs reimbursed prior to
such date of determination; provided, however, that the Class A Investor
Interest may not be reduced below zero. In addition to the Class A
Certificates, a class of certificates entitled "People's Bank Credit Card Master
Trust [$___________] Floating Rate Class B Asset Backed Certificates, Series
1997-2" (the "Class B Certificates") and an Undivided Interest in the Trust in
the initial amount of $41,250,000 (the "Collateral Interest," and together with
the Class A Certificates and the Class B Certificates, the "Certificates") will
be issued, and the Exchangeable Seller Certificate will be reissued to the
Holder of the Exchangeable Seller Certificate pursuant to the Agreement, and
other Series of certificates have been, and may from time to time be, issued by
the Trust, which represent or will represent an undivided interest in the Trust.
The Exchangeable Seller Certificate will represent the interest in the Principal
Receivables not represented by the Certificates or any other Series of
certificates.
-3-
Interest on the Class A Certificates will be distributed on October 15,
1997 and on the fifteenth day of each calendar month thereafter, or if such
fifteenth day is not a Business Day, on the next succeeding Business Day (a
"Distribution Date"), to the Class A Certificateholders of record on the Record
Date preceding the related Distribution Date.
No principal will be payable to the Class A Certificateholders during the
Revolving Period, which begins on the date of issuance of this Class A
Certificate or during the Controlled Accumulation Period. During the Controlled
Accumulation Period, which is scheduled to begin with the June 2001 Monthly
Period but which may be postponed as provided in the Agreement, an amount equal
to the Controlled Deposit Amount will be deposited into the Principal Funding
Account on each Transfer Date commencing with the Transfer Date following the
Monthly Period in which the Controlled Accumulation Period commences. The
amount on deposit in the Principal Funding Account will be distributed as
principal to the Class A Certificateholders on the [August 2002] Distribution
Date (the "Class A Scheduled Payment Date"), unless paid earlier as the result
of the occurrence of a Pay Out Event and the commencement of the Rapid
Amortization Period, or later in accordance with the Agreement. During the
Rapid Amortization Period, if any, in addition to monthly payments of interest
on the Class A Certificates, principal will be distributed to the Class A
Certificateholders on the Distribution Date of each calendar month commencing in
the month following the month in which the Rapid Amortization Period commences.
The Servicer will 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.
Notwithstanding anything in the Agreement to the contrary, for so long as,
and only so long as, the Transferor shall remain the Servicer hereunder and
(a)(i) the Servicer provides to the Trustee a letter of credit or other
arrangement covering risk of collection of the Servicer acceptable to the Rating
Agency (as evidenced by letters from the Rating Agency) and (ii) the Transferor
shall not have received a notice from the Rating Agency that such letter of
credit or other arrangement would result in the lowering or withdrawal of such
Rating Agency's then-existing rating of any Series of Investor Certificates or
(b) under certain other circumstances permitted under the Agreement, the
Servicer need not deposit Collections into the Collection Account, the Principal
Account or the Finance Charge Account in accordance with the immediately
preceding sentence, or make payments to the Holder of the Exchangeable Seller
Certificate prior to the close of business on the day any Collections are
deposited in the Collection Account, but may make such pay-
-4-
ments on the Transfer Date in the Monthly Period following the Monthly Period in
which such Collections are received 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.
On each Distribution Date, to the extent funds are available on the terms
specified in the Agreement from available Finance Charge Collections, from
payments made pursuant to the Class A Interest Rate Cap and from Excess Spread,
interest will be distributed to the Class A Certificateholders in an amount
equal to the sum of: (i) the product of (a) the Class A Certificate Rate, (b)
the lesser of the Class A Adjusted Investor Interest determined as of the
preceding Distribution Date, after giving effect to all payments, deposits and
withdrawals on such Distribution Date or Closing Date, as applicable, and the
Expected Class A Principal as of the preceding Distribution Date or Closing Date
(or, for the initial Interest Accrual Period, the Class A Initial Investor
Interest), and (c) the actual number of days in the related Interest Accrual
Period divided by 360, plus (ii) the Class A Covered Amounts for such Interest
Accrual Period, plus (iii) the product of (a) the Class A Excess Principal, (b)
the lesser of the Class A Certificate Rate and [____%] per annum, and (c) the
actual number of days in the related Interest Accrual Period divided by 360,
plus (iv) to the extent permitted by applicable law, any interest accrued on the
Class A Certificates (including interest on any overdue Class A Monthly
Interest) during any prior Interest Accrual Period which has not been
distributed to the Class A Certificateholders, plus, (v) to the extent that
there is available Excess Spread, an amount equal to the product of (a) the
amount by which the Class A Certificate Rate exceeds [____%], (b) the Class A
Excess Principal and (c) the actual number of days in the related Interest
Accrual Period divided by 360.
On each Determination Date during the Revolving Period, the Controlled
Accumulation Period and the Rapid Amortization Period, if any, the Servicer will
determine the Class A Required Amount and the Class B Required Amount. If
either or both of the Required Amounts are greater than zero after application
of available Finance Charge Collections, Excess Spread and Shared Finance Charge
Collections, then Principal Collections allocable to the Collateral Interest
will be reallocated and applied first to fund the remaining Class A Required
Amount, if any, and second to fund the remaining Class B Required Amount, if
any, and to the extent that Reallocated Collateral Principal Collections are
less than such remaining Class A Required Amount, Principal Collections
allocable to the Class B Certificates will then be reallocated and applied to
fund the remaining Class A Required Amount. The Collateral Interest and (if the
Collateral Interest is reduced to zero) the Class B Investor Interest will be
reduced
-5-
by the amount of Reallocated Collateral Principal Collections and Reallocated
Class B Principal Collections applied to fund the Required Amounts.
If, on any Distribution Date, Reallocated Collateral Principal Collections
are insufficient to fund the remaining Class A Required Amount for the related
Monthly Period, then the Collateral Interest (after giving effect to reduction
for any Collateral Interest Charge-Offs and Reallocated Principal Collections)
will be reduced by the amount of such deficiency (but not by more than the Class
A Investor Default Amount for such Monthly Period). In the event that such
reduction would cause the Collateral Interest to be a negative number, the
Collateral Interest will be reduced to zero, and the Class B Investor Interest
(after giving effect to reductions for any Class B Investor Charge-Offs and any
Reallocated Class B Principal Collections in excess of the Collateral Interest
as of such Distribution Date) will be reduced by the amount by which the
Collateral Interest would have been reduced below zero. In the event that such
reduction would cause the Class B Investor Interest to be a negative number, the
Class B Investor Interest will be reduced to zero and the Class A Investor
Interest will be reduced by the amount by which the Class B Investor Interest
would have been reduced below zero.
The Trustee has entered into the Class A Interest Rate Cap with the
Interest Rate Cap Provider for the exclusive benefit of the Class A
Certificateholders. On each Transfer Date that the Class A Certificate Rate for
the related Interest Accrual Period exceeds the Class A Cap Rate, the Interest
Rate Cap Provider will make a payment to the Trustee, on behalf of the Trust,
based on the amount of such excess and the notional amount of the Class A
Interest Rate Cap. The Class A Notional Amount will at all times be equal to or
greater than the amount of the Expected Class A Principal. The Class A Interest
Rate Cap or its Replacement Interest Rate Cap or Qualified Substitute
Arrangement will terminate on the day immediately following the Class A
Scheduled Payment Date.
People's Bank, as Servicer, is entitled to receive as servicing
compensation a monthly servicing fee in an amount equal to one-twelfth of the
product of 2.00% per annum and the Aggregate Principal Receivables in the Trust
on the last day of the preceding Monthly Period, payable on each succeeding
Distribution Date. With respect to any Distribution Date, the Class A Monthly
Servicing Fee will equal one-twelfth of the product of 2.00% per annum and the
Class A Adjusted Investor Interest as of the last day of the preceding Monthly
Period; provided that the Class Monthly Servicing Fee for the first Distribution
Date will be an amount equal to [____ thirtieth] of the foregoing amount.
-6-
On each Transfer Date, beginning with the Transfer Date following the
Monthly Period in which the Controlled Accumulation Period commences, an amount
equal to the Controlled Deposit Amount will be deposited in the Principal
Funding Account. The amounts on deposit in the Principal Funding Account will
be deposited in the Distribution Account for distribution to the Class A
Certificateholders on the Class A Scheduled Payment Date.
As provided in the Agreement, Principal Collections remaining after funding
of the Required Amounts during the Revolving Period and the Controlled
Accumulation Period and Principal Collections remaining after funding of the
Controlled Deposit Amount during the Controlled Accumulation Period will be
applied as Shared Principal Collections and distributed first to the
certificateholders of other Series to the extent of Principal Shortfalls, if
any, and then to the Holder of the Exchangeable Seller Certificate. In
addition, during the Controlled Accumulation Period and the Rapid Amortization
Period, Shared Principal Collections from other Series available to the
Certificates will be applied to pay the Certificateholders to the extent of
Principal Shortfalls, if any, with respect to Series 1997-2.
On each Distribution Date beginning with the month following the Monthly
Period in which the Rapid Amortization Period commences, the Monthly Total
Principal Allocations from the prior Monthly Period along with Shared Principal
Collections from other Series, if any, and certain other amounts treated as
Available Investor Principal Collections will be distributed to the Class A
Certificateholders until the earlier of the date on which the Class A Investor
Interest is paid in full and the Series 1997-2 Termination Date.
Distributions with respect to this Class A Certificate will be made by the
Paying Agent by check mailed to the address of the holders of record appearing
in the Certificate Register (except for the final distribution in respect of
this Class A Certificate) without the presentation or surrender of this
Certificate or the making of any notation thereon, except that with respect to
Certificates registered in the name of the nominee of a Clearing Agency,
distributions will be made in the form of immediately available funds.
This Class A Certificate does not represent an obligation of, or an
interest in, the Transferor or the Servicer, and neither the Class A
Certificates nor the Accounts or Receivables are insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency. This
Class A Certificate is limited in right of payment to certain collections
respecting the Receivables, as more specifically set forth hereinabove and in
the Agreement.
-7-
As provided in the Agreement, withdrawals from the Series 1997-2 Investor
Accounts may be made upon the instructions of the Servicer from time to time for
purposes other than distributions to Class A Certificateholders.
The Transferor may designate (subject to the terms and conditions of the
Agreement) Accounts for deletion and removal from the Accounts previously
assigned to and constituting a part of the Trust.
The Agreement and any Supplement may be amended by the Transferor, the
Servicer and the Trustee, without the consent of the Certificateholders of any
Series, to cure any ambiguity, to correct or supplement any provision therein
which may be inconsistent with any other provision therein, and to add any other
provisions with respect to matters or questions arising under the Agreement and
any Supplement which are not inconsistent with the provisions of the Agreement
and any Supplement. The Agreement may be amended from time to time by the
Transferor, the Servicer and the Trustee, and without the consent of any
Certificateholders, to (a) provide for the transfer by the Transferor of its
interest in and to all or part of the Accounts in accordance with the provisions
of the Agreement and (b) provide for the purchase of Principal Receivables by
the Trust at a price which is less than 100% of the outstanding balance thereof,
and to provide for the treatment of Collections of Principal Receivables, in an
amount up to the aggregate amount by which the purchase price of Principal
Receivables as sold thereafter is less than 100%, as Collections of Finance
Charge Receivables; provided, however, that any such action may not adversely
affect in any material respect the interests of Certificateholders; provided
further that the Servicer and the Trustee shall have received notice from the
Rating Agency that any such amendment will not result in the reduction or
withdrawal of its then-existing rating of the certificates of any Series.
The Agreement and any Supplement may be amended by the Transferor, the
Servicer and the Trustee with the consent of the holders of certificates
evidencing undivided interests aggregating not less than 66-2/3% of the
principal amount of each Series adversely affected, for the purpose of adding
any provisions to, changing in any manner or eliminating any of the provisions
of the Agreement or any Supplement or of modifying in any manner the rights of
certificateholders of any Series. No such amendment, however, may (a) reduce in
any manner the amount of, or delay the timing of, distributions required to be
made on such Series, (b) change the definition of or the manner of calculating
the interest of any certificateholder of such Series or (c) reduce the aforesaid
percentage of undivided interests, the holders of which are required to consent
to any such amendment, in each case
-8-
without the consent of all certificateholders of all Series adversely affected.
The transfer of this Class A Certificate shall (subject to the limitations
set forth in the Agreement) be registered in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Class A Certificateholder or
such Class A Certificateholder's attorney-in-fact duly authorized in writing,
and thereupon one or more new Class A Certificates of authorized denomination
and for the same aggregate Undivided Interests will be issued to the designated
transferee or transferees.
Pursuant to the Series 1997-2 Supplement, the Transferor has the option
(the "Discount Option"), at any time to designate as Finance Charge Receivables
a fixed or variable percentage of Receivables in designated Accounts which
otherwise would be treated as Principal Receivables. The exercise by the
Transferor of the Discount Option will be subject to, among other things, the
receipt by the Trustee of written confirmation from each Rating Agency that the
exercise of such option will not result in a withdrawal or reduction of its
rating of the Certificates. Each Certificateholder by its acceptance of a
beneficial interest in a Certificate will be deemed to have consented to the
exercise by the Transferor of the Discount Option at such time as the Transferor
determines to exercise such option.
As provided in the Agreement and subject to certain limitations therein
set forth, Class A Certificates are exchangeable for new Class A Certificates
evidencing like aggregate Undivided Interests, as requested by the Class A
Certificateholder surrendering such Class A Certificates. No service charge may
be imposed for any such exchange but the Servicer or Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar, and any agent of any of them, may treat the person in whose name this
Class A Certificate is registered as the owner hereof for all purposes, and
neither the Servicer, the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them or of any such agent shall be affected
by notice to the contrary except in certain circumstances described in the
Agreement.
Subject to the prior termination of Series 1997-2, the Agreement provides
that the right of the Class A
-9-
Certificateholders to receive payments from the Trust will terminate on the
Scheduled Series 1997-2 Termination Date. Upon the termination of Trust
pursuant to Section 12.1 of the Agreement (and subject to the exceptions set
forth in the Agreement), the Trustee will assign and convey to the Holder of the
Exchangeable Seller Certificate (without recourse, representation or warranty)
all right, title and interest of the Trust in the Receivables, whether then
existing or thereafter created, and Recoveries allocable to the Trust relating
thereto and Interchange pursuant to subsections 2.5(k) and (l) of the Agreement.
The Trustee will 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 Seller Certificate to vest in such Holder all
right, title and interest which the Trustee had in the Receivables.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Class A Certificate shall not
be entitled to any benefit under the Agreement, or be valid for any purpose.
-10-
IN WITNESS WHEREOF, People's Bank has caused this Class A Certificate to be
executed by its duly authorized officer.
PEOPLE'S BANK
By:
Dated: [September __, 1997]
-11-
Form of Trustee's Certificate of Authentication
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
BANKERS TRUST COMPANY, not in
its individual capacity,
but solely as Trustee
By:
(Authorized Officer)
-12-
EXHIBIT 1-B
-----------
FORM OF CLASS B INVESTOR CERTIFICATE
$
-----------
No. R-1 CUSIP No.
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PEOPLE'S BANK CREDIT CARD MASTER TRUST FLOATING RATE
CLASS B ASSET BACKED CERTIFICATE, SERIES 1997-2
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists of a portfolio of selected VISA/1/ and MasterCard/1/ credit card
receivables generated or to be generated by People's Bank.
(Not an interest in or obligation of
People's Bank
or any Affiliate thereof.)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO PEOPLE'S BANK
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
This certifies that CEDE & CO. (CEDE & CO. or any successors or assigns of
CEDE & CO. with respect to this certificate, the "Class B Investor
Certificateholders") is the registered owner of the undivided interest in
certain assets of a trust (the "Trust"), the corpus of which consists of a
portfolio of Receivables (the "Receivables") now existing or hereafter created
under selected VISA and MasterCard credit card accounts (the "Accounts") of
People's Bank, a Connecticut stock savings bank, all Receivables in Automatic
Additional Accounts and Additional Accounts added to the Trust from time to
time, all monies due or to become due in payment of the Receivables (including
all
-----------------
/1/ VISA and MasterCard are registered trademarks of VISA USA, Inc., and
MasterCard International Incorporated, respectively.
Finance Charge Receivables), and the other assets and interests constituting the
Trust pursuant to an Amended and Restated Pooling and Servicing Agreement, dated
as of March 18, 1997, and as supplemented by the Series 1997-2 Supplement, dated
as of [September __, 1997], (collectively, the "Agreement"), by and between
People's Bank, as Transferor and Servicer, and Bankers Trust Company, as Trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth herein below.
The Transferor has structured the Agreement and the Investor Certificates
with the intention that the Investor Certificates will qualify under applicable
tax law as indebtedness, and the Transferor, the Holder of the Exchangeable
Seller Certificate, the Servicer and each Investor Certificateholder (or
Certificate Owner) by acceptance of its Certificate (or, in the case of a
Certificate Owner, by virtue of such Certificate Owner's acquisition of a
beneficial interest therein), agrees to treat the Investor Certificates (or a
beneficial interest therein) consistently with, and to take no action
inconsistent with, the treatment of the Investor Certificates (or beneficial
interest therein) for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness. Each Certificateholder agrees that it will cause any Certificate
Owner acquiring an interest in a Certificate through it to comply with this
Agreement as to treatment as indebtedness under applicable tax law.
This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound. Although a summary of certain
provisions of the Agreement is set forth below, this Class B Certificate does
not purport to summarize the Agreement and reference is made to the Agreement
for information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Trustee. To the extent not defined herein, capitalized terms used herein
have the meanings assigned in the Agreement.
THE AGREEMENT AND THE CERTIFICATES CREATED THEREUNDER 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.
The Receivables consist of Principal Receivables which arise from the
purchase of goods, services and cash advances and of Finance Charge Receivables
which arise generally from Periodic Finance Charges and other fees and charges
as fully specified in the Agreement. The assets of the Trust in which this
Certificate
-2-
represents an interest, consist of (i)(a) the Receivables now existing and
hereafter created and arising in connection with the Accounts and all
Receivables in Automatic Additional Accounts and Additional Accounts added to
the Trust from time to time, (b) all monies due or to become due with respect
thereto (including all Finance Charge Receivables), (c) all proceeds (as defined
in Section 9-306 of the UCC as in effect in the State of New York) of such
Receivables, (d) proceeds of insurance policies relating to the Receivables, (e)
Interchange and Recoveries pursuant to subsections 2.5(k) and (l) of the
Agreement, (ii) such funds as from time to time are deposited in the Collection
Account, the Excess Funding Account, and the Investor Accounts and (iii) the
benefit of the Class B Interest Rate Cap between the Trustee and the Interest
Rate Cap Provider.
This Certificate is one of the People's Bank Credit Card Master Trust
[$__________] Floating Rate Class B Asset Backed Certificates, Series 1997-2
(the "Class B Certificates"), each of which represents an undivided interest in
certain assets of the Trust, including the right to receive Collections
allocable to the Class B Certificates and other amounts at the times and in the
amounts specified in the Agreement to be deposited in the Investor Accounts or
paid to the Investor Certificateholders. The aggregate interest represented by
the Class B Certificates at any time in the Principal Receivables in the Trust
will not exceed an amount equal to the Class B Investor Interest at such time.
The Class B Initial Investor Interest is [$__________] minus the retirement of
any Class B Certificates pursuant to an Investor Exchange. The Class B Investor
Interest on any date of determination will be an amount equal to (a) the Class B
Initial Investor Interest, minus (b) the aggregate amount of payments of
Certificate Principal paid to the Class B Certificateholders prior to such date
of determination, minus (c) the excess, if any, of the aggregate amount of Class
B Investor Charge-Offs, Reallocated Principal Collections and other reductions
of the Class B Investor Interest in respect of the Class A Required Amount over
Class B Investor Charge-Offs, Reallocated Principal Collections and such other
reductions reimbursed prior to such date of determination; provided, however,
that the Class B Investor Interest may not be reduced below zero. In addition
to the Class B Certificates, a class of certificates entitled "People's Bank
Credit Card Master Trust [$__________] Floating Rate Class A Asset Backed
Certificates, Series 1997-2" (the "Class A Certificates") and an Undivided
Interest in the Trust in the initial amount of [$__________] (the "Collateral
Interest," and together with the Class A Certificates and the Class B
Certificates, the "Certificates") will be issued, and the Ex changeable Seller
Certificate will be issued to the Holder of the Exchangeable Seller Certificate
pursuant to the Agreement, and other Series of certificates have been, and may
from time to time be, issued by the Trust, which represent or will represent an
-3-
undivided interest in the Trust. The Exchangeable Seller Certificate will
represent the interest in the Principal Receivables not represented by the
Certificates or any other Series of certificates.
Interest on the Class B Certificates will be distributed on October 15,
1997 and on the fifteenth day of each calendar month thereafter, or if such
fifteenth day is not a Business Day, on the next succeeding Business Day (a
"Distribution Date"), to the Class B Certificateholders of record on the Record
Date preceding the related Distribution Date. Principal with respect to the
Class B certificates is scheduled to be distributed on the [September 2002]
Distribution Date, (the "Class B Scheduled Payment Date"), but may be paid
earlier or later as provided in the Agreement. During the Rapid Amortization
Period, if any, interest and principal will be distributed to the Class B
Certificateholders on the Distribution Date of each calendar month until the
Class B Certificateholders have been paid in full.
The Servicer will 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.
Notwithstanding anything in the Agreement to the contrary, for so long as,
and only so long as, the Transferor shall remain the Servicer hereunder and
(a)(i) the Servicer provides to the Trustee a letter of credit or other
arrangement covering risk of collection of the Servicer acceptable to the Rating
Agency (as evidenced by letters from the Rating Agency) and (ii) the Transferor
shall not have received a notice from the Rating Agency that such letter of
credit or other arrangement would result in the lowering or withdrawal of such
Rating Agency's then-existing rating of any Series of Investor Certificates or
(b) under certain circumstances permitted under the Agreement, the Servicer need
not deposit Collections into the Collection Account, the Principal Account or
the Finance Charge Account in accordance with the immediately preceding sentence
or make payments to the Holder of the Exchangeable Seller Certificate prior to
the close of business on the day any Collections are deposited in the Collection
Account, but may make such payments on the Transfer Date in the Monthly Period
following the Monthly Period in which such Collections are received 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.
On each Distribution Date, to the extent funds are available on the terms
specified in the Agreement from available Finance Charge Collections, from
payments made pursuant to the Class B Interest Rate Cap and from Excess Spread,
interest will be
-4-
distributed to the Class B Certificateholders in an amount equal to the sum of:
(i) the product of (a) the Class B Certificate Rate, (b) the lesser of the Class
B Investor Interest determined as of the preceding Distribution Date, after
giving effect to all payments, deposits and withdrawals on such Distribution
Date and the Expected Class B Principal as of the preceding Distribution Date or
Closing Date (or, for the initial Interest Accrual Period, the Class B Initial
Investor Interest), as applicable, and (c) the actual number of days in the
related Interest Accrual Period divided by 360, plus (ii) the product of (a) the
Class B Excess Principal, (b) the lesser of the Class B Certificate Rate and
[____%], and (c) the actual number of days in the related Interest Accrual
Period divided by 360, plus (iii) to the extent permitted by applicable law, any
interest accrued on the Class B Certificates (including interest on any overdue
Class B Monthly Interest) during any prior Interest Accrual Period which has not
been distributed to the Class B Certificateholders, plus, (iv) to the extent
that there is available Excess Spread, an amount equal to the product of (a) the
amount by which the Class B Certificate Rate exceeds [____%], (b) the Class B
Excess Principal and (c) the actual number of days in the related Interest
Accrual Period divided by 360.
On each Determination Date during the Revolving Period, the Controlled
Accumulation Period and the Rapid Amortization Period, if any, the Servicer will
determine the Class A Required Amount and the Class B Required Amount. If
either or both of the Required Amounts are greater than zero after application
of available Finance Charge Collections, Excess Spread and Shared Finance Charge
Collections, then Principal Collections allocable to the Collateral Interest
will be reallocated and applied first to fund the remaining Class A Required
Amount, if any, and second to fund the remaining Class B Required Amount, if
any, and to the extent that Reallocated Collateral Principal Collections are
less than such remaining Class A Required Amount, Principal Collections
allocable to the Class B Certificates will then be reallocated and applied to
fund the remaining Class A Required Amount. The Collateral Interest will be
reduced by the amount of Reallocated Collateral Principal Collections and
Reallocated Class B Principal Collections applied to fund the Required Amounts.
The Class B Investor Interest will be reduced by the amount of Reallocated Class
B Principal Collections in excess of the Collateral Interest (after giving
effect to reductions for an Collateral Interest Charge-Offs and any reallocated
Collateral Principal Collections as of the related Distribution Date) applied to
fund the Class A Required Amount.
If, on any Distribution Date, Reallocated Collateral Principal Collections
are insufficient to fund the remaining Class A Required Amount for the related
Monthly Period, then the Collateral Interest (after giving effect to reduction
for any
-5-
Collateral Interest Charge-Offs and Reallocated Principal Collections) will be
reduced by the amount of such deficiency (but not by more than the Class A
Investor Default Amount for such Monthly Period). In the event that such
reduction would cause the Collateral Interest to be a negative number, the
Collateral Interest will be reduced to zero, and the Class B Investor Interest
(after giving effect to reductions for any Class B Investor Charge-Offs and any
Reallocated Class B Principal Collections in excess of the Collateral Interest
as of such Distribution Date) will be reduced by the amount by which the
Collateral Interest would have been reduced below zero. In the event that such
reduction would cause the Class B Investor Interest to be a negative number, the
Class B Investor Interest will be reduced to zero and the Class A Investor
Interest will be reduced by the amount by which the Class B Investor Interest
would have been reduced below zero.
If, on any Distribution Date, Reallocated Collateral Principal Collections
not required to fund the Class A Required Amount are insufficient to fund the
remaining Class B Required Amount for such Monthly Period, then the Collateral
Interest (after giving effect to reduction for any Collateral Interest Charge-
Offs, Reallocated Principal Collections and any adjustments made thereto for the
benefit of the Class A Certificateholders) will be reduced by the amount of such
deficiency (but not by more than the Class B Investor Default Amount for such
Monthly Period). In the event that such reduction would cause the Collateral
Interest to be a negative number, the Collateral Interest will be reduced to
zero, and the Class B Investor Interest will be reduced by the amount by which
the Collateral Interest would have been reduced below zero.
The Trustee has entered into the Class B Interest Rate Cap with the
Interest Rate Cap Provider for the exclusive benefit of the Class B
Certificateholders. On each Transfer Date that the Class B Certificate Rate for
the related Interest Accrual Period exceeds the Class B Cap Rate, the Interest
Rate Cap Provider will make a payment to the Trustee, on behalf of the Trust,
based on the amount of such excess and the notional amount of the Class B
Interest Rate Cap. The Class B Notional Amount will at all times equal the
amount of the Expected Class B Principal. The Class B Interest Rate Cap, or its
Replacement Interest Rate Cap or Qualified Substitute Arrangement, will
terminate on the day immediately following the Class B Scheduled Payment Date.
People's Bank, as Servicer, is entitled to receive as servicing
compensation a monthly servicing fee in an amount equal to one-twelfth of the
product of 2.00% per annum and the Aggregate Principal Receivables in the Trust
on the last day of the preceding Monthly Period, payable on each succeeding
Distribution Date. With respect to any Distribution Date, the Class B Monthly
-6-
Servicing Fee will equal one-twelfth of the product of 2.00% per annum and the
Class B Investor Interest as of the last day of the preceding Monthly Period;
provided that the Class B Monthly Servicing Fee for the first Distribution Date
will be an amount equal to [____ thirtieth] of the foregoing amounts.
On the Transfer Date immediately preceding the Class B Scheduled Payment
Date, and on each Transfer Date thereafter until the Class B Investor Interest
has been reduced to zero, the Servicer or the Trustee acting in accordance with
instructions from the Servicer will withdraw all amounts on deposit in the
Principal Account, in respect of Collections processed during the preceding
Monthly Period and deposit such amounts in the Distribution Account for
distribution to the Class B Certificateholders on the next succeeding
Distribution Date, to the extent specified in the Agreement.
As provided in the Agreement, Principal Collections remaining after
funding of the Required Amounts during the Revolving Period and the Controlled
Accumulation Period and Principal Collections remaining after funding of the
Controlled Deposit Amount during the Controlled Accumulation Period will be
applied as Shared Principal Collections and distributed first to the
certificateholders of other Series to the extent of Principal Shortfalls, if
any, and then to the Holder of the Exchangeable Seller Certificate. In
addition, during the Controlled Accumulation Period and the Rapid Amortization
Period, Shared Principal Collections from other Series available to the
Certificates will be applied to pay the Certificateholders to the extent of
Principal Shortfalls, if any, with respect to Series 1997-2.
On each Distribution Date beginning with the month following the Monthly
Period in which the Rapid Amortization Period commences, the Monthly Total
Principal Allocations from the prior Monthly Period along with Shared Principal
Collections from other Series, if any, and certain other amounts treated as
Available Investor Principal Collections will be distributed to the Class A
Certificateholders until the earlier of the date on which the Class A Investor
Interest is paid in full and the Series 1997-2 Termination Date and, following
the final principal payment to the Class A Certificateholders, to the Class B
Certificateholders until the earlier of the date on which the Class B Investor
Interest is paid in full and the Series 1997-2 Termination Date.
Distributions with respect to this Class B Certificate will be made by the
Paying Agent by check mailed to the address of the holder of record appearing in
the Certificate Register (except for the final distribution in respect of this
Class B Certificate) without the presentation or surrender of this Certificate
or the making of any notation thereon, except that with respect to Certificates
registered in the name of the nominee of a Clear-
-7-
ing Agency, distributions will be made in the form of immediately available
funds.
This Class B Certificate does not represent an obligation of, or an
interest in, the Transferor or the Servicer, and neither the Class B
Certificates nor the Accounts or Receivables are insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency. This
Class B Certificate is limited in right of payment to certain collections
respecting the Receivables, as more specifically set forth hereinabove and in
the Agreement.
As provided in the Agreement, withdrawals from the Series 1997-2 Investor
Accounts may be made upon the instructions of the Servicer from time to time for
purposes other than distributions to Class B Certificateholders.
The Transferor may designate (subject to the terms and conditions of the
Agreement) Accounts for deletion and removal from the Accounts previously
assigned to and constituting a part of the Trust.
The Agreement and any Supplement may be amended by the Transferor, the
Servicer and the Trustee, without the consent of the Certificateholders of any
Series, to cure any ambiguity, to correct or supplement any provision therein
which may be inconsistent with any other provision therein, to add any other
provisions with respect to matters or questions arising under the Agreement and
any Supplement which are not inconsistent with the provisions of the Agreement
and any Supplement. The Agreement may be amended from time to time by the
Transferor, the Servicer and the Trustee, and without the consent of any
Certificateholders, to (a) provide for the transfer by the Transferor of its
interest in and to all or part of the Accounts in accordance with the provisions
of the Agreement and (b) provide for the purchase of Principal Receivables by
the Trust at a price which is less than 100% of the outstanding balance thereof,
and to provide for the treatment of Collections of Principal Receivables, in an
amount up to the aggregate amount by which the purchase price of Principal
Receivables as sold thereafter is less than 100%, as Collections of Finance
Charge Receivables; provided, however, that any such action may not adversely
affect in any material respect the interests of Certificateholders; provided
further that the Servicer and the Trustee shall have received notice from the
Rating Agency that any such amendment will not result in the reduction or
withdrawal of its then-existing rating of the certificates of any Series.
The Agreement and any Supplement may be amended by the Transferor, the
Servicer and the Trustee with the consent of the holders of certificates
evidencing undivided interests aggregat-
-8-
ing not less than 66-2/3% of the principal amount of each Series adversely
affected, for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of the Agreement or any Supplement or of
modifying in any manner the rights of certificateholders of any Series. No such
amendment, however, may (a) reduce in any manner the amount of, or delay the
timing of, distributions required to be made on such Series, (b) change the
definition of or the manner of calculating the interest of any certificateholder
of such Series or (c) reduce the aforesaid percentage of undivided interests,
the holders of which are required to consent to any such amendment, in each case
without the consent of all certificateholders of all Series adversely affected.
The transfer of this Class B Certificate shall be registered in the
Certificate Register upon surrender of this Class B Certificate for registration
of transfer at any office or agency maintained by the Transfer Agent and
Registrar accompanied by a written instrument of transfer in a form satisfactory
to the Trustee and the Transfer Agent and Registrar duly executed by the Class B
Certificateholder or such Class B Certificateholder's attorney-in-fact duly
authorized in writing, and thereupon one or more new Class B Certificates of
authorized denomination and for the same aggregate Undivided Interests will be
issued to the designated transferee or transferees.
Pursuant to the Series 1997-2 Supplement, the Transferor has the option
(the "Discount Option"), at any time to designate as Finance Charge Receivables
a fixed or variable percentage of Receivables in designated Accounts which
otherwise would be treated as Principal Receivables. The exercise by the
Transferor of the Discount Option will be subject to, among other things, the
receipt by the Trustee of written confirmation from each Rating Agency that the
exercise of such option will not result in a withdrawal or reduction of its
rating of the Certificates. Each Certificateholder by its acceptance of a
beneficial interest in a Certificate will be deemed to have consented to the
exercise by the Transferor of the Discount Option at such time as the Transferor
determines to exercise such option.
As provided in the Agreement and subject to certain limitations therein
set forth, Class B Certificates are exchangeable for new Class B Certificates
evidencing like aggregate Undivided Interests, as requested by the Class B
Certificateholder surrendering such Class B Certificates. No service charge may
be imposed for any such exchange but the Servicer or Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
-9-
The Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar, and any agent of any of them, may treat the person in whose name this
Class B Certificate is registered as the owner hereof for all purposes, and
neither the Servicer, the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them or of any such agent shall be affected
by notice to the contrary except in certain circumstances described in the
Agreement.
Subject to the prior termination of Series 1997-2, the Agreement provides
that the right of the Class B Certificateholders to receive payments from the
Trust will terminate on the Scheduled Series 1997-2 Termination Date. Upon the
termination of Trust pursuant to Section 12.1 of the Agreement, the Trustee will
assign and convey to the Holder of the Exchangeable Seller Certificate (without
recourse, representation or warranty) all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, and Recoveries
allocable to the Trust relating thereto and Interchange pursuant to subsections
2.5(k) and (l) of the Agreement. The Trustee will 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 Seller Certificate to
vest in such Holder all right, title and interest which the Trustee had in the
Receivables.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Class B Certificate shall not
be entitled to any benefit under the Agreement, or be valid for any purpose.
-10-
IN WITNESS WHEREOF, People's Bank has caused this Class B Certificate to be
executed by its duly authorized officer.
PEOPLE'S BANK
By:
Dated: [September __, 1997]
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Form of Trustee's Certificate of Authentication
This is one of the Class B Certificates referred to in the within-mentioned
Agreement.
BANKERS TRUST COMPANY, not in
its individual capacity,
but solely as Trustee
By:
(Authorized Officer)
-12-
EXHIBIT 2
---------
FORM OF MONTHLY CERTIFICATEHOLDERS' STATEMENT
---------------------------------------------
PEOPLE'S BANK
PEOPLE'S BANK CREDIT CARD MASTER TRUST, SERIES 1997-2
MONTHLY CERTIFICATEHOLDERS' STATEMENT FOR MONTHLY PERIOD #
Monthly Period - Beginning Date _________
Monthly Period - Ending Date _________
Determination Date _________
Distribution Date _________
(Note: Monthly Period numbers found herein refer solely to Series 1997-2 and
may not correspond to Monthly Period numbers used for other Series of
the Trust.)
21. Information Regarding Distributions
to Certificateholders _________________
21.1 Total amount distributed to
Certificateholders (per $1,000
Initial Investor Interest) _________________
21.2 Total principal amount
distributed to Certificateholders
(per $1,000 Initial Investor Interest) _________________
21.3 Total interest amount
distributed to Certificateholders
(Per $1,000 Initial Investor Interest) _________________
22. Receivables Balances
22.1 Aggregate Principal Receivables in
Trust, end of period ___ _________________
(a) Aggregate Principal Receivables
in Trust on Closing Date _________________
22.2 Investor Interest, end of period ___ _________________
(a) Investor Interest as of Closing Date _________________
22.3 Investor Interest as a percentage
of Trust Principal Receivables
(a) Investor Interest as a percentage of
Trust Principal Receivables as of the
Closing Date _________________
22.4 Adjusted Investor Interest _________________
22.5 Floating Investor Percentage _________________
22.6 Fixed Investor Percentage _________________
23. Collections _________________
23.1 Aggregate amount of Collections Processed
during the Monthly Period allocated to
Certificateholders _________________
B. Monthly Pay Rate for:
(i) Period - 1 _________%
(ii) Period - 2 _________%
(iii) Period - 3 _________%
(iv) Period - 4 _________%
(v) Period - 5 _________%
(vi) Period - 6 _________%
(vii) 6 mo. Avg. _________%
23.2 Principal Collections during the Monthly
Period allocated to Certificateholders _________________
23.3 Amount by which Controlled Accumulation
exceeds principal allocated to Investors _________________
23.4 Finance Charge Collections during the Monthly
Period allocated to Certificateholders _________________
23.5 Annualized Gross Portfolio Yield for:
(i) Period - 1 _________%
(ii) Period - 2 _________%
(iii) Period - 3 _________%
(iv) 3 mo. avg. _________%
-2-
24. Delinquent Balances*
Aggregate Percentage
Account Aggregate
Balances Receivables
--------- -----------
24.1 Less than 31 days delinquent ___________ ___________%
24.2 31-60 days delinquent ___________ ___________%
24.3 61-90 days delinquent ___________ ___________%
24.4 More than 90 days delinquent ___________ ___________%
24.5 Total ___________ ___________%
25. Default Summary
25.1 Aggregate Investor Default Amount _________________
Aggregate Percent of
Account Aggregate
Balances Receivables
--------- -----------
25.2 Investor default percentage for:
(i) Period - 1 _________%
(ii) Period - 2 _________%
(iii) Period - 3 _________%
(iv) 3 mo. avg. _________%
25.3 Investor Charge-Offs
(i) Aggregate dollar amount _________________
(ii) Per $1,000 of Initial Investor Interest _________________
25.4 Reimbursed Investor Charge-Offs
(i) Aggregate dollar amount _________________
(ii) Per $1,000 of Initial Investor Interest _________________
25.5 Reallocated Principal Collections
(i) Aggregate dollar amount _________________
(ii) Per $1,000 of Initial Investor Interest _________________
25.6 Base Rate _________________
-3-
25.7 Portfolio Yield minus Base Rate for:
(i) Period - 1 _________%
(ii) Period - 2 _________%
(iii) Period - 3 _________%
(iv) 3 mo. avg. _________%
26. Monthly Investor Servicing Fee _________________
27. Accumulation Shortfall _________________
28.1 Principal Funding Investment Proceeds _________________
28.2 Principal Funding Investment Shortfall _________________
29. Withdrawal from Reserve Account under Section 4.6 _________________
30. Required Reserve Account Amount _________________
31. Available Reserve Account Amount _________________
32. Pool Factor _________________
33. Collateral Interest as a Percentage of
Investor Interest _________________
PEOPLE'S BANK, Servicer
By:_______________________
Calculations
------------
Monthly Pay Rate = Aggregate Collections (excluding Interchange) during the
Monthly Period/Aggregate Amount of Receivables at the end of the prior
Monthly Period
Amount by which Controlled Accumulation Amount exceeds Principal allocated
to Investors during the Monthly Period = $________ - Principal allocated to
Investors
Gross Portfolio Yield = Finance Charges allocated to Investors during the
Monthly Period (including Interchange allocated to Investors and deposited
in the Finance Charge Account)/Investor Interest for the prior Monthly
Period #_______
-4-
Portfolio Yield minus Base Rate - Finance charges allocated to Investors
during the Monthly Period (including Interchange allocated to Investors and
deposited in the Finance Charge Amount) - Investor Default Amount for the
Monthly Period/Investor Interest for the prior Monthly Period - Base Rate.
-5-
EXHIBIT 3
---------
FORM OF DTC LETTER OF REPRESENTATION
EXHIBIT 4
---------
FORM OF MONTHLY PAYMENT INSTRUCTIONS TO TRUSTEE
BANKERS TRUST COMPANY
ABA #000000000
A/C 00-000-000
CORPORATE TRUST AND AGENCY GROUP
ATTENTION: XXXXX XXXX/XXXXX XXXXXX
RE: PEOPLE'S BANK1997-2 FINANCE CHARGE ACCOUNT
ON _________________________ PLEASE PERFORM THE FOLLOWING TRANSACTIONS PURSUANT
TO THE SERIES 1997-2 SUPPLEMENT AND THE AMENDED AND RESTATED POOLING AND
SERVICING AGREEMENT DATED AS OF MARCH 18, 1997:
Per Section Please withdraw $0.00 from Finance
4.6 (a) (i) & Charge Account - 22756 and deposit into the
4.6 (d) (vii) Distribution Account - 22753 to pay Monthly
Certificate Interest to Class A Investors.
Per Section Please withdraw $0.00 from Finance
4.6 (b) (i) & Charge Account - 22756 and deposit into the
4.6 (d) (viii) Distribution Account - 22753 to pay Monthly
Certificate Interest to Class B Investors.
Per Section Please withdraw $0.00 from Finance
4.6 (d) (vi) Charge Account - 22756 and deposit into the
Distribution Account - 22753 to pay Collateral
Monthly Interest to the Collateral Interest Holder.
Per Section Please withdraw $0.00 from Finance
4.6 (a) (ii), Charge Account - 22756 to pay Monthly
4.6 (b) (ii), Investor Servicing Fee to People's Bank.
4.6 (c) (i) &
4.6 (d) (vii)
Per Section Please withdraw $0.00 from Finance
4.6 (a) (iii), Charge Account - 22756 to pay Investor Default
4.6 (c) (iii) & Amount to People's Structured Finance Corp.
4.6 (d) (ix)
4.6 (d) (ix)
Per Section Please withdraw $0.00 from Finance
4.6 (d) (xvii) Charge Account - 22756 and wire to People's
Structured Finance.
AUTHORIZED BY: _______________________________
XXXX XXXXXX, VICE PRESIDENT
-2-
EXHIBIT 5
---------
Form of Notification to Trustee Regarding
Completion of Required Deposits and Withdrawals
PEOPLE'S BANK
PEOPLE'S BANK CREDIT CARD MASTER TRUST, SERIES 1997-2
This is to inform you that on the Transfer Date occurring on _________
we have made all deposits and withdrawals for the Monthly Period beginning on
________ and ending on _________.
-------------------------------------
Name:
Title:
EXHIBIT 6
---------
Form of Notification to Trustee Regarding
Failure to Make Payment
PEOPLE'S BANK
PEOPLE'S BANK CREDIT CARD MASTER TRUST, SERIES 1997-2
This is to inform you that we have been unable to make a [payment or
deposit] in the amount of __________ for the Monthly Period beginning on
________ and ending on _________. Such payments were to be made from [Account]
on _________ and such payment or deposit was to be made to [Person or Account].
-------------------------------------
Name:
Title:
