First USA Credit Card Master Trust
Class A Floating Rate Asset Backed Certificates,
Series 1997-5
Class B Floating Rate Asset Backed Certificates,
Series 1997-5
UNDERWRITING AGREEMENT
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July 23, 1997
X.X. Xxxxxx Securities Inc.
as Representative of the
Underwriters set forth herein
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
First USA Bank, a Delaware chartered banking corporation (the "Bank"),
has duly authorized the issuance and sale to X.X. Xxxxxx Securities Inc. (the
"Representative"), Banc One Capital Corporation, Bear, Xxxxxxx & Co. Inc. and
Credit Suisse First Boston Corporation, as underwriters (the "Underwriters" and
each individually, an "Underwriter") of First USA Credit Card Master Trust
$650,000,000 aggregate principal amount of Class A Floating Rate Asset Backed
Certificates, Series 1997-5 (the "Class A Certificates") and $58,735,000
aggregate principal amount of Class B Floating Rate Asset Backed Certificates,
Series 1997-5 (the "Class B Certificates" and together with the Class A
Certificates, the "Certificates"). The Certificates will be issued pursuant to a
Pooling and Servicing Agreement, dated as of September 1, 1992 (the "Master
Pooling and Servicing Agreement"), as supplemented by the Series 1997-5
Supplement dated as of the Closing Date (the "Supplement" and together with the
Master Pooling and Servicing Agreement, the "Pooling and Servicing Agreement"),
each by and between the Bank, as transferor and servicer, and The Bank of New
York (Delaware) (the "Trustee").
Each Certificate will represent an undivided interest in certain
assets of First USA Credit Card Master Trust (the "Trust"). The property of the
Trust will include, among other things, receivables (the "Receivables") arising
under certain
MasterCard(R) and VISA(R)/*/ revolving credit card accounts (the "Accounts").
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement.
1. Representations, Warranties and Agreements of the Bank. The Bank
represents and warrants to, and agrees with, the Underwriters as follows:
(a) The Bank has filed with the Securities and Exchange
Commission (the "Commission"), on Form S-3, a registration statement
(Registration No. 333-24227) pursuant to Rule 415 under the Securities Act of
1933, as amended (such act, the "Act"). The Bank may have filed one or more
amendments thereto each of which amendments has previously been furnished to
each of the Underwriters. The Bank will also file with the Commission a
prospectus supplement in accordance with Rule 424(b) under the Act. As filed,
the registration statement as amended, the form of prospectus supplement, and
any prospectuses or prospectus supplements filed pursuant to Rule 424(b) under
the Act relating to the Certificates shall, except to the extent that the
Underwriters shall agree in writing to a modification, be in all substantive
respects in the form furnished to the Representative prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in the
latest preliminary prospectus supplement which has previously been furnished to
the Underwriters) as the Bank has advised the Underwriters, prior to the
Execution Time, will be included or made therein.
For purposes of this Agreement, "Effective Time" means the date and
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission, and
"Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, and including the exhibits thereto
and any material incorporated by reference therein (including any Computational
Materials, ABS Term Sheets, Structural Term Sheets and Collateral Term Sheets
(as defined in Section 3(b) of this Agreement) filed on Form 8-K), is
hereinafter referred to as the
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/*/ VISA(R) and MasterCard(R) are registered trademarks of Visa USA
Incorporated and MasterCard International Incorporated, respectively.
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"Registration Statement," and any prospectus supplement (the "Prospectus
Supplement") relating to the Certificates, as filed with the Commission pursuant
to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act is, together
with the prospectus filed as part of the Registration Statement (such
prospectus, in the form it appears in the Registration Statement or in the form
most recently revised and filed with the Commission pursuant to Rule 424(b)
being hereinafter referred to as the "Basic Prospectus"), hereinafter referred
to as the "Prospectus". "Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties hereto.
(b) On the Effective Date and on the date of this Agreement, the
Registration Statement did or will, and, when the Prospectus was first filed and
on the Closing Date, the Prospectus did or will, comply in all material respects
with the applicable requirements of the Act and the rules and regulations of the
Commission (the "Rules and Regulations"); on the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus did not
or will not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Bank makes no representation or warranty as to the information
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished in writing to the
Bank by the Underwriters specifically for use in connection with preparation of
the Registration Statement or the Prospectus.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there has not been any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, business, management,
financial condition, stockholders' equity, results of operations, regulatory
status or business prospects of the Bank and (ii) the Bank has not entered into
any transaction or agreement (whether or not in the ordinary course of business)
material to the Bank that, in either case, would reasonably be expected to
materially adversely affect the interests of the holders of the Certificates,
otherwise than as set forth or contemplated in the Prospectus.
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(d) The Bank is duly organized, validly existing and in good
standing as a banking corporation under the laws of the State of Delaware and is
qualified to transact business in and is in good standing under the laws of each
state in which its activities require such qualification, and has full power,
authority and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, the Spread
Account Agreement dated as of the Closing Date by and among the Bank, as
Transferor and Servicer, the Trustee and The Bank of New York, as initial
collateral agent (the "Spread Account Agreement"), the Pooling and Servicing
Agreement, and the Certificates.
(e) This Agreement has been duly authorized and validly executed
and delivered by the Bank.
(f) The Pooling and Servicing Agreement has been duly authorized
and, when executed and delivered by the Bank and assuming the due authorization,
execution and delivery thereof by the Trustee, will constitute a valid and
binding obligation of the Bank enforceable against the Bank in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is pursuant to a proceeding in equity or at law). As of the Closing
Date, the Pooling and Servicing Agreement will have been duly and validly
executed by the Bank and will conform in all material respects to the
description thereof contained in the Prospectus.
(g) The Certificates have been duly and validly authorized by all
required action of the Bank, and when duly and validly executed by the Bank,
authenticated by the Trustee and delivered in accordance with the Pooling and
Servicing Agreement, and delivered to and paid for by the Underwriters as
provided herein, will be validly issued and outstanding and entitled to the
benefits of the Pooling and Servicing Agreement. As of the Closing Date, the
Certificates will have been duly and validly executed by the Bank, and will
conform in all material respects to the descriptions thereof contained in the
Prospectus.
(h) The Spread Account Agreement has been duly authorized, and
when executed and delivered by the Bank and assuming the due authorization,
execution and delivery thereof by the other parties thereto, will constitute a
valid and binding obligation of the Bank enforceable against the Bank in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency and similar laws affecting creditors' rights generally
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and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is pursuant to a proceeding in equity or at law). As of
the Closing Date, the Spread Account Agreement will have been validly executed
by the Bank.
(i) The Receivables delivered on the Closing Date to the Trustee
pursuant to the Pooling and Servicing Agreement will conform in all material
respects with the description thereof contained in the Prospectus.
(j) Neither the transfer of the Receivables to the Trustee, nor
the issuance, sale and delivery of the Certificates, nor the execution or
delivery of this Agreement, the Spread Account Agreement, or the Pooling and
Servicing Agreement, nor the consummation of any of the transactions herein or
therein contemplated, nor the fulfillment of the terms of the Certificates, the
Pooling and Servicing Agreement, the Spread Account Agreement, or this
Agreement, will result in the breach of any term or provision of the charter or
by-laws of the Bank, or conflict with, result in a breach, violation or
acceleration of, or constitute a default under, the terms of any indenture or
other agreement or instrument to which the Bank is a party or by which it or its
properties is bound or may be affected or any statute, order or regulation
applicable to the Bank of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Bank or will result
in the creation of any Lien upon any property or assets of the Bank (other than
as contemplated in the Pooling and Servicing Agreement). The Bank is not a party
to, bound by, or in breach or violation of, any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over it, that materially and adversely affects
the ability of the Bank to perform its obligations under this Agreement, the
Pooling and Servicing Agreement, the Spread Account Agreement, or the
Certificates.
(k) There are no charges, investigations, actions, suits, claims
or proceedings before or by any court, regulatory body, administrative agency,
governmental body or arbitrator now pending or, to the best knowledge of the
Bank, threatened that, separately or in the aggregate (i) could have a material
adverse effect on (x) the general affairs, business, management, financial
condition, stockholders' equity, results of operations, regulatory status or
business prospects of the Bank or (y) the ability of the Bank to perform its
obligations under this Agreement, the Spread Account Agreement, the Pooling and
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Servicing Agreement, or the Certificates, (ii) assert the invalidity of this
Agreement, the Spread Account Agreement, the Pooling and Servicing Agreement, or
the Certificates, (iii) seek to prevent the issuance, sale or delivery of the
Certificates or any of the transactions contemplated by this Agreement, the
Spread Account Agreement, or the Pooling and Servicing Agreement or (iv) seek to
affect adversely the federal income tax or ERISA attributes of the Certificates
described in the Prospectus.
(l) No federal, state or local tax, including intangibles tax or
documentary stamp tax, the non-payment of which would result in the imposition
of a Lien on the Receivables or of transferee liability on the Trustee, is
imposed with respect to the conveyance of the Receivables from the Bank to the
Trust, or in connection with the issuance of the Certificates by the Trust, or
the holding of the Receivables by the Trust, or in connection with any of the
other transactions contemplated by this Agreement, the Spread Account Agreement,
or the Pooling and Servicing Agreement. Any taxes, fees and other governmental
charges in connection with the execution, delivery and issuance of the
Certificates or the execution and delivery of this Agreement, the Spread
Account Agreement, or the Pooling and Servicing Agreement have been or will have
been paid at or prior to the Closing Date.
(m) As of the Closing Date, the representations and warranties of
the Bank in the Pooling and Servicing Agreement, with regard to itself as both
transferor and servicer and the Receivables (individually and in the aggregate),
will be true and correct.
(n) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the execution, delivery and performance by the Bank of or compliance by the
Bank with this Agreement, the Spread Account Agreement, the Pooling and
Servicing Agreement, or the Certificates or the consummation of the transactions
contemplated hereby or thereby except the filing of Uniform Commercial Code
financing statements with respect to the Receivables and to the approval of the
Office of the State Bank Commissioner of the State of Delaware.
(o) Xxxxxxx & Xxxxxxx L.L.P. who have audited certain financial
statements of the Bank are independent public accountants as required by the Act
and the Rules and Regulations.
(p) As of the close of business on June 30, 1997, the Principal
Receivables transferred to the Trust pursuant to the Pooling and Servicing
Agreement have an aggregate balance
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determined, including the Receivables in the Additional Accounts to be added to
the Trust on or prior to the Closing Date, of not less than the sum of (i) the
sum of (x) the aggregate outstanding principal amount of all classes of all
Series outstanding on June 30, 1997, plus (y) $783,130,000 plus (ii) 7% of the
sum of (x) plus (y).
(q) The Trust is not, and will not be as a result of the issuance
and sale of the Certificates, an "investment company" or a company "controlled
by" an investment company within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act").
2. Purchase, Sale, Payment and Delivery of Certificates. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Bank agrees to sell to
the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Bank, on August 7, 1997 or on such other date as shall be
mutually agreed upon by the Bank and the Underwriters (the "Closing Date"), the
number and type of Certificates set forth in Schedule A opposite the name of
each such Underwriter. The Class A Certificates being purchased by the
Underwriters hereunder are to be purchased at a purchase price equal to 99.65%
of the principal amount thereof. The Class B Certificates being purchased by the
Underwriters hereunder are to be purchased at a purchase price equal to 99.60%
of the principal amount thereof.
The closing of the sale of the Certificates (the "Closing") shall be
held at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the
Closing Date. Payment of the purchase price for the Certificates being sold and
purchased hereunder shall be made on the Closing Date by wire transfer of
federal or other immediately available funds to an account to be designated one
business day prior to the Closing Date by the Bank, against delivery of the
Certificates at the Closing on the Closing Date. Each of the Certificates to be
so delivered shall be represented by one or more definitive certificates
registered in the name of Cede & Co., as nominee for The Depository Trust
Company.
3. Offering by Underwriters. (a) It is understood that after the
Effective Date the Underwriters propose to offer the Certificates for sale to
the public as set forth in the Prospectus.
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(b) Each Underwriter may provide to prospective investors the
1997-5 Term Sheet dated July 22, 1997 relating to the Certificates (the "1997-5
Term Sheet") prepared by the Bank and attached hereto as Exhibit A, subject to
the following conditions:
(i) Such Underwriter shall have complied with the requirements of
the no-action letter, dated May 20, 1994, issued by the Commission to Xxxxxx,
Xxxxxxx Acceptance Corporation I, Xxxxxx, Xxxxxxx & Co. Incorporated and Xxxxxx
Structured Asset Corporation, as made applicable to other issuers and
underwriters by the Commission in the response to the request of the Public
Securities Association, dated May 24, 1994 (collectively, the "Xxxxxx/PSA
Letter"), the requirements of the no-action letter, dated February 17, 1995,
issued by the Commission to the Public Securities Association (the "PSA Letter")
and the requirements of the no-action letter, dated April 5, 1996, issued by the
Commission to Greenwood Trust Company (the "Greenwood Letter" and together with
the Xxxxxx/PSA Letter and the PSA Letter, the "No-Action Letters").
(ii) Each Underwriter, severally, represents and warrants to the
Bank that (a) it has not and will not use any information that constitutes
"Computational Materials" with respect to the offering of the Certificates
unless it has obtained the prior written consent of the Bank to such usage and
(b) other than the 1997-5 Term Sheet, it has not and will not use any
information that constitutes "Series Term Sheets," "ABS Term Sheets,"
"Structural Term Sheets," or "Collateral Term Sheets" with respect to the
offering of the Certificates. For purposes hereof, "Series Term Sheet" shall
have the meaning given such term in the Greenwood Letter and "Computational
Materials" shall have the meaning given such term in the No-Action Letters. For
purposes hereof, "ABS Term Sheets," "Structural Term Sheets" and "Collateral
Term Sheets" shall have the meanings given such terms in the PSA Letter.
4. Certain Agreements of the Bank. The Bank covenants and agrees
with the several Underwriters as follows:
(a) Immediately following the execution of this Agreement, the
Bank will prepare a Prospectus Supplement setting forth the amount of
Certificates covered thereby and the terms thereof not otherwise specified in
the Basic Prospectus, the price at which such Certificates are to be purchased
by the Underwriters, the initial public offering price, the selling concessions
and allowances, and such other information as the Bank deems appropriate. The
Bank will transmit the Prospectus including such Prospectus Supplement to the
Commission pursuant
8
to Rule 424(b) by a means reasonably calculated to result in filing that
complies with all applicable provisions of Rule 424(b). The Bank will advise
the Representative promptly of any such filing pursuant to Rule 424(b).
(b) The Bank will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement or the Prospectus and
will not effect such amendment or supplement without the consent of the
Representative, which consent will not unreasonably be withheld; the Bank will
also advise the Representative promptly of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information; and the Bank will also advise the
Representative promptly of any amendment or supplement to the Registration
Statement or the Prospectus and of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threat of any proceeding for that purpose and the Bank will use
its best efforts to prevent the issuance of any such stop order and to obtain as
soon as possible the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with the Act, the Bank promptly will advise
the Representative thereof and will prepare and file, or cause to be prepared
and filed, with the Commission an amendment or supplement which will correct
such statement or omission, or an amendment or supplement which will effect such
compliance. Any such filing shall not operate as a waiver or limitation on any
condition or right of the Underwriters hereunder.
(d) As soon as practicable, but not later than sixteen months
after the original effective date of the Registration Statement, the Bank will
cause the Trust to make generally available to Certificateholders an earnings
statement (or statements) of the Trust covering a period of at least twelve
months beginning after the effective date of the Registration Statement which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 promulgated
thereunder.
(e) The Bank will furnish to the Underwriters copies of the
Registration Statement (one of which will be signed
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and will include all exhibits), each related preliminary prospectus or
prospectus supplement, the Prospectus and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as the
Underwriters request.
(f) The Bank will promptly, from time to time, take such action
as any Underwriter may reasonably request to qualify the Certificates for
offering and sale under the securities laws of such jurisdictions as such
Underwriter may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Certificates, provided that
in connection therewith the Bank shall not be required to qualify as a foreign
corporation or dealer in securities or to file a general consent to service of
process in any jurisdiction.
(g) For a period from the date of this Agreement until the
retirement of the Certificates, the Bank will deliver to the Representative the
annual statements of compliance and the annual independent certified public
accountants' reports furnished to the Trustee pursuant to the Pooling and
Servicing Agreement, as soon as such statements and reports are furnished to the
Trustee.
(h) So long as any of the Certificates are outstanding, the Bank
will furnish to the Representative (i) as soon as practicable after the end of
the fiscal year all documents required to be distributed to Certificateholders
or filed with the Commission pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any order of the Commission thereunder and (ii)
from time to time, any other information concerning the Bank filed with any
government or regulatory authority which is otherwise publicly available, as the
Representative reasonably requests.
(i) To the extent, if any, that the rating provided with respect
to the Certificates by the rating agency or agencies that initially rate the
Certificates is conditional upon the furnishing of documents or the taking of
any other actions by the Bank, the Bank shall use its best efforts to furnish
such documents and take any such other actions.
(j) The Bank will file with the Commission a report on Form 8-K
with respect to the 1997-5 Term Sheet and a report on Form 8-K setting forth all
Computational Materials described in Section 3 hereof provided to the Bank by
any of the Underwriters and identified by such Underwriter as such within
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the time period allotted for such filing pursuant to the No-Action Letters.
5. Payment of Expenses. The Bank will pay all expenses incident to
the performance of its obligations under this Agreement, including (i) the
printing of the 1997-5 Term Sheet and any Computational Materials described in
Section 3 hereof, (ii) the printing of the Prospectus and of each amendment or
supplement thereto, (iii) the preparation of this Agreement, the Spread Account
Agreement, and the Pooling and Servicing Agreement, (iv) the preparation,
issuance and delivery of the Certificates to the Underwriters, (v) the fees and
disbursements of the Bank's counsel and accountants, (vi) the qualification of
the Certificates under securities laws in accordance with the provisions of
Section 4(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriters and in connection with the preparation of any blue
sky and legal investment survey, (vii) the printing and delivery to the
Underwriters of copies of the 1997-5 Term Sheet and any Computational Materials
described in Section 3 hereof, (viii) the printing and delivery to the
Underwriters of copies of the Prospectus and of each amendment or supplement
thereto, (ix) the printing and delivery to the Underwriters of copies of any
blue sky or legal investment survey prepared in connection with the
Certificates, (x) any fees charged by rating agencies for the rating of the
Certificates, (xi) the fees and expenses, if any, incurred with respect to any
filing with the National Association of Securities Dealers, Inc. and (xii) the
fees and expenses of the Trustee and its counsel. The Underwriters have agreed
to reimburse the Bank for expenses not to exceed $191,868 incurred by the Bank
in connection with the issuance and distribution of the Certificates.
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Certificates
will be subject to the accuracy of the representations and warranties on the
part of the Bank herein, to the accuracy of the statements of officers of the
Bank made pursuant to the provisions hereof, to the performance by the Bank of
its obligations hereunder and to the following additional conditions precedent:
(a) The Prospectus and any supplements thereto shall have been
filed (if required) with the Commission in accordance with the rules and
regulations under the Act and Section 1 hereof, and prior to the Closing Date,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or, to the knowledge of the Bank, shall be contemplated by
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the Commission or by any authority administering any state securities or blue
sky law.
(b) On or prior to the date of the Prospectus and on or prior to
the Closing Date, the Underwriters shall have received a letter or letters,
dated as of the date of the Prospectus and as of the Closing Date, respectively,
of Coopers & Xxxxxxx L.L.P., Certified Public Accountants, substantially in the
form of the drafts to which the Representative has previously agreed and
otherwise in form and substance satisfactory to the Representative and its
counsel.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Trust, or the Bank which, in the judgment of the Representative, materially
impairs the investment quality of the Certificates or makes it impractical or
inadvisable to market the Certificates; (ii) any suspension or limitation on
trading in securities generally on the New York Stock Exchange or the National
Association of Securities Dealers National Market system, or any setting of
minimum prices for trading on such exchange or market system; (iii) any
suspension of trading of any securities of BANC ONE CORPORATION on any exchange
or in the over-the-counter market which materially impairs the investment
quality of the Certificates or makes it impractical or inadvisable to market the
Certificates; (iv) any banking moratorium declared by Federal, Delaware or New
York authorities; or (v) any outbreak or escalation of major hostilities or
armed conflict, any declaration of war by Congress, or any other substantial
national or international calamity or emergency if, in the judgment of the
Representative, the effect of any such outbreak, escalation, declaration,
calamity, or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Certificates.
(d) At the Closing Date, the Bank shall have furnished to the
Representative certificates of a vice president or more senior officer of the
Bank as to the accuracy of the representations and warranties of the Bank herein
at and as of the Closing Date, as to the performance by the Bank of all of its
obligations hereunder to be performed at or prior to such Closing Date, and as
to such other matters as the Representative may reasonably request.
(e) Xxxxxx Xxxxxxxx, Associate General Counsel of First USA Bank,
shall have furnished to the Representative her written opinion, addressed to the
Representative and dated the
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Closing Date, in form and substance satisfactory to the Representative and its
counsel, substantially to the effect that:
(i) The Bank has been duly incorporated and is validly
existing as a bank in good standing under the laws of the State of
Delaware with full power and authority (corporate and other) to own
its properties and conduct its business, as presently owned and
conducted by it, and to enter into and perform its obligations under
this Agreement, the Spread Account Agreement and the Pooling and
Servicing Agreement (collectively referred to in this subsection (e)
as the "Agreements"), and the Certificates and had at all times, and
now has, the power, authority and legal right to acquire, own and
transfer the Receivables;
(ii) The Bank is duly qualified to do business and is in
good standing, and under state laws, as they are currently interpreted
and enforced, has obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such
licenses or approvals would materially and adversely affect the
enforceability of any Receivable by the Bank or the Trustee or would
adversely affect the ability of the Bank to perform its obligations
under the Agreements or the Certificates;
(iii) The Certificates have been duly authorized, executed
and delivered by the Bank and, when duly authenticated by the Trustee
in accordance with the terms of the Pooling and Servicing Agreement
and delivered to and paid for by the Underwriters in accordance with
the terms of this Agreement, will be validly issued and outstanding
and entitled to the benefits provided by the Pooling and Servicing
Agreement;
(iv) Each of the Agreements has been duly authorized,
executed and delivered by the Bank and constitutes the legal, valid
and binding agreement of the Bank enforceable against the Bank in
accordance with its terms, subject, as to enforceability to
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(A) the effect of bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation and other similar laws relating to or
affecting the rights and remedies of creditors generally, and (B) the
application of principles of equity (regardless of whether considered
and applied in a proceeding in equity or at law) and the rights and
powers of the FDIC;
(v) The Trust is not now, and immediately following the
sale of the Certificates pursuant to the Underwriting Agreement will
not be, required to register under the 1940 Act;
(vi) No consent, approval, authorization or order of any
governmental agency or body is required for (A) the execution,
delivery and performance by the Bank of its obligations under the
Agreements or the Certificates, or (B) the issuance or sale of the
Certificates, except such as have been obtained under the Act and as
may be required under state securities or blue sky laws in connection
with the purchase and distribution of the Certificates by the
Underwriters and the filing of Uniform Commercial Code financing
statements with respect to the Receivables and the approval of the
Office of the State Bank Commissioner of the State of Delaware;
(vii) To the best knowledge of such counsel, neither the
execution and delivery of the Agreements or the Certificates by the
Bank nor the performance by the Bank of the transactions therein
contemplated nor the fulfillment of the terms thereof does or will
result in any violation of any statute or regulation or any order or
decree of any court or governmental authority binding upon the Bank or
its property, or conflict with, or result in a breach or violation of
any term or provision of, or result in a default under any of the
terms and provisions of, the Bank's charter or by-laws or any material
indenture, loan agreement or other
14
material agreement to which the Bank is a party or by which the Bank
is bound;
(viii) To the knowledge of such counsel after due
investigation, there are no legal or governmental proceedings pending
to which the Bank is a party or to which the Bank is subject which,
individually or in the aggregate (A) would have a material adverse
effect on the ability of the Bank to perform its obligations under the
Agreements or the Certificates, (B) assert the invalidity of the
Agreements or the Certificates, (C) seek to prevent the issuance, sale
or delivery of the Certificates or any of the transactions
contemplated by the Agreements or (D) seek to affect adversely the
federal income tax or ERISA attributes of the Certificates described
in the Prospectus;
(ix) The Registration Statement and the Prospectus
(except for the financial statements, financial schedules and other
financial and operating data included therein, as to which such
counsel expresses no view) comply as to form with the Act and the
Rules and Regulations;
(x) The Registration Statement has become effective
under the Act, and the Prospectus Supplement will be filed with the
Commission pursuant to Rule 424(b) thereunder; and
(xi) Such counsel has not independently verified and is
not passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the information contained in the
Registration Statement and Prospectus. Based upon discussion with the
Bank, its accountants and others, however, no facts have come to its
attention that cause it to believe that the Prospectus (except for the
financial statements, financial schedules and other financial and
statistical data included therein, as to which such counsel expresses
no view), contains any untrue statement of a material fact or omits to
state a material
15
fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(f) The Representative shall have received a letter from Xxxxxxx,
Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel for the Bank, to the
effect that the Representative may rely on those provisions of their
opinions to Xxxxx'x Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc.
("Standard & Poor's") with respect to certain matters relating to the
transfer of the Receivables to the Trust, with respect to the perfection of
the Trust's interest in the Receivables and with respect to other related
matters.
(g) The Representative shall have received an opinion of Xxxxxxx,
Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel to the Bank, addressed to
the Representative, dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, to the effect that the
Certificates will be treated as indebtedness for Federal income tax
purposes and for Delaware income tax purposes.
(h) The Representative shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, substantially to the effect that:
(i) Each of the Pooling and Servicing Agreement and the
Spread Account Agreement (collectively referred to in this subsection
(h) as the "Agreements") constitutes the valid and binding obligation
of the Bank, enforceable against the Bank in accordance with its
terms, except (x) to the extent that the enforceability thereof may be
limited by (a) bankruptcy, insolvency, receivership, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and the rights of creditors of Delaware
chartered banks as the same may be applied in the event of the
bankruptcy, insolvency, receivership, reorganization, moratorium or
other similar event in respect of the Bank, (b) general principles of
equity (regardless of whether enforceability
16
is considered in a proceeding at law or in equity) and (c) the
qualification that certain of the remedial provisions of the
Agreements may be unenforceable in whole or in part, but the inclusion
of such provisions does not affect the validity of the Agreements
taken as a whole, and the Agreements, together with applicable law,
contain adequate provisions for the practical realization of the
benefits of the security created thereby and (y) such counsel
expresses no opinion as to the enforceability of any rights to
contribution or indemnification which are violative of public policy
underlying any law, rule or regulation;
(ii) The Certificates, when executed and authenticated in
accordance with the terms of the Pooling and Servicing Agreement and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be duly and validly issued and outstanding and will be
entitled to the benefits of the Pooling and Servicing Agreement;
(iii) This Agreement has been duly authorized, executed and
delivered by the Bank;
(iv) Neither the execution, delivery or performance by the
Bank of the Agreements or this Agreement, nor the compliance by the
Bank with the terms and provisions thereof or hereof, will contravene
any provision of any applicable law;
(v) Based on such counsel's review of applicable laws, no
governmental approval, which has not been obtained or taken and is not
in full force and effect, is required to authorize or is required in
connection with the execution, delivery or performance of the
Agreements by the Bank;
(vi) The Certificates, the Agreements and this Agreement
conform in all material respects to the descriptions thereof contained
in the Prospectus;
17
(vii) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended, and
the Trust is not required to be registered under the 1940 Act;
(viii) The statements in the Prospectus under the heading
"Certain Legal Aspects of the Receivables", to the extent that they
constitute matters of law or legal conclusions with respect thereto,
have been reviewed by such counsel and are correct in all material
respects; and
(ix) Each of the Registration Statement, as of its effective
date, and the Prospectus, as of its date, appeared on its face to be
appropriately responsive in all material respects to the requirements
of the Act and the General Rules and Regulations under the Act, except
that in each case such counsel expresses no opinion as to the
financial data included therein or excluded therefrom or the exhibits
to the Registration Statement, and such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus.
Such opinion shall also state that such counsel has participated
in conferences with officers and representatives of the Bank, counsel for
the Bank, representatives of the independent accountants of the Bank and
the Underwriters at which the contents of the Prospectus and related
matters were discussed and, although such counsel need not pass upon, and
need not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Prospectus and shall have made
no independent check or verification thereof, except for those made under
the caption "Certain Legal Aspects of the Receivables" to the extent set
forth in paragraph (viii) above, on the basis of the foregoing, no facts
shall have come to such counsel's attention that shall have led such
counsel to believe that the Prospectus, as of its date, contained an untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under
18
which they were made, not misleading, except that such counsel need not
express an opinion or belief with respect to the financial statements,
schedules and other financial information included in such Prospectus or
excluded therefrom.
(i) XxXxxxx, Woods, Battle & Xxxxxx, L.L.P., counsel for The Bank
of New York, a New York banking corporation ("BONY"), in connection with
the Agency Agreement dated as of December 4, 1995 between BONY and the
Trustee (the "Agency Agreement"), and counsel for the Trustee, shall have
furnished to the Representative their written opinion, addressed to the
Representative and dated the Closing Date, in form and substance
satisfactory to the Representative and its counsel, substantially to the
effect that:
(i) BONY is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York
and has the corporate power and authority to execute, deliver and
perform its obligations under the Agency Agreement;
(ii) the Certificates have been duly authenticated by BONY
pursuant to the Agency Agreement and in accordance with the Pooling
and Servicing Agreement;
(iii) the Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to execute, deliver
and perform its obligations under the Pooling and Servicing Agreement
and the Spread Account Agreement;
(iv) the Supplement and the Spread Account Agreement have
been duly authorized, executed and delivered by the Trustee, and the
Pooling and Servicing Agreement and the Spread Account Agreement
constitute the legal, valid and binding agreements of the Trustee
enforceable against the Trustee in accordance with their respective
terms, except (x) as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
19
or affecting the rights of creditors generally (as such laws would
apply in the event of the insolvency, receivership, conservatorship or
reorganization of, or other similar occurrence with respect to, the
Trustee), (y) that the enforceability of the Pooling and Servicing
Agreement and the Spread Account Agreement may be subject to the
application of general principles of equity (regardless of whether
considered or applied in a proceeding in equity or at law), and (z)
that certain remedial provisions of the Pooling and Servicing
Agreement may be unenforceable in whole or in part, but the inclusion
of such provisions does not affect the validity of the Pooling and
Servicing Agreement taken as a whole, and the Pooling and Servicing
Agreement, together with applicable law, contains adequate provisions
for the practical realization of the benefits of the security provided
thereby. Such counsel expresses no opinion as to the enforceability of
any rights to contribution or indemnification that are violative of
public policy underlying any law, rule or regulation;
(v) the execution and delivery by the Trustee of the
Supplement and the Spread Account Agreement and the performance by the
Trustee of its obligations under the Pooling and Servicing Agreement
and the Spread Account Agreement do not conflict with or result in a
violation of (x) any law or regulation of the United States of America
or the State of Delaware governing the banking or trust activities of
the Trustee or (y) the amended and restated articles of association or
by-laws of the Trustee; and
(vi) the execution and delivery by the Trustee of the
Supplement and the Spread Account Agreement and the performance by the
Trustee of its obligations under the Pooling and Servicing Agreement
and the Spread Account Agreement do not require any approval,
authorization or other action by, or filing with, any governmental
authority of the United States of America or the State of Delaware
having jurisdiction over the banking or trust
20
activities of the Trustee, except such as have been obtained, taken or
made.
(j) The Representative shall have received evidence satisfactory
to the Representative and its counsel that, on or before the Closing Date,
UCC-1 financing statements have been filed in the appropriate filing
offices of the State of Delaware and such other jurisdictions as counsel to
the Bank deems appropriate to reflect the interest of the Trustee in the
Receivables.
(k) The Class A Certificates shall be rated "AAA" by Standard &
Poor's and "Aaa" by Xxxxx'x and the Class B Certificates shall be rated at
least "A" by Standard & Poor's and rated at least "A2" by Xxxxx'x on the
Closing Date, and letters to such effect dated the Closing Date shall have
been received from each Rating Agency.
(l) The Representative shall have received evidence satisfactory
to the Representative that, on or before the Closing Date, the Bank shall
have received the approval of the Office of the State Bank Commissioner of
the State of Delaware to the transaction.
(m) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident thereto shall be
satisfactory inform and substance to the Representative and its counsel,
and the Representative and its counsel shall have received such
information, certificates and documents as any of them may reasonably
request.
7. Indemnification and Contribution.
(a) The Bank agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act and under Section 20 of the Exchange
Act against any and all losses, claims, damages or liabilities to which
they may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or in any revision
or amendment thereof or supplement thereto or any related preliminary pro-
21
spectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and agrees to reimburse
each such indemnified party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Bank will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Bank by any Underwriter specifically for use
therein or any revision or amendment thereof or supplement thereto. The
foregoing indemnification with respect to any untrue statement or omission
in any preliminary prospectus or prospectus supplement shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Certificates, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Bank shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Certificates to such person and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability provided that the Bank
shall have identified to such Underwriter in writing such defect prior to
the delivery of such written confirmation by such Underwriter to such
person.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Bank, its directors, each of the Bank's
officers who signed the Registration Statement and each person, if any, who
controls the Bank within the meaning of Section 15 of the Act and under
Section 20 of the Exchange Act against any and all losses, claims, damages
or liabilities to which they may become subject insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or
in any revision or amendment thereof or supplement thereto or any related
preliminary prospectus
22
or prospectus supplement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Bank by such Underwriter specifically for use therein or any revision or
amendment thereof or supplement thereto, and agrees to reimburse such
indemnified party for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage or liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 7 of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may
have to any indemnified party other than under this Section 7. In the event
that any such action is brought against any indemnified party and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional
23
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnifying party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Bank on the one hand and the respective
Underwriter on the other from the offering of the Certificates or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Bank on the one hand and of the respective Underwriter on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Bank on the one hand
and the respective Underwriter on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Bank bear to the total underwriting
discounts and commissions received by such Underwriter. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Bank or by any Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d),
each Underwriter shall not be required to contribute any amount in excess
of the underwriting discount or commission applicable to the Certificates
purchased by it hereunder. The Bank and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this subsection
(d) were determined by pro
24
rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of any of the equitable considerations referred to above in this
subsection (d). No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
8. Survival. The Bank and the Underwriters agree that the
respective representations, warranties and agreements made by them herein
and in any certificate or other instrument delivered pursuant hereto shall
be deemed to be relied upon, in the case of the Bank, by each Underwriter
and, in the case of the Underwriters, by the Bank, notwithstanding any
investigation heretofore or hereafter made by or on behalf of the Bank or
the Underwriters, and that the respective representations, warranties and
agreements (including without limitation the indemnity and contribution
agreement) made by the Bank and the Underwriters herein or in any such
certificate or other instrument shall survive the delivery of and payment
for the Certificates.
9. Termination. This Agreement may be terminated in the sole
discretion of the Underwriters by notice to the Bank given at or prior to
the Closing Date in the event that the Bank shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on its
part to be performed or satisfied hereunder at or prior thereto.
Termination of this Agreement pursuant to this Section 9 shall be without
liability of any party to any other party except as provided in Sections 5
and 7 hereof.
10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail on the Closing Date to purchase the
Certificates which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the lead Underwriter shall have the
right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as
may be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-
hour period, then:
25
(a) if the aggregate amount of Defaulted Securities does not exceed 10% of
the aggregate principal amount of the applicable class of Certificates,
each of the non-defaulting Underwriters of such class of Certificates shall
be obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder with respect to such
class of Certificates bear to the underwriting obligations of all non-
defaulting Underwriters of such class of Certificates, or
(b) if the aggregate amount of Defaulted Securities exceeds 10% of the
aggregate principal amount of the applicable class of Certificates, this
Agreement shall terminate without liability on the part of any non-
defaulting Underwriter.
No action taken pursuant to this section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Bank shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
11. Representation of the Underwriters. Each of the Underwriters
represents and warrants to, and agrees with, the Bank that (w) it has only
issued or passed on and shall only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Certificates to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 or who is a person to
whom the document may otherwise lawfully be issued or passed on, (x) it has
complied and shall comply with all applicable provisions of the Financial
Services Act 1986 and other applicable laws and regulations with respect to
anything done by it in relation to the Certificates in, from or otherwise
involving the United Kingdom and (y) if that Underwriter is an authorized person
under the Financial Services Act 1986, it has only promoted and shall only
promote (as that term is defined in Regulation 1.02 of the Financial Services
(Promotion of Unregulated
26
Schemes) Regulations 1991) to any person in the United Kingdom the scheme
described in the Prospectus if that person is of a kind described either in
Section 76(2) of the Financial Services Act 1986 or in Regulation 1.04 of the
Financial Services (Promotion of Unregulated Schemes) Regulations 1991.
12. Notices. All communications provided for or permitted hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered, sent by overnight courier or mailed by registered mail, postage
prepaid and return receipt requested, or transmitted by telex, telegraph or
telecopier and confirmed by a similar mailed writing, if to (a) the
Underwriters, addressed to X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0060 Attention: ABS Trading/Syndicate, or to such other
address as the Representative may designate in writing to the Bank or (b) the
Bank, addressed to the Bank at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxx, Senior Vice President and General Counsel,
telephone: (000) 000-0000, telecopier: (000) 000-0000, with a copy to First USA
Financial, Inc., 0000 Xxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxx 00000, Attention:
Xxxx Xxxx Xxxxxx, Vice President-Corporate Finance, telephone: (000) 000-0000,
telecopier: (000) 000-0000.
13. Secondary Trusts. Each Underwriter, severally, represents that
it will not, at any time that such Underwriter is acting as an "underwriter" (as
defined in Section 2(11) of the Act) with respect to the Certificates, transfer,
deposit or otherwise convey any Certificates into a trust or other type of
special purpose vehicle that issues securities or other instruments backed in
whole or in part by, or that represents interests in, such Certificates without
the prior written consent of the Bank.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Nothing expressed herein is intended or shall be construed to give any person
other than the persons referred to in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement.
15. Severability of Provisions. Any covenant, provision, agreement
or term of this Agreement that is prohibited or is held to be void or unenforce-
27
able in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
16. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the matters
and transactions contemplated hereby and supersedes all prior agreements and
understandings whatsoever relating to such matters and transactions.
17. Amendment. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
18. Headings. The headings in this Agreement are for the purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
19. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which shall together
constitute one instrument.
20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PROVISIONS THEREOF.
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will be a binding agreement among the undersigned in accordance with its
terms.
Very truly yours,
FIRST USA BANK,
as Transferor and Servicer
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
The foregoing Underwriting Agreement
is hereby agreed to as of the date
first above written.
X.X. XXXXXX SECURITIES INC.,
for itself and as Representative
of the several Underwriters named
in Schedule A hereto
By: /s/ Xxxxxxx Xxxxx, III
--------------------------
Name: Xxxxxxx Xxxxx, III
Title: Vice President
SCHEDULE A
Aggregate Principal
Amount of the Class A
Underwriter Certificates
----------- ------------
X.X. Xxxxxx Securities Inc.... $162,500,000
Banc One Capital Corporation.. $162,500,000
Bear, Xxxxxxx & Co. Inc....... $162,500,000
Credit Suisse First Boston
Corporation.................. $162,500,000
------------
Total............... $650,000,000
============
Aggregate Principal
Amount of the Class B
Underwriter Certificates
----------- ------------
X.X. Xxxxxx Securities Inc.... $14,683,750
Banc One Capital Corporation.. $14,683,750
Bear, Xxxxxxx & Co. Inc....... $14,683,750
Credit Suisse First Boston
Corporation.................. $14,683,750
-----------
Total............... $58,735,000
===========
EXHIBIT A
SUBJECT TO REVISION
SERIES TERM SHEET DATED JULY 22, 1997
FIRST USA CREDIT CARD MASTER TRUST
$650,000,000 Class A Floating Rate Asset Backed Certificates, Series 1997-5
$58,735,000 Class B Floating Rate Asset Backed Certificates, Series 1997-5
FIRST USA BANK
Transferor and Servicer
THE OFFERED CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST ONLY AND WILL
NOT REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF FIRST USA BANK OR ANY AF-
FILIATE THEREOF. AN OFFERED CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE OF-
FERED CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMEN-
TAL AGENCY.
THIS SERIES TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION ABOUT THE
OFFERED CERTIFICATES; HOWEVER, THIS SERIES TERM SHEET DOES NOT CONTAIN COMPLETE
INFORMATION ABOUT THE OFFERED CERTIFICATES. THE INFORMATION PROVIDED HEREIN IS
PRELIMINARY AND WILL BE SUPERSEDED BY THE INFORMATION CONTAINED IN THE PROSPEC-
TUS SUPPLEMENT AND THE PROSPECTUS. ADDITIONAL INFORMATION WILL BE CONTAINED IN
THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. PURCHASERS ARE URGED TO READ BOTH
THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS SERIES TERM SHEET SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITA-
TION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REG-
ISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SALES
OF THE OFFERED CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RE-
CEIVED BOTH THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
X.X. XXXXXX & CO.
BANC ONE CAPITAL CORPORATION
BEAR, XXXXXXX & CO. INC.
CREDIT SUISSE FIRST BOSTON
SUMMARY OF TERMS
This Series Term Sheet will be superseded in its entirety by the information
appearing in the Prospectus Supplement, the Prospectus and the Series 1997-5
Supplement to the Pooling and Servicing Agreement (as amended, the "Pooling and
Servicing Agreement") between First USA Bank (the "Bank"), as transferor (in
such capacity, the "Transferor") and servicer (in such capacity, the
"Servicer"), and The Bank of New York (Delaware), as trustee (the "Trustee").
Type of Securities.......... Class A Floating Rate Asset Backed
Certificates, Series 1997-5 (the "Class A
Certificates") and Class B Floating Rate
Asset Backed Certificates, Series 1997-5
(the "Class B Certificates" and, together
with the Class A Certificates, the "Offered
Certificates").
Trust Assets................ The property of the First USA Credit Card
Master Trust (the "Trust") includes and will
include receivables (the "Receivables")
arising under certain VISA (R) and
MasterCard (R)* revolving credit card
accounts (the "Accounts") selected by the
Transferor from a portfolio of VISA and
MasterCard accounts owned by the Transferor,
all monies due or to become due in payment
of the Receivables, all proceeds of the
Receivables and all monies on deposit in
certain bank accounts of the Trust (other
than certain investment earnings on such
amounts), Recoveries and any enhancement
issued with respect to any series issued
from time to time by the Trust (each, a
"Series") which will consist of one or more
classes of certificates. The benefits of any
enhancement issued with respect to any other
Series will not be available for the benefit
of the holders of the Certificates and the
holders of the certificates of other Series
will not be entitled to the benefits of any
enhancement for this Series.
Trustee..................... The Bank of New York (Delaware).
Certificateholders' Each of the Offered Certificates represents
Interest.................... an undivided interest in the Trust. The
Trust's assets will be allocated among the
Class A Certificateholders (the "Class A
Certificateholders' Interest"), the Class B
Certificateholders (the "Class B
Certificateholders' Interest," and together
with the Class A Certificateholders'
Interest, the "Investor Interest"), the CIA
Certificateholders (the "CIA
Certificateholders' Interest"), the holders
of other Series previously issued or issued
at some future time pursuant to the Pooling
and Servicing Agreement and the applicable
series supplements to the Pooling and
Servicing Agreement (each, a "Supplement")
and the Transferor (the "Transferor
Interest"), as described below.
The aggregate principal amount of the Class A
Certificateholders' Interest and the Class B
Certificateholders' Interest will, except as
otherwise provided herein, remain fixed at
$650,000,000 (the "Class A Invested Amount")
and $58,735,000 (the "Class B Invested
Amount"), respectively. The principal amount
of the Transferor Interest will fluctuate as
the amount of Receivables in the Trust
changes from time to time.
--------
* VISA (R) and MasterCard (R) are registered trademarks of Visa USA
Incorporated and MasterCard International Incorporated, respectively.
2
The "CIA Invested Amount" in the initial
amount of $74,395,000 (which amount
represents 9.5% of the sum of the initial
Class A Invested Amount, the initial Class B
Invested Amount and the initial CIA Invested
Amount) constitutes enhancement for the
Offered Certificates. Allocations will be
made to the CIA Invested Amount and the
holders of the CIA Certificates will have
voting and certain other rights of a
subordinated class of certificates. The CIA
Certificates together with the Offered
Certificates are referred to herein as the
"Certificates."
The Class A Certificates will represent the
right to receive from the assets of the
Trust allocated to the Class A
Certificateholders' Interest funds up to
(but not in excess of) the amounts required
to make payments of interest on the Class A
Certificates at the Class A Certificate
Rate, and the payment of principal during
the amortization period to the extent of the
Class A Invested Amount (which may be less
than the aggregate unpaid principal amount
of the Class A Certificates, in certain
circumstances).
The Class B Certificates will represent the
right to receive from the assets of the
Trust allocated to the Class B
Certificateholders' Interest funds up to
(but not in excess of) the amounts required
to make payments of interest on the Class B
Certificates at the Class B Certificate
Rate, and the payment of principal during
the amortization period, following the final
principal payment of the Class A Invested
Amount to the holders of the Class A
Certificates, to the extent of the Class B
Invested Amount (which may be less than the
aggregate unpaid principal amount of the
Class B Certificates, in certain
circumstances, if there has been a reduction
of the Class B Invested Amount).
Receivables................. The aggregate amount of Receivables in the
Accounts (including the amount of
Receivables in the additional Accounts added
to the Trust on July 1, 1997 and in certain
additional Accounts designated to be added
to the Trust on August 7, 1997 (the "Closing
Date")), as of the close of business on June
30, 1997, was $22,896,608,903, comprised of
$22,243,943,201 of principal Receivables and
$652,665,702 of finance charge Receivables.
Interest.................... Class A Certificate Rate: One-month LIBOR
plus 0. %.
Class B Certificate Rate: One-month LIBOR
plus 0. %.
Interest Payment Dates...... Interest on the Certificates will be
distributed on the 17th day of each calendar
month or, if such day is not a business day,
on the next succeeding business day (each, a
"Distribution Date"), commencing September
17, 1997, in an amount equal to the product
of (a) the actual number of days in the
period from the preceding Distribution Date
(or in the case of the September 1997
Distribution Date, the Closing Date) through
the day preceding such Distribution Date
divided by 360, (b) the Class A Certificate
Rate or the Class B Certificate Rate, as
applicable, and (c) the outstanding
principal amount of the Class A Certificates
or the outstanding principal amount of the
Class B Certificates, as
3
applicable, as of the last day of the
preceding calendar month (or, in the case of
the September 1997 Distribution Date, as of
the Closing Date). "LIBOR" means the London
interbank offered quotations for one-month
United States dollar deposits prevailing on
the date that LIBOR is determined. The
Trustee will determine LIBOR on August 5,
1997 for the period from the Closing Date
through August 16, 1997, on August 14, 1997
for the period from August 17, 1997 through
September 16, 1997, and on the second
business day prior to each Distribution Date
thereafter for the period from and including
such Distribution Date through the day
preceding the next succeeding Distribution
Date.
Principal................... The principal of the Class A Certificates and
the Class B Certificates is scheduled to be
paid on the Class A Expected Final Payment
Date and the Class B Expected Final Payment
Date, respectively, but may be paid earlier
or later under certain circumstances.
Class A Expected Final
Payment Date...............
The August 2004 Distribution Date.
Class B Expected Final
Payment Date...............
The August 2004 Distribution Date.
Stated Series Termination The final distribution of principal and
Date........................ interest on the Certificates will be made no
later than the April 2007 Distribution Date
(the "Stated Series Termination Date").
After the Stated Series Termination Date,
the Trust will have no further obligation to
pay principal or interest on the
Certificates.
Subordination of the Class
B Certificates and the CIA
Certificates...............
The Class B Certificateholders' Interest will
be subordinated to the extent necessary to
fund certain payments with respect to the
Class A Certificates. In addition, the CIA
Certificateholders' Interest will be
subordinated to the extent necessary to fund
certain payments with respect to the Class A
Certificates and the Class B Certificates.
If the CIA Invested Amount is reduced to
zero, the Class B Certificateholders will
bear directly the credit and other risks
associated with their undivided interest in
the Trust. To the extent the Class B
Invested Amount is reduced, the percentage
of collections of finance charge Receivables
allocated to the Class B Certificateholders
in subsequent Monthly Periods will be
reduced. Moreover, to the extent the amount
of such reduction in the Class B Invested
Amount is not reimbursed, the amount of
principal distributable to the Class B
Certificateholders will be reduced.
ERISA Considerations........ If certain conditions are satisfied,
including that upon completion of the public
offering thereof interests in the Class A
Certificates are held by 100 or more persons
independent of the Transferor and each
other, the Class A Certificates should
qualify as "publicly- offered securities"
for purposes of the "plan assets regulation"
issued by the Department of Labor. In such
event, the purchase and holding of Class A
Certificates by an employee benefit plan
4
(or other entity deemed to hold assets of
such a plan) would not cause the assets of
the Trust to be deemed "plan assets" of any
such plan subject to the prohibited
transaction rules of the Employee Retirement
Income Security Act of 1974, as amended and
the Internal Revenue Code of 1986, as
amended. Further information regarding the
status of the Class A Certificates as
publicly offered securities will be provided
in the Prospectus Supplement. Accordingly,
plan investors contemplating the purchase of
Class A Certificates should consult their
counsel and review "ERISA Considerations" in
the Prospectus and "Summary of Terms--ERISA
Considerations" in the Prospectus Supplement
prior to making any purchase of Class A
Certificates.
The Underwriters currently do not expect the
Class B Certificates to qualify as publicly-
offered securities and, accordingly, the
Class B Certificates may not be purchased by
employee benefit plans (or entities deemed
to hold assets of such plans, including
without limitation any insurance company
general account deemed to hold plan assets
by reason of a plan's investment in the
general account).
Certificate Ratings......... It is a condition to the issuance of the
Class A Certificates that they be rated in
the highest rating category by at least one
nationally recognized statistical rating
organization (each such rating organization,
a "Rating Agency").
It is a condition to the issuance of the
Class B Certificates that they receive a
rating of at least "A" or its equivalent by
at least one Rating Agency.
Listing..................... Application will be made to list the Offered
Certificates on the Luxembourg Stock
Exchange.
5
RECENT DEVELOPMENTS
Pursuant to an Agreement and Plan of Merger dated as of January 19, 1997, and
amended as of April 23, 1997, between First USA, Inc. ("FUSA") and BANC ONE
CORPORATION ("BANC ONE"), FUSA was merged with and into BANC ONE on June 27,
1997 (the "Merger") at which time the separate corporate existence of FUSA
ceased. As a result of the Merger, the Bank is now an indirect wholly-owned
subsidiary of BANC ONE. See "The Bank and BANC ONE CORPORATION" in the
Prospectus.
BANC ONE intends to consolidate the management of its credit card operations
with those of FUSA. BANC ONE may also consolidate the operations of certain
other subsidiaries or divisions of BANC ONE and FUSA, which provide similar
services, although no final determination with respect to such matters has been
made. No decision has been made as to whether receivables in accounts
originated by Bank One, N.A. or Bank One, Arizona, N.A., or any affiliate
thereof (other than the Bank) will be added at any time to the Trust. Any such
addition would be subject to the restrictions on additions of Accounts in the
Pooling and Servicing Agreement. See "Description of the Certificates--Addition
of Accounts" in the Prospectus.
THE BANK'S CREDIT CARD PORTFOLIO
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for each
of the periods shown for the portfolio of VISA and MasterCard credit card
accounts serviced by the Bank (the "Bank Portfolio"). The Bank has changed its
charge-off policy to align it with that of BANC ONE. For the Trust, this change
in charge-off policy will be implemented over the course of a six month period
which began in July 1997 and will end in December 1997. The Bank will now
generally charge-off an account immediately prior to the end of the sixth
billing cycle after having become contractually past due. Its prior policy was
to charge off accounts immediately prior to the end of the seventh billing
cycle after having become contractually past due. Receivables Delinquent 95 or
more days and Net Losses in the Bank Portfolio tables below have been restated
to reflect this change in charge-off policy for each of the periods shown. As
of the close of business on June 30, 1997, the Receivables in the Trust
Portfolio (including the Receivables in the additional Accounts added to the
Trust on July 1, 1997 and certain additional Accounts designated to be added to
the Trust on the Closing Date) represented approximately 93.0% of the Bank
Portfolio. The accounts in the Bank Portfolio that are not included in the
Trust Portfolio are primarily newly originated accounts with lower delinquency
and loss rates than the average accounts in the Trust Portfolio which are
generally more seasoned. Therefore, the actual delinquency and loss experience
with respect to the Receivables in the Trust Portfolio may be different from
that set forth below. There can be no assurance that the delinquency and loss
experience for the Trust Portfolio will be similar to the historical experience
set forth below because, among other things, economic and financial conditions
affecting the ability of cardholders to make payments may be different from
those that have prevailed during the periods reflected in the tables below.
DELINQUENCY EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
AS OF DECEMBER 31, (1)
SIX MONTHS ENDED -----------------------------------------------------------------------
JUNE 30, 1997 1996 1995 1994
----------------------- ----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Receivables
Outstanding(2)......... $24,619,969 100.00% $22,119,202 100.00% $17,411,514 100.00% $10,989,357 100.00%
=========== ====== =========== ====== =========== ====== =========== ======
Receivables Delinquent:
35-64 days............. $ 321,263 1.30% $ 359,275 1.62% $ 219,240 1.26% $ 106,275 0.97%
65-94 days............. 242,393 0.98 250,468 1.13 130,088 0.75 53,691 0.49
95 or more days(3)..... 441,131 1.80 475,115 2.15 231,315 1.32 100,532 0.91
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total................. $ 1,004,787 4.08% $ 1,084,858 4.90% $ 580,643 3.33% $ 260,498 2.37%
=========== ====== =========== ====== =========== ====== =========== ======
--------
(1) The information set forth in the table above is stated on a basis
consistent with the Bank's current fiscal year. The Bank changed its fiscal
year end from June 30 to December 31 in connection with the Merger.
(2) The Receivables Outstanding on the accounts consist of all amounts due from
cardholders as posted to the accounts.
(3) The amount of Receivables Delinquent 95 or more days for each of the
periods shown is stated on a basis consistent with the Bank's current
policy of charging off an account immediately prior to the end of the sixth
billing cycle after having become contractually past due. Its prior policy,
which applied during the periods shown above, was to charge off accounts
immediately prior to the end of the seventh billing cycle after having
become contractually past due.
6
LOSS EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
SIX MONTHS YEAR ENDED DECEMBER 31,(1)
ENDED ------------------------------------
JUNE 30, 1997 1996 1995 1994
------------- ----------- ----------- ----------
Average Receivables Out-
standing(2)............... $23,003,652 $18,986,458 $13,497,080 $7,680,291
Gross Charge-Offs(3)....... 675,830 895,267 416,406 180,715
Gross Charge-Offs as a
percentage of Average
Receivables
Outstanding(4)............ 5.92% 4.72% 3.09% 2.35%
Recoveries(5).............. 57,916 61,787 23,597 14,688
Net Losses(5).............. 617,914 833,480 392,809 166,027
Net Losses as a percentage
of Average Receivables
Outstanding(4)............ 5.42% 4.39% 2.91% 2.16%
--------
(1) The information set forth in the table above is stated on a basis
consistent with the Bank's current fiscal year. The Bank changed its fiscal
year end from June 30 to December 31 in connection with the Merger.
(2) Average Receivables Outstanding is the average daily receivables during the
periods indicated.
(3) Gross Charge-Offs are principal charge-offs before recoveries and do not
include the amount of any reductions in average receivables outstanding due
to fraud, returned goods or customer disputes.
(4) Annualized.
(5) Recoveries are included in the Trust as of July 1, 1996. Net Losses for
each of the periods shown are stated on a basis consistent with the Bank's
current policy of charging off an account immediately prior to the end of
the sixth billing cycle after having become contractually past due. Its
prior policy, which applied during the periods shown above, was to charge
off accounts immediately prior to the end of the seventh billing cycle
after having become contractually past due.
SUMMARY OF MONTHLY PAYMENT RATES
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Bank Portfolio during any month in the periods shown and
the average cardholder monthly payment rates for all months during the periods
shown, in each case calculated as a percentage of total opening monthly account
balances during the periods shown. Payment rates shown in the table are based
on amounts which would be deemed payments of principal Receivables and finance
charge Receivables with respect to the Accounts.
CARDHOLDER MONTHLY PAYMENT RATES
BANK PORTFOLIO
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------
JUNE 30, 1997 1996 1995 1994
------------- ------- ------- -------
Lowest Month........................... 11.73% 10.16% 9.86% 10.46%
Highest Month.......................... 13.51 11.86 11.73 12.14
Monthly Average........................ 12.62 11.18 10.90 11.17
RECEIVABLE YIELD CONSIDERATIONS
The portfolio yield on the Bank Portfolio for each of the three years
contained in the period ended December 31, 1996 and for the six months ended
June 30, 1997 is set forth in the table on the following page. The portfolio
yields in the table are calculated on an accrual basis. The portfolio yield on
Receivables included in the Trust is calculated on a cash basis. Portfolio
yields calculated on an accrual basis may differ from portfolio yields
calculated on a cash basis due to (a) a lag between when finance charges and
fees are charged to cardholder accounts and when such finance charges and fees
are collected and (b) finance charges and fees that are not ultimately
collected from the cardholder. However, during the three years contained in the
period ended December 31, 1996 and for the six months ended June 30, 1997,
portfolio yield on an accrual basis approximated portfolio yield on a cash
basis. Portfolio yield on both an accrual and a cash basis will also be
affected by numerous factors, including changes in the monthly periodic rates,
variations in the rate of payments and new
7
borrowings on the Accounts, the amount of the annual membership fees and other
charges, changes in the delinquency and loss rates on the Receivables and the
percentage of cardholders who pay their balances in full each month and do not
incur periodic finance charges, which may in turn be caused by a variety of
factors, including seasonal variations, the availability of other sources of
credit and general economic conditions. Interchange allocated to the Trust with
respect to the Receivables may vary from the amounts included in the table
below because interchange will be included in the Trust on an estimated basis
by initially treating 1.3% of collections on the Receivables, other than
collections with respect to periodic finance charges, annual membership fees
and other charges, as discount Receivables.
PORTFOLIO YIELD
BANK PORTFOLIO
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, ----------------------
1997 1996 1995 1994
---------- ------ ------ ------
Average account monthly accrued fees and
charges (1)(2)............................. $39.39 $36.82 $32.35 $27.17
Average account balance(3).................. 2,979 2,799 2,580 2,219
Portfolio yield from fees and charges
(1)(4)..................................... 15.87% 15.79% 15.04% 14.69%
--------
(1) Fees and charges are comprised of periodic finance charges, interchange,
annual membership fees and other charges.
(2) Average account monthly accrued fees and charges are presented net of
adjustments made pursuant to the Bank's normal servicing procedures,
including removal of incorrect or disputed periodic finance charges, and
include interchange.
(3) Average account balance includes purchases, cash advances and accrued and
unpaid periodic finance charges, annual membership fees and other charges
and is calculated based on the average of the month end balances for
accounts with balances.
(4) Annualized.
The increase in portfolio yield for the years ended December 31, 1995 and
December 31, 1996 and for the six months ended June 30, 1997 reflects changes
in the overall pricing distribution of the Bank Portfolio. The accounts in the
Bank Portfolio that are not included in the Trust Portfolio are primarily newly
originated accounts with a greater proportion of Receivables arising under
accounts generated under this type of solicitation than the average accounts in
the Trust Portfolio, which are more seasoned. Therefore, the actual portfolio
yield with respect to the Receivables in the Trust Portfolio may be different
from that set forth above.
THE RECEIVABLES
The Receivables in the Accounts selected from the Bank Portfolio included and
to be included in the Trust on the basis of criteria set forth in the Pooling
and Servicing Agreement (the "Trust Portfolio") (including the additional
Accounts added to the Trust on July 1, 1997 and certain additional Accounts
designated to be added to the Trust on the Closing Date), as of the close of
business on June 30, 1997, consisted of $22,243,943,201 of principal
Receivables and $652,665,702 of finance charge Receivables. On June 24, 1997
(the "Relevant Cut Off Date"), the Transferor designated additional Accounts,
which included approximately $962,279,212 of principal Receivables as of the
close of business on June 30, 1997, and will transfer the Receivables arising
therein to the Trust on the Closing Date. In addition, on the Closing Date, the
Transferor will deposit $1,840,000 into the finance charge account, which will
be applied as collections of finance charge Receivables received during the
initial monthly period and allocated to Series 1997-5. The additional Accounts
to be added to the Trust on the Closing Date were, as of the Relevant Cut Off
Date, Eligible Accounts. The Accounts, including such additional Accounts, had
an average principal Receivable balance of $2,086 (including accounts with a
zero balance) and an average credit limit of $8,688. The percentage of the
aggregate total Receivable balance to the aggregate total credit limit was
24.7%.
As of June 30, 1997, cardholders whose Accounts are included in the Trust
Portfolio, including such additional Accounts, had billing addresses in 50
states, the District of Columbia and other United States
8
territories and possessions. As of June 30, 1997, 72% of the Accounts,
including such additional Accounts, were premium accounts and 28% were standard
accounts, and the aggregate principal Receivable balances of premium accounts
and standard accounts, as a percentage of the aggregate total principal
Receivables, were 81% and 19%, respectively.
The following tables summarize the Trust Portfolio (including the additional
Accounts added to the Trust on July 1, 1997 and certain additional Accounts
designated to be added to the Trust on the Closing Date) by various criteria as
of the close of business on June 30, 1997. Because the future composition of
the Trust Portfolio may change over time, these tables are not necessarily
indicative of the composition of the Trust Portfolio at any subsequent time.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE OF
ACCOUNT NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
------------- ---------- ---------- --------------- ---------------
Credit Balance.......... 152,895 1.4% $ (33,295,408) (0.1)%
No Balance.............. 3,180,891 29.8 -- --
$0.01 to $2,000.00...... 3,600,491 33.8 2,445,553,251 10.7
$2,000.01 to $5,000.00.. 2,057,703 19.3 7,290,081,829 31.8
$5,000.01 to $10,000.00. 1,404,211 13.2 9,717,560,130 42.4
$10,000.01 or More...... 268,937 2.5 3,476,709,101 15.2
---------- ----- --------------- -----
TOTAL............... 10,665,128 100.0% $22,896,608,903 100.0%
========== ===== =============== =====
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE OF
CREDIT NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
LIMIT RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----------- ---------- ---------- --------------- ---------------
$0.00 to $2,000.00....... 637,586 6.0% $ 460,714,236 2.0%
$2,000.01 to $5,000.00... 2,440,036 22.9 4,414,092,426 19.3
$5,000.01 to $10,000.00.. 4,226,742 39.6 9,548,680,588 41.7
$10,000.01 or More....... 3,360,764 31.5 8,473,121,653 37.0
---------- ----- --------------- -----
TOTAL................ 10,665,128 100.0% $22,896,608,903 100.0%
========== ===== =============== =====
9
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE
PERIOD OF DELINQUENCY OF TOTAL PERCENTAGE OF
(DAYS CONTRACTUALLY NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
--------------------- ---------- ---------- --------------- ---------------
Not Delinquent........... 10,123,109 94.9% $20,549,543,419 89.7%
Up to 34 Days............ 320,902 3.0 1,275,226,985 5.6
35 to 64 Days............ 70,229 0.7 310,975,702 1.4
65 to 94 Days............ 42,495 0.4 204,382,701 0.9
95 or More Days (1)...... 108,393 1.0 556,480,096 2.4
---------- ----- --------------- -----
TOTAL................ 10,665,128 100.0% $22,896,608,903 100.0%
========== ===== =============== =====
--------
(1) A change in the Bank's charge-off policy, which is being implemented over a
six month period beginning in July 1997, will result in a decrease in the
number of accounts and amount of receivables delinquent 95 or more days but
will also result in an increase in Default Amounts during such period.
COMPOSITION OF ACCOUNTS BY AGE
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
AGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
--- ---------- ---------- --------------- ---------------
Less than or equal to 6
Months.................. 1,141,402 10.7% $ 3,172,994,647 13.9%
Over 6 Months to 12
Months.................. 1,489,555 14.0 3,456,435,615 15.1
Over 12 Months to 24
Months.................. 2,637,089 24.7 6,006,114,561 26.2
Over 24 Months to 36
Months.................. 2,304,720 21.6 4,922,123,181 21.5
Over 36 Months to 48
Months.................. 1,359,997 12.8 2,429,141,688 10.6
Over 48 Months to 60
Months.................. 678,617 6.4 1,052,865,172 4.6
Over 60 Months........... 1,053,748 9.8 1,856,934,039 8.1
---------- ----- --------------- -----
TOTAL................ 10,665,128 100.0% $22,896,608,903 100.0%
========== ===== =============== =====
COMPOSITION BY GEOGRAPHIC DISTRIBUTION
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----- --------- ---------- ------------- ---------------
Alabama...................... 104,945 1.0% $ 243,140,294 1.1%
Alaska....................... 26,230 0.2 73,539,462 0.3
Arizona...................... 183,963 1.7 408,602,476 1.8
Arkansas..................... 87,932 0.8 175,345,716 0.8
California................... 1,323,309 12.4 3,252,830,926 14.2
Colorado..................... 176,042 1.7 386,626,411 1.7
Connecticut.................. 161,873 1.5 344,179,230 1.5
Delaware..................... 26,045 0.2 56,080,400 0.2
District of Columbia......... 21,629 0.2 52,117,780 0.2
Florida...................... 703,285 6.6 1,532,462,776 6.7
Georgia...................... 238,239 2.2 566,882,030 2.5
Hawaii....................... 48,987 0.5 122,241,237 0.5
Idaho........................ 45,516 0.4 99,510,678 0.4
Illinois..................... 511,577 4.8 996,418,995 4.4
Indiana...................... 114,022 1.1 240,695,871 1.1
10
PERCENTAGE
OF TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----- ---------- ---------- --------------- ---------------
Iowa..................... 11,086 0.1% $ 21,012,739 0.1%
Kansas................... 100,273 0.9 209,719,573 0.9
Kentucky................. 107,417 1.0 206,585,127 0.9
Louisiana................ 236,059 2.2 440,565,877 1.9
Maine.................... 41,044 0.4 84,000,674 0.4
Maryland................. 259,830 2.4 591,924,796 2.6
Massachusetts............ 348,780 3.3 665,434,487 2.9
Michigan................. 359,899 3.4 765,803,388 3.3
Minnesota................ 108,405 1.0 209,174,775 0.9
Mississippi.............. 67,642 0.6 144,710,704 0.6
Missouri................. 183,656 1.7 373,497,924 1.6
Montana.................. 39,453 0.4 81,535,691 0.4
Nebraska................. 67,853 0.6 115,701,214 0.5
Nevada................... 86,382 0.8 210,060,118 0.9
New Hampshire............ 54,509 0.5 107,465,660 0.5
New Jersey............... 441,133 4.1 861,990,410 3.8
New Mexico............... 71,068 0.7 146,004,803 0.6
New York................. 801,847 7.5 1,723,693,015 7.5
North Carolina........... 199,821 1.9 446,907,481 2.0
North Dakota............. 21,727 0.2 37,790,237 0.2
Ohio..................... 405,834 3.8 818,941,162 3.6
Oklahoma................. 184,506 1.7 360,808,007 1.6
Oregon................... 149,253 1.4 329,523,909 1.4
Pennsylvania............. 455,487 4.3 797,016,401 3.5
Rhode Island............. 46,659 0.4 90,236,697 0.4
South Carolina........... 100,498 0.9 211,929,818 0.9
South Dakota............. 23,756 0.2 46,552,794 0.2
Tennessee................ 91,737 0.9 204,633,583 0.9
Texas.................... 1,070,624 10.0 2,338,210,234 10.2
Utah..................... 70,103 0.7 138,301,435 0.6
Vermont.................. 23,379 0.2 44,209,632 0.2
Virginia................. 280,893 2.6 649,267,211 2.8
Washington............... 251,067 2.4 614,356,449 2.7
West Virginia............ 54,092 0.5 112,683,067 0.5
Wisconsin................ 23,977 0.2 43,531,163 0.2
Wyoming.................. 20,139 0.2 40,663,727 0.2
Other U.S. territories
and possessions......... 31,646 0.6 61,490,639 0.2
---------- ----- --------------- -----
TOTAL................ 10,665,128 100.0% $22,896,608,903 100.0%
========== ===== =============== =====
Since the largest number of cardholders (based on billing addresses) whose
accounts were included in the Trust as of June 30, 1997 were in California,
Texas, New York, Florida and Illinois, adverse changes in the economic
conditions in these areas could have a direct impact on the timing and amount
of payments on the Certificates.
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