1
EXHIBIT 4.2
-------------------------------------------------------------------------------
FIRST NORTH AMERICAN NATIONAL BANK,
as Transferor and Servicer
and
FIRST UNION NATIONAL BANK,
as Trustee
on behalf of the Certificateholders
-------------------------------
SERIES 1997-2 SUPPLEMENT
Dated as of November __, 1997
to
MASTER POOLING AND SERVICING AGREEMENT
Dated as of October 30, 1997
------------------------------
$900,000,000
------------
FNANB CREDIT CARD MASTER TRUST
SERIES 1997-2
-------------------------------------------------------------------------------
2
TABLE OF CONTENTS
SECTION 1. Designation . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Minimum Transferor Interest Percentage
and Minimum Aggregate Principal
Receivables . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4. Reassignment and Transfer Terms . . . . . . . . . . . 26
SECTION 5. Delivery and Payment for the
Certificates . . . . . . . . . . . . . . . . . . . . 26
SECTION 6. Form of Delivery of the Series
1997-2 Certificates . . . . . . . . . . . . . . . . . 26
SECTION 7. Servicing Compensation . . . . . . . . . . . . . . . 26
SECTION 8. Article IV of the Agreement . . . . . . . . . . . . . 27
ARTICLE IV
RIGHTS OF SERIES 1997-2 CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.2 Collections and Allocations . . . . . . . . . . . . . 28
Section 4.3 Determination of Monthly
Interest. . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.3A Determination of Certificate LIBOR . . . . . . . . . 32
Section 4.4 Determination of Monthly
Principal . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.5 Required Amount . . . . . . . . . . . . . . . . . . . 34
Section 4.6 Application of Class A Available
Funds, Class B Available Funds,
Collateral Available Funds, Class D
Available Funds and Collections of
Principal Receivables . . . . . . . . . . . . . . . . 37
Section 4.7 Defaulted Amounts; Adjustment Amounts;
Investor Charge Offs; Reductions
of Adjustment Amounts . . . . . . . . . . . . . . . . 40
Section 4.8 Excess Spread; Shared Excess Finance
Charge Collections . . . . . . . . . . . . . . . . . 44
Section 4.9 Reallocated Principal Collections . . . . . . . . . . 47
Section 4.10 Principal Shortfall . . . . . . . . . . . . . . . . . 48
Section 4.11 Finance Charge Shortfall . . . . . . . . . . . . . . 48
Section 4.12 Cash Collateral Account . . . . . . . . . . . . . . . 49
Section 4.13 Principal Funding Account . . . . . . . . . . . . . . 50
Section 4.14 Reserve Account . . . . . . . . . . . . . . . . . . . 52
Section 4.15 Postponement of Accumulation Period . . . . . . . . . 54
Section 4.16 Additional Issuances of Class D
Certificates . . . . . . . . . . . . . . . . . . . . 54
i
3
SECTION 9. Article V of the Agreement . . . . . . . . . . . . . . 55
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.1 Distributions . . . . . . . . . . . . . . . . . . . . . 55
Section 5.2 Statements to Series 1997-2
Certificateholders . . . . . . . . . . . . . . . . . . 57
Section 5.3 Distributions to Collateral Indebtedness
Holder . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10. Early Amortization Events . . . . . . . . . . . . . . . 57
SECTION 11. Restrictions on Transfer . . . . . . . . . . . . . . . 60
SECTION 12. Tax Characterization of the Collateral
Indebtedness Interest and the Class D
Certificates . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13. Ratification of Master Pooling
and Servicing Agreement . . . . . . . . . . . . . . . . 64
SECTION 14. Counterparts . . . . . . . . . . . . . . . . . . . . . 64
SECTION 15. Governing Law . . . . . . . . . . . . . . . . . . . . . 64
SECTION 16. Subordination of Certain
Termination Payments . . . . . . . . . . . . . . . . . 64
SECTION 17. Third-Party Beneficiaries . . . . . . . . . . . . . . . 65
SECTION 18. FASIT Election . . . . . . . . . . . . . . . . . . . . 65
SECTION 19. Paired Series . . . . . . . . . . . . . . . . . . . . . 65
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Class D Certificate
Exhibit D Form of Monthly Servicer's Certificate
Exhibit E Form of Monthly Certificateholder's Statement
Exhibit F Form of Transfer Certification
ii
4
SERIES 1997-2 SUPPLEMENT, dated as of November __, 1997 (this
"Series Supplement"), by and among FIRST NORTH AMERICAN NATIONAL BANK, a
national banking association, as transferor and servicer (together with its
successors and permitted assigns in such capacities, the "Transferor" and the
"Servicer"), and FIRST UNION NATIONAL BANK, a national banking association, as
trustee (together with its successors in trust thereunder as provided in the
Agreement referred to below, the "Trustee") under the Master Pooling and
Servicing Agreement, dated as of October 30, 1997 (the "Agreement").
PRELIMINARY STATEMENTS
Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may at any time and from time to time enter
into one or more Supplements to the Agreement for the purpose of authorizing the
issuance by the Trustee on behalf of the Trust to the Transferor, for execution
and redelivery to the Trustee for authentication, of one or more Series of
Certificates. The Transferor and the Servicer each hereby enter into this Series
Supplement with the Trustee as required by Section 6.9(c) of the Agreement to
provide for the issuance, authentication and delivery of the Investor
Certificates of Series 1997-2.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof. The Series 1997-2 Certificates shall not be
subordinated to any other Series. The Series 1997-2 Certificates shall be in
Group One and shall be a Principal Sharing Series.
In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern.
SECTION 1. Designation. The Certificates issued hereunder
shall be designated generally as the Series 1997-2 Certificates. The Investor
Certificates of Series 1997-2 (collectively, the "Series 1997-2 Certificates")
shall be issued initially in three certificated Classes, which shall be
designated generally as the Class A Floating Rate Asset Backed Certificates,
Series 1997-2, the Class B Floating Rate Asset Backed Certificates, Series
1997-2 and the Class D Floating Rate Asset Backed Certificates, Series 1997-2.
In addition, there is hereby created a fourth Class of uncertificated interests
in the Trust which, except as expressly provided herein, shall be deemed to be
Investor Certificates for all purposes under the Agreement and this Series
Supplement and which shall be designated generally as the Collateral
Indebtedness Interest, Series 1997-2.
5
Notwithstanding the foregoing, except as expressly provided herein, the
provisions of Article VI and Article XII of the Agreement relating to the
registration, authentication, delivery, presentation, cancellation and surrender
of registered Certificates shall not be applicable to the Collateral
Indebtedness Interest.
SECTION 2. Definitions. All capitalized terms not otherwise
defined herein are defined in the Agreement. All Article, Section or subsection
references herein shall mean Articles, Sections or subsections of the Agreement,
except as otherwise provided herein. Unless otherwise stated herein, as the
context otherwise requires or if such term is otherwise defined in the
Agreement, each capitalized term used or defined herein shall relate only to the
Series 1997-2 Certificates and to no other Series of Certificates issued by the
Trust.
The following words and phrases shall have the following
meanings with respect to the Series 1997-2 Certificates and the definitions of
such terms are applicable to the singular as well as the plural form of such
terms and to the masculine as well as the feminine and neuter genders of such
terms:
"Accumulation Period" shall mean the Class A Accumulation
Period and the Class B Accumulation Period.
"Accumulation Period Factor" shall mean, for any Collection
Period, a fraction, the numerator of which is equal to the sum of the initial
invested amounts of all outstanding Series, and the denominator of which is
equal to the sum of (a) the Initial Invested Amount (plus the aggregate initial
principal amount of any Additional Class D Certificates), (b) the initial
invested amounts of all outstanding Series (other than Series 1997-2) which are
not expected to be in their revolving periods during such Collection Period and
(c) the initial invested amounts of all other outstanding Series which are not
allocating Shared Principal Collections to other Series and are expected to be
in their revolving periods during such Collection Period.
"Accumulation Period Length" shall have the meaning specified
in Section 4.15.
"Additional Class D Certificates" shall have the meaning
specified in Section 4.16.
"Adjusted Invested Amount" shall mean, as of any date, the
Invested Amount as of such date plus the Principal Funding Account Balance as of
such date.
2
6
"Amortization Period" shall mean, with respect to the Series
1997-2 Certificates, the period commencing on the earlier of (a) the first day
of the Accumulation Period and (b) the first day of the Early Amortization
Period and ending on the earlier of (i) the payment in full to the Class A
Certificateholders of the Class A Adjusted Invested Amount, to the Class B
Certificateholders of the Class B Adjusted Invested Amount, to the Collateral
Indebtedness Holder of the Collateral Indebtedness Amount and to the Class D
Certificateholders of the Class D Invested Amount and (ii) the Stated Series
Termination Date.
"Available Cash Collateral Amount" shall mean, with respect to
any Distribution Date, the amount on deposit in and available to be withdrawn
from the Cash Collateral Account on such date (before giving effect to any
deposit to, or withdrawal from, the Cash Collateral Account to be made with
respect to such date).
"Available Enhancement Amount" shall mean an amount equal to
the sum of the Available Cash Collateral Amount, the Collateral Indebtedness
Amount and the Class D Invested Amount.
"Available Principal Collections" shall mean, with respect to
any Distribution Date, an amount equal to (a) the applicable Invested Percentage
of Collections of Principal Receivables for the preceding Collection Period,
plus (b) amounts designated as Available Principal Collections pursuant to
Section 4.6 and Section 4.8, plus (c) Shared Principal Collections allocated to
Series 1997-2, plus (d) during the Early Amortization Period, any amounts
allocated to Series 1997-2 as described in Section 4.10, minus (e) Reallocated
Principal Collections applied pursuant to Section 4.9 for the preceding
Collection Period.
"Available Reserve Account Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount on deposit in and available
to be withdrawn from the Reserve Account on such date (before giving effect to
any deposit to, or withdrawal from, the Reserve Account on such date) and (b)
the Required Reserve Account Amount for such Distribution Date.
"Base Rate" shall mean, with respect to any Collection Period,
the sum of (a) the annualized percentage equivalent of a fraction, the numerator
of which is equal to the Monthly Interest distributable on the Distribution Date
immediately following the last day of such Collection Period and the denominator
of which is the Adjusted Invested Amount as of the last day of the preceding
Collection Period and (b) the product of (i) 2.00% per annum and (ii) a
fraction, the numerator of which is equal to the Invested Amount and the
denominator of which is equal to the
3
7
Adjusted Invested Amount, in each case determined as of the last day of such
preceding Collection Period.
"Business Day" shall have the meaning specified in the
Agreement.
"Cash Collateral Account" shall have the meaning specified in
Section 4.12(a).
"Cash Enhancement Surplus" shall mean, as of any date of
determination, the lesser of (a) the Enhancement Surplus and (b) the excess of
the amount on deposit in the Cash Collateral Account (after giving effect to all
deposits to and withdrawals from the Cash Collateral Account with respect to
such date) over the Required Cash Collateral Amount.
"Certificate LIBOR" shall mean, for any Interest Period, the
London interbank offered rate for one-month dollar deposits determined by the
Trustee for each Interest Period in accordance with the provisions of Section
4.3A.
"Certificate LIBOR Determination Date" shall mean, with
respect to any Interest Period, the second Business Day prior to the
Distribution Date on which such Interest Period commences; provided, however,
that Certificate LIBOR Determination Date shall mean November __, 1997 with
respect to the initial Interest Period. For purposes of this definition, a
Business Day is any Business Day on which dealings in deposits in United States
dollars are transacted in the London interbank market.
"Circuit City" shall mean Circuit City Stores, Inc., a
Virginia corporation.
"Class A Accumulation Period" shall mean, unless an Early
Amortization Event with respect to Series 1997-2 shall have occurred prior
thereto, the period commencing at the close of business on the last day of the
October 2001 Collection Period, or such later date as shall be determined in
accordance with Section 4.15, and ending on the first to occur of (a) the
commencement of the Early Amortization Period, (b) the payment in full to Class
A Certificateholders of the Class A Adjusted Invested Amount or (c) the Stated
Series Termination Date.
"Class A Additional Interest" shall have the meaning specified
in Section 4.3(a).
"Class A Adjusted Invested Amount" shall mean, on any date of
determination, the Class A Invested Amount on such date plus the amount then on
deposit in the Principal Funding Account with respect to the Class A
Certificates on such date.
4
8
"Class A Adjustment Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 as of the end of the preceding Collection Period and
(ii) the percentage equivalent of a fraction, the numerator of which is the
Class A Invested Amount and the denominator of which is the Invested Amount,
each as of the last day of the Collection Period preceding such preceding
Collection Period.
"Class A Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Class A Investor Default Amount and the Class
A Adjustment Amount, in each case with respect to such Distribution Date.
"Class A Available Funds" shall mean, with respect to any
Collection Period, the sum of (i) the Class A Floating Allocation Percentage
(with respect to any Collection Period during the Revolving Period or the
Accumulation Period) or the Class A Fixed Allocation Percentage (with respect to
any Collection Period during the Early Amortization Period) of Collections of
Finance Charge Receivables and any other amounts, including interest and other
investment earnings, if any (net of losses and investment expenses), on funds on
deposit in the Excess Funding Account, that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement, plus (ii) if the
Distribution Date immediately following the last day of such Collection Period
occurs before the Class B Principal Commencement Date, the Principal Funding
Investment Proceeds, if any, to be withdrawn from the Principal Funding Account
on such Distribution Date, plus (iii) the amount, if any, to be withdrawn from
the Reserve Account on such Distribution Date and included in Class A Available
Funds pursuant to Section 4.14(d) plus (iv) the investment earnings, if any (net
of losses and investment expenses), on funds on deposit in the Reserve Account
to be withdrawn from the Reserve Account on such Distribution Date and included
in Class A Available Funds pursuant to Section 4.14(b).
"Class A Certificate Rate" shall mean, with respect to the
Class A Certificates and each Interest Period, a per annum rate of [___]% in
excess of Certificate LIBOR, as determined on the related Certificate LIBOR
Determination Date.
"Class A Certificateholder" shall mean the Person in whose
name a Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
5
9
"Class A Expected Final Distribution Date" shall mean the
November 2002 Distribution Date.
"Class A Fixed Allocation Percentage" shall mean, with respect
to any Collection Period, the percentage equivalent of a fraction, the numerator
of which is equal to the Class A Invested Amount as of the last day of the
Revolving Period and the denominator of which is equal to the greater of (i) the
sum of (a) the Aggregate Principal Receivables in the Trust as of the last day
of the immediately preceding Collection Period (or the Closing Date, in the case
of the first Collection Period applicable to Series 1997-2) plus (b) the Excess
Funding Amount at the end of such day and (ii) the sum of the numerators used to
calculate the corresponding Invested Percentages with respect to all Classes of
all Series outstanding as of the date on which such determination is being made;
provided, however, that, with respect to any Collection Period during which
Supplemental Accounts are included as Accounts pursuant to Section 2.6(a) or
Section 2.6(b), the denominator in clause (i) above shall be increased by the
amount of Principal Receivables in such Supplemental Accounts as of the
Supplemental Cut Off Date on and after the Supplemental Closing Date applicable
to such Supplemental Accounts.
"Class A Floating Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is equal to the Class A Invested Amount as of the last day of
the immediately preceding Collection Period (or the Class A Initial Invested
Amount, in the case of the first Collection Period applicable to Series 1997-2)
and the denominator of which is equal to the greater of (i) the sum of (a) the
Aggregate Principal Receivables in the Trust as of the last day of the
immediately preceding Collection Period (or the Closing Date, in the case of the
first Collection Period applicable to Series 1997-2) plus (b) the Excess Funding
Amount at the end of such day and (ii) the sum of the numerators used to
calculate the corresponding Invested Percentages with respect to all Classes of
all Series outstanding as of the date on which such determination is being made;
provided, however, that, with respect to any Collection Period during which
Supplemental Accounts are included as Accounts pursuant to Section 2.6(a) or
Section 2.6(b), the denominator in clause (i) above shall be increased by the
amount of Principal Receivables in such Supplemental Accounts as of the
Supplemental Cut Off Date on and after the Supplemental Closing Date applicable
to such Supplemental Accounts.
"Class A Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class A Certificates, which is $603,000,000.
6
10
"Class A Interest Shortfall" shall have the meaning specified
in Section 4.3(a).
"Class A Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Invested Amount, minus
(b) the Principal Funding Account Balance on such date, minus (c) the aggregate
amount of principal payments made to the Class A Certificateholders prior to
such date, minus (d) the excess, if any, of the aggregate amount of Class A
Investor Charge Offs for all prior Distribution Dates over the sum of the
aggregate amount of Class A Investor Charge Offs reimbursed pursuant to Section
4.8(b) and, without duplication, the aggregate amount of the reductions of the
Series Adjustment Amounts allocable to the Class A Invested Amount pursuant to
Section 4.7(f) prior to such date; provided, however, that the Class A Invested
Amount may not be reduced below zero.
"Class A Investor Charge Offs" shall have the meaning
specified in Section 4.7(a).
"Class A Investor Default Amount" shall mean, with respect to
any Distribution Date, an amount equal to the product of (i) the Default Amount
for the preceding Collection Period and (ii) the Class A Floating Allocation
Percentage with respect to such Collection Period.
"Class A Monthly Interest" shall have the meaning specified in
Section 4.3(a).
"Class A Monthly Principal" shall have the meaning specified
in Section 4.4(a).
"Class A Penalty Rate" shall mean the sum of the Class A
Certificate Rate and 2.00% per annum.
"Class A Required Amount" shall have the meaning specified in
Section 4.5(a).
"Class A Servicing Fee" shall have the meaning specified in
Section 7 of this Supplement.
"Class B Accumulation Period" shall mean, unless an Early
Amortization Event with respect to Series 1997-2 shall have occurred prior
thereto, the period commencing on the Distribution Date on which the Class A
Adjusted Invested Amount is paid in full or, if the Class A Adjusted Invested
Amount is paid in full on the Class A Expected Final Distribution Date, at the
close of business on the Class A Expected Final Distribution Date, and ending on
the first to occur of (a) the commencement of the Early Amortization Period, (b)
the payment in full to the Class B
7
11
Certificateholders of the Class B Adjusted Invested Amount or (c) the Stated
Series Termination Date.
"Class B Additional Interest" shall have the meaning specified
in Section 4.3(b).
"Class B Adjusted Invested Amount" shall mean, on any date of
determination, an amount equal to the Class B Invested Amount on such date plus,
after the Class A Invested Amount has been paid in full, the Principal Funding
Account Balance on such date.
"Class B Adjustment Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 as of the end of the preceding Collection Period and
(ii) the percentage equivalent of a fraction, the numerator of which is the
Class B Invested Amount and the denominator of which is the Invested Amount,
each as of the last day of the Collection Period preceding such preceding
Collection Period.
"Class B Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Class B Investor Default Amount and the Class
B Adjustment Amount, in each case with respect to such Distribution Date.
"Class B Available Funds" shall mean, with respect to any
Collection Period, the sum of (i) the Class B Floating Allocation Percentage
(with respect to any Collection Period during the Revolving Period or the
Accumulation Period) or the Class B Fixed Allocation Percentage (with respect to
any Collection Period during the Early Amortization Period) of Collections of
Finance Charge Receivables and any other amounts, including interest and other
investment earnings, if any (net of losses and investment expenses), on funds on
deposit in the Excess Funding Account, that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement, plus (ii) if the
Distribution Date immediately following the last day of such Collection Period
occurs on or after the Class B Principal Commencement Date, the Principal
Funding Investment Proceeds, if any, to be withdrawn from the Principal Funding
Account on such Distribution Date, plus (iii) the amount, if any, to be
withdrawn from the Reserve Account on such Distribution Date and included in
Class B Available Funds pursuant to Section 4.14(d) plus (iv) the investment
earnings, if any (net of losses and investment expenses), on funds on deposit in
the Reserve Account to be withdrawn from the Reserve Account on such
Distribution Date and included in Class A Available Funds pursuant to Section
4.14(b).
8
12
"Class B Certificate Rate" shall mean, with respect to the
Class B Certificates and each Interest Period, a per annum rate of [___]% in
excess of Certificate LIBOR, as determined on the related Certificate LIBOR
Determination Date.
"Class B Certificateholder" shall mean the Person in whose
name a Class B Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit B.
"Class B Expected Final Distribution Date" shall mean the
January 2003 Distribution Date.
"Class B Fixed Allocation Percentage" shall mean, with respect
to any Collection Period, the percentage equivalent of a fraction, the numerator
of which is equal to the Class B Invested Amount as of the last day of the
Revolving Period and the denominator of which is equal to the greater of (i) the
sum of (a) the Aggregate Principal Receivables in the Trust as of the last day
of the immediately preceding Collection Period (or the Closing Date, in the case
of the first Collection Period applicable to Series 1997-2) plus (b) the Excess
Funding Amount at the end of such day and (ii) the sum of the numerators used to
calculate the corresponding Invested Percentages with respect to
9
13
all Classes of all Series outstanding as of the date on which such determination
is being made; provided, however, that, with respect to any Collection Period
during which Supplemental Accounts are included as Accounts pursuant to Section
2.6(a) or Section 2.6(b), the denominator in clause (i) above shall be increased
by the amount of Principal Receivables in such Supplemental Accounts as of the
Supplemental Cut Off Date on and after the Supplemental Closing Date applicable
to such Supplemental Accounts.
"Class B Floating Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is equal to the Class B Invested Amount as of the last day of
the immediately preceding Collection Period (or the Class B Initial Invested
Amount, in the case of the first Collection Period applicable to Series 1997-2)
and the denominator of which is equal to the greater of (i) the sum of (a) the
Aggregate Principal Receivables in the Trust as of the last day of the
immediately preceding Collection Period (or the Closing Date, in the case of the
first Collection Period applicable to Series 1997-2) plus (b) the Excess Funding
Amount at the end of such day and (ii) the sum of the numerators used to
calculate the corresponding Invested Percentages with respect to all Classes of
all Series outstanding as of the date on which such determination is being made;
provided, however, that, with respect to any Collection Period during which
Supplemental Accounts are included as Accounts pursuant to Section 2.6(a) or
Section 2.6(b), the denominator in clause (i) above shall be increased by the
amount of Principal Receivables in such Supplemental Accounts as of the
Supplemental Cut Off Date on and after the Supplemental Closing Date applicable
to such Supplemental Accounts.
"Class B Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class B Certificates, which is $135,000,000.
"Class B Interest Shortfall" shall have the meaning specified
in Section 4.3(b).
"Class B Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Invested Amount, minus
(b) after the Class A Adjusted Invested Amount has been paid in full, the
Principal Funding Account Balance on such date, minus (c) the aggregate amount
of principal payments made to the Class B Certificateholders prior to such date,
minus (d) the aggregate amount of Class B Investor Charge Offs for all prior
Distribution Dates, minus (e) the amount of Class B Subordinated Principal
Collections allocated on all prior Distribution Dates pursuant to Section
4.9(a), minus (f) an amount equal to the amount by which the Class B Invested
Amount has been reduced on all prior Distribution Dates pursuant to Section
4.7(a), plus (g) the sum of the amount of Excess Spread and Shared Excess
Finance Charge Collections allocated and available on all prior Distribution
Dates pursuant to Section 4.8(e) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (d), (e) and (f) and, without duplication, the
aggregate amount of the reductions of the Series Adjustment Amounts allocable to
the Class B Invested Amount pursuant to Section 4.7(f) prior to such date;
provided, however, that the Class B Invested Amount may not be reduced below
zero.
"Class B Investor Charge Offs" shall have the meaning
specified in Section 4.7(b).
"Class B Investor Default Amount" shall mean, with respect to
any Distribution Date, an amount equal to the product of (i) the Default Amount
for the preceding Collection Period and (ii) the Class B Floating Allocation
Percentage with respect to such Collection Period.
"Class B Monthly Interest" shall have the meaning specified in
Section 4.3(b).
10
14
"Class B Monthly Principal" shall have the meaning specified
Section 4.4(b).
"Class B Penalty Rate" shall mean the sum of the Class B
Certificate Rate and 2.00% per annum.
"Class B Principal Commencement Date" shall mean the
Distribution Date on which the Class A Adjusted Invested Amount is paid in full
or, if the Class A Adjusted Invested Amount is paid in full on the Class A
Expected Final Distribution Date and the Early Amortization Period has not
commenced, the Distribution Date following the Class A Expected Final
Distribution Date.
"Class B Required Amount" shall have the meaning specified in
Section 4.5(b).
"Class B Servicing Fee" shall have the meaning specified in
Section 7 of this Supplement.
"Class B Subordinated Principal Collections" shall mean, with
respect to any Collection Period, an amount equal to the product of (i) the
Class B Floating Allocation Percentage with respect to any Collection Period
during the Revolving Period or the Class B Fixed Allocation Percentage with
respect to any Collection Period during the Amortization Period and (ii) the
aggregate amount of Collections of Principal Receivables for such Collection
Period.
"Class D Additional Interest" shall have the meaning specified
in Section 4.3(d).
"Class D Adjustment Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 as of the end of the preceding Collection Period and
(ii) the percentage equivalent of a fraction, the numerator of which is the
Class D Invested Amount and the denominator of which is the Invested Amount,
each as of the last day of the Collection Period preceding such preceding
Collection Period.
"Class D Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Class D Investor Default Amount and the Class
D Adjustment Amount, in each case with respect to such Distribution Date.
"Class D Available Funds" shall mean, with respect to any
Collection Period, the Class D Floating Allocation Percentage (with respect to
any Collection Period during the Revolving Period or the Accumulation Period)
or the Class D Fixed Allocation Percentage (with respect to any Collection
Period
11
15
during the Early Amortization Period) of Collections of Finance Charge
Receivables and any other amounts, including interest and other investment
earnings, if any (net of losses and investment expenses), on funds on deposit in
the Excess Funding Account, that are to be treated as Collections of Finance
Charge Receivables in accordance with the Agreement.
"Class D Certificate Rate" shall mean, with respect to the
Class D Certificates and each Interest Period, a per annum rate of [___]% in
excess of Certificate LIBOR, as determined on the related Certificate LIBOR
Determination Date, or such lesser rate as may be designated by the Transferor.
"Class D Certificateholder" shall mean the Person in whose
name a Class D Certificate is registered in the Certificate Register.
"Class D Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit C.
"Class D Fixed Allocation Percentage" shall mean, with respect
to any Collection Period, the percentage equivalent of a fraction, the numerator
of which is equal to the Class D Invested Amount as of the last day of the
Revolving Period and the denominator of which is equal to the greater of (i) the
sum of (a) the Aggregate Principal Receivables in the Trust as of the last day
of the immediately preceding Collection Period (or the Closing Date, in the case
of the first Collection Period applicable to Series 1997-2) plus (b) the Excess
Funding Amount at the end of such day and (ii) the sum of the numerators used to
calculate the corresponding Invested Percentages with respect to all Classes of
all Series outstanding as of the date on which such determination is being made;
provided, however, that, with respect to any Collection Period during which
Supplemental Accounts are included as Accounts pursuant to Section 2.6(a) or
Section 2.6(b), the denominator in clause (i) above shall be increased by the
amount of Principal Receivables in such Supplemental Accounts as of the
Supplemental Cut Off Date on and after the Supplemental Closing Date applicable
to such Supplemental Accounts.
"Class D Floating Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is equal to the Class D Invested Amount as of the last day of
the immediately preceding Collection Period (or the Class D Initial Invested
Amount, in the case of the first Collection Period applicable to Series 1997-2)
and the denominator of which is equal to the greater of (i) the sum of (a) the
Aggregate Principal Receivables in the Trust as of
12
16
the last day of the immediately preceding Collection Period (or the Closing
Date, in the case of the first Collection Period applicable to Series 1997-2)
plus (b) the Excess Funding Amount at the end of such day and (ii) the sum of
the numerators used to calculate the corresponding Invested Percentages with
respect to all Classes of all Series outstanding as of the date on which such
determination is being made; provided, however, that, with respect to any
Collection Period during which Supplemental Accounts are included as Accounts
pursuant to Section 2.6(a) or Section 2.6(b), the denominator in clause (i)
above shall be increased by the amount of Principal Receivables in such
Supplemental Accounts as of the Supplemental Cut Off Date on and after the
Supplemental Closing Date applicable to such Supplemental Accounts.
"Class D Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class D Certificates, which is $99,000,000.
"Class D Interest Shortfall" shall have the meaning specified
in Section 4.3(d).
"Class D Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class D Initial Invested Amount (plus
the aggregate initial principal amount of any Additional Class D Certificates
issued on or prior to such date), minus (b) the aggregate amount of principal
payments made to the Class D Certificateholders prior to such date, minus (c)
the amount of Class D Subordinated Principal Collections allocated on all prior
Distribution Dates pursuant to Section 4.9(a), (b) and (c), minus (d) an amount
equal to the amount by which the Class D Invested Amount has been reduced on all
prior Distribution Dates pursuant to Section 4.7(a), (b), (c) and (d), plus (e)
the sum of the amount of Excess Spread and Shared Excess Finance Charge
Collections allocated and available on all prior Distribution Dates pursuant to
Section 4.8(n) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c) and (d) and, without duplication, the aggregate amount of
the reductions of the Series Adjustment Amounts allocable to the Class D
Invested Amount pursuant to Section 4.7(f) prior to such date; provided,
however, that the Class D Invested Amount may not be reduced below zero.
"Class D Investor Charge Offs" shall have the meaning
specified in Section 4.7(d).
"Class D Investor Default Amount" shall mean, with respect to
any Distribution Date, an amount equal to the product of (i) the Default Amount
for the preceding Collection Period and
13
17
(ii) the Class D Floating Allocation Percentage with respect to such Collection
Period.
"Class D Monthly Interest" shall have the meaning specified in
Section 4.3(d).
"Class D Monthly Principal" shall have the meaning specified
in Section 4.4(d).
"Class D Penalty Rate" shall mean, for any Interest Period,
the sum of the Class D Certificate Rate for such Interest Period and 2.00% per
annum.
"Class D Servicing Fee" shall have the meaning specified in
Section of this Series Supplement.
"Class D Subordinated Principal Collections" shall mean, with
respect to any Collection Period, an amount equal to the product of (i) the
Class D Floating Allocation Percentage with respect to any Collection Period
during the Revolving Period or the Class D Fixed Allocation Percentage with
respect to any Collection Period during the Amortization Period and (ii) the
aggregate amount of Collections of Principal Receivables for such Collection
Period.
"Closing Date" shall mean November __, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral Additional Interest" shall have the meaning
specified in Section 4.3(c).
"Collateral Adjustment Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 as of the end of the preceding Collection Period and
(ii) the percentage equivalent of a fraction, the numerator of which is the
Collateral Indebtedness Amount and the denominator of which is the Invested
Amount, each as of the last day of the Collection Period preceding such
preceding Collection Period.
"Collateral Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Collateral Investor Default Amount and the
Collateral Adjustment Amount.
"Collateral Available Funds" shall mean, with respect to any
Collection Period, the Collateral Floating Allocation Percentage (with respect
to any Collection Period during the Revolving Period or the Accumulation Period)
or the Collateral
14
18
Fixed Allocation Percentage (with respect to any Collection Period during the
Early Amortization Period) of Collections of Finance Charge Receivables and any
other amounts, including interest and other investment earnings, if any (net of
losses and investment expenses), on funds on deposit in the Excess Funding
Account, that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement.
"Collateral Fixed Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is equal to the Collateral Indebtedness Amount as of the last
day of the Revolving Period and the denominator of which is equal to the greater
of (i) the sum of (a) the Aggregate Principal Receivables in the Trust as of the
last day of the immediately preceding Collection Period (or the Closing Date, in
the case of the first Collection Period applicable to Series 1997-2) plus (b)
the Excess Funding Amount at the end of such day and (ii) the sum of the
numerators used to calculate the corresponding Invested Percentages with respect
to all Classes of all Series outstanding as of the date on which such
determination is being made; provided, however, that, with respect to any
Collection Period during which Supplemental Accounts are included as Accounts
pursuant to Section 2.6(a) or Section 2.6(b), the denominator in clause (i)
above shall be increased by the amount of Principal Receivables in such
Supplemental Accounts as of the Supplemental Cut Off Date on and after the
Supplemental Closing Date applicable to such Supplemental Accounts.
"Collateral Floating Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is equal to the Collateral Indebtedness Amount as of the last
day of the immediately preceding Collection Period (or the Collateral Initial
Indebtedness Amount, in the case of the first Collection Period applicable to
Series 1997-2) and the denominator of which is equal to the greater of (i) the
sum of (a) the Aggregate Principal Receivables in the Trust as of the last day
of the immediately preceding Collection Period (or the Closing Date, in the case
of the first Collection Period applicable to Series 1997-2) plus (b) the Excess
Funding Amount at the end of such day and (ii) the sum of the numerators used to
calculate the corresponding Invested Percentages with respect to all Classes of
all Series outstanding as of the date on which such determination is being made;
provided, however, that, with respect to any Collection Period during which
Supplemental Accounts are included as Accounts pursuant to Section 2.6(a) or
Section 2.6(b), the denominator in clause (i) above shall be increased by the
amount of Principal Receivables in such Supplemental Accounts as of the
15
19
Supplemental Cut Off Date on and after the Supplemental Closing Date applicable
to such Supplemental Accounts.
"Collateral Indebtedness Amount" shall mean, on any date of
determination, an amount equal to (a) the Collateral Initial Indebtedness
Amount, minus (b) the aggregate amount of principal payments made to the
Collateral Indebtedness Holder on or prior to such date, minus (c) the amount of
Collateral Subordinated Principal Collections allocated on all prior
Distribution Dates pursuant to Section 4.9(a) and (b), minus (d) an amount equal
to the amount by which the Collateral Indebtedness Amount has been reduced on
all prior Distribution Dates pursuant to Section 4.7(a), (b) and (c), plus (e)
the sum of the amount of Excess Spread and Shared Excess Finance Charge
Collections allocated and available on all prior Distribution Dates pursuant to
Section 4.8(i) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c) and (d) and, without duplication, the aggregate amount of
the reductions of the Series Adjustment Amounts allocable to the Collateral
Indebtedness Amount pursuant to Section 4.7(f) prior to such date; provided,
however, that the Collateral Indebtedness Amount may not be reduced below zero.
"Collateral Indebtedness Holder" shall mean the entity
designated as such in the Loan Agreement.
"Collateral Indebtedness Interest" shall mean a fractional
undivided interest in the Trust which shall consist of the right to receive, to
the extent necessary to make the required payments to the Collateral
Indebtedness Holder under this Series Supplement, the portion of Collections
allocable thereto under the Agreement and this Series Supplement, funds on
deposit in the Collection Account allocable thereto pursuant to the Agreement
and this Series Supplement and, subject to the rights of the Series 1997-2
Certificateholders with respect thereto, funds on deposit in the Cash Collateral
Account and the Reserve Account.
"Collateral Initial Indebtedness Amount" shall mean the
aggregate initial principal amount of the Collateral Indebtedness Interest,
which is $63,000,000.
"Collateral Interest Shortfall" shall have the meaning
specified in Section 4.3(c).
"Collateral Investor Charge Offs" shall have the meaning
specified in Section 4.7(c).
"Collateral Investor Default Amount" shall mean, with respect
to any Distribution Date, an amount equal to the product
16
20
of (i) the Default Amount for the preceding Collection Period and (ii) the
Collateral Floating Allocation Percentage for such Collection Period.
"Collateral Monthly Interest" shall have the meaning
specified in Section 4.3(c).
"Collateral Monthly Principal" shall have the meaning
specified in Section 4.4(c).
"Collateral Penalty Rate" shall mean, for any Interest Period,
the rate designated as such in the Loan Agreement.
"Collateral Rate" shall mean, for any Interest Period, the
rate designated as such in the Loan Agreement.
"Collateral Required Amount" shall have the meaning specified
in Section 4.5(c).
"Collateral Servicing Fee" shall have the meaning specified
in Section 7 of this Series Supplement.
"Collateral Subordinated Principal Collections" shall mean,
with respect to any Collection Period, an amount equal to the product of (i) the
Collateral Floating Allocation Percentage with respect to any Collection Period
during the Revolving Period or the Collateral Fixed Allocation Percentage with
respect to any Collection Period during the Amortization Period and (ii) the
aggregate amount of Collections of Principal Receivables for such Collection
Period.
"Collection Period" shall have the meaning specified in the
Agreement; provided, however, that, with respect to the first Distribution Date,
the Collection Period shall be the period from and including the Closing Date
through and including December 14, 1997.
"Controlled Accumulation Amount" shall mean (a) for any
Distribution Date with respect to the Class A Accumulation Period, $50,250,000;
provided, however, if the Accumulation Period Length shall be determined to be
less than 12 months in accordance with Section 4.15, the Controlled Accumulation
Amount with respect to the Class A Certificates shall be equal to (i) the
product of (x) the Class A Initial Invested Amount and (y) the Accumulation
Period Factor for such Collection Period divided by (ii) the Required
Accumulation Factor Number and (b) for any Distribution Date with respect to the
Class B Accumulation Period, $67,500,000.
17
21
"Controlled Deposit Amount" shall mean, for any Distribution
Date with respect to the Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date plus any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean (a) for any Distribution Date with
respect to the Class A Accumulation Period or the first Special Distribution
Date, if such Special Distribution Date occurs before the Class B Principal
Commencement Date, an amount equal to the product of (i) a fraction, the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, (ii) the Class A Certificate Rate and (iii)
the Principal Funding Account Balance, if any, as of the preceding Distribution
Date and (b) for any Distribution Date with respect to the Class B Accumulation
Period or the first Special Distribution Date, if such Special Distribution Date
occurs after the Distribution Date on which the Class A Adjusted Invested Amount
has been paid in full, an amount equal to the product of (i) a fraction, the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, (ii) the Class B Certificate Rate and (iii)
the Principal Funding Account Balance, if any, as of the preceding Distribution
Date.
"Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date with respect to the Class A Accumulation Period or the
Class B Accumulation Period, as applicable, the excess, if any, of the
applicable Controlled Accumulation Amount for such Distribution Date over the
amount deposited into the Principal Funding Account as Class A Monthly Principal
or Class B Monthly Principal, as the case may be, for such Distribution Date and
(b) on each subsequent Distribution Date with respect to the Class A
Accumulation Period or the Class B Accumulation Period, the excess, if any, of
the applicable Controlled Deposit Amount for such subsequent Distribution Date
over the amount deposited into the Principal Funding Account as Class A Monthly
Principal or Class B Monthly Principal, as applicable, for such subsequent
Distribution Date.
"Distribution Date" shall mean the fifteenth day of each
month, or, if such fifteenth day is not a Business Day, the next succeeding
Business Day, commencing with December 15, 1997.
"Early Amortization Event" shall mean an Early Amortization
Event as specified in Section 9.1 of the Agreement or Section 10 of this Series
Supplement.
"Early Amortization Period" shall mean the period commencing
at the close of business on the day on which an Early
18
22
Amortization Event with respect to Series 1997-2 is deemed to have occurred, and
ending on the first to occur of (a) the payment in full of the Class A Adjusted
Invested Amount, the Class B Adjusted Invested Amount, the Collateral
Indebtedness Amount and the Class D Invested Amount, respectively, or (b) the
Stated Series Termination Date.
"Enhancement" shall mean (a) with respect to the Class A
Certificates, the subordination of the Class B Certificates, the Collateral
Indebtedness Interest and the Class D Certificates and amounts allocated to the
Class A Certificates from the Available Cash Collateral Amount, (b) with respect
to the Class B Certificates, the subordination of the Collateral Indebtedness
Interest and the Class D Certificates and amounts allocated to the Class B
Certificates from the Available Cash Collateral Amount and (c) with respect to
the Collateral Indebtedness Interest, the subordination of the Class D
Certificates.
"Enhancement Provider" shall mean the Collateral Indebtedness
Holder.
"Enhancement Surplus" shall mean, with respect to any
Distribution Date, the excess, if any, of the Available Enhancement Amount
(after giving effect to deposits to or withdrawals from the Cash Collateral
Account on such Distribution Date) over the Required Enhancement Amount.
"Excess Spread" shall mean, with respect to any Distribution
Date, the sum of the amounts, if any, specified pursuant to Sections 4.6(a)(iv),
4.6(b)(iii), 4.6(c)(ii), 4.6(d)(ii) and 4.12(b) with respect to such
Distribution Date plus the amount of interest and other investment earnings, if
any (net of losses and investment expenses), on funds on deposit in the Cash
Collateral Account.
"FASIT" shall have the meaning specified in Section 18 of this
Series Supplement.
"Finance Charge Shortfall" shall have the meaning specified
in Section 4.11.
"Fixed Allocation Percentage" shall mean, with respect to any
Collection Period, the sum of the Class A Fixed Allocation Percentage, the Class
B Fixed Allocation Percentage, the Collateral Fixed Allocation Percentage and
the Class D Fixed Allocation Percentage, in each case with respect to such
Collection Period.
"Floating Allocation Percentage" shall mean, with respect to
any Collection Period, the sum of the Class A Floating
19
23
Allocation Percentage, the Class B Floating Allocation Percentage, the
Collateral Floating Allocation Percentage and the Class D Floating Allocation
Percentage, in each case with respect to such Collection Period.
"Group One" shall mean Series 1997-2 and each other Series
specified in the related Supplement to be included in Group One.
"Initial Invested Amount" shall mean the aggregate initial
principal amount of the Series 1997-2 Certificates, which is $900,000,000.
"Interest Period" shall mean, with respect to any
Distribution Date, the period from and including the Distribution Date
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing Date) to but excluding such
Distribution Date.
"Invested Amount" shall mean, as of any date of determination,
an amount equal to the sum of the Class A Invested Amount, the Class B Invested
Amount, the Collateral Indebtedness Amount and the Class D Invested Amount, in
each case as of such date.
"Invested Percentage" shall mean, with respect to any
Collection Period, (a) when used with respect to Principal Receivables during
the Revolving Period or Finance Charge Receivables during the Revolving Period
or the Accumulation Period, the Floating Allocation Percentage with respect to
such Collection Period, (b) when used with respect to Principal Receivables
during the Amortization Period or Finance Charge Receivables during the Early
Amortization Period, the Fixed Allocation Percentage with respect to such
Collection Period, and (c) when used with respect to the Default Amount or the
Series Adjustment Amount at any time, the Floating Allocation Percentage with
respect to such Collection Period.
"Investor Charge Offs" shall mean, as of any date of
determination, the sum of the Class A Investor Charge Offs, the Class B Investor
Charge Offs, the Collateral Investor Charge Offs and the Class D Investor Charge
Offs, in each case as of such date.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Default Amount for
the immediately preceding Collection Period and (b) the Floating Allocation
Percentage with respect to such Collection Period.
20
24
"Investor Monthly Servicing Fee" shall have the meaning
specified in Section 7 of this Series Supplement.
"LIBOR" shall have the meaning specified in the Loan
Agreement.
"Loan Agreement" shall mean the agreement dated the date
hereof among the Transferor, the Servicer, the Trustee and the Collateral
Indebtedness Holder, as amended, supplemented or modified from time to time.
"Minimum Aggregate Principal Receivables" shall have the
meaning specified in Section 3 of this Series Supplement.
"Minimum Transferor Interest Percentage" shall have the
meaning specified in Section 3 of this Series Supplement.
"Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of the Class A Monthly Interest, the Class B Monthly
Interest, the Collateral Monthly Interest and the Class D Monthly Interest for
such Distribution Date.
"Paired Series" shall have the meaning specified in Section
19 of this Series Supplement.
"Portfolio Adjusted Yield" shall mean, with respect to any
Collection Period, the Portfolio Yield with respect to such Collection Period
minus the Base Rate with respect to such Collection Period.
"Portfolio Yield" shall mean, with respect to any Collection
Period, the annualized percentage equivalent of a fraction, the numerator of
which is equal to (a) an amount equal to the amount of Collections of Finance
Charge Receivables that are allocated to Series 1997-2 with respect to such
Collection Period (including interest and other investment earnings on funds on
deposit in the Excess Funding Account applied as Collections of Finance Charge
Receivables allocable to Series 1997-2), plus (b) any Shared Excess Finance
Charge Collections that are allocated to Series 1997-2 with respect to such
Collection Period, plus (c) any Principal Funding Investment Proceeds to be
included as Class A Available Funds or Class B Available Funds with respect to
such Collection Period, plus (d) interest and other investment earnings on funds
on deposit in the Reserve Account to be included as Class A Available Funds or
Class B Available Funds with respect to such Collection Period, plus (e) the
Reserve Draw Amount with respect to such Collection Period, plus (f) interest
and other investment earnings on funds on deposit in the Cash Collateral Account
deposited in the Collection Account with respect to such Collection Period,
minus (g) the Investor Default Amount with respect to the Distribution Date
immediately following the last day of such Collection Period, and the
denominator of which is the Adjusted
21
25
Invested Amount as of the last day of the preceding Collection Period.
"Principal Funding Account" shall have the meaning specified
in Section 4.13(a).
"Principal Funding Account Balance" shall mean, with respect
to any date of determination during the Accumulation Period, the principal
amount, if any, of funds on deposit in the Principal Funding Account on such
date of determination.
"Principal Funding Investment Proceeds" shall have the
meaning specified in Section 4.13(b).
"Principal Shortfall" shall have the meaning specified in
Section 4.10.
"Rating Agencies" shall mean Xxxxx'x and Standard & Poor's.
"Reallocated Principal Collections" shall mean, with respect
to any Collection Period, an amount equal to the sum of Class B Subordinated
Principal Collections, Collateral Subordinated Principal Collections and Class
D Subordinated Principal Collections, in each case for such Collection Period.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer upon notice to the Trustee.
"Required Accumulation Factor Number" shall be a fraction,
rounded upwards to the nearest whole number, the numerator of which is one and
the denominator of which is equal to the lowest monthly principal payment rate
on the Accounts for the 12 months preceding the date of such calculation (or
any lower monthly principal payment rate selected by the Servicer at its option
in its sole discretion), expressed as a decimal.
"Required Cash Collateral Amount" shall mean the amount
specified as such in the Loan Agreement or such higher amount designated by the
Transferor.
"Required Draw Amount" shall have the meaning specified in
Section 4.12(c).
"Required Enhancement Amount" shall mean, with respect to any
Distribution Date, an amount equal to the greater of (a) $27,000,000 and (b) 18%
of the Invested Amount, in each case as of such Distribution Date after taking
into account all distributions made on such date; provided, however, that (i)
if
22
26
an Early Amortization Event shall have occurred, the Required Enhancement Amount
for each Distribution Date thereafter (subject to clause (ii) below) shall equal
the Required Enhancement Amount for the Distribution Date immediately preceding
the occurrence of such Early Amortization Event, (ii) in no event shall the
Required Enhancement Amount exceed the sum of the Class A Invested Amount and
the Class B Invested Amount on such date and (iii) the Required Enhancement
Amount may be reduced at any time without the consent of the Series 1997-2
Certificateholders if (x) the Rating Agency Condition shall have been satisfied
with respect to Series 1997-2, (y) the Transferor shall have delivered to the
Trustee an Officer's Certificate to the effect that, based on the facts known to
such officer at such time, in the reasonable belief of such officer, such
reduction will not cause an Early Amortization Event or an event that, after the
giving of notice or the lapse of time, would constitute an Early Amortization
Event, to occur and (z) the Transferor shall have provided an Opinion of
Counsel, addressed to the Trustee, dated the date of such reduction, that such
reduction will not adversely affect the tax characterization of any outstanding
Series or Class with respect to which an Opinion of Counsel addressed to the
Trustee was delivered at the time of their issuance that such Investor
Certificates would be characterized as debt, cause the Trust to be classified,
for federal income tax purposes, as an association (or publicly traded
partnership) taxable as a corporation and cause or constitute an event in which
gain or loss would be recognized by any Certificateholder.
"Required Reserve Account Amount" shall mean, with respect to
any Distribution Date prior to the Reserve Account Funding Date, $0, and on or
after the Reserve Account Funding Date, an amount equal to (a) 0.50% of the
Class A Adjusted Invested Amount as of the preceding Distribution Date (after
giving effect to all changes therein on such date) or (b) any other amount
designated by the Transferor; provided, however, that if such designation
pursuant to clause (b) above is of a lesser amount, (i) the Rating Agency
Condition shall have been satisfied and (ii) the Transferor shall have delivered
to the Trustee an Officer's Certificate to the effect that, based on the facts
known to such officer at such time, in the reasonable belief of such officer,
such designation will not cause an Early Amortization Event or an event that,
after the giving of notice or the lapse of time, would constitute an Early
Amortization Event to occur.
"Reserve Account" shall have the meaning specified in Section
4.14(a).
"Reserve Account Funding Date" shall mean the Distribution
Date following the Collection Period which commences
23
27
no later than [______] months prior to the commencement of the Class A
Accumulation Period; provided, however, that the Reserve Account Funding Date
shall be accelerated to (a) the Distribution Date following the Collection
Period which commences [______] months prior to the commencement of the Class A
Accumulation Period if the average of the Portfolio Adjusted Yields for any
three consecutive Collection Periods shall be less than [___]%; (b) the
Distribution Date following the Collection Period which commences [______]
months prior to the commencement of the Class A Accumulation Period if the
average of the Portfolio Adjusted Yields for any three consecutive Collection
Periods shall be less than [___]%; or (c) the Distribution Date following the
Collection Period which commences [______] months prior to the commencement of
the Class A Accumulation Period if the average of the Portfolio Adjusted Yields
for any three consecutive Collection Periods shall be less than [___]%.
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in and
available to be withdrawn from the Reserve Account exceeds the Required Reserve
Account Amount.
"Reserve Draw Amount" shall have the meaning specified in
Section 4.14(c).
"Retained Interest" shall mean, on any date of determination,
the sum of the Transferor Amount on such date and the Invested Amount of each
Class of Investor Certificates retained by the Transferor on such date.
"Retained Percentage" shall mean, on any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the retained interest on such date and the denominator of which is the
Aggregate Principal Receivables on such date plus the Excess Funding Amount (not
including interest and other investment earnings) on such date.
"Revolving Period" shall mean the period beginning on the
Closing Date and ending on the earlier of (a) the close of business on the day
preceding the commencement of the Class A Accumulation Period and (b) the close
of business on the day preceding the commencement of the Early Amortization
Period.
"Series 1997-2" shall mean the Series the terms of which are
specified in this Series Supplement.
"Series 1997-2 Certificate" shall have the meaning specified
in Section 1 of this Series Supplement.
24
28
"Series 1997-2 Certificateholder" shall mean a holder of a
Series 1997-2 Certificate.
"Servicer" shall have the meaning specified in the preamble
to this Series Supplement.
"Servicing Fee Percentage" shall mean 2.00%.
"Shared Excess Finance Charge Collections" shall mean, with
respect to any Collection Period, the aggregate amount for all outstanding
Series in Group One of Collections of Finance Charge Receivables which the
related Supplements specify are to be treated as "Shared Excess Finance Charge
Collections" for such Collection Period.
"Shared Principal Collections" shall mean, with respect to any
Collection Period, the aggregate amount for all outstanding Series in Group One
of Collections of Principal Receivables which the related Supplements specify
are to be treated as "Shared Principal Collections" for such Collection Period.
"Special Distribution Date" shall mean each Distribution Date
with respect to the Early Amortization Period.
"Stated Series Termination Date" shall mean the March 2006
Distribution Date.
"Telerate Page 3750" shall mean the display page currently so
designated on the Dow Xxxxx Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying comparable rates or
prices).
"Transfer" shall have the meaning specified in Section 11 of
this Series Supplement.
"Transfer Date" shall mean the Business Day preceding each
Distribution Date.
"Transferor" shall have the meaning specified in the preamble
to this Series Supplement.
"Trustee" shall have the meaning specified in the preamble to
this Series Supplement.
SECTION 3. Minimum Transferor Interest Percentage and
Minimum Aggregate Principal Receivables. The Minimum Transferor Interest
Percentage applicable to the Series 1997-2 Certificates shall be 0%; provided,
however, that the Transferor may, at its option and in its sole discretion,
designate a higher percentage
25
29
as the Minimum Transferor Interest Percentage so long as, after giving effect to
such designation and any repurchase of Investor Certificates or designation of
Supplemental Accounts, the Transferor Amount shall equal or exceed the Minimum
Transferor Amount. The Minimum Aggregate Principal Receivables applicable to the
Series 1997-2 Certificates shall be the Initial Invested Amount plus the
principal amount of any Additional Class D Certificates that may be issued or,
subject to the Rating Agency Condition, such lesser amount designated by the
Transferor.
SECTION 4. Reassignment and Transfer Terms. The Series
1997-2 Certificates may be reassigned and transferred to the Transferor at the
option of the Transferor on any Distribution Date during the Amortization Period
on or after which the Invested Amount is reduced to an amount less than or equal
to 5% of the Initial Invested Amount, subject to the provisions of Section 12.2
of the Agreement.
SECTION 5. Delivery and Payment for the Certificates. The
Trustee shall deliver the Series 1997-2 Certificates upon the written direction
of the Transferor when authenticated in accordance with Section 6.2 of the
Agreement (except in the case of the Collateral Indebtedness Interest, which
shall be in uncertificated form).
SECTION 6. Form of Delivery of the Series 1997-2
Certificates. (a) The Class A Certificates and the Class B Certificates shall be
delivered as Book-Entry Certificates as provided in Section 6.11 of the
Agreement and shall be issued in minimum denominations of $1,000 and in integral
multiples of $1,000 in excess thereof. The Class D Certificates shall be
delivered as Registered Certificates as provided in Section 6.1 of the Agreement
and shall be issued in minimum denominations of $500,000 and in integral
multiples of $1,000 in excess thereof. The Collateral Indebtedness Interest
shall be issued in uncertificated form.
(b) The Class A Certificates and the Class B Certificates
shall initially be registered in the name of Cede & Co., as nominee for The
Depository Trust Company. [The Class A Certificates and the Class B Certificates
will initially be held by the Trustee as custodian for The Depository Trust
Company.]
SECTION 7. Servicing Compensation. The share of the Monthly
Servicing Fee allocable to the Series 1997-2 Certificateholders with respect to
any Distribution Date (the "Investor Monthly Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Servicing Fee Percentage and (b) the
Invested Amount as of the last day of the second preceding Collection Period;
provided, however, that with respect to the
26
30
first Distribution Date, the Investor Monthly Servicing Fee shall be equal to
$[__________]. The share of the Investor Monthly Servicing Fee allocable to the
Class A Certificateholders with respect to any Distribution Date (the "Class A
Servicing Fee") shall be equal to one-twelfth of the product of (a) the Class A
Invested Amount as of the last day of the second preceding Collection Period and
(b) the Servicing Fee Percentage; provided, however, that with respect to the
first Distribution Date, the Class A Servicing Fee shall be equal to
$[__________]. The share of the Investor Monthly Servicing Fee allocable to the
Class B Certificateholders with respect to any Distribution Date (the "Class B
Servicing Fee") shall be equal to one-twelfth of the product of (a) the Class B
Invested Amount as of the last day of the second preceding Collection Period and
(b) the Servicing Fee Percentage; provided, however, that with respect to the
first Distribution Date, the Class B Servicing Fee shall be equal to
$[__________]. The share of the Investor Monthly Servicing Fee allocable to the
Collateral Indebtedness Holder with respect to any Distribution Date (the
"Collateral Servicing Fee") shall be equal to one-twelfth of the product of (a)
the Collateral Indebtedness Amount as of the last day of the second preceding
Collection Period and (b) the Servicing Fee Percentage; provided, however, that
with respect to the first Distribution Date, the Collateral Servicing Fee shall
be equal to $[__________]. The share of the Investor Monthly Servicing Fee
allocable to the Class D Certificateholders with respect to any Distribution
Date (the "Class D Servicing Fee") shall be equal to one-twelfth of the product
of (a) the Class D Invested Amount as of the last day of the second preceding
Collection Period and (b) the Servicing Fee Percentage; provided, however, that
with respect to the first Distribution Date, the Class D Servicing Fee shall be
equal to $[__________]. The Class A Servicing Fee, the Class B Servicing Fee,
the Collateral Servicing Fee and the Class D Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to this Series Supplement. The remainder of the Monthly Servicing Fee
shall be paid by the Transferor or from amounts allocable to other Series (as
provided in the Agreement and the Supplements relating to such other Series) and
in no event shall the Trust, the Trustee or the Series 1997-2 Certificateholders
be liable for the share of the Monthly Servicing Fee to be paid by the
Transferor or from amounts allocable to any other Series.
SECTION 8. Article IV of the Agreement. Any provisions of Article
IV of the Agreement which distribute Collections to the Transferor on the basis
of the Transferor Percentage shall continue to apply irrespective of the
issuance of the Series 1997-2 Certificates. Section 4.1 of the Agreement shall
read in its entirety as provided in the Agreement. Article IV of the
27
31
Agreement (except for Section 4.1) as it relates to Series 1997-2 shall read in
its entirety as follows:
ARTICLE IV
RIGHTS OF SERIES 1997-2 CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.2 Collections and Allocations. (a) The Servicer
shall apply, or shall instruct the Trustee to apply, all Collections and other
funds on deposit in the Collection Account that are allocated to the Series
1997-2 Certificates as described in this Article IV. Collections of Finance
Charge Receivables (including interest and other investment earnings, if any
(net of losses and investment expenses), on funds on deposit in the Excess
Funding Account) with respect to any Collection Period shall be allocated to
Series 1997-2 in an amount equal to the product of such Collections and the
applicable Invested Percentage for such Collection Period. Collections of
Principal Receivables with respect to any Collection Period shall be allocated
to Series 1997-2 in an amount equal to the product of such Collections and the
applicable Invested Percentage for such Collection Period.
(b) During the Revolving Period or the Amortization Period
(other than an Early Amortization Period), if daily deposits of Collections of
Finance Charge Receivables are required pursuant to Section 4.1(e), the Servicer
shall deposit Collections of Finance Charge Receivables allocable to Series
1997-2 into the Collection Account in accordance with Section 4.1(e). During the
Early Amortization Period, the Servicer shall deposit Collections of Finance
Charge Receivables allocable to Series 1997-2 into the Collection Account on a
daily basis in accordance with Section 4.1(e). If daily deposits are not
required pursuant to Section 4.1(e) or this Section 4.2(b), the Servicer shall,
subject to Section 4.1(i), deposit Collections of Finance Charge Receivables
allocable to Series 1997-2 with respect to any Collection Period into the
Collection Account on the following Transfer Date.
(c) During the Revolving Period, so long as the Available
Enhancement Amount is not less than the Required Enhancement Amount, the
Servicer need not deposit Collections of Principal Receivables allocable to
Series 1997-2 into the Collection Account on a daily basis and may distribute
such Collections to the Transferor; provided, however, that such Collections of
Principal Receivables shall be deposited in the Excess Funding Account in
accordance with Section 4.1(f); and, provided further, that if the Aggregate
Invested Amount exceeds
28
32
the sum of the Aggregate Principal Receivables and the Excess Funding Amount on
any Business Day, the Servicer shall deposit Collections of Principal
Receivables that would otherwise be distributed to the Transferor on such day
into the Excess Funding Account on such day in an amount equal to such excess.
During the Accumulation Period, after an amount of Collections of Principal
Receivables allocable to Series 1997-2 equal to the Controlled Deposit Amount
for the applicable Distribution Date has been deposited into the Collection
Account, and so long as the Available Enhancement Amount is not less than the
Required Enhancement Amount, the Servicer need not deposit Collections of
Principal Receivables allocable to Series 1997-2 into the Collection Account on
a daily basis and may distribute such Collections to the Transferor; provided,
however, that such Collections of Principal Receivables shall be deposited in
the Excess Funding Account in accordance with Section 4.1(f); and, provided
further, that if the Aggregate Invested Amount exceeds the sum of the Aggregate
Principal Receivables and the Excess Funding Amount on any Business Day, the
Servicer shall deposit Collections of Principal Receivables that would otherwise
be distributed to the Transferor on such day into the Excess Funding Account on
such day in an amount equal to such excess. If and for so long as the Required
Enhancement Amount exceeds the Available Enhancement Amount, the Servicer shall
deposit Collections of Principal Receivables allocable to Series 1997-2 into the
Collection Account on a daily basis. If daily deposits are not required pursuant
to Section 4.1(e) or this Section 4.2(b), the Servicer shall, subject to Section
4.1(i), deposit Collections of Principal Receivables allocable to Series 1997-2
with respect to any Collection Period into the Collection Account on the
following Transfer Date.
(d) Notwithstanding the foregoing, the Servicer need not make
daily deposits of Collections into the Collection Account at any time when the
requirements of Section 4.1(e) are satisfied.
Section 4.3. Determination of Monthly Interest. (a) The
amount of monthly interest ("Class A Monthly Interest") distributable from the
Collection Account with respect to the Class A Certificates on any Distribution
Date shall be an amount equal to the product of (i) the Class A Certificate Rate
for the related Interest Period, (ii) the outstanding principal amount of the
Class A Certificates as of the preceding Record Date and (iii) a fraction, the
numerator of which is the actual number of days in such Interest Period and the
denominator of which is 360; provided, however, that, with respect to the first
Distribution Date, Class A Monthly Interest shall be equal to $[__________].
29
33
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class A Interest
Shortfall"), of (x) the Class A Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class A
Monthly Interest on such Distribution Date. If the Class A Interest Shortfall
with respect to any Distribution Date is greater than zero, an additional amount
("Class A Additional Interest") equal to the product of (i) the Class A Penalty
Rate for the related Interest Period, (ii) such Class A Interest Shortfall (or
the portion thereof which has not theretofore been paid to the Class A
Certificateholders) and (iii) a fraction, the numerator of which is the actual
number of days in such Interest Period and the denominator of which is 360 shall
be payable as provided herein with respect to the Class A Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Class A Interest Shortfall is paid to Class A
Certificateholders. Notwithstanding anything to the contrary herein, Class A
Additional Interest shall be payable or distributed to Class A
Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly
Interest") distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to the product of
(i) the Class B Certificate Rate for the related Interest Period, (ii) the
outstanding principal amount of the Class B Certificates as of the preceding
Record Date and (iii) a fraction, the numerator of which is the actual number of
days in such Interest Period and the denominator of which is 360; provided,
however, that, with respect to the first Distribution Date, Class B Monthly
Interest shall be equal to $[__________].
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class B Interest
Shortfall"), of (x) the Class B Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class B
Monthly Interest on such Distribution Date. If the Class B Interest Shortfall
with respect to any Distribution Date is greater than zero, an additional amount
("Class B Additional Interest") equal to the product of (i) the Class B Penalty
Rate for the related Interest Period, (ii) such Class B Interest Shortfall (or
the portion thereof which has not theretofore been paid to the Class B
Certificateholders) and (iii) a fraction, the numerator of which is the actual
number of days in such Interest Period and the denominator of which is 360 shall
be payable as provided herein with respect to the Class B Certificates on each
Distribution Date following such Distribution Date to and including the
30
34
Distribution Date on which such Class B Interest Shortfall is paid to Class B
Certificateholders. Notwithstanding anything to the contrary herein, Class B
Additional Interest shall be payable or distributed to Class B
Certificateholders only to the extent permitted by applicable law.
(c) The amount of monthly interest ("Collateral Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Indebtedness Interest on any Distribution Date shall be an amount
equal to the product of (i) the Collateral Rate for the related Interest Period,
(ii) the outstanding principal amount of the Collateral Indebtedness Interest as
of the preceding Record Date and (iii) a fraction, the numerator of which is the
actual number of days in such Interest Period and the denominator of which is
360.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Collateral Interest
Shortfall"), of (x) the Collateral Monthly Interest for such Distribution Date
over (y) the aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the Collateral
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("Collateral Additional Interest") equal to the product of
(i) the Collateral Penalty Rate for the related Interest Period, (ii) such
Collateral Interest Shortfall (or the portion thereof which has not theretofore
been paid to the Collateral Indebtedness Holder) and (iii) a fraction, the
numerator of which is the actual number of days in such Interest Period and the
denominator of which is 360 shall be payable as provided herein with respect to
the Collateral Indebtedness Interest on each Distribution Date following such
Distribution Date to and including the Distribution Date on which such
Collateral Interest Shortfall is paid to the Collateral Indebtedness Holder.
Notwithstanding anything to the contrary herein, Collateral Additional Interest
shall be payable or distributed to the Collateral Indebtedness Holder only to
the extent permitted by applicable law.
(d) The amount of monthly interest ("Class D Monthly
Interest") distributable from the Collection Account with respect to the Class D
Certificates on any Distribution Date shall be an amount equal to the product of
(i) the Class D Certificate Rate for the related Interest Period, (ii) the
outstanding principal amount of the Class D Certificates as of the preceding
Record Date and (iii) a fraction, the numerator of which is the actual number of
days in such Interest Period and the denominator of which is 360; provided,
however, that, with respect to the first Distribution Date, Class D Monthly
Interest shall be equal to $[__________].
31
35
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class D Interest
Shortfall"), of (x) the Class D Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class D
Monthly Interest on such Distribution Date. If the Class D Interest Shortfall
with respect to any Distribution Date is greater than zero, an additional amount
("Class D Additional Interest") equal to the product of (i) the Class D Penalty
Rate for the related Interest Period, (ii) such Class D Interest Shortfall (or
the portion thereof which has not theretofore been paid to the Class D
Certificateholders) and (iii) a fraction, the numerator of which is the actual
number of days in such Interest Period and the denominator of which is 360 shall
be payable as provided herein with respect to the Class D Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Class D Interest Shortfall is paid to Class D
Certificateholders. Notwithstanding anything to the contrary herein, Class D
Additional Interest shall be payable or distributed to Class D
Certificateholders only to the extent permitted by applicable law.
Section 4.3A Determination of Certificate LIBOR. (a) On each
Certificate LIBOR Determination Date, the Trustee shall determine Certificate
LIBOR for the following Interest Period on the basis of the rate for deposits in
United States dollars for a one-month period (commencing on the first day of
such Interest Period) which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such Certificate LIBOR Determination Date. If such rate does not
appear on Telerate Page 3750, Certificate LIBOR for such Interest Period shall
be determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks at approximately 11:00 a.m., London
time, on such Certificate LIBOR Determination Date to prime banks in the London
interbank market for a one-month period (commencing on the first day of such
Interest Period). The Trustee shall request the principal London office of each
of the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that Certificate LIBOR Determination Date
shall be the arithmetic mean of all of the provided quotations. If fewer than
two quotations are provided as requested, the rate for that Certificate LIBOR
Determination Date shall be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a one-month period (commencing on the first day of such
Interest Period).
32
36
(b) The Class A Certificate Rate and the Class B Certificate
Rate applicable to the then current and the immediately preceding Interest
Periods may be obtained by any Series 1997-2 Certificateholder by telephoning
the Trustee at its Corporate Trust Office at 1 (800) 829-8432.
(c) On each Certificate LIBOR Determination Date, the Trustee
shall send to the Servicer and the Collateral Indebtedness Holder by facsimile
notification of Certificate LIBOR for the following Interest Period.
Section 4.4. Determination of Monthly Principal. (a) The
amount of monthly principal ("Class A Monthly Principal") distributable or
available for deposit into the Principal Funding Account from the Collection
Account with respect to the Class A Certificates on each Distribution Date,
beginning with the Distribution Date in the month following the month in which
the Amortization Period begins, shall be equal to the least of (x) the Available
Principal Collections on deposit in the Collection Account and available for
distribution with respect to such Distribution Date, (y) for each Distribution
Date with respect to the Class A Accumulation Period prior to the Class A
Expected Final Distribution Date, the Controlled Deposit Amount for such
Distribution Date and (z) the Class A Invested Amount on such Distribution Date.
(b) The amount of monthly principal ("Class B Monthly
Principal") distributable or available for deposit into the Principal Funding
Account from the Collection Account with respect to the Class B Certificates on
each Distribution Date, beginning with the Class B Principal Commencement Date,
shall be equal to the least of (x) the Available Principal Collections on
deposit in the Collection Account and available for distribution with respect to
such Distribution Date minus the portion of such Available Principal Collections
applied to any Class A Monthly Principal on such Distribution Date, (y) for each
Distribution Date with respect to the Class B Accumulation Period prior to the
Class B Expected Final Distribution Date, the Controlled Deposit Amount for such
Distribution Date and (z) the Class B Invested Amount on such Distribution Date.
(c) The amount, if any, of monthly principal ("Collateral
Monthly Principal") distributable with respect to the Collateral Indebtedness
Interest on each Distribution Date shall be equal to:
(i) on any Distribution Date prior to the
occurrence of an Early Amortization Event or the payment in full of
the Class B Adjusted Invested Amount, at the option of the Transferor,
to be exercised in its sole discretion,
33
37
the lesser of (A) the Available Principal Collections on deposit in the
Collection Account and available for distribution with respect to such
Distribution Date minus the portion of such Available Principal
Collections applied to any Class A Monthly Principal or Class B Monthly
Principal on such Distribution Date and (B) the Enhancement Surplus on
such Distribution Date (after giving effect to any increase in the
amount on deposit in the Cash Collateral Account or increase in the
Class D Invested Amount on such Distribution Date); and
(ii) beginning with the Distribution Date
on which the Class B Adjusted Invested Amount has been paid in full,
the lesser of (A) the Available Principal Collections on deposit in the
Collection Account and available for distribution with respect to such
Distribution Date minus the portion of such Available Principal
Collections applied to any Class A Monthly Principal or Class B Monthly
Principal on such Distribution Date and (B) the Collateral Indebtedness
Amount on such Distribution Date.
(b) The amount of monthly principal ("Class D Monthly
Principal") distributable with respect to the Class D Certificates on each
Distribution Date, beginning with the Distribution Date on which the Collateral
Indebtedness Amount has been paid in full, or prior thereto subject to
satisfaction of the requirements of the Loan Agreement, shall be equal to the
least of (x) the Available Principal Collections on deposit in the Collection
Account and available for distribution with respect to such Distribution Date
minus the portion of such Available Principal Collections applied to any Class A
Monthly Principal, Class B Monthly Principal or Collateral Monthly Principal on
such Distribution Date, (y) the Enhancement Surplus on such Distribution Date
(after giving effect to any increase in the amount on deposit in the Cash
Collateral Account on such Distribution Date) and (z) the Class D Invested
Amount on such Distribution Date.
Section 4.5 Required Amount. (a) On each Determination Date,
the Servicer shall determine the amount (the "Class A Required Amount"), if any,
by which (a) the sum of (i) Class A Monthly Interest for the following
Distribution Date, (ii) any Class A Monthly Interest previously due but not paid
to the Class A Certificateholders on a prior Distribution Date, (iii) any Class
A Additional Interest for the following Distribution Date and any Class A
Additional Interest previously due but not paid to Class A Certificateholders on
a prior Distribution Date, (iv) the Class A Allocable Amount, if any, for the
following Distribution Date and (v) if First North American
34
38
National Bank is no longer the Servicer, the Class A Servicing Fee for the
following Distribution Date and the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior Distribution Date
exceeds (b) Class A Available Funds with respect to the preceding Collection
Period. In the event that the Class A Required Amount for any Distribution Date
is greater than zero, the Servicer shall give written notice to the Trustee of
such positive Class A Required Amount on the date of computation and all or a
portion of the Excess Spread and the Shared Excess Finance Charge Collections
allocable to Series 1997-2 pursuant to Section 4.1(h) with respect to the
preceding Collection Period shall be distributed from the Collection Account on
such Distribution Date pursuant to Section 4.8(a). In the event that the Class A
Required Amount for such Distribution Date exceeds the amount of the Excess
Spread and the Shared Excess Finance Charge Collections allocable to Series
1997-2 with respect to the preceding Collection Period, all or a portion of the
Available Cash Collateral Amount with respect to such Distribution Date in an
amount equal to such excess shall be applied to fund the Class A Required
Amount. In the event that the Class A Required Amount for such Distribution Date
exceeds the amount of the Excess Spread, the Shared Excess Finance Charge
Collections allocable to Series 1997-2 with respect to the preceding Collection
Period and the Available Cash Collateral Amount with respect to such
Distribution Date, all or a portion of the Reallocated Principal Collections
with respect to such Collection Period in an amount equal to such excess shall
be distributed from the Collection Account on such Distribution Date pursuant to
Section 4.9(a).
(b) On each Determination Date, the Servicer shall determine
the amount (the "Class B Required Amount"), if any, equal to the sum of (x) the
amount, if any, by which the sum of (i) Class B Monthly Interest for the
following Distribution Date, (ii) any Class B Monthly Interest previously due
but not paid to the Class B Certificateholders on a prior Distribution Date,
(iii) any Class B Additional Interest for the following Distribution Date and
any Class B Additional Interest previously due but not paid to Class B
Certificateholders on a prior Distribution Date and (iv) if First North American
National Bank is no longer the Servicer, the Class B Servicing Fee for the
following Distribution Date and the amount of any Class B Servicing Fee
previously due but not distributed to the Servicer on a prior Distribution Date
exceeds Class B Available Funds with respect to the preceding Collection Period
and (y) the amount, if any, by which the Class B Allocable Amount, if any, for
the following Distribution Date exceeds the amount available to make payments
with respect thereto pursuant to Section 4.8(d). In the event that the Class B
Required Amount for any Distribution Date is greater than zero, the Servicer
shall give written notice to
35
39
the Trustee of such positive Class B Required Amount on the date of computation
and all or a portion of the Excess Spread and the Shared Excess Finance Charge
Collections allocable to Series 1997-2 pursuant to Section 4.1(h) with respect
to the preceding Collection Period shall be distributed from the Collection
Account on such Distribution Date pursuant to Sections 4.8(c) and (d). In the
event that the Class B Required Amount for such Distribution Date exceeds the
amounts distributed pursuant to Sections 4.8(c) and (d), all or a portion of the
Available Cash Collateral Amount with respect to such Distribution Date (other
than that portion of the Available Cash Collateral Amount applied to fund the
amounts described in Sections 4.8(a) and (b) with respect to such Distribution
Date) in an amount equal to such excess shall be applied to fund the Class B
Required Amount. In the event that the Class B Required Amount for such
Distribution Date exceeds such portion of the Available Cash Collateral Amount
and the amounts distributed pursuant to Sections 4.8(c) and (d), all or a
portion of the Reallocated Principal Collections with respect to the preceding
Collection Period (other than the portion of the Reallocated Principal
Collections applied to fund the Class A Required Amount and other than Class B
Subordinated Principal Collections) in an amount equal to such excess shall be
distributed from the Collection Account on such Distribution Date pursuant to
Section 4.9(b).
(c) On each Determination Date, the Servicer shall determine
the amount (the "Collateral Required Amount"), if any, equal to the sum of (x)
the amount, if any, by which the sum of (i) Collateral Monthly Interest for the
following Distribution Date, (ii) any Collateral Monthly Interest previously due
but not paid to the Collateral Indebtedness Holder on a prior Distribution Date,
(iii) any Collateral Additional Interest for the following Distribution Date and
any Collateral Additional Interest previously due but not paid to the Collateral
Indebtedness Holder on a prior Distribution Date and (iv) if First North
American National Bank is no longer the Servicer, the Collateral Servicing Fee
for the following Distribution Date and the amount of any Collateral Servicing
Fee previously due but not distributed to the Servicer on a prior Distribution
Date exceeds the amount available to make payments with respect thereto pursuant
to Sections 4.6(c)(i) and 4.8(f) with respect to the preceding Collection Period
and (y) the amount, if any, by which the Collateral Allocable Amount, if any,
for the following Distribution Date exceeds the amount available to make
payments with respect thereto pursuant to Section 4.8(h). In the event that the
Collateral Required Amount for any Distribution Date is greater than zero, the
Servicer shall give written notice to the Trustee of such positive Collateral
Required Amount on the date of computation and all or a portion of the Available
Cash Collateral Amount with respect to such Distribution Date (other
36
40
than that portion of the Available Cash Collateral Amount applied to fund the
amounts described in Sections 4.8(a), (b), (c) and (d) with respect to such
Distribution Date) in an amount equal to such excess shall be applied to fund
the Collateral Required Amount. In the event that the Collateral Required Amount
for such Distribution Date exceeds the portion of the Available Cash Collateral
Amount with respect to such Distribution Date not used to fund the amounts
described in Sections 4.8(a), (b), (c) and (d) with respect to such Distribution
Date, all or a portion of the Reallocated Principal Collections with respect to
the preceding Collection Period (other than the portion of the Reallocated
Principal Collections applied to fund the Class A Required Amount or the Class B
Required Amount and other than Class B Subordinated Principal Collections or
Collateral Subordinated Principal Collections) in an amount equal to such excess
shall be distributed from the Collection Account on such Distribution Date
pursuant to Section 4.9(c).
Section 4.6 Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds, Class D Available Funds and
Collections of Principal Receivables. The Servicer shall apply or shall instruct
the Trustee to apply, on each Distribution Date, Class A Available Funds, Class
B Available Funds, Collateral Available Funds, Class D Available Funds and
Collections of Principal Receivables allocable to Series 1997-2 on deposit in
the Collection Account with respect to the Collection Period immediately
preceding such Distribution Date to make the following distributions:
(a) On each Distribution Date, Class A Available Funds with
respect to the Collection Period immediately preceding such Distribution Date
shall be applied in the following priority:
(i) an amount equal to Class A Monthly Interest
for such Distribution Date, plus the amount of any Class A Monthly
Interest previously due but not distributed to Class A
Certificateholders on a prior Distribution Date, plus the amount of any
Class A Additional Interest for such Distribution Date and any Class A
Additional Interest previously due but not distributed to Class A
Certificateholders on a prior Distribution Date, shall be distributed
to the Paying Agent for payment to the Class A Certificateholders;
(ii) if First North American National Bank is no
longer the Servicer, an amount equal to the Class A Servicing Fee for
such Distribution Date, plus the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer;
37
41
(iii) an amount equal to the Class A Allocable
Amount for such Distribution Date shall be treated as a portion of
Available Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed as set forth in Section
4.8.
(b) On each Distribution Date, Class B Available Funds with
respect to the Collection Period immediately preceding such Distribution Date
shall be applied in the following priority:
(i) an amount equal to Class B Monthly Interest
for such Distribution Date plus the amount of any Class B Monthly
Interest previously due but not distributed to Class B
Certificateholders on a prior Distribution Date, plus the amount of any
Class B Additional Interest for such Distribution Date and any Class B
Additional Interest previously due but not distributed to Class B
Certificateholders on a prior Distribution Date, shall be distributed
to the Paying Agent for payment to the Class B Certificateholders;
(ii) if First North American National Bank is no
longer the Servicer, an amount equal to the Class B Servicing Fee for
such Distribution Date, plus the amount of any Class B Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed as set forth in Section
4.8.
(c) On each Distribution Date, Collateral Available Funds with
respect to the Collection Period immediately preceding such Distribution Date
shall be applied in the following priority:
(i) if First North American National Bank is no
longer the Servicer, an amount equal to the Collateral
Servicing Fee for such Distribution Date, plus the amount of
any Collateral Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer; and
38
42
(ii) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed as set forth in Section
4.8.
(d) On each Distribution Date, Class D Available Funds with
respect to the Collection Period immediately preceding such Distribution Date
shall be applied in the following priority:
(i) if First North American National Bank is no
longer the Servicer, an amount equal to the Class D Servicing
Fee for such Distribution Date, plus the amount of any Class D
Servicing Fee previously due but not distributed to the
Servicer on a prior Distribution Date, shall be distributed to
the Servicer; and
(ii) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed as set forth in Section
4.8.
(e) On each Distribution Date with respect to the Revolving
Period, Available Principal Collections shall be applied in the following
priority:
(i) an amount equal to Collateral Monthly
Principal for such Distribution Date shall be applied in accordance
with the Loan Agreement;
(ii) an amount equal to Class D Monthly Principal
for such Distribution Date shall be distributed to the Paying Agent for
payment to the Class D Certificateholders; and
(iii) the balance, if any, shall constitute "Shared
Principal Collections" with respect to Group One and shall be applied
in accordance with Section 4.1(g) (and be retained in the Excess
Funding Account if required by such provision).
(f) On each Distribution Date following the commencement of
the Amortization Period, Available Principal Collections shall be applied in the
following priority:
(i) an amount equal to Class A Monthly Principal
for such Distribution Date shall, during the Class A Accumulation
Period, be deposited into the Principal Funding Account for payment to
Class A Certificateholders on the earlier to occur of the Class A
Expected Final Distribution Date and the first Special Distribution
Date and, during the
39
43
Early Amortization Period, be distributed to the Paying Agent for
payment to the Class A Certificateholders;
(ii) an amount equal to Class B Monthly Principal
for such Distribution Date shall, during the Class B Accumulation
Period, be deposited into the Principal Funding Account for payment to
Class B Certificateholders on the earlier to occur of the Class B
Expected Final Distribution Date and the first Special Distribution
Date and, during the Early Amortization Period, be distributed to the
Paying Agent for payment to the Class B Certificateholders;
(iii) an amount equal to Collateral Monthly
Principal for such Distribution Date shall be applied in accordance
with the Loan Agreement;
(iv) an amount equal to Class D Monthly Principal
for such Distribution Date shall be distributed to the Paying Agent for
payment to the Class D Certificateholders; and
(v) the balance, if any, shall constitute "Shared
Principal Collections" with respect to Group One and shall be applied
in accordance with Section 4.1(g) (and be retained in the Excess
Funding Account if required by such provision).
Section 4.7. Defaulted Amounts; Adjustment Amounts; Investor
Charge Offs; Reductions of Adjustment Amounts. (a) On each Determination Date,
the Servicer shall calculate the Class A Required Amount, if any, for the
related Distribution Date. If, on any Distribution Date, the Class A Required
Amount for such Distribution Date exceeds the sum of (x) the amount of Excess
Spread and the Shared Excess Finance Charge Collections allocable to Series
1997-2 with respect to such Distribution Date, (y) the Available Cash Collateral
Amount with respect to such Distribution Date and (z) the amount of Reallocated
Principal Collections available pursuant to Section 4.9(a) with respect to the
preceding Collection Period, then the Class D Invested Amount (after giving
effect to any reduction thereof pursuant to Section 4.7(d)) shall be reduced by
the amount of such excess, but not by more than the excess of the Class A
Allocable Amount for such Distribution Date over the amount of Excess Spread and
Shared Excess Finance Charge Collections, the amount withdrawn from the Cash
Collateral Account and the amount of Reallocated Principal Collections used to
fund the Class A Allocable Amount for such Distribution Date. In the event that
such reduction would cause the Class D Invested Amount to be a negative number,
the Class D Invested Amount shall be reduced to zero and the Collateral
Indebtedness Amount (after giving effect to any reduction thereof
40
44
pursuant to Section 4.7(c)) shall be reduced by the amount by which the Class D
Invested Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Allocable Amount for such Distribution Date over
the amount of such reduction, if any, of the Class D Invested Amount with
respect to such Distribution Date and the amount of Excess Spread and Shared
Excess Finance Charge Collections, the amount withdrawn from the Cash Collateral
Account and the amount of Reallocated Principal Collections used to fund the
Class A Allocable Amount for such Distribution Date. In the event that such
reduction would cause the Collateral Indebtedness Amount to be a negative
number, the Collateral Indebtedness Amount shall be reduced to zero and the
Class B Adjusted Invested Amount (after giving effect to any reduction thereof
pursuant to Section 4.7(b)) shall be reduced by the amount by which the
Collateral Indebtedness Amount would have been reduced below zero, but not by
more than the excess, if any, of the Class A Allocable Amount for such
Distribution Date over the aggregate amount of the reductions, if any, of the
Class D Invested Amount and the Collateral Indebtedness Amount with respect to
such Distribution Date and the amount of Excess Spread and Shared Excess Finance
Charge Collections, the amount withdrawn from the Cash Collateral Account and
the amount of Reallocated Principal Collections used to fund the Class A
Allocable Amount for such Distribution Date. In the event that such reduction
would cause the Class B Adjusted Invested Amount to be a negative number, the
Class B Adjusted Invested Amount shall be reduced to zero, and the Class A
Adjusted Invested Amount shall be reduced by the amount by which the Class B
Adjusted Invested Amount would have been reduced below zero, but not by more
than the excess, if any, of the Class A Allocable Amount for such Distribution
Date over the aggregate amount of the reductions, if any, of the Class D
Invested Amount, the Collateral Indebtedness Amount and the Class B Adjusted
Invested Amount with respect to such Distribution Date and the amount of Excess
Spread and Shared Excess Finance Charge Collections, the amount withdrawn from
the Cash Collateral Account and the amount of Reallocated Principal Collections
used to fund the Class A Allocable Amount for such Distribution Date (a "Class A
Investor Charge Off"). Class A Investor Charge Offs shall thereafter be
reimbursed and the Class A Adjusted Invested Amount increased (but not by an
amount in excess of the aggregate unreimbursed Class A Investor Charge Offs) on
any Distribution Date by (i) the amount of Excess Spread and Shared Excess
Finance Charge Collections allocated and available for that purpose pursuant to
Section 4.8(b), and (ii) without duplication, the aggregate amount of the
reductions of the Series Adjustment Amounts allocable to the Class A Invested
Amount pursuant to Section 4.7(f).
41
45
(b) On each Determination Date, the Servicer shall calculate
the Class B Required Amount, if any, for the related Distribution Date. If, on
any Distribution Date, the Class B Required Amount for such Distribution Date
exceeds the sum of (x) the amount of Excess Spread and the Shared Excess Finance
Charge Collections allocable to Series 1997-2 with respect to such Distribution
Date which are not used to fund the Class A Required Amount or reimburse Class A
Investor Charge Offs on the related Distribution Date, (y) the portion, if any,
of the Available Cash Collateral Amount which is remaining after applying the
Available Cash Collateral Amount to fund the Class A Required Amount with
respect to such Distribution Date and (z) the amount of Reallocated Principal
Collections which are available to fund the Class B Required Amount on such
Distribution Date pursuant to Section 4.9(b), then the Class D Invested Amount
(after giving effect to any reduction thereof pursuant to Sections 4.7(a) and
(d)) shall be reduced by the amount of such excess, but not by more than the
excess of the Class B Allocable Amount for such Distribution Date over the
amount of Excess Spread and Shared Excess Finance Charge Collections, the amount
withdrawn from the Cash Collateral Account and the amount of Reallocated
Principal Collections used to fund the Class B Allocable Amount for such
Distribution Date. In the event that such reduction would cause the Class D
Invested Amount to be a negative number, the Class D Invested Amount shall be
reduced to zero and the Collateral Indebtedness Amount (after giving effect to
any reduction thereof pursuant to Sections 4.7(a) and (c)) shall be reduced by
the amount by which the Class D Invested Amount would have been reduced below
zero, but not by more than the excess, if any, of the Class B Allocable Amount
for such Distribution Date over the amount of such reduction, if any, of the
Class D Invested Amount with respect to such Distribution Date and the amount of
Excess Spread and Shared Excess Finance Charge Collections, the amount withdrawn
from the Cash Collateral Account and the amount of Reallocated Principal
Collections used to fund the Class B Allocable Amount for such Distribution
Date. In the event that such reduction would cause the Collateral Indebtedness
Amount to be a negative number, the Collateral Indebtedness Amount shall be
reduced to zero and the Class B Adjusted Invested Amount (after giving effect to
any reduction thereof pursuant to Section 4.7(a)) shall be reduced by the amount
by which the Collateral Indebtedness Amount would have been reduced below zero,
but not by more than the excess, if any, of the Class B Allocable Amount for
such Distribution Date over the aggregate amount of the reductions, if any, of
the Class D Invested Amount and the Collateral Indebtedness Amount with respect
to such Distribution Date and the amount of Excess Spread and Shared Excess
Finance Charge Collections, the amount withdrawn from the Cash Collateral
Account and the amount of Reallocated Principal Collections used to fund the
Class B Allocable Amount for such Distribution Date
42
46
(a "Class B Investor Charge Off"). Class B Investor Charge Offs shall thereafter
be reimbursed and the Class B Adjusted Invested Amount increased (but not by an
amount in excess of the aggregate unreimbursed Class B Investor Charge Offs) on
any Distribution Date by (i) the amount of Excess Spread and Shared Excess
Finance Charge Collections allocated and available for that purpose pursuant to
Section 4.8(e), and (ii) without duplication, the aggregate amount of the
reductions of the Series Adjustment Amounts allocable to the Class B Invested
Amount pursuant to Section 4.7(f).
(c) On each Determination Date, the Servicer shall calculate
the Collateral Allocable Amount, if any, for the related Distribution Date. If,
on any Distribution Date, the Collateral Allocable Amount exceeds the sum of (x)
the amount of Excess Spread and Shared Excess Finance Charge Collections
available to fund the Collateral Allocable Amount on such Distribution Date
pursuant to Section 4.8(h), (y) the portion, if any, of the Available Cash
Collateral Amount available to fund the Collateral Allocable Amount on such
Distribution Date pursuant to Section 4.12(c) and (z) the amount of Reallocated
Principal Collections available to fund the Collateral Allocable Amount on such
Distribution Date pursuant to Section 4.9(c), then the Class D Invested Amount
(after giving effect to any reduction thereof pursuant to Sections 4.7(a), (b)
and (d)) shall be reduced by the amount of such excess. In the event that such
reduction would cause the Class D Invested Amount to be a negative number, the
Class D Invested Amount shall be reduced to zero and the Collateral Indebtedness
Amount shall be reduced by the amount by which the Class D Invested Amount would
have been reduced below zero (a "Collateral Investor Charge Off"); provided,
however, that the Collateral Indebtedness Amount shall not be reduced below
zero. Collateral Investor Charge Offs shall thereafter be reimbursed and the
Collateral Indebtedness Amount increased (but not by an amount in excess of the
aggregate unreimbursed Collateral Investor Charge Offs) on any Distribution Date
by (i) the amount of Excess Spread and Shared Excess Finance Charge Collections
allocated and available for that purpose pursuant to Section 4.8(h), and (ii)
without duplication, the aggregate amount of the reductions of the Series
Adjustment Amounts allocable to the Collateral Indebtedness Amount pursuant to
Section 4.7(f).
(d) On each Determination Date, the Servicer shall calculate
the Class D Allocable Amount, if any, for the related Distribution Date. If, on
any Distribution Date, the Class D Allocable Amount exceeds the amount of Excess
Spread and Shared Excess Finance Charge Collections available to fund the Class
D Allocable Amount on such Distribution Date pursuant to Section 4.8(m), then
the Class D Invested Amount shall be reduced by the
43
47
amount of such excess (a "Class D Investor Charge Off"); provided, however, that
the Class D Invested Amount shall not be reduced below zero. Class D Investor
Charge Offs shall thereafter be reimbursed and the Class D Invested Amount
increased (but not by an amount in excess of the aggregate unreimbursed Class D
Investor Charge Offs) on any Distribution Date by (i) the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available for
that purpose pursuant to Section 4.8(m), and (ii) without duplication, the
aggregate amount of the reductions of the Series Adjustment Amounts allocable to
the Class D Invested Amount pursuant to Section 4.7(f).
(e) Whenever funds or other amounts are available hereunder in
respect of the Class A Allocable Amount, the Class B Allocable Amount, the
Collateral Allocable Amount or the Class D Allocable Amount, as the case may be,
such funds or other amounts shall be applied first to the elimination of any
deficiency resulting from Default Amounts and then to any deficiency resulting
from Series Adjustment Amounts.
(f) Any reduction of the Series Adjustment Amount for Series
1997-2 as a result of the deposit of funds into the Excess Funding Account, the
repurchase or other repayment of Investor Certificates or the increase of the
Principal Receivables in the Trust shall be allocated first to the Class A
Certificates, then to the Class B Certificates, then to the Collateral
Indebtedness Interest and finally to the Class D Certificates, in each case to
the extent of any unreimbursed reduction of the Invested Amount thereof
attributable to Series Adjustment Amounts.
Section 4.8 Excess Spread; Shared Excess Finance Charge
Collections . The Servicer shall apply, or shall instruct the Trustee to apply,
on each Distribution Date, Excess Spread and Shared Excess Finance Charge
Collections allocable to Series 1997-2 pursuant to Section 4.1(h) with respect
to the preceding Collection Period, to make the following distributions in the
following priority:
(a) an amount up to the Class A Required Amount, if
any, with respect to such Distribution Date shall be distributed by the
Trustee to fund any deficiency pursuant to Sections 4.6(a)(i), (ii) and
(iii), in that order of priority;
(b) an amount equal to the aggregate amount of Class
A Investor Charge Offs which have not been previously reimbursed shall
be treated as a portion of Available Principal Collections for such
Distribution Date;
44
48
(c) an amount up to the Class B Required Amount, if
any, with respect to such Distribution Date shall be distributed by the
Trustee to fund any deficiency pursuant to Sections 4.6(b)(i) and (ii),
in that order of priority;
(d) an amount equal to [any remaining portion of the
Class B Required Amount] for such Distribution Date shall be treated as
a portion of Available Principal Collections for such Distribution
Date;
(e) an amount equal to the aggregate amount by which
the Class B Invested Amount has been reduced pursuant to clauses (d),
(e) and (f) of the definition of "Class B Invested Amount" (but not in
excess of the aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(f) an amount equal to Collateral Monthly Interest
for such Distribution Date, plus the amount of Collateral Monthly
Interest previously due but not distributed to the Collateral
Indebtedness Holder on a prior Distribution Date, plus the amount of
Collateral Additional Interest for such Distribution Date and any
Collateral Additional Interest previously due but not distributed to
the Collateral Indebtedness Holder shall be applied in accordance with
Section 2.10 of the Loan Agreement;
(g) if First North American National Bank is the
Servicer, an amount equal to the Class A Servicing Fee, the Class B
Servicing and the Collateral Servicing Fee for such Distribution Date
(or, if First North American National Bank is no longer the Servicer,
the portion thereof not paid pursuant to Section 4.6 (a),(b) or (c)),
plus the amount of any Class A Servicing Fee, Class B Servicing Fee or
Collateral Servicing Fee previously due but not distributed to the
Servicer on a prior Distribution Date, shall be distributed to the
Servicer;
(h) an amount equal to the Collateral Allocable
Amount, if any, for such Distribution Date shall be treated as a
portion of Available Principal Collections for such Distribution Date;
(i) an amount equal to the aggregate amount by which
the Collateral Indebtedness Amount has been reduced pursuant to clauses
(c) and (d) of the definition of "Collateral Indebtedness Amount" (but
not in excess of the aggregate amount of such reductions which have not
been
45
49
previously reimbursed) shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(j) an amount equal to the excess, if any, of the
Required Cash Collateral Amount over the Available Cash Collateral
Amount (without giving effect to any deposit made on such date
hereunder and after giving effect to any payment of Collateral Monthly
Principal or Class D Monthly Principal being made on such date) shall
be deposited into the Cash Collateral Account;
(k) an amount equal to Class D Monthly Interest for
such Distribution Date, plus the amount of Class D Monthly Interest
previously due but not distributed to the Class D Certificateholders on
a prior Distribution Date, plus the amount of Class D Additional
Interest for such Distribution Date and any Class D Additional Interest
previously due but not distributed shall be distributed to the Paying
Agent for payment to the Class D Certificateholders;
(l) if First North American National Bank is the
Servicer, an amount equal to the Class D Servicing Fee for such
Distribution Date (or, if First North American National Bank is no
longer the Servicer, the portion of the Class D Servicing Fee for such
Distribution Date not paid pursuant to Section 4.6(d)(i)), plus the
amount of any Class D Servicing Fee previously due but not distributed
to the Servicer on a prior Distribution Date, shall be distributed to
the Servicer;
(m) an amount equal to the Class D Allocable Amount
for such Distribution Date shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(n) an amount equal to the aggregate amount by which
the Class D Invested Amount has been reduced pursuant to clauses (c)
and (d) of the definition of "Class D Invested Amount" (but not in
excess of the aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(o) an amount equal to the excess, if any, of the
Required Reserve Account Amount over the amount on deposit in the
Reserve Account shall be deposited into the Reserve Account;
46
50
(p) an amount equal to the aggregate of any other
amounts then due to the Collateral Indebtedness Holder pursuant to the
Loan Agreement shall be applied in accordance with Section 2.10 of the
Loan Agreement; and
(q) the balance, if any, shall constitute "Shared
Excess Finance Charge Collections" with respect to Group One and shall
be applied in accordance with Section 4.1(h).
Section 4.9 Reallocated Principal Collections. The Servicer
shall apply, or shall instruct the Trustee to apply, on each Distribution Date,
Reallocated Principal Collections (applying all Class D Subordinated Principal
Collections prior to applying any Collateral Subordinated Principal Collections,
and applying all Collateral Subordinated Principal Collections prior to applying
any Class B Subordinated Principal Collections, and applying no Class B
Subordinated Principal Collections with respect to the Class B Required Amount
pursuant to clause (b) below and applying no Class B Subordinated Principal
Collections or Collateral Subordinated Principal Collections with respect to the
Collateral Required Amount pursuant to clause (c) below) with respect to such
Distribution Date, to make the following distributions in the following
priority:
(a) an amount equal to the excess, if any, of (i) the
Class A Required Amount, if any, with respect to such Distribution Date
over (ii) the sum of (x) the amount of Excess Spread and Shared Excess
Finance Charge Collections allocable to Series 1997-2 with respect to
the preceding Collection Period pursuant to Section 4.8(a) and (y) the
Available Cash Collateral Amount with respect to such Distribution Date
shall be distributed by the Trustee to fund any deficiency pursuant to
Sections 4.6(a)(i), (ii) and (iii), in that order of priority;
(b) an amount equal to the excess, if any, of (i) the
Class B Required Amount, if any, with respect to such Distribution Date
over (ii) the sum of (x) the amount of Excess Spread and Shared Excess
Finance Charge Collections allocable to Series 1997-2 with respect to
the preceding Collection Period available in respect of the Class B
Required Amount pursuant to Section 4.8(c) and (d) on such Distribution
Date and (y) the amount withdrawn from the Cash Collateral Account in
respect of the Class B Required Amount with respect to such
Distribution Date shall be distributed by the Trustee to fund any
deficiency pursuant to Sections 4.8(c) and (d), in that order of
priority; and
(c) an amount equal to the excess, if any, of (i) the
Collateral Required Amount, if any, with respect to such
47
51
Distribution Date over (ii) the sum of (x) the amount of Excess Spread
and Shared Excess Finance Charge Collections allocable to Series 1997-2
with respect to the preceding Collection Period available in respect of
the Collateral Required Amount pursuant to Sections 4.8(f) and (h) on
such Distribution Date and (y) the amount withdrawn from the Cash
Collateral Account in respect of the Collateral Required Amount with
respect to such Distribution Date shall be distributed by the Trustee
to fund any deficiency pursuant to Section 4.6(c)(i) and Sections
4.8(f) and (h), in that order of priority.
Section 4.10 Principal Shortfall. The "Principal Shortfall"
for Series 1997-2 shall be equal to (a) for any Distribution Date with respect
to the Revolving Period, zero or such higher amount designated by the Servicer
in an Officer's Certificate, (b) for any Distribution Date with respect to the
Accumulation Period (on or prior to the Class B Expected Final Distribution
Date), the excess, if any, of the Controlled Deposit Amount with respect to such
Distribution Date over the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), (c) for any Distribution Date with respect to the Early
Amortization Period, unless and until the Class A Adjusted Invested Amount and
the Class B Adjusted Invested Amount shall have been paid in full, the excess,
if any, of the Invested Amount as of the end of the preceding Collection Period
over the amount of Available Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Shared Principal Collections) and
(d) for each Distribution Date after the Class A Adjusted Invested Amount and
the Class B Adjusted Invested Amount have been paid in full, the excess, if any,
of the Invested Amount over the amount of Available Principal Collections for
such Distribution Date, or such lesser amount as may be designated by the
Servicer.
On each Distribution Date during the Early Amortization
Period, there shall be withdrawn from the Excess Funding Account an amount equal
to the product of (i) the amount on deposit in the Excess Funding Account, if
any, and (ii) a fraction, the numerator of which is the Principal Shortfall with
respect to Series 1997-2 and the denominator of which is equal to the aggregate
Principal Shortfalls of all Series then outstanding. Such amount shall be
deposited in the Collection Account and be considered as part of Available
Principal Collections with respect to Series 1997-2.
Section 4.11 Finance Charge Shortfall. The "Finance Charge
Shortfall" for Series 1997-2 for any Distribution Date shall be equal to the
excess, if any, of (a) the full amount
48
52
required to be paid, without duplication, pursuant to Sections 4.6(a), 4.6(b),
4.6(c) and 4.6(d) and Section 4.8 (a)-(o) on such Distribution Date over (b) the
applicable Invested Percentage of Collections of Finance Charge Receivables with
respect to the preceding Collection Period.
Section 4.12 Cash Collateral Account. (a) The Servicer shall
establish and maintain, in the name of the Trustee, for the benefit of the
Series 1997-2 Certificateholders, with an Eligible Institution a segregated
trust account (the "Cash Collateral Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1997-2 Certificateholders. The Cash Collateral Account shall initially be
established with the Trustee. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Cash Collateral
Account and in all proceeds thereof. The Cash Collateral Account shall be under
the sole dominion and control of the Trustee for the benefit of the Series
1997-2 Certificateholders. If, at any time, the institution holding the Cash
Collateral Account ceases to be an Eligible Institution, the Trustee (or the
Servicer on its behalf) shall within five Business Days establish a new Cash
Collateral Account meeting the conditions specified above with an Eligible
Institution and shall transfer any cash and/or any investments to such new Cash
Collateral Account. The Trustee, at the direction of the Servicer, shall make
deposits to and withdrawals from the Cash Collateral Account in the amounts and
at the times set forth in this Agreement and the Loan Agreement. All withdrawals
from the Cash Collateral Account shall be made in the priority set forth below.
The interest of the Collateral Indebtedness Holder in the Cash Collateral
Account shall be subordinated to the interests of the Class A Certificateholders
and the Class B Certificateholders as provided herein and in the Loan Agreement.
The Collateral Indebtedness Holder shall not be entitled to reimbursement from
the Trust Property for any withdrawals from the Cash Collateral Account except
as specifically provided in this Agreement and the Loan Agreement.
(b) Funds on deposit in the Cash Collateral Account shall be
invested at the direction of the Servicer by the Trustee in Eligible
Investments. Funds on deposit in the Cash Collateral Account on any Distribution
Date, after giving effect to any withdrawals from the Cash Collateral Account on
such Distribution Date, shall be invested in such investments that will mature
so that such funds will be available for withdrawal on or prior to the following
Distribution Date. No Eligible Investment shall be disposed of prior to its
maturity; provided, however, that the Trustee may sell, liquidate or dispose of
an Eligible Investment before its maturity, if so directed by the Servicer, the
Servicer having reasonably determined that the interest of the 1997-2
49
53
Certificateholders may be adversely affected if such Eligible Investment is held
to its maturity. The proceeds of any such investments shall be invested in such
investments that will mature so that such funds will be available for withdrawal
on or prior to the Distribution Date immediately following the date of such
investment. The Trustee shall maintain for the benefit of the Series 1997-2
Certificateholders possession of the negotiable instruments or securities, if
any, evidencing such Eligible Investments. On each Distribution Date, all
interest and earnings (net of losses and investment expenses) on funds on
deposit in the Cash Collateral Account shall be treated as a portion of Excess
Spread for such Distribution Date and applied in accordance with Section 4.8.
(c) On each Determination Date, the Servicer shall calculate
the amount (the "Required Draw Amount") by which the amounts specified in
clauses (a) through (f) and clause (h) of Section 4.8 with respect to the
related Distribution Date exceed the amount of Excess Spread and Shared Excess
Finance Charge Collections allocable to Series 1997-2 with respect to the
preceding Collection Period available to pay such specified amounts. In the
event that for any Distribution Date the Required Draw Amount is greater than
zero, the Servicer shall give written notice to the Trustee of such positive
Required Draw Amount on the related Determination Date. On the Distribution
Date, the Required Draw Amount, if any, up to the Available Cash Collateral
Amount, shall be withdrawn from the Cash Collateral Account and distributed to
fund any deficiency pursuant to clauses (a) through (f) and clause (h) of
Section 4.8 (in the order of priority set forth in Section 4.8).
(d) In the event that the Cash Enhancement Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Cash Collateral Account and all payments of principal to Series 1997-2
Certificateholders with respect to such Distribution Date, is greater than zero,
the Trustee, acting in accordance with the instructions of the Servicer, shall
withdraw from the Cash Collateral Account, and pay to the Transferor, an amount
equal to such Cash Enhancement Surplus; provided, however, that the Transferor,
at its option, to be exercised in its sole discretion, may instruct the Servicer
not to instruct the Trustee to withdraw such Cash Enhancement Surplus (or any
portion thereof), in which event the Trustee shall not withdraw such Cash
Enhancement Surplus (or portion thereof) from the Cash Collateral Account.
Section 4.13 Principal Funding Account. (a) The Servicer
shall establish and maintain, in the name of the Trustee, for the benefit of the
Series 1997-2 Certificateholders, with an Eligible Institution a segregated
trust account (the
50
54
"Principal Funding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1997-2
Certificateholders. The Principal Funding Account shall initially be established
with the Trustee. The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Principal Funding Account and in all
proceeds thereof. The Principal Funding Account shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1997-2
Certificateholders. If, at any time, the institution holding the Principal
Funding Account ceases to be an Eligible Institution, the Trustee (or the
Servicer on its behalf) shall within five Business Days establish a new
Principal Funding Account meeting the conditions specified above with an
Eligible Institution and shall transfer any cash and/or any investments to such
new Principal Funding Account. Pursuant to the authority granted to the Servicer
in Section 3.1(b), the Servicer shall have the power, revocable by the Trustee,
to make withdrawals and payments or to instruct the Trustee to make withdrawals
and payments from the Principal Funding Account for the purposes of carrying out
the Servicer's or the Trustee's duties hereunder.
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer by the Trustee in Eligible
Investments. All such Eligible Investments shall be held by the Trustee for the
benefit of the Series 1997-2 Certificateholders; provided, however, that on each
Distribution Date all interest and other investment income (net of losses and
investment expenses) ("Principal Funding Investment Proceeds") on funds on
deposit therein shall be applied as set forth in Section 4.13(c) below. Funds on
deposit in the Principal Funding Account shall be invested in Eligible
Investments that will mature so that such funds will be available for withdrawal
on or prior to the following Distribution Date. No Eligible Investment shall be
disposed of prior to its maturity; provided, however, that the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Servicer, the Servicer having reasonably determined that the
interest of the 1997-2 Certificateholders may be adversely affected if such
Eligible Investment is held to its maturity.
(c) On each Distribution Date with respect to the Accumulation
Period, the Servicer shall direct the Trustee to withdraw from the Principal
Funding Account and deposit into the Collection Account all Principal Funding
Investment Proceeds then on deposit in the Principal Funding Account and such
Principal Funding Investment Proceeds shall be treated as a portion of (x) prior
to the payment in full of the Class A Adjusted Invested Amount, Class A
Available Funds and (y) thereafter, Class B Available Funds, in each case for
such Distribution Date.
51
55
(d) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to be
principal amounts on deposit therein for purposes of this Agreement.
Section 4.14 Reserve Account. (a) The Servicer shall
establish and maintain, in the name of the Trustee, for the benefit of the
Series 1997-2 Certificateholders, with an Eligible Institution a segregated
trust account (the "Reserve Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series 1997-2
Certificateholders. The Reserve Account shall initially be established with the
Trustee. The Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Reserve Account and in all proceeds thereof.
The Reserve Account shall be under the sole dominion and control of the Trustee
for the benefit of the Series 1997-2 Certificateholders. If at any time the
institution holding the Reserve Account ceases to be an Eligible Institution,
the Trustee (or the Servicer on its behalf) shall within five Business Days
establish a new Reserve Account meeting the conditions specified above with an
Eligible Institution, and shall transfer any cash and/or any investments to such
new Reserve Account. The Trustee, at the direction of the Servicer, shall (i)
make withdrawals from the Reserve Account from time to time in an amount up to
the Available Reserve Account Amount at such time, for the purposes set forth in
this Agreement, and (ii) on each Distribution Date (from and after the Reserve
Account Funding Date) prior to the termination of the Reserve Account, make a
deposit into the Reserve Account in the amount specified in, and otherwise in
accordance with, Section 4.8(p).
(b) Funds on deposit in the Reserve Account shall be invested
at the direction of the Servicer by the Trustee in Eligible Investments. Funds
on deposit in the Reserve Account on any Distribution Date, after giving effect
to any withdrawals from the Reserve Account on such Distribution Date, shall be
invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Distribution Date. The
Trustee shall maintain for the benefit of the Series 1997-2 Certificateholders
possession of the negotiable instruments or securities, if any, evidencing such
Eligible Investments. No Eligible Investment shall be disposed of prior to its
maturity; provided, however, that the Trustee may sell, liquidate or dispose of
an Eligible Investment before its maturity, if so directed by the Servicer, the
Servicer having reasonably determined that the interest of the Series 1997-2
Certificateholders may be adversely affected if such Eligible Investment is held
to its maturity. On each Distribution Date, all interest and earnings (net of
losses and investment expenses)
52
56
on funds on deposit in the Reserve Account shall be retained in the Reserve
Account (to the extent that the Available Reserve Account Amount is less than
the Required Reserve Account Amount) and the balance, if any, shall be deposited
in the Collection Account and treated as a portion of (x) until the payment in
full of the Class A Adjusted Invested Amount, Class A Available Funds and (y)
thereafter, Class B Available Funds, in each case for such Distribution Date.
For purposes of determining the availability of funds or the balance in the
Reserve Account for any reason under this Agreement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On the Determination Date preceding each Distribution Date
with respect to the Accumulation Period (prior to the Class B Expected Final
Distribution Date) and the first Special Distribution Date, the Servicer shall
calculate the "Reserve Draw Amount" which shall be equal to the excess, if any,
of the Covered Amount with respect to such Distribution Date or Special
Distribution Date over the Principal Funding Investment Proceeds with respect to
such Distribution Date or Special Distribution Date.
(d) In the event that for any Distribution Date the Reserve
Draw Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Trustee (acting in accordance with the instructions of
the Servicer), deposited into the Collection Account and included in (i) until
the payment in full of the Class A Adjusted Invested Amount, Class A Available
Funds and (ii) thereafter, Class B Available Funds, in each case for such
Distribution Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay in accordance with the Loan
Agreement, an amount equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the
Trust pursuant to Article XII of the Agreement, (ii) the day on which the Class
A Adjusted Invested Amount and Class B Adjusted Invested Amount have been paid
in full, (iii) if the Accumulation Period has not commenced, the occurrence of
an Early Amortization Event with respect to Series 1997-2 and (iv) if the
Accumulation Period has commenced, the earlier of the first Special Distribution
Date and the Class B Expected Final Distribution Date, the Trustee, acting in
accordance with the
53
57
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 1997-2 Certificateholders which are payable from the Reserve Account
as provided herein, shall withdraw from the Reserve Account and pay in
accordance with the Loan Agreement all amounts, if any, on deposit in the
Reserve Account, and the Reserve Account shall be deemed to have terminated for
all purposes of the Agreement.
Section 4.15. Postponement of Accumulation Period. The
Accumulation Period is scheduled to commence at the end of the day on the last
day of the October 2001 Collection Period; provided, however, that, if the
Accumulation Period Length (determined as described below) shall be less than 12
months, the date on which the Accumulation Period actually commences may, at the
option of the Transferor, be delayed to the first day of any month that is a
number of whole months prior to the Class A Expected Final Distribution Date at
least equal to the Accumulation Period Length and, as a result, the number of
Collection Periods in the Accumulation Period shall at least equal the
Accumulation Period Length. On each Determination Date until the Accumulation
Period begins, the Servicer shall determine the "Accumulation Period Length,"
which shall equal the number of whole months such that the sum of the
Accumulation Period Factors for each month during such period will be equal to
or greater than the Required Accumulation Factor Number; provided, however, that
the Accumulation Period Length shall not be determined to be less than one
month.
Section 4.16 Additional Issuances of Class D Certificates.
(a) On any day in the Revolving Period, the Trustee shall issue to the
Transferor for execution, upon the Transferor's request, and the Trustee shall
authenticate and deliver, in accordance with the Transferor's instructions, an
additional principal amount of Class D Certificates ("Additional Class D
Certificates") as provided below.
(b) Additional Class D Certificates may be issued, executed
and delivered upon satisfaction of the following conditions:
(i) after giving effect to the issuance of such
Additional Class D Certificates, the Transferor Amount shall be at
least equal to the Minimum Transferor Amount and the Aggregate
Principal Receivables shall be at least equal to the Minimum Aggregate
Principal Receivables;
(ii) the Transferor shall have given notice by
10:00 A.M., New York City time, on the date such Additional Class D
Certificates are to be issued to the Trustee, the
54
58
Paying Agent and the Collateral Indebtedness Holder of the proposed
issuance of such Additional Class D Certificates;
(iii) on or before the date on which such Additional
Class D Certificates are issued, the Transferor shall have delivered an
Opinion of Counsel addressed to the Trustee, dated the date of such
issuance, to the effect that such issuance will not adversely affect
the tax characterization as debt of Investor Certificates of any
outstanding Series or Class with respect to which an Opinion of Counsel
addressed to the Trustee was delivered at the time of their issuance
that such Investor Certificates would be characterized as debt, cause
the Trust to be classified, for federal income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation,
or cause or constitute an event in which gain or loss would be
recognized by any Certificateholder; and
(iv) on or before the date such Additional Class D
Certificates are issued, the Transferor shall deliver to the Trustee an
Officer's Certificate confirming the item set forth in clause (i)
above. The Trustee may conclusively rely on such certificate, shall
have no duty to make inquiries with regard to matters set forth therein
and shall incur no liability in so relying.
[END OF ARTICLE IV]
SECTION 9. Article V of the Agreement. Article V of the
Agreement as it relates to Series 1997-2 shall read in its entirety as follows:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.1 Distributions. (a) On each Determination Date,
the Servicer shall deliver to the Trustee and Paying Agent a certificate
substantially in the form of Exhibit D prepared by the Servicer.
(b) On each Distribution Date, the Paying Agent shall
distribute to each Class A Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class A Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay interest on the Class A
Certificates pursuant to this Agreement.
55
59
(c) On the Class A Expected Final Distribution Date and each
Special Distribution Date, the Paying Agent shall distribute to each Class A
Certificateholder of record as of the preceding Record Date (other than as
provided in Section 12.2 respecting a final distribution) such Class A
Certificateholder's pro rata share of the amounts that are available on such
date to pay principal of the Class A Certificates pursuant to this Agreement.
(d) On each Distribution Date, the Paying Agent shall
distribute to each Class B Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class B Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay interest on the Class B
Certificates pursuant to this Agreement.
(e) On the Class B Expected Final Distribution Date and each
Special Distribution Date, the Paying Agent shall distribute to each Class B
Certificateholder of record as of the preceding Record Date (other than as
provided in Section 12.2 respecting a final distribution) such Class B
Certificateholder's pro rata share of the amounts that are available on such
date to pay principal of the Class B Certificates pursuant to this Agreement.
(f) On each Distribution Date, the Paying Agent shall
distribute to each Class D Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class D Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay interest on the Class D
Certificates pursuant to this Agreement.
(g) On each Distribution Date, the Paying Agent shall
distribute to each Class D Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class D Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay principal of the Class D
Certificates pursuant to this Agreement.
(h) Except as provided in Section 12.2 with respect to a final
distribution and Section 5.3, distributions to Series 1997-2 Certificateholders
hereunder shall be made by check mailed to each such Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any such Series 1997-2 Certificate or the making of
any notation thereon; provided, however, that with respect to such Certificates
registered in the name of a
56
60
Clearing Agency, such distributions shall be made to such Clearing Agency in
immediately available funds.
Section 5.2 Statements to Series 1997-2 Certificateholders.
On each Distribution Date, the Paying Agent, on behalf of the Trustee, shall
forward to each Series 1997-2 Certificateholder, including, for the avoidance of
doubt, the Collateral Indebtedness Holder, a statement substantially in the form
of Exhibit E prepared by the Servicer setting forth certain information relating
to the Trust and the Series 1997-2 Certificates.
On or before January 31 of each calendar year, beginning with
1998, the Paying Agent, on behalf of the Trustee, shall furnish or cause to be
furnished to each Person who at any time during the preceding calendar year was
a Series 1997-2 Certificateholder a statement prepared by the Servicer
containing the information which is required to be contained in the monthly
statement referred to in the preceding paragraph, aggregated for such calendar
year or the applicable portion thereof during which such Person was a
Certificateholder of such Series, together with other information as is required
to be provided by an issuer of indebtedness under the Internal Revenue Code and
such other customary information as is necessary to enable the
Certificateholders of such Series to prepare their tax returns. Such obligation
of the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall have been provided by the Paying
Agent pursuant to any requirements of the Internal Revenue Code as from time to
time in effect.
Section 5.3 Distributions to Collateral Indebtedness Holder.
Notwithstanding the foregoing provisions of this Article V, amounts payable to
the Collateral Indebtedness Holder pursuant to this Series Supplement shall be
distributed in the manner provided for in the Loan Agreement.
[END OF ARTICLE V]
SECTION 10. Early Amortization Events. If any one of the
events specified in Section 9.1 of the Agreement or any one of the following
events shall occur during either the Revolving Period or the Accumulation Period
with respect to the Series 1997-2 Certificates:
(a) failure on the part of the Transferor (x) to make
any payment or deposit required by the terms of the Agreement on or
before the date occurring five Business Days after the date such
payment or deposit is required to be made; or (y) duly to observe or
perform in any material
57
61
respect any other covenants or agreements of the Transferor set forth
in the Agreement that continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the
Trustee, or to the Transferor and the Trustee by the Holders of Series
1997-2 Certificates evidencing not less than 25% of the Invested
Amount, and as a result of which the interests of the Series 1997-2
Certificateholders are materially and adversely affected;
(b) any representation or warranty made by the
Transferor in the Agreement shall prove to have been incorrect in any
material respect when made that continues to be incorrect in any
material respect for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of Series 1997-2 Certificates
evidencing not less than 50% of the Invested Amount, and as a result of
which the interests of the Series 1997-2 Certificateholders are
materially and adversely affected; provided, however, that if the
representation or warranty which was breached relates to any particular
Receivable or group of Receivables, an Early Amortization Event shall
not be deemed to have occurred hereunder if the Transferor shall have
accepted reassignment of such Receivable, or all of such Receivables,
if applicable, during such period (or such longer period not to exceed
a total of 90 days as the Trustee may specify) in accordance with the
provisions hereof;
(c) the Transferor or Circuit City shall consent to
the appointment of a trustee, conservator, receiver, liquidator,
custodian or other similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities,
receivership, conservatorship or similar proceedings of or relating to
the Transferor or Circuit City or of or relating to all or
substantially all of its property; or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver, liquidator,
custodian or other similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities,
receivership, conservatorship or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Transferor or Circuit City and such decree or order shall
have remained in force undischarged or unstayed for a period of 30
days; either the Transferor or Circuit City shall admit in writing
58
62
its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable bankruptcy, insolvency,
receivership, conservatorship or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; an involuntary proceeding shall be
commenced or an involuntary petition shall be filed with respect to the
Transferor or Circuit City in a court of competent jurisdiction seeking
to take advantage of any applicable bankruptcy, insolvency,
receivership, conservatorship or reorganization statute and such
proceeding or petition shall continue undismissed for 60 days; or the
Transferor shall become unable for any reason to transfer Receivables
to the Trust in accordance with the provisions of the Agreement;
(d) any Servicer Default shall occur that would have
a material adverse effect on the Series 1997-2 Certificates;
(e) the Transferor shall fail to designate
Supplemental Accounts or cause the Trust to repurchase Investor
Certificates in an amount and within the time period required by
Section 2.6(a) of the Agreement; or
(f) the average of the Portfolio Yields for any three
consecutive Collection Periods shall be less than the average of the
Base Rates for such period plus 2.00%;
(g) the Class A Invested Amount shall not be paid in
full on the Class A Expected Final Distribution Date or the Class B
Invested Amount shall not be paid in full on the Class B Expected Final
Distribution Date; or
(h) the Retained Percentage shall be equal to or
less than 2.00% as of the last day of any Collection Period;
then, in the case of any event described in clause (a), (b) or (d), an Early
Amortization Event will be deemed to have occurred with respect to the Series
1997-2 Certificates only if, after any applicable grace period described in the
clauses, either the Trustee or Series 1997-2 Certificateholders evidencing more
than 50% of the Invested Amount of such Series, by written notice to the
Transferor and the Servicer (and to the Trustee, if given by such
Certificateholders) declare that an Early Amortization Event has occurred as of
the date of such notice, and, in the case of any event described in Section 9.1
of the Agreement an Early Amortization Event with respect to all Series, and in
the case of any event described in clause (c), (e), (f), (g), or (h), an Early
Amortization Event with respect to only the Series 1997-2 Certificates, will be
deemed to have occurred without any notice
59
63
or other action on the part of the Trustee or the Certificateholders or all
certificateholders, as appropriate, immediately upon the occurrence of such
event.
SECTION 11. Restrictions on Transfer. (a) The Collateral
Indebtedness Interest shall be subject to the restrictions on transfer set forth
in the Loan Agreement.
(b) The Transferor may at any time, without the consent of the
Series 1997-2 Certificateholders, (i) sell or transfer all or a portion of the
Class D Certificates, provided that (A) the Transferor shall have given notice
to the Trustee, the Servicer and the Rating Agencies of such proposed sale or
transfer of the Class D Certificates at least five Business Days prior to the
consummation of such sale or transfer; (B) the Rating Agency Condition shall
have been satisfied; (C) no Early Amortization Event shall have occurred prior
to the consummation of such proposed sale or transfer of Class D Certificates;
(D) the Transferor shall have delivered an Officer's Certificate dated the date
of the consummation of such proposed sale or transfer to the effect that, in the
reasonable belief of the Transferor, such action will not, based on the facts
known to such officer at the time of such certification, cause an Early
Amortization Event to occur with respect to any Series, and (E) the Transferor
shall have provided an Opinion of Counsel addressed to the Trustee, dated the
date of such certificate with respect to such action, that such proposed sale or
transfer will not (x) adversely affect the tax characterization as debt of
Investor Certificates of any outstanding Series or Class with respect to which
an Opinion of Counsel addressed to the Trustee was delivered at the time of
their issuance that such Investor Certificates would be characterized as debt,
(y) cause the Trust to be classified, for federal income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation and (z)
cause or constitute an event in which gain or loss would be recognized by any
Certificateholder.
(c) No Class D Certificate or any interest therein may be
Transferred except in accordance with this Section 11. Any sale, conveyance,
assignment, hypothecation, pledge, participation or other transfer (each, a
"Transfer") of a Class D Certificate otherwise permitted by this Section 11 will
be permitted only if it consists of a pro rata percentage interest in all
payments made with respect to such holder's Class D Certificates. No Class D
Certificate or any interest therein may be Transferred to any Person (each, an
"Assignee") unless the Assignee shall have executed and delivered the
certification referred to in subsection 11(e) below and each of the Transferor
and the Servicer shall have granted its prior consent thereto. The consent of
the Transferor and the Servicer shall be granted
60
64
unless the Transferor reasonably determines that such Transfer would create a
risk that the Trust would be classified for federal or any applicable state tax
purposes as an association or publicly traded partnership taxable as a
corporation; provided, however, that any attempted Transfer that would cause the
number of Targeted Holders to exceed ninety-nine shall be void.
(d) Each initial purchaser of a Class D Certificate or any
interest therein and any Assignee thereof shall certify to the Transferor, the
Servicer and the Trustee that it is either (x)(A) a citizen or resident of the
United States, (B) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof which,
if such entity is a tax-exempt entity, recognizes that payments with respect to
the Class D Certificates may constitute unrelated business taxable income or (C)
a person not described in (A) or (B) whose ownership of the Class D Certificates
is effectively connected with the conduct of a trade or business within the
United States (within the meaning of the Code) and whose ownership of any
interest in a Class D Certificate will not result in any withholding obligation
with respect to any payments with respect to the Class D Certificates by any
person and who will furnish to the Certificateholder making the Transfer, the
Servicer and the Trustee, a properly executed United States Internal Revenue
Service Form 4224 (and to agree to provide a new Form 4224 upon the expiration
or obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws) or (y) an estate or trust the
income of which is includible in gross income for United States federal income
tax purposes.
(e) Each initial purchaser of a Class D Certificate or any
interest therein and any Assignee thereof shall further certify to the
Transferor, the Servicer and the Trustee that it has neither acquired nor will
it sell, trade or transfer any interest in a Class D Certificate or cause an
interest in a Class D Certificate to be marketed on or through (i) an
"established securities market" within the meaning of Section 7704(b)(1) of the
Code and any treasury regulation thereunder, including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations or (ii) a "secondary market" within the
meaning of Section 7704(b)(2) of the Code and any treasury regulation
thereunder, including, without limitation, a market wherein interests in the
Class D Certificates are regularly quoted by any Person making a market in such
interests and a market wherein any Person regularly makes available bid or offer
quotes with respect to interests in the Class D Certificates and stands ready to
effect buy or sell transactions at the quoted price for itself or on behalf of
others. In addition, each initial purchaser of a
61
65
Class D Certificate or any interest therein and any Assignee shall certify,
prior to any delivery or Transfer to it of a Class D Certificate that it is not
and will not become, for so long as it holds an interest in a Class D
Certificate, a partnership, Subchapter S corporation or grantor trust for United
States federal income tax purposes. If an initial purchaser of an interest in a
Class D Certificate or an Assignee cannot make the certification described in
the preceding sentence, the Transferor may, in its sole discretion, prohibit a
Transfer to such entity; provided, however, that if the Transferor agrees to
permit such a Transfer, the Transferor may require additional certifications in
order to prevent the Trust from being treated as a publicly traded partnership.
Each Holder acknowledges that special tax counsel to the Transferor may render
Opinions of Counsel from time to time to the Transferor and others that the
Trust will not be treated as a publicly traded partnership taxable as a
corporation, and that such Opinions of Counsel will rely in part of the accuracy
of the certifications in this subsection 11(c).
(f) Each Class D Certificate will bear a legend or legends
substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF
FIRST NORTH AMERICAN NATIONAL BANK AND THE TRUSTEE THAT SUCH PURCHASER IS NOT
(I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL,
STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" (AS DESCRIBED IN 29 C.F.R. 2510.3-101)
BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING "PLAN
ASSETS" (AS DESCRIBED IN 29 C.F.R. 2510.3-101) OF ANY SUCH PLAN (INCLUDING FOR
PURPOSES OF CLAUSES (IV) AND (V), INSURANCE COMPANY GENERAL CONTRACTS (WITHIN
THE MEANING OF SECTION 401(C) OF ERISA), BUT EXCLUDING, ANY ENTITY REGISTERED
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR
TRANSFERRED, NOR MAY AN INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH
AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b)(1) OF
THE CODE AND ANY TREASURY REGULATION THEREUNDER, INCLUDING, WITHOUT LIMITATION,
AN OVER-THE-COUNTER-MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT REGULARLY
DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
62
66
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) TO
THE TRANSFEROR OR (2) TO A LIMITED NUMBER OF INSTITUTIONAL "ACCREDITED
INVESTORS" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) AND IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (UPON DELIVERY OF THE DOCUMENTATION REQUIRED BY THE POOLING AND
SERVICING AGREEMENT AND, IF THE TRUSTEE SO REQUIRES, AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE). EACH CERTIFICATE OWNER, BY ACCEPTING A BENEFICIAL
INTEREST IN THIS CERTIFICATE, IS DEEMED TO REPRESENT THAT IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT). THIS CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE TRANSFER AGENT
AND REGISTRAR THAT THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SERIES 1997-2
SUPPLEMENT HAVE BEEN COMPLIED WITH. THIS CERTIFICATE MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF
EACH OF THE TRANSFEROR AND THE SERVICER AND UNLESS AND UNTIL THE TRUSTEE SHALL
HAVE RECEIVED THE CERTIFICATIONS REQUIRED BY THE SERIES 1997-2 SUPPLEMENT.
(g) Upon surrender for registration of transfer of a Class D
Certificate at the office of the Transfer Agent and Registrar, accompanied by a
certification by the Class D Certificateholder substantially in the form
attached as Exhibit F, executed by the registered owner, in person or by such
Class D Certificateholder's attorney thereunto duly authorized in writing, and
receipt by the Trustee of the written consent of each of the Transferor and the
Servicer to such transfer, such Class D Certificate shall be transferred upon
the Certificate Register, and the Transferor shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferees one or
more new registered Class D Certificates of any authorized denominations and of
a like aggregate principal amount and tenor. Such transfers of Class D
Certificates shall be subject to the restrictions set forth in this Section 11
and to such other restrictions as shall be set forth in the text of the Class D
Certificates. Successive registrations and registrations of transfers as
aforesaid may be made from time to time as desired, and each such registration
shall be noted on the Certificate Register.
SECTION 12. Tax Characterization of the Collateral
Indebtedness Interest and the Class D Certificates. It is the
63
67
intention of the parties hereto that the Collateral Indebtedness Interest and
the Class D Certificates be treated under applicable tax law as indebtedness. In
the event that either the Collateral Indebtedness Interest or the Class D
Certificates are not so treated, it is the intention of the parties that the
Collateral Indebtedness Interest or the Class D Certificates, as the case may
be, be treated under applicable tax law as interests in a partnership that owns
the Receivables. In the event that either the Collateral Indebtedness Interest
or the Class D Certificates are treated under applicable tax law as interests in
a partnership, it is the intention of the parties that the Collateral
Indebtedness Interest or the Class D Certificates, as the case may be, be
treated as guaranteed payments and, if for any reason they are not so treated,
that the holders of the Collateral Indebtedness Interest or the Class D
Certificates, as the case may be, be specially allocated gross interest income
equal to the interest accrued during each Interest Period on the Collateral
Indebtedness Interest and on the Class D Certificates.
SECTION 13. Ratification of Master Pooling and Servicing
Agreement. As supplemented by this Series Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so supplemented by this
Series Supplement shall be read, taken, and construed as one and the same
instrument; provided, however, that pursuant to Section 9.2(a) of the Agreement,
the Trustee shall sell the portion of the Receivables allocable to Series 1997-2
unless instructed not to sell, dispose of or otherwise liquidate the Receivables
by holders of interests aggregating more than 50% of each Class of each Series
(including a majority in interest in each collateral indebtedness interest),
each holder of an interest in the Transferor Interest other than the Transferor
and any other Person specified in a Supplement.
SECTION 14. Counterparts. This Series Supplement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together constitute
but one and the same instrument.
SECTION 15. Governing Law. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 16. Subordination of Certain Termination Payments.
Notwithstanding anything contained in Section 12.2(c) of the Agreement, upon the
sale of Receivables or interests therein as provided in Section 12.2(c) of the
Agreement, the
64
68
proceeds of any such sale payable in respect of the Series 1997-2 Certificates
shall be payable first to the Class A Certificateholders on a pro rata basis
until all obligations payable in respect of the Class A Certificates are paid in
full, then to the Class B Certificateholders on a pro rata basis until all
obligations payable in respect of the Class B Certificates are paid in full,
then to the Collateral Indebtedness Holder until all obligations payable in
respect of the Collateral Indebtedness Interest are paid in full and then to the
Class D Certificateholders on a pro rata basis until all obligations payable in
respect of the Class D Certificates are paid in full.
SECTION 17. Third-Party Beneficiaries. As provided in
Section 13.12 of the Agreement, the Agreement and this Series Supplement will
inure to the benefit of the Series 1997-2 Certificateholders and their
respective successors and permitted assigns.
SECTION 18. FASIT Election. Each Series 1997-2
Certificateholder, by acquiring an interest in a Series 1997-2 Certificate, is
deemed to consent to any amendment to the Agreement or this Series Supplement
necessary for the Transferor to elect for the Trust or any portion thereof to be
treated as a financial asset securitization investment trust ("FASIT") within
the meaning of Section 860L of the Code (or any successor provision thereto);
provided, however, that such election may not be made unless the Transferor
delivers to the Trustee an Opinion of Counsel to the effect that (i) the
issuance of FASIT regular interests will not adversely affect the federal or any
applicable state income tax characterization as debt of Investor Certificates of
any outstanding Series or Class with respect to which an Opinion of Counsel was
delivered at the time of their issuance that such Investor Certificates would be
characterized as debt, (ii) following such issuance, the Trust will not be
classified, for federal or any applicable state income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation, and (iii)
such issuance will not cause or constitute an event in which gain or loss would
be recognized by any Investor Certificateholder.
SECTION 19. Paired Series. Subject to obtaining confirmation
by each Rating Agency of the then existing ratings of each Class of Series
1997-2 Certificates which is then rated, and prior to the commencement of the
Early Amortization Period, the Series 1997-2 Certificates may be paired with one
or more other Series (each, a "Paired Series"). Each Paired Series either will
be pre-funded with an initial deposit to a pre-funding account in an amount up
to the initial principal balance of such Paired Series and primarily from the
proceeds of the sale of such Paired Series or will have a variable principal
amount.
65
69
Any such pre-funding account will be held for the benefit of such Paired
Series and not for the benefit of the Series 1997-2 Certificateholders. As
principal is paid or deposited into the Principal Funding Account with respect
to the Series 1997-2 Certificates, either (i) in the case of a pre-funded Paired
Series, an equal amount of funds on deposit in any pre-funding account for such
pre-funded Paired Series will be released (which funds will be distributed to
the Transferor) or (ii) in the case of a Paired Series having a variable
principal amount, an interest in such variable Paired Series in an equal or
lesser amount may be sold by the Trust (and the proceeds thereof will be
distributed to the Transferor) and, in either case, the invested amount in the
Trust of such Paired Series will increase by up to a corresponding amount. Upon
payment in full of the Certificates, assuming that there have been no
unreimbursed charge-offs with respect to any related Paired Series, the
aggregate invested amount of such related Paired Series will have been increased
by an amount up to an aggregate amount equal to the Invested Amount paid to the
Series 1997-2 Certificateholders since the issuance of such Paired Series. The
issuance of a Paired Series will be subject to the conditions described in
subsection 6.9(b) of the Agreement.
66
70
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series Supplement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first above
written.
FIRST NORTH AMERICAN NATIONAL BANK,
as Transferor and Servicer
By:
-----------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Trustee and Paying Agent
By:
-----------------------------------
Name:
Title:
67
71
EXHIBIT A
REGISTERED [$_____________]
No. A-1 CUSIP No. ____________
Unless this Class A Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
FNANB CREDIT CARD MASTER TRUST
CLASS A FLOATING RATE ASSET BACKED CERTIFICATE,
SERIES 1997-2
Class A Expected Final Distribution Date:
November 2002 Distribution Date
Each $1,000 minimum denomination represents a
1/603,000 undivided interest
in certain assets of the
FNANB CREDIT CARD MASTER TRUST
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in a portfolio of
MasterCard(R) and VISA(R) credit card accounts of
FIRST NORTH AMERICAN NATIONAL BANK
(Not an interest in or obligation of First North
American National Bank or any affiliate thereof)
72
This certifies that Cede & Co. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to the Master Pooling and Servicing Agreement,
dated as of October 30, 1997 (as amended and supplemented, the "Agreement"), as
supplemented by the Series 1997-2 Supplement, dated as of November __, 1997 (as
amended and supplemented, the "Series Supplement"), among First North American
National Bank, a national banking association, as Transferor and Servicer, and
First Union National Bank, a national banking association, as trustee (the
"Trustee"). The corpus of the Trust consists of (i) receivables (the
"Receivables") generated from time to time in a portfolio of MasterCard(R) and
VISA(R) credit card accounts identified under the Agreement (the "Accounts")
(including any Supplemental Accounts following their designation and any
Automatic Additional Accounts following their creation but excluding any Removed
Accounts following their designation), (ii) all monies due or to become due and
all amounts received with respect to the Receivables on and after the Initial
Cut-Off Date (including recoveries of amounts previously charged-off), (iii)
certain interchange fees received by the Transferor in connection with the
Receivables, (iv) all monies on deposit in certain bank accounts of the Trust
(including, to the extent specified in the related Series Supplement, investment
earnings on such amounts), (v) all proceeds of the foregoing and (vi) any
Enhancement with respect to any particular Series or Class as provided in the
related Series Supplement. Although a summary of certain provisions of the
Agreement and the Series Supplement is set forth below and on the Summary of
Terms and Conditions attached hereto and made a part hereof, this Class A
Certificate does not purport to summarize the Agreement and the Series
Supplement and reference is made to the Agreement and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at the
Corporate Trust Office: One Xxxxx Center, 2nd Floor, 000 Xxxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Department. To the extent
not defined herein, the capitalized terms used herein have the meanings ascribed
to them in the Agreement or the Series Supplement, as applicable.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Series Supplement, to which
Agreement and Series Supplement, each as amended and supplemented from time to
time, the Class A Certificateholder by virtue of the acceptance hereof assents
and is bound.
It is the intent of the Transferor and the Investor Certificateholders
(and Certificate Owners) that, for Federal, state and local income and
franchise tax purposes only, the Investor Certificates will qualify as
indebtedness of the
2
73
Transferor secured by the Receivables (unless otherwise specified in the
related Supplement). The Class A Certificateholder (and each Certificate Owner
of a Class A Certificate), by the acceptance of this Class A Certificate (or
its interest therein), is deemed to agree to treat this Class A Certificate for
Federal, state and local income and franchise tax purposes and any other tax
imposed on or measured by income as indebtedness of the Transferor.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate
shall not be entitled to any benefit under the Agreement or the Series
Supplement or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class A Certificate
to be duly executed.
FIRST NORTH AMERICAN NATIONAL BANK
By:
---------------------------------------
Name:
Title:
Dated: November __, 1997
3
74
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the within-mentioned
Agreement and Series Supplement.
FIRST UNION NATIONAL BANK,
as Trustee
By:
-----------------------------------
Authorized Officer
4
75
FNANB CREDIT CARD MASTER TRUST
CLASS A FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1997-2
Summary of Terms and Conditions
This Class A Certificate is one of a Series of Certificates
entitled FNANB Credit Card Master Trust, Series 1997-2 Certificates (the "Series
1997-2 Certificates"), and one of a class thereof entitled Class A Floating Rate
Asset Backed Certificates, Series 1997-2 (the "Class A Certificates"), each of
which represents a fractional undivided interest in certain assets of the Trust.
The Trust property is allocated in part to the Investor Certificateholders of
all outstanding Series (the "Certificateholders' Interest") and the interests,
if any, of any Enhancement Providers, with the remainder allocated to the
Transferor. The aggregate interest represented by the Class A Certificates at
any time in the Principal Receivables in the Trust shall not exceed an amount
equal to the Class A Invested Amount at such time. The Class A Initial Invested
Amount is $603,000,000. The Class A Invested Amount on any date will be an
amount equal to (a) the Class A Initial Invested Amount, minus (b) the Principal
Funding Account Balance on such date, minus (c) the aggregate amount of
principal payments made to the Class A Certificateholders prior to such date,
minus (d) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates over the sum of the aggregate
amount of Class A Investor Charge-Offs reimbursed pursuant to the Series
Supplement and, without duplication, the aggregate amount of the reductions of
the Series Adjustment Amounts allocable to the Class A Invested Amount pursuant
to the Series Supplement prior to such date; provided, however, that the Class A
Invested Amount may not be reduced below zero. In addition, classes of the
Series 1997-2 Certificates entitled Class B Floating Rate Asset Backed
Certificates, Series 1997-2 (the "Class B Certificates"), Collateral
Indebtedness Interest, Series 1997-2 (the "Collateral Indebtedness Interest")
and Class D Asset Backed Certificates, Series 1997-2 (the "Class D
Certificates") will be issued. The Exchangeable Transferor Certificate, which
represents the Tranferor Interest, has been issued to First North American
National Bank pursuant to the Agreement.
Subject to the terms and conditions of the Agreement, the
Transferor may from time to time direct the Trustee, on behalf of the Trust, to
issue one or more new Series of Investor Certificates, which will represent
fractional undivided interests in certain Trust Property.
Each Class A Certificate represents the right to receive
payments of (i) interest at the rate of 0.__% per annum above Certificate LIBOR
(as determined on the related Certificate LIBOR Determination Date), accruing
from November __, 1997,
76
payable on December 15, 1997 and on the 15th day of each month thereafter (or,
if such 15th day is not a Business Day, the next succeeding Business Day)
(each, a "Distribution Date") and (ii) principal on the November 2002
Distribution Date (and on each Distribution Date thereafter, if the Class A
Certificates are not paid in full on the November 2002 Distribution Date) or,
upon the occurrence of an Early Amortization Event, on each Distribution Date
relating to the Early Amortization Period, in each case funded from a
percentage of the payments received with respect to the Receivables and certain
other funds, all as more fully described in the Agreement and the Series
Supplement. Interest on the Class A Certificates will be calculated on the
basis of a 360-day year and the actual number of days in the relevant Interest
Period.
The Class B Certificates, the Collateral Indebtedness
Interest and the Class D Certificates are subordinated to the Class A
Certificates to the extent set forth in the Series Supplement.
On each Distribution Date, the Paying Agent shall distribute
to each Class A Certificateholder of record on the last day of the preceding
calendar month (each, a "Record Date") such Class A Certificateholder's pro rata
share of such amounts (including amounts on deposit in the Principal Funding
Account) as are payable to the Class A Certificateholders pursuant to the
Agreement and the Series Supplement. Distributions with respect to this Class A
Certificate will be made by the Paying Agent by check mailed to the address of
the Class A Certificateholder of record appearing in the Certificate Register
without the presentation or surrender of this Class A Certificate or the making
of any notation thereon (except for the final distribution in respect of this
Class A Certificate), except that with respect to Class A Certificates
registered in the name of Cede & Co., the nominee for The Depository Trust
Company, distributions will be made in the form of immediately available funds.
Final payment of this Class A Certificate will be made only upon presentation
and surrender of this Class A Certificate at the office or agency specified in
the notice of final distribution delivered by the Trustee in accordance with
the Agreement and the Series Supplement.
On any Distribution Date occurring on or after the day on
which the Invested Amount is reduced to an amount less than or equal to 5% of
the Initial Invested Amount, the Class A Certificates are subject to retransfer
to the Transferor. The retransfer price will be equal to the Class A Invested
Amount plus accrued but unpaid interest thereon.
Subject to certain conditions in the Agreement, if the
Invested Amount is greater than zero on the March 2006 Distribution Date (the
"Stated Series Termination Date"), the
2
77
Trustee shall sell or cause to be sold an amount of Receivables up to 110% of
the Invested Amount at the close of business on such date, but not more than
the total amount of Receivables allocable to the Series 1997-2 Certificates,
and apply the proceeds of such sale as provided in the Agreement and the Series
Supplement.
The Agreement and any Supplement may be amended from time to
time by the Servicer, the Transferor and the Trustee, without the consent of
any of the Investor Certificateholders, to cure any ambiguity, to correct or
supplement any provisions therein which may be inconsistent with any other
provisions therein or to add other identifying code numbers to the definition
of Account or to add any other provisions with respect to matters or questions
raised under the Agreement which shall not be inconsistent with the provisions
of the Agreement; provided, however, that such action shall not adversely
affect in any material respect the interests of any of the Investor
Certificateholders. In addition, the Agreement and any Supplement may be
amended from time to time by the Servicer, the Transferor and the Trustee,
without the consent of any of the Investor Certificateholders, to add or to
change any of the provisions of the Agreement to enable Bearer Certificates to
be issued in conformity with the Bearer Rules, to provide that Bearer
Certificates may be registrable as to principal, to change or eliminate any
restrictions on the payment of principal (or premium, if any) or any interest
on Bearer Certificates to comply with the Bearer Rules, to permit Bearer
Certificates to be issued in exchange for Registered Certificates (if then
permitted by the Bearer Rules), to permit Bearer Certificates to be issued in
exchange for Bearer Certificates of other authorized denominations or to permit
the issuance of Investor Certificates in uncertificated form, provided any such
action shall not adversely affect the interest of the Holders of Bearer
Certificates of any Series or any related Coupons in any material respect
unless such amendment is necessary to comply with the Bearer Rules.
The Agreement and any Supplement may also be amended from time
to time by the Servicer, the Transferor and the Trustee, without the consent of
any of the Investor Certificateholders, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement, or of modifying in any manner the rights of the Holders of Investor
Certificates; provided, however, that (i) the Servicer shall have provided an
Opinion of Counsel to the Trustee to the effect that such amendment will not
materially and adversely affect the interests of the Investor Certificateholders
of any outstanding Series, which Opinion of Counsel may rely solely on the
rating confirmation referred to in clause (iii) below (or 100% of the class of
Certificateholders so affected shall have consented), (ii) such amendment shall
not, as evidenced by an
3
78
Opinion of Counsel, cause any outstanding Series as to which an opinion that it
was debt was given on its Closing Date to fail to qualify as debt for Federal
income tax purposes, cause the Trust to be so characterized for Federal income
tax purposes as an association taxable as a corporation or otherwise have any
material adverse impact on the Federal income taxation characterization of any
outstanding Series of Investor Certificates or the Federal income taxation of
any Investor Certificateholder or any Certificate Owner and (iii) the Rating
Agencies shall confirm that such amendment shall not cause a reduction or
withdrawal of the rating of any outstanding Series of Certificates; and,
provided further, that such amendment shall not reduce in any manner the amount
of, or delay the timing of, or change the priority of, distributions which are
required to be made on any Investor Certificate of such Series without the
consent of the related Investor Certificateholder, change the definition of or
the manner of calculating the interest of any Investor Certificateholder of such
Series without the consent of the related Investor Certificateholder or reduce
the required percentage for consents to amendments pursuant to the following
paragraph without the consent of each affected Investor Certificateholder.
The Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee with the consent
of the Holders of Investor Certificates evidencing undivided interests
aggregating not less than 66-2/3% of the Invested Amount of all Series
adversely affected, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Agreement or of
modifying in any manner the rights of the Investor Certificateholders of any
Series then issued and outstanding; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any Investor Certificate of such
Series without the consent of the related Investor Certificateholders; (ii)
change the definition of or the manner of calculating the Invested Amount, the
Invested Percentage, the applicable available amount under any Enhancement or
the Investor Default Amount of such Series without the consent of the related
Investor Certificateholders; or (iii) reduce the aforesaid percentage required
to consent to any such amendment, without the consent of the related Investor
Certificateholders. Any amendment pursuant to this paragraph shall require that
each Rating Agency rating the affected Series confirm that such amendment will
not cause a reduction or withdrawal of the rating of any outstanding Series of
Certificates.
The Class A Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
transfer of this Class A Certificate shall be registered in the Certificate
Register upon surrender of this Class A Certificate
4
79
for registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar, and thereupon one or more new Class A Certificates in
authorized denominations representing like aggregate undivided interests in the
Trust will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates in authorized denominations of like aggregate undivided
interests in the Trust as requested by the Class A Certificateholder
surrendering such Class A Certificates. No service charge may be imposed for
any transfer or exchange but the Transfer Agent and Registrar and the Trustee
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
The Trustee, the Paying Agent and the Transfer Agent and
Registrar and any agent of any of them may treat the person in whose name this
Class A Certificate is registered as the owner hereof for all purposes, and
neither the Trustee, the Paying Agent, the Transfer Agent and Registrar, nor
any agent of any of them, shall be affected by notice to the contrary.
THE AGREEMENT AND THIS CLASS A CERTIFICATE SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
5
80
ASSIGNMENT
Social Security or other identifying number of assignee
-------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfe
unto
--------------------------------------------------------------------------
------------------------------------------------------------------------------
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ___________________________, attorney, to transfer
said certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: *
-----------------------------------
Signature Guaranteed:
----------------------------------
-----------------------
(*) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatsoever.
6
81
EXHIBIT B
REGISTERED $[___________]
No. B-1 CUSIP No. ___________
Unless this Class B Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
FNANB CREDIT CARD MASTER TRUST
CLASS B FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1997-2
Class B Expected Final Distribution Date:
January 2003 Distribution Date
Each $1,000 minimum denomination represents a
1/135,000 undivided interest
in certain assets of the
FNANB CREDIT CARD MASTER TRUST
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in a portfolio of
MasterCard(R) and VISA(R) credit card accounts of
FIRST NORTH AMERICAN NATIONAL BANK
(Not an interest in or obligation of First North
American National Bank or any affiliate thereof)
This certifies that Cede & Co. (the "Class B Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Master Pooling and Servicing
Agreement, dated as of October 30, 1997 (as amended and supplemented, the
"Agreement"), as supplemented by the Series 1997-2 Supplement, dated as of
November ___, 1997 (as amended and supplemented, the "Series Supplement"),
among First North American National Bank, a national banking association, as
Transferor and Servicer, and First Union National Bank, a national banking
association, as trustee (the "Trustee"). The corpus of the Trust consists of
(i) receivables (the
82
"Receivables") generated from time to time in a portfolio of MasterCard(R) and
VISA(R) credit card accounts identified under the Agreement (the "Accounts")
(including any Supplemental Accounts following their designation and any
Automatic Additional Accounts following their creation but excluding any Removed
Accounts following their designation), (ii) all monies due or to become due and
all amounts received with respect to the Receivables on and after the Initial
Cut-Off Date (including recoveries of amounts previously charged-off), (iii)
certain interchange fees received by the Transferor in connection with the
Receivables, (iv) all monies on deposit in certain bank accounts of the Trust
(including, to the extent specified in the related Series Supplement, investment
earnings on such amounts), (v) all proceeds of the foregoing and (vi) any
Enhancement with respect to any particular Series or Class as provided in the
related Series Supplement. Although a summary of certain provisions of the
Agreement and the Series Supplement is set forth below and on the Summary of
Terms and Conditions attached hereto and made a part hereof, this Class B
Certificate does not purport to summarize the Agreement and the Series
Supplement and reference is made to the Agreement and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights duties and obligations of
the Trustee. A copy of the Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at the
Corporate Trust Office: One Xxxxx Center, 2nd Floor, 000 Xxxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Department. To the extent
not defined herein, the capitalized terms used herein have the meanings ascribed
to them in the Agreement or the Series Supplement, as applicable.
This Class B Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement and the Series
Supplement, to which Agreement and Series Supplement, each as amended and
supplemented from time to time, the Class B Certificateholder by virtue of the
acceptance hereof assents and is bound.
It is the intent of the Transferor and the Investor
Certificateholders (and Certificate Owners) that, for Federal, state and local
income and franchise tax purposes only, the Investor Certificates will qualify
as indebtedness of the Transferor secured by the Receivables (unless otherwise
specified in the related Supplement). The Class B Certificateholder (and each
Certificate Owner of a Class B Certificate), by the acceptance of this Class B
Certificate (or its interest therein), is deemed to agree to treat this Class B
Certificate for Federal, state and local income and franchise tax purposes and
any other tax imposed on or measured by income as indebtedness of the
Transferor.
2
83
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class B
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class B
Certificate to be duly executed.
FIRST NORTH AMERICAN NATIONAL BANK
By:
--------------------------------------
Name:
Title:
Dated: November __, 1997
3
84
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates described in the within-mentioned
Agreement and Series Supplement.
FIRST UNION NATIONAL BANK,
as Trustee
By:
---------------------------------
Authorized Officer
4
85
FNANB CREDIT CARD MASTER TRUST
CLASS B FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1997-2
Summary of Terms and Conditions
This Class B Certificate is one of a Series of Certificates entitled
FNANB Credit Card Master Trust, Series 1997-2 Certificates (the "Series 1997-2
Certificates"), and one of a class thereof entitled Class B Floating Rate Asset
Backed Certificates, Series 1997-2 (the "Class B Certificates"), each of which
represents a fractional undivided interest in certain assets of the Trust. The
Trust property is allocated in part to the Investor Certificateholders of all
outstanding Series (the "Certificateholders' Interest") and the interests, if
any, of any Enhancement Providers, with the remainder allocated to the
Transferor. The aggregate interest represented by the Class Certificates at any
time in the Principal Receivables in the Trust shall not exceed an amount equal
to the Class B Invested Amount at such time. The Class B Initial Invested Amount
is $135,000,000. The Class B Invested Amount on any date will be an amount equal
to (a) the Class B Initial Invested Amount, minus (b) after the Class A Adjusted
Invested Amount has been paid in full, the Principal Funding Account Balance on
such date, minus (c) the aggregate amount of principal payments made to the
Class B Certificateholders prior to such date, minus (d) the aggregate amount
of Class B Investor Charge-Offs for all prior Distribution Dates minus (e) the
amount of Class B Subordinated Principal Collections allocated on all prior
Distribution Dates pursuant to the Series Supplement, minus (f) an amount equal
to the amount by which the Class B Invested Amount has been reduced on all
prior Distribution Dates pursuant to the Series Supplement, plus (g) the sum of
the amount of Excess Spread and Shared Excess Finance Charge Collections
allocated and available on all prior Distribution Dates pursuant to the Series
Supplement for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d), (e) and (f) and, without duplication, the aggregate
amount of the reductions of the Series Adjustment Amounts allocable to the
Class B Invested Amount pursuant to the Series Supplement prior to such date;
provided, however, that the Class B Invested Amount may not be reduced below
zero. In addition, classes of the Series 1997-2 Certificates entitled Class A
Floating Rate Asset Backed Certificates, Series 1997-2 (the "Class A
Certificates"), Collateral Indebtedness Interest, Series 1997-2 (the
"Collateral Indebtedness Interest") and Class D Asset Backed Certificates,
Series 1997-2 (the "Class D Certificates") will be issued. The Exchangeable
Transferor Certificate, which represents the Transferor Interest, has been
issued to First North American National Bank pursuant to the Agreement.
86
Subject to the terms and conditions of the Agreement, the Transferor
may from time to time direct the Trustee, on behalf of the Trust, to issue one
or more new Series of Investor Certificates, which will represent fractional
undivided interests in certain Trust Property.
Each Class B Certificate represents the right to receive payments of
(i) interest at the rate of 0.__% per annum above Certificate LIBOR (as
determined on the related Certificate LIBOR Determination Date), accruing from
November ___, 1997, payable on December 15, 1997 and on the 15th day of each
month thereafter (or, if such 15th day is not a Business Day, the next
succeeding Business Day) (each, a "Distribution Date") and (ii) principal on the
January 2003 Distribution Date (and on each Distribution Date thereafter, if the
Class B Certificates are not paid in full on the January 2003 Distribution Date)
or, upon the occurrence of an Early Amortization Event, on each Distribution
Date relating to the Early Amortization Period, in each case funded from a
percentage of the payments received with respect to the Receivables and certain
other funds, all as more fully described in the Agreement and the Series
Supplement. Interest on the Class B Certificates will be calculated on the basis
of a 360-day year and the actual number of days in the relevant Interest Period.
The Collateral Indebtedness Interest and the Class D Certificates are
subordinated to the Class B Certificates to the extent set forth in the Series
Supplement.
On each Distribution Date, the Paying Agent shall distribute to each
Class B Certificateholder of record on the last day of the preceding calendar
month (each, a "Record Date") such Class B Certificateholder's pro rata share of
such amounts (including amounts on deposit in the Principal Funding Account) as
are payable to the Class B Certificateholders pursuant to the Agreement and the
Series Supplement. Distributions with respect to this Class B Certificate will
be made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class B
Certificate), except that with respect to Class B Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and surrender of this
Class B Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee in accordance with the Agreement and the
Series Supplement.
2
87
On any Distribution Date occurring on or after the day on which the
Invested Amount is reduced to an amount less than or equal to 5% of the Initial
Invested Amount, the Class B Certificates are subject to retransfer to the
Transferor. The retransfer price will be equal to the Class B Invested Amount
plus accrued but unpaid interest thereon.
Subject to certain conditions in the Agreement, if the Invested Amount
is greater than zero on the March 2006 Distribution Date (the "Stated Series
Termination Date"), the Trustee shall sell or cause to be sold an amount of
Receivables up to 110% of the Invested Amount at the close of business on such
date, but not more than the total amount of Receivables allocable to the Series
1997-2 Certificates, and apply the proceeds of such sale as provided in the
Agreement and the Series Supplement.
The Agreement and any Supplement may be amended from time to time by
the Servicer, the Transferor and the Trustee, without the consent of any of the
Investor Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein which may be inconsistent with any other provisions therein
or to add other identifying code numbers to the definition of Account or to add
any other provisions with respect to matters or questions raised under the
Agreement which shall not be inconsistent with the provisions of the Agreement;
provided, however, that such action shall not adversely affect in any material
respect the interests of any of the Investor Certificateholders. In addition,
the Agreement and any Supplement may be amended from time to time by the
Servicer, the Transferor and the Trustee, without the consent of any of the
Investor Certificateholders, to add or to change any of the provisions of the
Agreement to enable Bearer Certificates to be issued in conformity with the
Bearer Rules, to provide that Bearer Certificates may be registrable as to
principal, to change or eliminate any restrictions on the payment of principal
(or premium, if any) or any interest on Bearer Certificates to comply with the
Bearer Rules, to permit Bearer Certificates to be issued in exchange for
Registered Certificates (if then permitted by the Bearer Rules), to permit
Bearer Certificates to be issued in exchange for Bearer Certificates of other
authorized denominations or to permit the issuance of Investor Certificates in
uncertificated form, provided any such action shall not adversely affect the
interest of the Holders of Bearer Certificates of any Series or any related
Coupons in any material respect unless such amendment is necessary to comply
with the Bearer Rules.
The Agreement and any Supplement may also be amended from time to time
by the Servicer, the Transferor and the Trustee, without the consent of any of
the Investor Certificateholders, for the purpose of adding any provisions to
3
88
or changing in any manner or eliminating any of the provisions of the Agreement,
or of modifying in any manner the rights of the Holders of Investor
Certificates; provided, however, that (i) the Servicer shall have provided an
Opinion of Counsel to the Trustee to the effect that such amendment will not
materially and adversely affect the interests of the Investor
Certificateholders of any outstanding Series, which Opinion of Counsel may rely
solely on the rating confirmation referred to in clause (iii) below (or 100% of
the class of Certificateholders so affected shall have consented), (ii) such
amendment shall not, as evidenced by an Opinion of Counsel, cause any
outstanding Series as to which an opinion that it was debt was given on its
Closing Date to fail to qualify as debt for Federal income tax purposes, cause
the Trust to be so characterized for Federal income tax purposes as an
association taxable as a corporation or otherwise have any material adverse
impact on the Federal income taxation characterization of any outstanding
Series of Investor Certificates or the Federal income taxation of any Investor
Certificateholder or any Certificate Owner and (iii) the Rating Agencies shall
confirm that such amendment shall not cause a reduction or withdrawal of the
rating of any outstanding Series of Certificates; and, provided further, that
such amendment shall not reduce in any manner the amount of, or delay the
timing of, or change the priority of, distributions which are required to be
made on any Investor Certificate of such Series without the consent of the
related Investor Certificateholder, change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such Series
without the consent of the related Investor Certificateholder or reduce the
required percentage for consents to amendments pursuant to the following
paragraph without the consent of each affected Investor Certificateholder.
The Agreement and any Supplement may also be amended from time to time
by the Servicer, the Transferor and the Trustee with the consent of the Holders
of Investor Certificates evidencing undivided interests aggregating not less
than 66-2/3% of the Invested Amount of all Series adversely affected, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Agreement or of modifying in any manner the rights of
the Investor Certificateholders of any Series then issued and outstanding;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, distributions which are required to be made
on any Investor Certificate of such Series without the consent of the related
Investor Certificateholders; (ii) change the definition of or the manner of
calculating the Invested Amount, the Invested Percentage, the applicable
available amount under any Enhancement or the Investor Default Amount of such
Series without the consent of the related Investor Certificateholders; or (iii)
reduce the aforesaid percentage required to consent to any such amendment,
without the
4
89
consent of the related Investor Certificateholders. Any amendment pursuant to
this paragraph shall require that each Rating Agency rating the affected Series
confirm that such amendment will not cause a reduction or withdrawal of the
rating of any outstanding Series of Certificates.
The Class B Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof. The transfer of this
Class B Certificate shall be registered in the Certificate Register upon
surrender of this Class B Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar, and thereupon
one or more new Class B Certificates in authorized denominations representing
like aggregate undivided interests in the Trust will be issued to the
designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Class B Certificates are exchangeable for new Class B Certificates in
authorized denominations of like aggregate undivided interests in the Trust as
requested by the Class B Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any transfer or exchange but
the Transfer Agent and Registrar and the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
The Trustee, the Paying Agent and the Transfer Agent and Registrar and
any agent of any of them may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Paying Agent, the Transfer Agent and Registrar, nor any agent of
any of them, shall be affected by notice to the contrary.
THE AGREEMENT AND THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
5
90
ASSIGNMENT
Social Security or other identifying number of assignee ________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfer unto ______________________________________________________________
________________________________________________________________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ___________________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _______________________________________________*
Signature Guaranteed:
________________________________________________
_______________________
(*) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatsoever.
6