EXHIBIT 4.1
SERIES 2007-2 INDENTURE SUPPLEMENT
Dated as of November 29, 2007
to
MASTER INDENTURE
Dated as of October 24, 2002
FIRST NATIONAL MASTER NOTE TRUST ,
Issuer,
and
THE
BANK OF NEW YORK TRUST COMPANY, N.A. ,
Indenture Trustee on behalf of the Noteholders
FIRST NATIONAL MASTER NOTE TRUST
TABLE
OF CONTENTS
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ARTICLE I
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CREATION OF THE
SERIES 2007-2 NOTES
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ARTICLE II
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DEFINITIONS
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ARTICLE III
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NOTEHOLDER SERVICING
FEE
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Section 3.01. Servicing
Compensation
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ARTICLE IV
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RIGHTS OF
NOTEHOLDERS AND ALLOCATION AND APPLICATION OF
COLLECTIONS
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Section 4.01. Collections and
Allocations
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Section 4.02. Determination of
Monthly Interest
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Section 4.03. Determination of
Monthly Principal
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Section 4.04. Application of
Available Finance Charge Collections and Available Principal
Collections
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Section 4.05. Investor
Charge-Offs
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Section 4.06. Reallocated
Principal Collections
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Section 4.07. Excess Finance
Charge Collections
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Section 4.08. Excess Principal
Collections
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Section 4.09. Certain
Series Accounts
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Section 4.10. Reserve
Account
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Section 4.11. Spread
Account
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Section 4.12. Investment
Instructions
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27 |
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Section 4.13. Accumulation
Period
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27 |
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Section 4.14. Suspension of
Accumulation Period
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Section 4.15. Determination of
LIBOR
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Section 4.16. Interchange
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Section 4.17. Foreign
Accounts
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ARTICLE V
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DELIVERY OF NOTES;
DISTRIBUTIONS; REPORTS TO NOTEHOLDERS
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Section 5.01. Delivery and
Payment for the Series 2007-2 Notes
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Section 5.02.
Distributions
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Section 5.03. Reports and
Statements to Series 2007-2 Noteholders
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ARTICLE VI
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SERIES 2007-2 PAY
OUT EVENTS
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ARTICLE VII
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REDEMPTION; FINAL
DISTRIBUTIONS; SERIES TERMINATION
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Section 7.01. Optional
Redemption of Series 2007-2 Notes; Final Distributions
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Section 7.02.
Series Termination
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ARTICLE VIII
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MISCELLANEOUS
PROVISIONS
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Section 8.01. Ratification of
Indenture; Amendments
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Section 8.02. Form of Delivery
of the Notes
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Section 8.03. Counterparts
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Section 8.04. Governing
Law
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Section 8.05. Limitation of
Liability
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Section 8.06. Rights of
Indenture Trustee
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Section 8.07. Additional
Requirements for Registration of and Limitations on Transfer and
Exchange of Notes
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EXHIBIT A-1
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FORM OF CLASS A NOTE |
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EXHIBIT A-2
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FORM OF CLASS B NOTE |
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EXHIBIT A-3
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FORM OF CLASS C NOTE |
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EXHIBIT B
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FORM OF MONTHLY PAYMENT INSTRUCTIONS
AND NOTIFICATION TO INDENTURE TRUSTEE |
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EXHIBIT C
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FORM OF MONTHLY REPORT TO
NOTEHOLDERS |
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EXHIBIT D
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FORM OF MONTHLY SERVICER’S
CERTIFICATE |
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EXHIBIT E
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FORM OF INVESTOR CERTIFICATION |
ii
SERIES 2007-2 INDENTURE SUPPLEMENT
SERIES 2007-2 INDENTURE
SUPPLEMENT , dated as of November 29, 2007 (the
“Indenture Supplement”), between FIRST NATIONAL
MASTER NOTE TRUST , a statutory trust organized and existing
under the laws of the State of Delaware (herein,
“Issuer” or the “Trust”), and THE BANK
OF NEW YORK TRUST COMPANY, N.A. , a national banking
association, duly organized and existing under the laws of the
United States, not in its individual capacity, but solely as
indenture trustee (herein, together with its successors in the
trusts thereunder as provided in the Master Indenture referred to
below, “Indenture Trustee”) under the Master Indenture,
dated as of October 24, 2002, and amended by the First
Amendment to Master Indenture, dated as of November 17, 2003
(as amended, the “Indenture”), between Issuer and
Indenture Trustee.
Pursuant to Section 2.11 of the
Indenture, Transferor may direct Issuer to issue one or more Series
of Notes. The Principal Terms of this Series are set forth in this
Indenture Supplement to the Indenture.
ARTICLE I
CREATION OF THE SERIES 2007-2 NOTES
There is hereby created and
designated a Series of Notes to be issued pursuant to the Indenture
and this Indenture Supplement to be known as “First National
Master Note Trust, Series 2007-2” or the
“Series 2007-2 Notes.” The Series 2007-2
Notes shall be issued in three Classes, known as the
“Class A Asset Backed Notes, Series 2007-2,”
the “Class B Asset Backed Notes, Series 2007-2,”
and the “Class C Asset Backed Notes,
Series 2007-2.”
Series 2007-2 shall be included
in Group One and shall be a Principal Sharing Series. Series 2007-2
shall be an Excess Allocation Series with respect to Group One
only. Series 2007-2 shall not be subordinated to any other
Series. Series 2007-2 shall not be a Paired Series.
ARTICLE II
DEFINITIONS
Whenever used in this Indenture
Supplement, the following words and phrases shall have the
following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such
terms and the masculine as well as the feminine and neuter genders
of such terms.
“ Accumulation Period
” means, unless a Pay Out Event shall have occurred prior
thereto, the period commencing at the opening of business on the
Controlled Accumulation Date and ending on the first to occur of
(a) the commencement of the Rapid Amortization Period and
(b) the Series Termination Date.
“ Accumulation Period
Length ” is defined in Section 4.13.
“ Accumulation Shortfall
” means (a) for the first Distribution Date during the
Accumulation Period, zero; and (b) thereafter, for any
Distribution Date during the Accumulation Period, the excess, if
any, of the Controlled Deposit Amount for the previous Distribution
Date over the amount deposited into the Principal Accumulation
Account pursuant to subsection 4.04(c)(i) for the previous
Distribution Date.
“ Allocation Percentage
” means, with respect to any Monthly Period, the percentage
equivalent of a fraction:
(a) the
numerator of which shall be equal to:
(i) for Principal Collections during
the Revolving Period, and for Finance Charge Collections during the
Revolving Period and the Accumulation Period, and for Default
Amounts at any time, the Collateral Amount at the end of the last
day of the prior Monthly Period (or, in the case of the Monthly
Period in which the Closing Date occurs, on the Closing Date);
or
(ii) for Finance Charge Collections
during the Rapid Amortization Period and for Principal Collections
during the Rapid Amortization Period and the Accumulation Period,
the Collateral Amount at the end of the last day of the Revolving
Period, or, with respect to Finance Charge Collections, if later,
at the end of the last day of the Accumulation Period;
provided,
however, that prior to the occurrence of a Pay Out Event Transferor
may, by written notice to Indenture Trustee, Servicer and each
Rating Agency, reduce the numerator used for purposes of allocating
Principal Collections and Finance Charge Collections to
Series 2007-2 at any time if (x) the Rating Agency
Condition shall have been satisfied with respect to such reduction
and (y) Transferor shall have delivered to Indenture Trustee
an Officer’s Certificate to the effect that, based on the
facts known to such officer at that time, in the reasonable belief
of Transferor, such designation will not cause a Pay Out Event or
an event that, after the giving of notice or the lapse of time,
would cause a Pay Out Event to occur with respect to
Series 2007-2; and provided, further, that Transferor may
designate that the numerator for Finance Charge Collections during
the Rapid Amortization Period will be the Collateral Amount at the
end of the last day of the prior Monthly Period by notice to
Servicer and Indenture Trustee, if the Rating Agency Condition has
been met; and
(b) the denominator of which shall be
the greater of (x) the Aggregate Principal Balance determined
as of the close of business on the last day of the prior Monthly
Period and (y) the sum of the numerators used to calculate the
allocation percentages for allocations with respect to Finance
Charge Collections, Principal Collections or Default Amounts, as
applicable, for all outstanding Series and all outstanding PSA
Series (other than any Series represented by the Collateral
Certificate) on such date of determination; provided, that if one
or more Reset Dates occur in a Monthly Period, the denominator of
the Allocation Percentage for the portion of the Monthly Period
falling on and after such Reset Date and prior to any subsequent
Reset
2
Date will be
recalculated for such period using amounts determined as of the
close of business on the subject Reset Date.
“ Available Finance Charge
Collections ” means, for any Monthly Period, an amount
equal to the sum of (a) the Investor Finance Charge
Collections for such Monthly Period, plus (b) the Excess
Finance Charge Collections allocated to Series 2007-2 for such
Monthly Period, plus (c) Principal Accumulation Investment
Earnings, if any, with respect to the related Transfer Date, plus
(d) amounts on deposit in the Reserve Account and Spread Account
deposited into the Finance Charge Account on the related Transfer
Date to be treated as Available Finance Charge Collections pursuant
to subsections 4.10(b) or (d) and 4.11(g).
“ Available Principal
Collections ” means, for any Monthly Period, an amount
equal to the sum of (a) the Investor Principal Collections for
such Monthly Period, minus (b) the amount of Reallocated
Principal Collections with respect to such Monthly Period which
pursuant to Section 4.06 are required to be applied on the
related Distribution Date, plus (c) any Excess Principal
Collections allocated to Series 2007-2 for such Monthly
Period, plus (d) the aggregate amount to be treated as
Available Principal Collections pursuant to subsections 4.04(a)(v)
and (vi) for the related Distribution Date.
“ Available Reserve Account
Amount ” means, for any Transfer Date, the lesser of
(a) the amount on deposit in the Reserve Account (including
Investment Earnings to the extent retained in the Reserve Account
pursuant to subsection 4.10(b) on such date or any prior Transfer
Date, and before giving effect to any deposit to or withdrawal from
the Reserve Account made or to be made on such date) and
(b) the Required Reserve Account Amount for such Transfer
Date.
“ Available Spread Account
Amount ” means, for any Transfer Date, an amount equal to
the lesser of (a) the amount on deposit in the Spread Account
(exclusive of Investment Earnings on such date and before giving
effect to any deposit to, or withdrawal from, the Spread Account
made or to be made with respect to such date) and (b) the
Required Spread Account Amount, in each case on such Transfer
Date.
“ Base Rate ”
means, for any Monthly Period, the annualized percentage equivalent
of a fraction, (a) the numerator of which is equal to the sum
of (i) the Monthly Interest and (ii) the Noteholder
Servicing Fee (calculated by assuming that Interchange allocated to
Series 2007-2 equals or exceeds Servicer Interchange for such
Monthly Period), each with respect to the related Distribution
Date, and (b) the denominator of which is the Collateral
Amount plus amounts on deposit in the Principal Accumulation
Account as of the first day of such Monthly Period.
“ Class A Default
Interest ” is defined in subsection 4.02(a).
“ Class A Interest
Shortfall ” is defined in subsection 4.02(a).
“ Class A Monthly
Interest Payment ” is defined in subsection
4.02(a).
“ Class A Note Initial
Principal Balance ” means $349,550,000.
“ Class A Note Interest
Rate ” means a per annum rate of 0.75% in excess of LIBOR
as determined on the LIBOR Determination Date for the applicable
Interest Period.
3
“ Class A Note
Principal Balance ” means, on any date of determination,
an amount equal to (a) the Class A Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments
made to Class A Noteholders on or prior to such date.
“ Class A
Noteholder ” means the Person in whose name a
Class A Note is registered in the Note Register.
“ Class A Notes
” means any one of the Notes executed by Issuer and
authenticated by or on behalf of Indenture Trustee, substantially
in the form of Exhibit A-1.
“ Class A Required
Amount ” means, for any Distribution Date, an amount
equal to the excess of the amounts described in subsection
4.04(a)(i) over the Available Finance Charge Collections applied to
pay such amount pursuant to subsection 4.04(a).
“ Class B Default
Interest ” is defined in subsection 4.02(b).
“ Class B Interest
Shortfall ” is defined in subsection 4.02(b).
“ Class B Monthly
Interest Payment ” is defined in subsection
4.02(b).
“ Class B Note Initial
Principal Balance ” means $34,000,000.
“ Class B Note Interest
Rate ” means a per annum rate as set forth in the
Class B Note Purchase Agreement, as such agreement may be
amended, amended and restated, or otherwise modified, provided that
the per annum rate shall not exceed 1.50% in excess of LIBOR as
determined on the LIBOR Determination Date for the applicable
Interest Period.
“ Class B Note
Principal Balance ” means, on any date of determination,
an amount equal to (a) the Class B Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments
made to Class B Noteholders on or prior to such date.
“ Class B Note Purchase
Agreement ” means the Note Purchase Agreement between the
Transferor, the Servicer, the Indenture Trustee and the
Class B Noteholder (or Class B Noteholders) pursuant to
which the Class B Noteholder (or Class B Noteholders)
agreed to purchase the Class B Notes, as such agreement may be
amended, amended and restated, or otherwise modified.
“ Class B
Noteholder ” means the Person in whose name a
Class B Note is registered in the Note Register.
“ Class B Notes
” means any one of the Notes executed by Issuer and
authenticated by or on behalf of Indenture Trustee, substantially
in the form of Exhibit A-2.
“ Class B Required
Amount ” means, for any Distribution Date, an amount
equal to the excess of the amount described in subsection
4.04(a)(ii) over the Available Finance Charge Collections applied
to pay such amount pursuant to subsection 4.04(a).
“ Class C Default
Interest ” is defined in subsection 4.02(c).
4
“ Class C Interest
Shortfall ” is defined in subsection 4.02(c).
“ Class C Monthly
Interest Payment ” is defined in subsection
4.02(c).
“ Class C Note Initial
Principal Balance ” means $41,450,000.
“ Class C Note Interest
Rate ” means a per annum rate as set forth in the
Class C Note Purchase Agreement, as such agreement may be
amended, amended and restated, or otherwise modified, provided that
the per annum rate shall not exceed 3.00% in excess of LIBOR as
determined on the LIBOR Determination Date for the applicable
Interest Period.
“ Class C Note
Principal Balance ” means, on any date of determination,
an amount equal to (a) the Class C Note Initial Principal
Balance, minus (b) the aggregate amount of principal payments
made to Class C Noteholders on or prior to such date.
“ Class C Note Purchase
Agreement ” means that certain Note Purchase Agreement
between the Transferor, the Servicer, the Indenture Trustee and the
Class C Noteholder (or Class C Noteholders) pursuant to
which the Class C Noteholder (or Class C Noteholders)
agreed to purchase the Class C Notes, as such agreement may be
amended, amended and restated, or otherwise modified.
“ Class C
Noteholder ” means the Person in whose name a
Class C Note is registered in the Note Register.
“ Class C Notes
” means any one of the Notes executed by Issuer and
authenticated by or on behalf of Indenture Trustee, substantially
in the form of Exhibit A-3.
“ Closing Date ”
means November 29, 2007.
“ Collateral Amount
” means, as of any date of determination, an amount equal to
the result of (a) the Initial Collateral Amount, minus
(b) the amount of principal previously paid to the Series
2007-2 Noteholders (other than any principal payments made from
funds on deposit in the Spread Account), minus (c) the balance
on deposit in the Principal Accumulation Account, minus
(d) the excess, if any, of the aggregate amount of Investor
Charge-Offs and Reallocated Principal Collections over the
reimbursements of such amounts pursuant to subsection 4.04(a)(vi)
prior to such date.
“ Controlled Accumulation
Amount ” means, (a) for any Transfer Date with
respect to the Accumulation Period an amount equal to one-twelfth
of the Collateral Amount at the end of the Revolving Period;
provided, however, that if the Accumulation Period Length is
determined to be less than twelve (12) months pursuant to
Section 4.13 or 4.14, the Controlled Accumulation Amount shall
be equal to (i) the Initial Collateral Amount divided by
(ii) the Accumulation Period Length; provided, further, that
the Controlled Accumulation Amount for any Transfer Date shall not
exceed the Note Principal Balance minus any amount already on
deposit in the Principal Accumulation Account on such Transfer
Date.
“ Controlled Accumulation
Date ” means November 1, 2008, or such later date as
is determined in accordance with Sections 4.13 and 4.14.
5
“ Controlled Deposit
Amount ” means, for any Transfer Date with respect to the
Accumulation Period, an amount equal to the sum of the Controlled
Accumulation Amount for such Transfer Date and any existing
Accumulation Shortfall.
“ Covered Amount ”
means an amount, determined as of each Transfer Date for any
Interest Period, equal to the sum of (a) the product of
(i) a fraction the numerator of which is the actual number of
days in such Interest Period and the denominator of which is 360,
times (ii) the Class A Note Interest Rate in
effect with respect to such Interest Period, times
(iii) the aggregate amount on deposit in the Principal
Accumulation Account up to the Class A Note Principal Balance
as of the Record Date preceding such Transfer Date, plus
(b) the product of (i) a fraction the numerator of which
is the actual number of days in such Interest Period and the
denominator of which is 360, times (ii) the
Class B Note Interest Rate in effect with respect to such
Interest Period, times (iii) the aggregate amount on
deposit in the Principal Accumulation Account in excess of the
Class A Principal Balance as of the Record Date preceding such
Transfer Date up to the Class B Principal Balance as of the
Record Date preceding such Transfer Date, plus (c) the
product of (i) a fraction the numerator of which is the actual
number of days in such Interest Period and the denominator of which
is 360, times (ii) the Class C Note Interest Rate
in effect with respect to such Interest Period, times
(iii) the aggregate amount on deposit in the Principal
Accumulation Account in excess of the sum of the Class A
Principal Balance and the Class B Principal Balance as of the
Record Date preceding such Transfer Date.
“ Default Amount ”
means, with respect to any Transfer Date, the aggregate amount of
Principal Receivables (other than Ineligible Receivables) in
Accounts which became Defaulted Accounts during the Related Monthly
Period.
“ Default Interest
” means, for any Distribution Date, an amount equal to the
sum of Class A Default Interest, Class B Default Interest
and Class C Default Interest for such Distribution Date.
“ Designated Maturity
” means, for any LIBOR Determination Date, one month;
provided that LIBOR for the initial Interest Period will be
determined by straight-line interpolation (based on the actual
number of days in the initial Interest Period) between two rates
determined in accordance with the definition of LIBOR, one of which
will be determined for a Designated Maturity of one month and the
other of which will be determined for a Designated Maturity of two
months.
“ Dilution ” means
any downward adjustment made by Servicer in the amount of any
Receivable (a) because of a rebate, refund, unauthorized charge,
fraudulent or counterfeit charge or billing error to an Obligor,
(b) because such Receivable was created in respect of
merchandise which was refused or returned by an Obligor,
(c) because of a credit pursuant to a debt cancellation or
debt deferral program which is not recovered from Collections or
from Insurance Proceeds or (d) for any other reason other than
receiving Collections therefor or charging off such amount as
uncollectible.
“ Distribution Account
” is defined in subsection 4.09(a).
6
“ Distribution Date
” means January 15, 2008 and the 15 th day of each
calendar month thereafter, or if such 15 th day is not a
Business Day, the next succeeding Business Day.
“ Excess Servicing Fee
” means, for each Distribution Date following a Servicer
Default and the appointment of a Successor Servicer, an amount
equal to one-twelfth of the product of the Collateral Amount as of
the last day of the preceding Monthly Period and the excess of the
market rate servicing fee percentage determined by Indenture
Trustee over the Series Servicing Fee Percentage plus, if the
Indenture Trustee is the Successor Servicer, an amount equal to the
amount of the reduction to the applicable Noteholder Servicing Fee
pursuant to the second proviso in Section 3.01 which is
attributable to the fact that Interchange included in Finance
Charge Collections for the Related Monthly Period and allocated to
Series 2007-2 is less than Servicer Interchange for such
Monthly Period. Indenture Trustee may determine the market rate
servicing fee percentage by soliciting three or more written bids
from qualified successor servicers and averaging the rates offered
in the bids.
“ Excess Spread
Percentage ” means Net Yield.
“ Expected Principal Payment
Date ” means November 16, 2009.
“ Finance Charge Account
” is defined in Section 4.09(a).
“ Finance Charge
Collections ” means Collections of Finance Charge
Receivables.
“ Finance Charge
Shortfall ” means, for any Distribution Date and the
related Transfer Date, an amount equal to the excess, if any, of
(a) the full amount required to be deposited or distributed,
without duplication, pursuant to subsections 4.04(a)(i) through
(ix) on such dates over (b) amounts available for such
deposits and distributions from the Available Finance Charge
Collections for the Related Monthly Period (excluding any portion
thereof attributable to Excess Finance Charge Collections).
“ Foreign Account
” means an Account, which as of July 31, 1995 (or, with
respect to Additional Accounts, as of the relevant Addition Date)
was an Eligible Account, but subsequent to such date the Obligor of
which has provided, as its most recent billing address, an address
which is not located in the United States or its territories or
possessions.
“ Group One ”
means Series 2007-2, the outstanding PSA Series (other than
any Series represented by the Collateral Certificate) and each
other Series specified in the related Indenture Supplement to be
included in Group One.
“ Initial Collateral
Amount ” means $425,000,000.
“ Interest Period
” means, for 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 (or, in the case of the first Interest Period,
January 15, 2008).
“ Investment Earnings
” means, for any Transfer Date (and the related Distribution
Date), all interest and earnings on Permitted Investments included
in the applicable Series Account (net
7
of
losses and investment expenses) during the period commencing on and
including the Transfer Date immediately preceding such Transfer
Date and ending on but excluding such Transfer Date.
“ Investor Charge-Offs
” is defined in Section 4.05.
“ Investor Default
Amount ” means, with respect to any Monthly Period, an
amount equal to the product of (a) the Default Amount for such
Monthly Period and (b) the Allocation Percentage for Default
Amounts for such Monthly Period.
“ Investor Finance Charge
Collections ” means, with respect to any Date of
Processing, an amount equal to the product of (a) the
Allocation Percentage for such Date of Processing and
(b) Finance Charge Collections received on such date and, with
respect to any Monthly Period, the aggregate of such sums for each
Date of Processing in such Monthly Period.
“ Investor Principal
Collections ” means, with respect to any Date of
Processing, an amount equal to the product of (a) the
Allocation Percentage for such day and (b) Principal
Collections received on such Date of Processing and, with respect
to any Monthly Period, the aggregate of such sums for each Date of
Processing in such Monthly Period.
“ LIBOR ” means,
for any Interest Period, an interest rate per annum for such
Interest Period determined by Indenture Trustee in accordance with
the provisions of Section 4.15.
“ LIBOR Determination
Date ” means (i) November 27, 2007 for the
first Interest Period and (ii) the second London Business Day prior
to the commencement of the second and each subsequent Interest
Period.
“ London Business Day
” means any day on which dealings in deposits in United
States dollars are transacted in the London interbank market.
“ Monthly Interest
” means, for any Distribution Date, the sum of the
Class A Monthly Interest Payment, the Class B Monthly
Interest Payment, and the Class C Monthly Interest Payment for
such Distribution Date.
“ Monthly Period ”
means the period from and including the first day of the calendar
month preceding a related Distribution Date to and including the
last day of such calendar month; provided that the Monthly Period
related to the January 15, 2008 Distribution Date shall mean
the period from and including the Closing Date to and including the
last day of December, 2007.
“ Monthly Principal
” is defined in Section 4.03.
“ Monthly Principal
Reallocation Amount ” means, for any Monthly Period, an
amount equal to the sum of:
(a) the lower of (i) the
Class A Required Amount and (ii) the greater of (A)(x)
the product of (I) 17.75% and (II) the Initial Collateral
Amount minus (y) the amount of unreimbursed Investor
Charge-Offs (after giving effect to Investor
8
Charge-Offs for
the Related Monthly Period) and unreimbursed Reallocated Principal
Collections (as of the previous Distribution Date) and
(B) zero; and
(b) the lower of (i) the sum of
the Class B Required Amount and the Servicing Fee Required
Amount and (ii) the greater of (A)(x) the product of
(I) 9.75% and (II) the Initial Collateral Amount minus
(y) the amount of unreimbursed Investor Charge-Offs (after
giving effect to Investor Charge-Offs for the Related Monthly
Period) and unreimbursed Reallocated Principal Collections (as of
the previous Distribution Date and as determined pursuant to clause
(a) above) and (B) zero.
“ Net Yield ”
means, with respect to any Monthly Period, Portfolio Yield with
respect to such Monthly Period minus the Base Rate with respect to
such Monthly Period.
“ Note Principal Balance
” means, on any date of determination, an amount equal to the
sum of the Class A Note Principal Balance, the Class B
Note Principal Balance and the Class C Note Principal
Balance.
“ Note Purchase
Agreement ” means the Class B Note Purchase
Agreement or the Class C Note Purchase Agreement, as
applicable.
“ Noteholder Servicing
Fee ” is defined in Section 3.01.
“ Paired Series ”
means a Series that has been paired with Series 2007-2 (which
Series may be prefunded or partially prefunded or may be a Variable
Interest) such that a reduction of the Collateral Amount results in
(or permits) an increase of the collateral amount of the Paired
Series.
“ Permitted Investments
” is defined in Annex A to the Indenture.
“ Portfolio Yield
” means, for any Monthly Period, the annualized percentage
equivalent of a fraction, (a) the numerator of which is equal
to (i) the Available Finance Charge Collections (excluding any
Excess Finance Charge Collections and any amounts withdrawn from
the Spread Account, except that Excess Finance Charge Collections
from other Series applied for the benefit of Series 2007-2 Notes
may be included if the Rating Agency Condition is met), minus
(ii) the Investor Default Amount and the Uncovered Dilution
Amount for such Monthly Period and (b) the denominator of
which is the Collateral Amount plus amounts on deposit in the
Principal Accumulation Account as of the first day of such Monthly
Period.
“ Principal Account
” is defined in subsection 4.09(a).
“ Principal Accumulation
Account ” is defined in subsection 4.09(a).
“ Principal Accumulation
Account Balance ” means, for any date of determination,
the principal amount, if any, on deposit in the Principal
Accumulation Account on such date of determination.
“ Principal Accumulation
Investment Earnings ” means, with respect to each
Transfer Date, the Investment Earnings, if any, on funds in the
Principal Accumulation Account.
9
“ Principal Collections
” means Collections of Principal Receivables.
“ Principal Shortfall
” means (a) for any Distribution Date (and related
Transfer Date), with respect to the Revolving Period, zero,
(b) for any Distribution Date (and related Transfer Date),
with respect to the Accumulation Period, an amount equal to the
excess, if any, of the Controlled Deposit Amount with respect to
such date over the amount of Available Principal Collections for
the Related Monthly Period (excluding any portion thereof
attributable to Excess Principal Collections) and (c) for any
Distribution Date (and related Transfer Date), with respect to the
Rapid Amortization Period, an amount equal to the excess, if any,
of the Collateral Amount with respect to such Transfer Date over
the amount of Available Principal Collections for the Related
Monthly Period (excluding any portion thereof attributable to
Excess Principal Collections).
“ PSA Series ”
means a Series under (and as defined in) the Pooling and Servicing
Agreement.
“ QIB ” means a
“qualified institutional buyer” within the meaning of
Rule 144A under the Securities Act.
“ Qualified Maturity
Agreement ” means an agreement in which a Qualified
Maturity Agreement Institution agrees to make a deposit into the
Principal Accumulation Account on or before the Expected Principal
Payment Date in an amount equal to the initial Note Principal
Balance (reduced by any amount on deposit in the Principal
Accumulation Account.
“ Qualified Maturity
Agreement Institution ” means a counterparty having
short-term debt ratings of no less than “P-1/A-1+” by
Moody’s and Standard & Poor’s, respectively, or
long-term unsecured ratings of no less than “Aa3” by
Moody’s and “AA—” by Standard &
Poor’s.
“ Quarterly Net Yield
” means, for any Distribution Date, the average of the Net
Yields for each of the three preceding Monthly Periods, and, for
purposes of the January, 2008 and February, 2008 Distribution
Dates, the Net Yields for October and November, 2007 shall be
deemed to be 5.98% and 5.65%, respectively.
“ Rapid Amortization
Period ” means the period commencing on the date on which
a Trust Pay Out Event or a Series 2007-2 Pay Out Event is
deemed to occur and ending on the Series Termination
Date.
“ Rating Agency ”
means each of Moody’s and Standard & Poor’s.
“ Reallocated Principal
Collections ” means, for any Transfer Date, Investor
Principal Collections applied in accordance with Section 4.06
in an amount not to exceed the Monthly Principal Reallocation
Amount for the Related Monthly Period.
“ Reassignment Amount
” means, for any Transfer Date, after giving effect to any
deposits and distributions otherwise to be made on the related
Distribution Date, the sum of (i) the Note Principal Balance
on the related Distribution Date, plus (ii) Monthly Interest
for the related Distribution Date and any Monthly Interest
previously due but not distributed to the Series 2007-
10
2
Noteholders, plus (iii) the amount of Default Interest, if
any, for the related Distribution Date and any Default Interest
previously due but not distributed to the Series 2007-2
Noteholders on a prior Distribution Date.
“ Reference Banks
” means four major banks in the London interbank market
selected by Servicer.
“ Required Reserve Account
Amount ” means, for any Transfer Date on or after the
Reserve Account Funding Date, an amount equal to (a) 0.50% of
the Note Principal Balance or (b) any other amount designated
by Transferor; provided, however, that if such designation is of a
lesser amount, Transferor shall (i) provide Servicer and
Indenture Trustee with evidence that the Rating Agency Condition
shall have been satisfied and (ii) deliver to Indenture
Trustee a certificate of an Authorized Officer to the effect that,
based on the facts known to such officer at such time, in the
reasonable belief of Transferor, such designation will not cause a
Pay Out Event or an event that, after the giving of notice or the
lapse of time, would cause a Pay Out Event to occur with respect to
Series 2007-2.
“ Required Retained
Transferor Percentage ” means, for purposes of
Series 2007-2, 4%.
“ Required Spread Account
Amount ” means, for any date of determination,
(a) prior to the occurrence of a Pay Out Event, the product of
(i) the Spread Account Percentage in effect on such date and
(ii) the Initial Collateral Amount; provided that the Required
Spread Account Amount shall not exceed the Class C Note
Principal Balance minus the excess, if any, of the Principal
Accumulation Account Balance over the sum of the Class A Note
Principal Balance and the Class B Note Principal Balance on
such date of determination and (b) after the occurrence of a
Pay Out Event, an amount equal to the Class C Note Principal
Balance on such date of determination.
“ Reserve Account
” is defined in subsection 4.09(a).
“ Reserve Account Funding
Date ” means the Transfer Date designated by Servicer
which occurs not later than the earliest of (a) the Transfer
Date with respect to the Monthly Period which commences three
months prior to the commencement of the Accumulation Period (which
commencement shall be subject to postponement pursuant to
Section 4.14); (b) the first Transfer Date for which the
Quarterly Net Yield is less than 2%, but in such event the Reserve
Account Funding Date shall not be required to occur earlier than
the Transfer Date with respect to the Monthly Period which
commences twelve months prior to the commencement of the
Accumulation Period; (c) the first Transfer Date for which the
Quarterly Net Yield is less than 3%, but in such event the Reserve
Account Funding Date shall not be required to occur earlier than
the Transfer Date with respect to the Monthly Period which
commences six months prior to the commencement of the Accumulation
Period; and (d) the first Transfer Date for which the
Quarterly Net Yield is less than 4%, but in such event the Reserve
Account Funding Date shall not be required to occur earlier than
the Transfer Date with respect to the Monthly Period which
commences four months prior to the commencement of the Accumulation
Period; provided, however, that subject to satisfaction of the
Rating Agency Condition, the Reserve Account Funding Date may be
any date selected by Servicer; provided, further, that if a
Qualified Maturity Agreement has been assigned to the Indenture
Trustee in accordance with the
11
provisions of Section 4.14, the Reserve Account Funding Date
shall be the Distribution Date immediately following the date on
which a Qualified Maturity Agreement is terminated if (w) such
Qualified Maturity Agreement is terminated because the provider of
such Qualified Maturity Agreement ceases to qualify as a Qualified
Maturity Agreement Institution, (x) such Qualified Maturity
Agreement is terminated prior to the earlier of the Expected
Principal Payment Date and the commencement of the Rapid
Amortization Period, (y) such Qualified Maturity Agreement is
terminated after the later of the last day of the October, 2008
Monthly Period and, at the election of Transferor, the date to
which the commencement of the Accumulation Period may be postponed
pursuant to Section 4.13 (as determined on the date of such
termination) and (z) Transferor does not obtain a substitute
Qualified Maturity Agreement.
“ Reserve Account
Surplus ” means, as of any Transfer Date following the
Reserve Account Funding Date, the amount, if any, by which the
amount on deposit in the Reserve Account exceeds the Required
Reserve Account Amount.
“ Reserve Draw Amount
” means, with respect to each Transfer Date relating to the
Accumulation Period or the first Transfer Date relating to the
Rapid Amortization Period, the amount, if any, by which the
Principal Accumulation Investment Earnings for such Transfer Date
are less than the Covered Amount determined as of such Transfer
Date.
“ Reset Date ”
means:
(a) each Addition Date and each
“Addition Date” (as such term is defined in the Pooling
and Servicing Agreement), in each case relating to Additional
Accounts;
(b) each Removal Date and each
“Removal Date” (as such term is defined in the Pooling
and Servicing Agreement) on which Principal Receivables are removed
from the Receivables Trust;
(c) each date on which there is an
increase in the outstanding balance of any Variable Interest or any
variable funding certificate issued pursuant to the Pooling and
Servicing Agreement; and
(d) each date on which a new Series
or Class of Notes is issued and each date on which a new
“Series” or “Class” (each as defined in the
Pooling and Servicing Agreement) of investor certificates is issued
by the Certificate Trust.
“ Reuters Screen LIBOR01
Page ” means the display page currently so designated on
the Reuters system (or such page as may replace that page in that
service for the purpose of displaying comparable rates or
prices).
“ Revolving Period
” means the period beginning on the Closing Date and ending
at the close of business on the day immediately preceding the
earlier of the day the Accumulation Period commences or the day the
Rapid Amortization Period commences.
“ Series 2007-2
” means the Series of Notes the terms of which are specified
in this Indenture Supplement.
12
“ Series 2007-2 Final
Maturity Date ” means the November, 2012 Distribution
Date.
“ Series 2007-2
Note ” means a Class A Note, a Class B Note or
a Class C Note.
“ Series 2007-2
Noteholder ” means a Class A Noteholder, a
Class B Noteholder or a Class C Noteholder.
“ Series 2007-2 Pay Out
Event ” is defined in Section 6.01.
“ Series Allocation
Percentage ” means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is
the numerator used in determining the Allocation Percentage for
Finance Charge Collections for that Monthly Period and the
denominator of which is the sum of the numerators used in
determining the Allocation Percentage for Finance Charge
Receivables for all outstanding Series and PSA Series for such
Monthly Period; provided that if one or more Reset Dates occur in a
Monthly Period, the Series Allocation Percentage will be the
percentage equivalent of a fraction, the numerator of which is an
amount equal to the sum of the numerators used in determining the
Allocation Percentage for Finance Charge Collections for Series
2007-2 for each day during that Monthly Period divided by the total
number of days in such Monthly Period and the denominator of which
is an amount equal to the sum of the numerators used in determining
the Allocation Percentages for Finance Charge Receivables for all
outstanding Series and PSA Series for each day during such Monthly
Period divided by the total number of days in such Monthly
Period.
“ Series Servicing Fee
Percentage ” means 2% per annum.
“ Series Termination
Date ” means the earliest to occur of (a) the date
on which the Note Principal Balance is paid in full, (b) the
date on which the Collateral Amount is reduced to zero and
(c) the Series 2007-2 Final Maturity Date.
“ Servicer Interchange
” means, with respect to any Monthly Period, an amount equal
to one-twelfth of the product of (a) 1.50% and (b) the
Collateral Amount as of the last day of the preceding Monthly
Period; provided, however, that Servicer Interchange for the
January, 2008 Distribution Date shall be $584,375.
“ Servicing Fee Required
Amount ” means, for any Distribution Date, an amount
equal to the excess of the amount described in subsection
4.04(a)(iii) over the Available Finance Charge Collections applied
to pay such amount pursuant to subsection 4.04(a).
“ Spread Account ”
is defined in subsection 4.11(a).
“ Spread Account
Deficiency ” means the excess, if any, of the Required
Spread Account Amount over the Available Spread Account
Amount.
“ Spread Account
Percentage ” means, for any Distribution Date, the
applicable percentage specified in the Class C Note Purchase
Agreement.
“ Uncovered Dilution
Amount ” means, for any Distribution Date, an amount
equal to the product of (a) the Series Allocation
Percentage for the Related Monthly Period times (b) the
13
aggregate Dilutions occurring during that Monthly Period as to
which any deposit is required to be made to the Excess Funding
Account pursuant to Section 3.09 of the Transfer and Servicing
Agreement or Section 4.03(c) of the Pooling and Servicing
Agreement, as applicable, but has not been made (either directly by
the Transferor or from Principal Collections otherwise
distributable to the Holder of the Transferor Interest).
Each capitalized term defined herein
shall relate to the Series 2007-2 Notes and no other Series of
Notes issued by Issuer, unless the context otherwise requires. All
capitalized terms used herein and not otherwise defined herein have
the meanings ascribed to them in Annex A to the Master
Indenture.
The interpretive rules specified in
Section 1.02 of the Indenture also apply to this Indenture
Supplement. If any term or provision contained herein shall
conflict with or be inconsistent with any term or provision
contained in the Indenture, the terms and provisions of this
Indenture Supplement shall be controlling.
ARTICLE III
NOTEHOLDER SERVICING FEE
Section 3.01. Servicing
Compensation . The share of the Servicing Fee allocable to
Series 2007-2 for any Transfer Date (the “Noteholder
Servicing Fee”) shall be equal to one-twelfth of the product
of (a) the Series Servicing Fee Percentage and
(b) the Collateral Amount as of the last day of the Monthly
Period preceding such Transfer Date; provided, however, that with
respect to the first Transfer Date, the Noteholder Servicing Fee
shall be equal to $779,167; provided, further, that if FNBO or
Indenture Trustee is Servicer, the Noteholder Servicing Fee shall
be reduced by the amount, if any, by which the Servicer Interchange
for such Monthly Period exceeds the amount of Interchange included
as Finance Charge Collections allocable to the Series 2007-2
Notes with respect to such Monthly Period pursuant to
Section 4.16 of this Indenture Supplement. The remainder of
the Servicing Fee shall be paid by the Holders of the Transferor
Interest or the Noteholders of other Series (as provided in the
related Indenture Supplements) and in no event shall Issuer,
Indenture Trustee or the Series 2007-2 Noteholders be liable
for the share of the Servicing Fee to be paid by the Holders of the
Transferor Interest or the Noteholders of any other Series.
ARTICLE IV
RIGHTS OF NOTEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.01. Collections
and Allocations .
(a) Finance Charge Collections,
Principal Collections and Receivables in Defaulted Accounts shall
be allocated and distributed to Series 2007-2 as set forth in
this Article.
14
(b) On each Date of Processing,
Servicer shall allocate to the Series 2007-2 Noteholders the
following amounts as set forth below:
(i) Allocations of Finance Charge
Collections . An amount equal to the product of (A) the
Allocation Percentage and (B) the aggregate Finance Charge
Collections processed on such Date of Processing shall be allocated
to the Series 2007-2 Noteholders and, first, deposited to the
Finance Charge Account to the extent required by Section 4.03
of the Pooling and Servicing Agreement or Section 8.04 of the
Indenture and subsection 4.01(c) below, and, second, paid to the
Holder of the Transferor Interest.
(ii) Allocations of Principal
Collections .
(A) Allocations During the
Revolving Period .
(1) During the Revolving Period an
amount equal to the product of the Allocation Percentage and the
aggregate amount of Principal Collections processed on each Date of
Processing, shall be allocated to the Series 2007-2
Noteholders and, first, if any other Principal Sharing Series is
outstanding and in its accumulation period or amortization period,
deposited to and retained in the Principal Account to the extent
necessary for application as Excess Principal Collections for other
Principal Sharing Series on the related Distribution Date, second,
deposited to the Excess Funding Account to the extent necessary so
that (x) the Transferor Interest is not less than the Minimum
Transferor Interest and (y) the sum of the Principal
Receivables in the Trust plus the amount on deposit in the Excess
Funding Account equals or exceeds the Minimum Aggregate Principal
Receivables and, third, paid to the Holder of the Transferor
Interest.
(2) With respect to each Monthly
Period falling in the Revolving Period, to the extent that
Principal Collections allocated to the Series 2007-2
Noteholders pursuant to this subsection 4.01(b)(ii) are paid to
Transferor, Transferor shall make an amount equal to the
Reallocated Principal Collections for the related Transfer Date
available on that Transfer Date for application in accordance with
Section 4.06.
(B) Allocations During the
Accumulation Period . During the Accumulation Period an amount
equal to the product of the Allocation Percentage and the aggregate
amount of Principal Collections processed on each Date of
Processing shall be allocated to the Series 2007-2 Noteholders
and deposited into the Principal Account in accordance with
Section 8.04 of the Indenture and subsection 4.01(c).
15
(C) Allocations During the Rapid
Amortization Period . During the Rapid Amortization Period, an
amount equal to the product of the Allocation Percentage and the
aggregate amount of Principal Collections processed on each Date of
Processing shall be allocated to the Series 2007-2 Noteholders
and deposited into the Principal Account until applied as provided
herein; provided, however, that after the date on which an amount
of such Principal Collections equal to the Note Principal Balance
has been deposited into the Principal Account such amount shall be,
first, if any other Principal Sharing Series is outstanding and in
its accumulation period or amortization period, deposited to and
retained in the Principal Account for application, to the extent
necessary, as Excess Principal Collections to other Principal
Sharing Series on the related Distribution Date, second, deposited
in the Excess Funding Account to the extent necessary so that
(x) the Transferor Interest is not less than the Minimum
Transferor Interest and (y) the sum of the Principal
Receivables in the Trust plus the amount on deposit in the Excess
Funding Account equals or exceeds the Minimum Aggregate Principal
Receivables and, third, paid to the holders of the Transferor
Interest.
(c) During any period when Servicer
is permitted by Section 4.03 of the Pooling and Servicing
Agreement or Section 8.04 of the Indenture to make a single
monthly deposit to the Collection Account, amounts allocated to the
Noteholders pursuant to Sections 4.01(a) and (b) with
respect to any Monthly Period need not be deposited into the
Collection Account or any Series Account prior to the related
Transfer Date, and, when so deposited, (x) may be deposited
net of any amounts required to be distributed to Transferor and, if
FNBO is Servicer, Servicer, and (y) shall be deposited into
the Finance Charge Account (in the case of Finance Charge
Collections) and the Principal Account (in the case of Collections
of Principal Receivables (not including any Excess Principal
Collections allocated to Series 2007-2 pursuant to
Section 4.03(e) of the Pooling and Servicing Agreement or
Section 8.05 of the Indenture)). The exception to the daily
deposit requirements provided by Section 4.03(a)(ii) of the Pooling
and Servicing Agreement or by the second paragraph of Section
8.04(a) of the Indenture shall not be available during any Monthly
Period during the Rapid Amortization Period, or at any time that
(A) the Transferor Interest is less than the Minimum
Transferor Interest, (B) the Available Spread Account Amount
is less than the Required Spread Account Amount or (C) the sum
of the Principal Receivables in the Trust plus the amount on
deposit in the Excess Funding Account is less than the Minimum
Aggregate Principal Receivables. For purposes of
Section 4.03(a)(ii) of the Pooling and Servicing Agreement and
the second paragraph of Section 8.04(a) of the Indenture, the
amount of Principal Collections required to be deposited or
distributed on or prior to the related Distribution Date during the
Accumulation Period shall include an amount equal to the Controlled
Deposit Amount.
Notwithstanding the provisions of
Section 4.03(a)(ii) of the Pooling and Servicing Agreement and
the second paragraph of Section 8.04(a) of the Indenture, all
Finance Charge Collections for each Monthly Period shall be
deposited daily and retained until the delivery of the statement
required by Section 5.03(b). On or after delivery of
such
16
statement,
Finance Charge Collections for the Related Monthly Period which are
not required to be deposited or distributed pursuant to such
statement may be withdrawn by Servicer.
(d) On any date, Servicer may
withdraw from the Collection Account or any Series Account any
amounts inadvertently deposited in such account that should have
not been so deposited.
Section 4.02. Determination
of Monthly Interest .
(a) The amount of monthly interest
(“Class A Monthly Interest Payment”) distributable
from the Distribution Account with respect to the Class A
Notes on any Distribution Date shall be an amount equal to the
product of (i) (A) a fraction, the numerator of which is the
actual number of days in the related Interest Period and the
denominator of which is 360, times (B) the Class A Note
Interest Rate in effect with respect to the related Interest Period
and (ii) the Class A Note Principal Balance as of the
close of business on the last day of the preceding Monthly Period
(or, with respect to the initial Distribution Date, the
Class A Note Initial Principal Balance).
On the Determination Date preceding
each Distribution Date, Servicer shall determine the excess, if any
(the “Class A Interest Shortfall”), of
(x) the aggregate amount accrued pursuant to this
Section 4.02(a) as of the prior Distribution Date over
(y) the amount actually transferred from the Distribution
Account for payment of such amount. If the Class A Interest
Shortfall for any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Class A Interest
Shortfall is fully paid, an additional amount (“Class A
Default Interest”) equal to the product of (i) (A) a
fraction, the numerator of which is the actual number of days in
the related Interest Period and the denominator of which is 360,
times (B) the Class A Note Interest Rate in effect with
respect to the related Interest Period and (ii) such
Class A Interest Shortfall (or the portion thereof which has
not been paid to the Class A Noteholders) shall be payable as
provided herein with respect to the Class A Notes.
Notwithstanding anything to the contrary herein, Class A
Default Interest shall be payable or distributed to the
Class A Noteholders only to the extent permitted by applicable
law.
(b) The amount of monthly interest
(“Class B Monthly Interest Payment”) distributable
from the Distribution Account with respect to the Class B
Notes on any Distribution Date shall be an amount equal to the
product of (i) (A) a fraction, the numerator of which is the
actual number of days in the related Interest Period and the
denominator of which is 360, times (B) the Class B Note
Interest Rate in effect with respect to the related Interest Period
and (ii) the Class B Note Principal Balance as of the
close of business on the last day of the preceding Monthly Period
(or, with respect to the initial Distribution Date, the
Class B Note Initial Principal Balance).
On the Determination Date preceding
each Distribution Date, Servicer shall determine the excess, if any
(the “Class B Interest Shortfall”), of
(x) the aggregate amount accrued pursuant to this
Section 4.02(b) as of the prior Distribution Date over
(y) the amount of funds actually transferred from the
Distribution Account for payment
17
of such amount.
If the Class B Interest Shortfall for any Distribution Date is
greater than zero, on each subsequent Distribution Date until such
Class B Interest Shortfall is fully paid, an additional amount
(“Class B Default Interest”) equal to the product
of (i) (A) a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator
of which is 360, times (B) the Class B Note Interest Rate
in effect with respect to the related Interest Period and
(ii) such Class B Interest Shortfall (or the portion
thereof which has not been paid to the Class B Noteholders)
shall be payable as provided herein with respect to the
Class B Notes. Notwithstanding anything to the contrary
herein, Class B Default Interest shall be payable or
distributed to the Class B Noteholders only to the extent
permitted by applicable law.
(c) The amount of monthly interest
(“Class C Monthly Interest Payment”) distributable
from the Distribution Account with respect to the Class C
Notes on any Distribution Date shall be an amount equal to the
product of (i) (A) a fraction, the numerator of which is the
actual number of days in the related Interest Period the actual
number of days in the related Interest Period and the denominator
of which is 360, times (B) the Class C Note Interest Rate
in effect with respect to the related Interest Period and
(ii) the Class C Note Principal Balance as of the close
of business on the last day of the preceding Monthly Period (or,
with respect to the initial Distribution Date, the Class C
Note Initial Principal Balance).
On the Determination Date preceding
each Distribution Date, Servicer shall determine the excess, if any
(the “Class C Interest Shortfall”), of
(x) the aggregate amount accrued pursuant to this
Section 4.02(c) as of the prior Distribution Date over
(y) the amount of funds actually transferred from the
Distribution Account for payment of such amount. If the
Class C Interest Shortfall for any Distribution Date is
greater than zero, on each subsequent Distribution Date until such
Class C Interest Shortfall is fully paid, an additional amount
(“Class C Default Interest”) equal to the product
of (i) (A) a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator
of which is 360, times (B) the Class C Note Interest Rate
in effect with respect to the related Interest Period and
(ii) such Class C Interest Shortfall (or the portion
thereof which has not been paid to the Class C Noteholders)
shall be payable as provided herein with respect to the
Class C Notes. Notwithstanding anything to the contrary
herein, Class C Default Interest shall be payable or
distributed to the Class C Noteholders only to the extent
permitted by applicable law.
Section 4.03. Determination
of Monthly Principal . The amount of monthly principal to be
transferred from the Principal Account with respect to the Notes on
each Transfer Date (the “Monthly Principal”), beginning
with the Transfer Date in the month following the month in which
the Accumulation Period or, if earlier, the Rapid Amortization
Period, begins, shall be equal to the least of (i) the
Available Principal Collections on deposit in the Principal Account
with respect to such Transfer Date, (ii) for each Transfer
Date with respect to the Accumulation Period, the Controlled
Deposit Amount for such Transfer Date, (iii) the Collateral
Amount (after taking into account any adjustments to be made on
such Distribution Date pursuant to Sections 4.05 and 4.06)
prior to any deposit into the Principal Accumulation Account on
such Transfer Date, and (iv) the Note Principal Balance, minus any
amount already on deposit in the Principal Accumulation Account on
such Transfer Date.
18
Section 4.04. Application of
Available Finance Charge Collections and Available Principal
Collections . On or before each Transfer Date, Servicer shall
instruct Indenture Trustee in writing (which writing shall be
substantially in the form of Exhibit B) to withdraw and
Indenture Trustee, acting in accordance with such instructions,
shall withdraw on such Transfer Date or the related Distribution
Date, as applicable, to the extent of available funds, the amounts
required to be withdrawn from the Finance Charge Account, the
Principal Account, the Principal Accumulation Account and the
Distribution Account as follows:
(a) On each Transfer Date, an amount
equal to the Available Finance Charge Collections for the Related
Monthly Period will be withdrawn from the Finance Charge Account
and distributed, deposited or paid by Indenture Trustee in the
following priority:
(i) an amount equal to Class A
Monthly Interest Payment for such Distribution Date, plus any
Class A Interest Shortfall, plus the amount of any
Class A Default Interest for such Distribution Date, plus the
amount of any Class A Default Interest previously due but not
distributed to Class A Noteholders on a prior Distribution
Date shall be deposited into the Distribution Account for
distribution to the Class A Noteholders;
(ii) an amount equal to Class B
Monthly Interest Payment for such Distribution Date, plus any
Class B Interest Shortfall, plus the amount of any
Class B Default Interest for such Distribution Date, plus the
amount of any Class B Default Interest previously due but not
distributed to Class B Noteholders on a prior Distribution
Date shall be deposited into the Distribution Account for
distribution to the Class B Noteholders;
(iii) an amount equal to the
Noteholder Servicing Fee for such Transfer Date, plus the amount of
any Noteholder Servicing Fee previously due but not distributed to
Servicer on a prior Transfer Date, shall be distributed to
Servicer;
(iv) an amount equal to Class C
Monthly Interest Payment for such Distribution Date, plus any
Class C Interest Shortfall, plus the amount of any
Class C Default Interest for such Distribution Date, plus the
amount of any Class C Default Interest previously due but not
distributed to the Class C Noteholders on a prior Distribution
Date shall be deposited into the Distribution Account for
distribution to the Class C Noteholders;
(v) an amount equal to the Investor
Default Amount and any Uncovered Dilution Amount for such
Distribution Date shall be treated as a portion of Available
Principal Collections for such Distribution Date and deposited into
the Principal Account for application pursuant to this
Section 4.04;
(vi) an amount equal to the sum of
the aggregate amounts of Investor Charge-Offs and Reallocated
Principal Collections which have not been previously reimbursed
pursuant to this subsection (vi) shall be treated as a portion
of Available Principal Collections for such Distribution Date and
deposited into the Principal Account for application pursuant to
this Section 4.04;
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(vii) on each Transfer Date from and
after the Reserve Account Funding Date, but prior to the date on
which the Reserve Account terminates as described in subsection
4.10(f), an amount up to the excess, if any, of the Required
Reserve Account Amount over the Available Reserve Account Amount
shall be deposited into the Reserve Account;
(viii) any amount required to be
deposited or paid under the terms of the Class B Note Purchase
Agreement shall be so deposited or paid subject to a maximum
aggregate amount, with respect to any Transfer Date, equal to the
product of (A) 0.50% per annum, (B) the Class B Note
Principal Balance as of the close of business on the last day of
the preceding Monthly Period and (C) a fraction, the numerator
of which is the actual number of days in the Related Monthly Period
and the denominator of which is 360;
(ix) an amount equal to the sum of
(x) the excess, if any, of the Required Spread Account Amount
over the Available Spread Account Amount shall be deposited into
the Spread Account and (y) any other amount required to be
paid or deposited under the terms of the Class C Note Purchase
Agreement shall be so paid or deposited; and
(x) the balance, if any, will
constitute a portion of Excess Finance Charge Collections for such
Distribution Date to be applied in accordance with Section
4.07.
(b) On each Transfer Date with
respect to the Revolving Period, an amount equal to the Available
Principal Collections for the Related Monthly Period shall be
treated as Excess Principal Collections and applied in accordance
with Section 4.08.
(c) On each Transfer Date with
respect to the Accumulation Period or the Rapid Amortization
Period, an amount equal to the Available Principal Collections for
the Related Monthly Period shall be withdrawn from the Principal
Account and distributed or deposited in the following order of
priority:
(i) on each Transfer Date with
respect to the Accumulation Period, an amount equal to the Monthly
Principal for such Transfer Date shall be deposited into the
Principal Accumulation Account;
(ii) on each Transfer Date with
respect to the Rapid Amortization Period, an amount equal to the
Monthly Principal for such Transfer Date shall be deposited into
the Distribution Account for distribution to the Class A
Noteholders until the Class A Note Principal Balance has been paid
in full;
(iii) on each Transfer Date with
respect to the Rapid Amortization Period, after giving effect to
clause (ii) above, an amount equal to the Monthly Principal
remaining, if any, shall be deposited into the Distribution Account
for distribution to the Class B Noteholders until the
Class B Note Principal Balance has been paid in full;
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(iv) on each Transfer Date with
respect to the Rapid Amortization Period, after giving effect to
clauses (ii) and (iii) above, an amount equal to the
Monthly Principal remaining, if any, shall be deposited into the
Distribution Account for distribution to the Class C
Noteholders until the Class C Note Principal Balance has been
paid in full; and
(v) on each Transfer Date with
respect to the Accumulation Period or the Rapid Amortization
Period, the balance of such Available Principal Collections
remaining after giving effect to clauses (i) through
(iv) above shall be retained in the Principal Account to be
treated as Excess Principal Collections and applied in accordance
with Section 4.08.
(d) On each Distribution Date,
Indenture Trustee shall make distributions from the Distribution
Account in accordance with Section 5.02 as follows:
(i) to the Class A Noteholders, the amount deposited into
the Distribution Account pursuant to subsections 4.04(a)(i) and
4.04(c)(ii); (ii) to the Class B Noteholders, the amount
deposited into the Distribution Account pursuant to subsections
4.04(a)(ii) and 4.04(c)(iii); and (iii) to the Class C
Noteholders, the amount deposited into the Distribution Account
pursuant to subsections 4.04(a)(iv) and 4.04(c)(iv).
(e) On the earlier to occur of
(i) the first Transfer Date during the Rapid Amortization
Period and (ii) the Transfer Date immediately preceding the
Expected Principal Payment Date, Indenture Trustee shall withdraw
from the Principal Accumulation Account and deposit into the
Distribution Account amounts necessary to pay, first, to the
Class A Noteholders, until paid in full, second, to the
Class B Noteholders, until paid in full, and, third, to the
Class C Noteholders, until paid in full, the amounts deposited
into the Principal Accumulation Account pursuant to subsections
4.04(c)(i). In accordance with Section 5.02, on the related
Distribution Date, Indenture Trustee shall pay from the
Distribution Account to the Class A Noteholders, the
Class B Noteholders and the Class C Noteholders, as
applicable, the amounts deposited into the Distribution Account for
the account of such Noteholders pursuant to this subsection
4.04(e).
Section 4.05. Investor
Charge-Offs . On each Determination Date, Servicer shall
calculate the Investor Default Amount and any Uncovered Dilution
Amount for the related Distribution Date. If, on any Distribution
Date, the sum of the Investor Default Amount and any Uncovered
Dilution Amount for such Distribution Date exceeds the amount of
Available Finance Charge Collections allocated with respect thereto
pursuant to subsection 4.04(a)(v) with respect to such Distribution
Date, the Collateral Amount will be reduced (but not below zero) by
the amount of such excess (such reduction, an “Investor
Charge-Off”).
Section 4.06. Reallocated
Principal Collections . On each Transfer Date, Servicer shall
apply, or shall instruct Indenture Trustee in writing to apply,
Investor Principal Collections with respect to such Transfer Date,
in an amount not to exceed the Monthly Principal Reallocation
Amount for the Related Monthly Period, to fund any deficiency in
amounts otherwise available for deposit and distribution pursuant
to and in the priority set forth in subsections 4.04(a)(i),
(ii) and (iii), after giving effect to any application of
funds from the Spread Account pursuant to
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Section 4.11, any application of funds from the Reserve
Account pursuant to Section 4.10 and after allocation and
application of Excess Finance Charge Collections pursuant to
Section 4.07 to cover such payments. On each Transfer Date,
the Collateral Amount shall be reduced by the amount of such
Reallocated Principal Collections, if any, for such Transfer
Date.
Section 4.07. Excess Finance
Charge Collections . Excess Finance Charge Collections from all
Excess Allocation Series in Group One will be allocated to cover
any Finance Charge Shortfall or finance charge shortfalls for other
Excess Allocation Series in Group One pursuant to Section 4.03(f)
of the Pooling and Servicing Agreement or Section 8.06 of the
Indenture, as applicable, except that, following a Servicer Default
and the appointment of a Successor Servicer, Excess Finance Charge
Collections remaining after their application to cover Finance
Charge Shortfalls and other finance charge shortfalls for Group
One, shall be paid to the Successor Servicer to pay any unpaid
Excess Servicing Fees or other unpaid excess servicing fees for all
Excess Allocation Series in Group One prior to any distribution to
the Holder of the Transferor Interest. If the remaining Excess
Finance Charge Collections do not exceed the aggregate amount of
such unpaid fees, the remaining Excess Finance Charge Collections
shall be allocated among the Group One Excess Allocation Series pro
rata based on the amount of unpaid excess servicing fees for each
such Series. Excess Finance Charge Collections with respect to
Group One shall be allocated to Series 2007-2 in accordance with
this Section 4.07, without regard to whether the Rating Agency
Condition has been met for purposes of the definition of
“Portfolio Yield.” On each Transfer Date, Indenture
Trustee, at the written direction of the Servicer, shall deposit
Excess Finance Charge Collections allocated to Series 2007-2
to the Finance Charge Account prior to the applications to be made
pursuant to Section 4.04.
Section 4.08. Excess
Principal Collections . Excess Principal Collections from all
Principal Sharing Series in Group One will be allocated to cover
any Principal Shortfall or principal shortfalls for other Principal
Sharing Series in Group One pursuant to Section 4.03(e) of the
Pooling and Servicing Agreement or Section 8.05 of the
Indenture, as applicable. If (i) any Principal Shortfall
remains after such allocation, (ii) any Series in Group One is
in an amortization period and (iii) the amount on deposit in
the Excess Funding Account is greater than zero, amounts on deposit
in the Excess Funding Account will be treated as Excess Principal
Collections and allocated to cover any remaining Principal
Shortfall or principal shortfalls for other Principal Sharing
Series in Group One pursuant to Section 4.02(e) of the Pooling
and Servicing Agreement or Section 8.03 of the Indenture, as
applicable. Indenture Trustee, at the written direction of the
Servicer, shall deposit Excess Principal Collections allocated to
Series 2007-2 to the Principal Accumulation Account or the
Distribution Account, as applicable.
Section 4.09. Certain
Series Accounts .
(a) Indenture Trustee shall establish
and maintain with a Qualified Institution, which may be Indenture
Trustee, in the name of the Trust, on behalf of the Trust, for the
benefit of the Noteholders, six segregated trust accounts with such
Qualified Institution (the “Finance Charge Account,”
the “Principal Account,” the “Principal
Accumulation Account,” the “Distribution
Account,” the “Spread Account,” the
“Reserve Account”), each bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Series 2007-2 Noteholders. The Finance Charge
Account, the Principal Account, the Principal Accumulation Account,
the Distribution Account, the Reserve
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Account and the
Spread Account are hereby designated as the Series Accounts
for the Series 2007-2 Notes. Except as otherwise provided in
Section 4.11, Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in each
Series Account and in all proceeds thereof. Except as
otherwise provided in Section 4.11, each Series Account
shall be under the sole dominion and control of Indenture Trustee
for the benefit of the Series 2007-2 Noteholders. If at any
time the institution holding a Series Account ceases to be a
Qualified Institution, Transferor shall notify Indenture Trustee in
writing, and Indenture Trustee upon being notified (or Servicer on
its behalf) shall, within ten (10) Business Days, establish a
new Series Account meeting the conditions specified above with
a Qualified Institution, and shall transfer any cash or any
investments to such new Series Account. Indenture Trustee, at
the written direction of Servicer, shall make withdrawals from and
deposits to each Series Account from time to time, in the
amounts and for the purposes set forth in this Indenture
Supplement. Indenture Trustee at all times shall maintain accurate
records reflecting each transaction in each Series Account, so
long as such accounts are established and maintained with Indenture
Trustee.
(b) Funds on deposit in each
Series Account from time to time shall be invested and
reinvested at the written direction of Servicer by Indenture
Trustee in Permitted Investments that will mature so that such
funds will be available for withdrawal on or prior to the following
Transfer Date. The Indenture Trustee shall not be held liable for
the performance of any Permitted Investments made in accordance
with the terms hereof.
On each Transfer Date with respect to
the Accumulation Period and on the first Transfer Date with respect
to the Rapid Amortization Period, Indenture Trustee, acting at
Servicer’s direction given on or before such Transfer Date,
shall transfer from the Principal Accumulation Account to the
Finance Charge Account the Principal Accumulation Investment
Earnings on deposit in the Principal Accumulation Account for
application as Available Finance Charge Collections in accordance
with Section 4.04(a).
Principal Accumulation Investment
Earnings (including reinvested interest) shall not be considered
part of the amounts on deposit in the Principal Accumulation
Account for purposes of this Indenture Supplement.
On each Distribution Date, all
Investment Earnings on funds on deposit in the Principal Account,
the Finance Charge Account and the Distribution Account shall be
deposited by Indenture Trustee in a separate deposit account with a
Qualified Institution in the name of Servicer, or a Person
designated in writing by Servicer, which shall not constitute a
part of the Trust, or shall otherwise be turned over by Indenture
Trustee to Servicer.
(c) Indenture Trustee shall hold such
of the Permitted Investments of funds in any Series Account as
consists of instruments, deposit accounts, negotiable documents,
money, goods, letters of credit, and advices of credit in the State
of New York. Indenture Trustee shall hold such of the Permitted
Investments as constitutes investment property through a securities
intermediary, which securities intermediary shall agree with
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Indenture
Trustee that (a) such investment property shall at all times
be credited to a securities account of Indenture Trustee,
(b) such securities intermediary shall treat Indenture Trustee
as entitled to exercise the rights that comprise each financial
asset credited to such securities account, (c) all property
credited to such securities account shall be treated as a financial
asset, (d) such securities intermediary shall comply with
entitlement orders originated by Indenture Trustee without the
further consent of any other person or entity, (e) such
securities intermediary will not agree with any person or entity
other than Indenture Trustee to comply with entitlement orders
originated by such other person or entity, (f) such securities
accounts and the property credited thereto shall not be subject to
any lien, security interest or right of set-off in favor of such
securities intermediary or anyone claiming through it (other than
Indenture Trustee), and (g) such agreement shall be governed
by the laws of the State of New York. Terms used in the preceding
sentence that are defined in the New York UCC and not otherwise
defined herein shall have the me
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