<PAGE>
Exhibit 4.1
EXECUTION COPY
================================================================================
SERIES 2007-1 INDENTURE SUPPLEMENT
Dated as of April 24, 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
================================================================================
42
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TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I
CREATION OF THE
SERIES 2007-1 NOTES................................... 1
ARTICLE II
DEFINITIONS...........................................................
1
ARTICLE III
NOTEHOLDER SERVICING FEE
Section 3.01. Servicing
Compensation..................................... 14
ARTICLE IV
RIGHTS OF NOTEHOLDERS AND ALLOCATION AND APPLICATION OF
COLLECTIONS
Section 4.01. Collections and
Allocations................................ 14
Section 4.02. Determination of Monthly
Interest.......................... 16
Section 4.03. Determination of Monthly
Principal......................... 18
Section 4.04. Application of Available Finance Charge Collections
and
Available Principal Collections............................
18
Section 4.05. Investor
Charge-Offs....................................... 21
Section 4.06. Reallocated Principal
Collections.......................... 21
Section 4.07. Excess Finance Charge
Collections.......................... 21
Section 4.08. Excess Principal
Collections............................... 22
Section 4.09. Certain Series
Accounts.................................... 22
Section 4.10. Reserve
Account............................................ 24
Section 4.11. Spread
Account............................................. 25
Section 4.12. Investment
Instructions.................................... 27
Section 4.13. Accumulation
Period........................................ 27
Section 4.14. Suspension of Accumulation
Period.......................... 28
Section 4.15. Determination of
LIBOR..................................... 29
Section 4.16.
Interchange................................................
30
Section 4.17. Foreign
Accounts........................................... 31
ARTICLE V
DELIVERY OF NOTES; DISTRIBUTIONS; REPORTS TO NOTEHOLDERS
Section 5.01. Delivery and Payment for the Series 2007-1
Notes........... 31
Section 5.02.
Distributions..............................................
31
</TABLE>
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<TABLE>
<S>
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Section 5.03. Reports and Statements to Series 2007-1
Noteholders........ 32
ARTICLE VI
SERIES 2007-1
PAY OUT EVENTS..........................................
32
ARTICLE VII
REDEMPTION; FINAL DISTRIBUTIONS; SERIES TERMINATION
Section 7.01. Optional Redemption of Series 2007-1 Notes; Final
Distributions..............................................
34
Section 7.02. Series
Termination......................................... 35
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Ratification of Indenture;
Amendments...................... 36
Section 8.02. Form of Delivery of the
Notes.............................. 36
Section 8.03.
Counterparts...............................................
36
Section 8.04. Governing
Law.............................................. 36
Section 8.05. Limitation of
Liability.................................... 36
Section 8.06. Rights of Indenture
Trustee................................ 36
Section 8.07. Additional Requirements for Registration of and
Limitations
on Transfer and Exchange of Notes..........................
37
</TABLE>
EXHIBIT A-1 FORM
OF CLASS A NOTE
EXHIBIT A-2 FORM
OF CLASS B NOTE
EXHIBIT A-3 FORM
OF CLASS C NOTE
EXHIBIT B FORM OF MONTHLY
PAYMENT INSTRUCTIONS AND NOTIFICATION TO
INDENTURE TRUSTEE
EXHIBIT C FORM OF MONTHLY
REPORT TO NOTEHOLDERS
EXHIBIT D FORM OF MONTHLY
SERVICER'S CERTIFICATE
44
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SERIES 2007-1 INDENTURE SUPPLEMENT
SERIES 2007-1 INDENTURE SUPPLEMENT, dated as of April 24, 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 2007-1 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 2007-1" or the "Series 2007-1 Notes." The
Series
2007-1 Notes shall be issued in three Classes, known as the "Class
A Floating
Rate Asset Backed Notes, Series 2007-1," the "Class B Floating Rate
Asset Backed
Notes, Series 2007-1," and the "Class C Floating Rate Asset Backed
Notes, Series
2007-1."
Series 2007-1 shall be included in Group One and shall be a
Principal Sharing
Series. Series 2007-1 shall be an Excess Allocation Series with
respect to Group
One only. Series 2007-1 shall not be subordinated to any other
Series. Series
2007-1 shall not be a Paired Series.
45
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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
2007-1 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 2007-1; and provided,
46
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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 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
2007-1 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 2007-1 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 2007-1 equals or exceeds Servicer
Interchange
for such Monthly Period), each with respect to the related
47
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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 $411,250,000.
"Class A Note Interest Rate" means a per annum rate of 0.04% in
excess of LIBOR
as determined on the LIBOR Determination Date for the applicable
Interest
Period.
"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 $40,000,000.
"Class B Note Interest Rate" means a per annum rate of 0.20% 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 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).
"Class C Interest Shortfall" is defined in subsection 4.02(c).
"Class C Monthly Interest Payment" is defined in subsection
4.02(c).
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"Class C Note Initial Principal Balance" means $48,750,000.
"Class C Note Interest Rate" means a per annum rate of 0.45% 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 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 April 24, 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 2007-1 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 April 1, 2009, or such later
date as is
determined in accordance with Sections 4.13 and 4.14.
"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
49
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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).
"Distribution Date" means June 15, 2007 and the 15th day of each
calendar month
thereafter, or if such 15th 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 2007-1 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
successors
servicers and averaging the rates offered in the bids.
"Excess Spread Percentage" means Net Yield.
"Expected Principal Payment Date" means April 15, 2010.
"Finance Charge Account" is defined in Section 4.09(a).
"Finance Charge Collections" means Collections of Finance Charge
Receivables.
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"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 (viii) 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) and the Spread
Account.
"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 2007-1, 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 $500,000,000.
"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.
"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 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) April 20, 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.
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"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 June
15, 2007 Distribution Date shall mean the period from and including
the Closing
Date to and including the last day of May, 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 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.
"Noteholder Servicing Fee" is defined in Section 3.01.
"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 2007-1 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.
52
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"Principal Accumulation Investment Earnings" means, with respect to
each
Transfer Date, the Investment Earnings, if any, on funds in the
Principal
Accumulation Account.
"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.
"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
June, 2007 and July, 2007 Distribution Dates, the Net Yields for
March and
April, 2007 shall be deemed to be 7.20% and 6.80%,
respectively.
"Rapid Amortization Period" means the period commencing on the date
on which a
Trust Pay Out Event or a Series 2007-1 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
2007-1
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 2007-1 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
53
<PAGE>
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
2007-1.
"Required Retained Transferor Percentage" means, for purposes of
Series 2007-1,
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
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
March, 2009
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.
54
<PAGE>
"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.
"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 2007-1" means the Series of Notes the terms of which are
specified in
this Indenture Supplement.
"Series 2007-1 Final Maturity Date" means the April, 2013
Distribution Date.
"Series 2007-1 Note" means a Class A Note, a Class B Note or a
Class C Note.
"Series 2007-1 Noteholder" means a Class A Noteholder, a Class B
Noteholder or a
Class C Noteholder.
"Series 2007-1 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
2007-1 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
55
<PAGE>
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 2007-1 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 June, 2007 Distribution Date shall be
$791,667.
"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 (a)
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 determined as follows:
<TABLE>
<CAPTION>
If the Quarterly Net
Yield
on such Distribution
Date is then the
Spread
-----------------------------
Account
greater than
Percentage will
or equal to: and
less than:
equal:
------------
--------------
---------------
<S>
<C>
<C>
5.50%
1.00%
5.00%
5.50%
1.50%
4.75%
5.00%
2.00%
4.50%
4.75%
2.50%
4.00%
4.50%
3.00%
3.50%
4.00%
4.00%
3.00%
3.50%
5.25%
2.00%
3.00%
6.25%
2.00%
6.50%
</TABLE>
The Initial Spread Account Percentage shall be 1.00%. The Spread
Account
Percentage shall remain unchanged until (a) it is increased to a
higher required
percentage as specified above or (b) the Distribution Date on which
the
Quarterly Net Yield has increased to a level above that for the
then effective
Spread Account Percentage on each of the three immediately
preceding
Distribution Dates (inclusive of the current Distribution Date), in
which case
the Spread Account Percentage shall be decreased to the next lowest
percentage
specified above.
"Telerate Page 3750" means the display page currently so designated
on the
Moneyline Telerate Service (or such page as may replace that page
in that
service for the purpose of displaying comparable rates or
prices).
56
<PAGE>
"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 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
2007-1 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 2007-1 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
$1,055,555;
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 2007-1 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 2007-1 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
2007-1
as
set forth in this Article.
57
<PAGE>
(b) On each Date of Processing, Servicer shall allocate to the
Series
2007-1 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 2007-1 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 2007-1
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 2007-1 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 2007-1 Noteholders and deposited into
the
Principal Account in accordance with Section 8.04 of the
Indenture and subsection 4.01(c).
58
<PAGE>
(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 2007-1 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 2007-1 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
59
<PAGE>
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
60
<PAGE>
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.
61
<PAGE>
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 or deposited 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) an amount equal to the excess, if any, of the Required
Spread Account Amount over the Available Spread Account Amount
shall
be deposited into the Spread Account; and
(ix) 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;
(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
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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 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
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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 2007-1 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 2007-1 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 2007-1 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 2007-1 Noteholders.
The
Finance Charge Account, the Principal Account, the Principal
Accumulation
Account, the Distribution Account, the Reserve Account and the
Spread
Account are hereby designated as the Series Accounts for the Series
2007-1
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 2007-1 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
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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
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
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<PAGE>
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
meaning set forth in the New York UCC. Except as permitted by
this
subsection 4.09(c), Indenture Trustee shall not hold Permitted
Investments
through an agent or nominee.
(d) No Permitted Investment in any Series Account shall be disposed
of
prior to its maturity unless Servicer so directs and either (i)
such
disposal will not result in a loss of all or part of the principal
portion
of
such Permitted Investment or (ii) prior to the maturity of such
Permitted Investment, a default occurs in the payment of
principal,
interest or any other amount with respect to such Permitted
Investment.
SECTION 4.10. RESERVE ACCOUNT.
(a) Indenture Trustee, at the written direction of 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 ti
