AMENDED AND RESTATED POOLING AND SERVICING AGREEMENTPooling and Servicing Agreement |
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Dayton Hudson Credit Card Master Trust | Dayton Hudson Receivables Corporation | If Retailers National Bank | NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION | Target Credit Card Master Trust | Target Receivables Corporation | Transferor, Retailers National Bank. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10(D)
TARGET RECEIVABLES
CORPORATION ,
RETAILERS NATIONAL
BANK ,
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION ,
TARGET CREDIT CARD MASTER
TRUST
Dated as of April 28, 2000
TABLE OF CONTENTS
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of April 28, 2000 among TARGET RECEIVABLES CORPORATION, a Minnesota corporation, as Transferor, RETAILERS NATIONAL BANK, a national banking association, as Servicer, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as Trustee.
WHEREAS, the Transferor, the Servicer and the Trustee have heretofore executed and delivered a Pooling and Servicing Agreement, dated as of September 13, 1995 (as amended, supplemented or otherwise modified, the “ Original Pooling and Servicing Agreement ”), by and between Target Receivables Corporation (formerly known as Dayton Hudson Receivables Corporation), as the Transferor, Retailers National Bank, as the Servicer, and the Trustee for the issuance by the Dayton Hudson Credit Card Master Trust of the Investor Certificates and the Exchangeable Transferor Certificate;
WHEREAS, the Transferor, formerly known as Dayton Hudson Receivables Corporation, has been renamed Target Receivables Corporation and desires to amend and restate the Original Pooling and Servicing Agreement to read in its entirety as set forth below and to, among other things, rename the Trust the Target Credit Card Master Trust;
WHEREAS, Section 13.1(a) of the Original Pooling and Servicing Agreement provides that the Servicer, the Transferor and the Trustee, without the consent of any of the Certificateholders, may amend the Original Pooling and Servicing Agreement from time to time so long as (x) the Transferor shall have delivered to the Trustee an Officer’s Certificate to the effect that the Transferor reasonably believes that such action shall not adversely affect in any material respect the interests of any Investor Certificateholder, (y) the Rating Agency Condition shall have been satisfied with respect to such amendment and (z) a Tax Opinion is delivered in connection with such amendment;
WHEREAS, all conditions precedent to the execution of this Agreement have been complied with;
NOW, THEREFORE, pursuant to Section 13.1(a) of the Original Pooling and Servicing Agreement, the Servicer, the Transferor and the Trustee hereby agree that effective on and as of the date hereof, the Original Pooling and Servicing Agreement is hereby amended and restated in its entirety as follows:
In consideration of the mutual agreements herein contained, each party agrees as follows for the benefit of the other parties, the Certificateholders and any Enhancement Provider to the extent provided herein and in any Supplement:
DEFINITIONS
Section 1.1 Definitions . Whenever used in this Agreement, 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 to the masculine as well as to the feminine and neuter genders of such terms.
“ Account ” shall mean each Initial Account, each Automatic Additional Account and each Supplemental Account, but shall exclude any Account all the Receivables in which are either reassigned or assigned to the Transferor or its designee or the Servicer in accordance with the terms of this Agreement and any inactive Accounts which in accordance with the Credit Card Guidelines have been removed from the active computer records of the Credit Card Originator. The definition of Account shall include each account into which an Account is transferred (a “ Transferred Account ”); provided that (i) such transfer is made in accordance with the Credit Card Guidelines and (ii) such Transferred Account can be traced or identified, by reference to or by way of the computer files, microfiche lists or printed lists delivered to the Trustee pursuant to Section 2.1 or 2.9(f), as an account into which an Account has been transferred. The term “ Account ” shall be deemed to refer to an Automatic Additional Account or a Supplemental Account only from and after the Addition Date with respect thereto, and the term “Account” shall be deemed to refer to any Removed Account only prior to the Removal Date with respect thereto.
“ Accumulation Period ” shall mean, with respect to any Series, the period, if any, specified as such in the related Supplement.
“ Act ” shall mean the Securities Act of 1933, as amended.
“ Addition ” shall mean the designation of additional Eligible Accounts to be included as Accounts pursuant to subsection 2.9(a), (b) or (d) or of Participation Interests to be included as Trust Assets pursuant to subsection 2.9(a) or (b), as applicable.
“ Addition Cut-Off Date ” shall mean the date as of which any Supplemental Accounts or Participation Interests are designated for inclusion in the Trust, as specified in the related Assignment.
“ Addition Date ” shall mean (i) with respect to Supplemental Accounts, the date on which the Receivables in such Supplemental Accounts are conveyed to the Trust pursuant to subsection 2.9(a) or (b), as applicable, (ii) with respect to Automatic Additional Accounts, the date on which such accounts are created, and (iii) with respect to Participation Interests, the date from and after which such Participation Interests are to be included as Trust Assets pursuant to subsection 2.9(a) or (b).
“ Additional Account ” shall mean an Automatic Additional Account or a Supplemental Account.
“ Affiliate ” shall mean, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” shall mean the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“ Aggregate Addition Limit ” shall mean, with respect to any Series, the number of accounts which may be included as Automatic Additional Accounts without
confirmation from each Rating Agency that such action will satisfy the Rating Agency Condition and which may be designated as Supplemental Accounts pursuant to subsection 2.9(a), without the prior Rating Agency notice described under subsection 2.9(c)(iv), which would either (x) with respect to any of the three consecutive Monthly Periods commencing in January, April, July and October of each calendar year commencing October, 1995, may not exceed 15% of the number of Accounts as of the first day of the calendar year during which such Monthly Periods commence (or the Trust Cut-Off Date, in the case of 1995) or (y) with respect to any twelve-month period, equal 20% of the number of Accounts as of the first day of such twelve-month period.
“ Agreement ” shall mean this Amended and Restated Pooling and Servicing Agreement and all amendments hereof and supplements hereto, including, with respect to any Series or Class, the related Supplement.
“ Amortization Period ” shall mean, with respect to any Series or any Class within a Series, a period following the Revolving Period, which shall be the controlled amortization period, the principal amortization period, the rapid accumulation period, the early amortization period, or other amortization period or accumulation period, in each case as defined with respect to such Series in the related Supplement.
“ Applicants ” shall have the meaning specified in Section 6.8.
“ Assignment ” shall have the meaning specified in subsection 2.9(f).
“ Authorized Newspaper ” shall mean any newspaper or newspapers of general circulation in the Borough of Manhattan, The City of New York printed in the English language (and, with respect to any Series or Class, if and so long as the Investor Certificates of such Series or Class are listed on the Luxembourg Stock Exchange and such exchange shall so require, in Luxembourg, printed in any language satisfying the requirements of such exchange) and customarily published on each business day at such place, whether or not published on Saturdays, Sundays or holidays.
“ Automatic Addition Suspension Date ” shall mean the Business Day specified in subsection 2.9(d)(i) or the Determination Date specified in subsection 2.9(d)(ii), as applicable.
“ Automatic Addition Termination Date ” shall mean the Business Day specified by the Transferor pursuant to subsection 2.9(d)(i) hereof as of which new open end credit card accounts owned by the Credit Card Originator shall cease to become Automatic Additional Accounts.
“ Automatic Additional Account ” shall mean each open end credit card account established pursuant to a Credit Card Agreement coming into existence (i) after the Trust Cut-Off Date and prior to the earlier of the Automatic Addition Termination Date or an Automatic Addition Suspension Date and (ii) following an Automatic Addition Suspension Date and after a Restart Date and prior to a subsequent Automatic Addition Suspension Date or any Automatic Addition Termination Date; provided , however , with respect to any accounts initially originated by parties other than Retailers National Bank
and its successors or assigns and/or any transferees of Accounts from Retailers National Bank, such accounts shall be deemed to be Automatic Additional Accounts only upon satisfaction of the Rating Agency Condition.
“ Bank Purchase Agreement ” shall mean (i) the amended and restated receivables purchase agreement, dated as of April 28, 2000, between Retailers National Bank, as seller, and Target Capital Corporation (formerly known as Dayton Hudson Capital Corporation), as purchaser, and (ii) in the event of a transfer of Accounts by Retailers National Bank to any other entity in accordance with this Agreement, the receivables purchase agreement between Retailers National Bank and such other entity, substantially in the form of the receivables purchase agreement referred to in clause (i) above.
“ Base Rate ” shall have the meaning, with respect to any Series, specified in the related Supplement.
“ Bearer Certificate ” shall have the meaning specified in Section 6.1.
“ Benefit Plan ” shall have the meaning specified in subsection 6.4(c).
“ Book-Entry Certificates ” shall mean beneficial interests in the Investor Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 6.10.
“ Business Day ” shall mean any day other than (a) a Saturday or Sunday, (b) any other day on which national banking associations or state banking institutions in New York, New York, Minneapolis, Minnesota or Sioux Falls, South Dakota are authorized or obligated by law, executive order or governmental decree to be closed or (c) for purposes of any particular Series, any other day specified in the related Supplement.
“ Certificate ” shall mean any one of the Investor Certificates or the Transferor Certificate.
“ Certificateholder ” or “ Holder ” shall mean an Investor Certificateholder or a Person in whose name the Transferor Certificate is registered.
“ Certificateholders’ Interest ” shall have the meaning specified in Section 4.1.
“ Certificate Owner ” shall mean, with respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency).
“ Certificate Rate ” shall mean, with respect to any Series or Class, the certificate rate specified therefor in the related Supplement.
“ Certificate Register ” shall mean the register maintained pursuant to Section 6.4, providing for the registration of the Registered Certificates and the Transferor Certificate and transfers and exchanges thereof.
“ Class ” shall mean, with respect to any Series, any one of the classes of Investor Certificates of that Series.
“ Clearing Agency ” shall mean an organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
“ Clearing Agency Participant ” shall mean a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
“ Closing Date ” shall mean, with respect to any Series, the closing date specified in the related Supplement.
“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“ Collection Account ” shall have the meaning specified in Section 4.2.
“ Collections ” shall mean all payments (including Recoveries of Principal Receivables or Finance Charge Receivables) received by the Servicer with respect to the Receivables, in the form of cash, checks (to the extent collected), wire transfers or other form of payment in accordance with the Credit Card Agreements in effect from time to time on any Receivables and all payments received by the Servicer with respect to Merchant Fees and Deferred Billing Fees. If so specified in any Supplement, Collections shall also include any payments received by the Servicer with respect to Participation Interests.
“ Commission ” shall mean the Securities and Exchange Commission.
“ Confidential Information ” shall have the meaning specified in Section 11.17.
“ Corporate Trust Office ” shall have the meaning specified in Section 11.16.
“ Coupon ” shall have the meaning specified in Section 6.1.
“ Credit Card Agreement ” shall mean, with respect to an Account, the agreements between the Credit Card Originator which owns such Account and the related Obligor, governing the terms and conditions of such Account, as such agreements may be amended, modified or otherwise changed from time to time and as distributed (including any amendments and revisions thereto) to such Obligors. An example of a Credit Card Agreement is attached as Exhibit F.
“ Credit Card Guidelines ” shall mean written policies and procedures of the Credit Card Originator relating to the operation of its consumer revolving lending business,
including, without limitation, the written policies and procedures for determining the creditworthiness of credit card customers, the extension of credit to credit card customers and relating to the maintenance of credit card accounts and collection of receivables with respect thereto, as such policies and procedures may be amended, modified, or otherwise changed from time to time in conformance with all Requirements of Law, the failure to comply with which would have a material adverse effect on interests hereunder of Investor Certificateholders.
“ Credit Card Originator ” shall mean Retailers National Bank, and its successors or assigns and/or any transferee of the Accounts from Retailers National Bank or any other originator of Accounts.
“ Daily Report ” shall have the meaning specified in subsection 3.4(a).
“ Date of Processing ” shall mean, with respect to any transaction, the Business Day on which such transaction is first recorded pursuant to the Servicer’s customary and usual servicing practices on the Servicer’s computer file of consumer open-end credit card accounts (without regard to the effective date of such recordation).
“ Debtor Relief Laws ” shall mean the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, readjustment of debt, marshalling of assets or similar debtor relief laws of the United States, any state or any foreign country from time to time in effect, affecting the rights of creditors generally.
“ Defaulted Amount ” shall mean, with respect to any Monthly Period, an amount (which shall not be less than zero) equal to (a) the amount of Defaulted Receivables for each day in such Monthly Period, minus (b) the sum of (i) the amount of any Defaulted Receivables for which the Transferor Amount is reduced as a result of the assignment of a principal balance of zero thereto for purposes of determining the aggregate amount of Principal Receivables or the Servicer became obligated to accept reassignment or assignment in accordance with the terms of this Agreement during such Monthly Period, (ii) the aggregate amount of Recoveries received in such Monthly Period with respect to Finance Charge Receivables and Principal Receivables previously charged off as uncollectible and (iii) the excess, if any, for the immediately preceding Monthly Period, of the sum computed pursuant to this clause (b) over the amount of Principal Receivables that became Defaulted Receivables during such Monthly Period; provided , however , that, if an Insolvency Event occurs with respect to the Transferor, the amount of such Defaulted Receivables which are subject to reassignment to the Transferor in accordance with the terms of this Agreement shall not be added to the sum so subtracted and, if any of the events described in subsection 10.1(d) occur with respect to the Servicer, the amount of such Defaulted Receivables which are subject to reassignment or assignment to the Servicer in accordance with the terms of this Agreement shall not be added to the sum so subtracted.
“ Defaulted Receivable ” shall mean, with respect to any date of determination, all Principal Receivables in any Account which are charged off as
uncollectible on such day in accordance with the Credit Card Guidelines and the Servicer’s customary and usual servicing procedures for servicing open end credit card account receivables comparable to the Receivables. A Principal Receivable in any Account shall become a Defaulted Receivable on the day on which such Principal Receivable is recorded as charged off on the Servicer’s computer master file of consumer credit card accounts in accordance with the Credit Card Guidelines.
“ Defeasance ” shall have the meaning specified in Section 12.4.
“ Defeased Series ” shall have the meaning specified in Section 12.4.
“ Deferred Billing Fees ” shall mean the fees paid with respect to the Accounts by the Dayton’s, Hudson’s, Marshall Field’s, Mervyn’s and Target Stores to Retailers National Bank as compensation for Accounts which make charges on a deferred billing basis.
“ Definitive Certificates ” shall have the meaning specified in Section 6.10.
“ Definitive Euro-Certificates ” shall have the meaning specified in Section 6.13.
“ Demand Note ” shall have the meaning specified in subsection 2.7(i).
“ Depositary ” shall mean the Person specified in the applicable Supplement, in its capacity as depositary for the respective accounts of any Clearing Agency or, with respect to Global Certificates, any foreign clearing agencies set forth in the related Supplement.
“ Depository Agreement ” shall mean, with respect to any Series or Class, the agreement among the Transferor, the Trustee and the applicable Clearing Agency.
“ Determination Date ” shall mean the third Business Day preceding each Distribution Date.
“ Discount Option Receivables ” shall mean, on any Date of Processing on and after the date on which the Transferor’s exercise of its discount option pursuant to Section 2.11 takes effect, the sum of (a) the aggregate Discount Option Receivables at the end of the prior day (which amount, prior to the date on which the Transferor’s exercise of its discount option takes effect and with respect to Receivables generated prior to such date, shall be zero) plus (b) any New Discount Option Receivables created on such day minus (c) any Discount Option Receivables Collections received on such Date of Processing.
“ Discount Option Receivables Collections ” shall mean on any Date of Processing on and after the date on which the Transferor’s exercise of its discount option pursuant to Section 2.11 takes effect, the product of (a) a fraction the numerator of which is the amount of the Discount Option Receivables and the denominator of which is the sum of the Principal Receivables plus the amount of Discount Option Receivables, in each case (for both numerator and denominator) at the end of the prior Monthly Period and (b)
Collections of Principal Receivables, prior to any reduction for Finance Charge Receivables which are Discount Option Receivables, received on such Date of Processing.
“ Discount Percentage ” shall have the meaning specified in subsection 2.11(a).
“ Distribution Date ” shall mean, with respect to any Series, the date specified in the related Supplement.
“ Document Delivery Date ” shall mean the first Closing Date in the case of Initial Accounts, the Addition Date in the case of Supplemental Accounts and the Removal Date in the case of Removed Accounts.
“ Early Amortization Event ” shall mean, with respect to any Series, each event specified in Section 9.1 and each additional event, if any, specified in the relevant Supplement as an Early Amortization Event with respect to such Series.
“ Eligible Account ” shall mean an open end credit card account, which is not a commercial account, owned by the Credit Card Originator which as of the Trust Cut-Off Date with respect to an Initial Account, on the date of creation thereof, with respect to an Automatic Additional Account, or as of the related Addition Cut-Off Date with respect to a Supplemental Account, meets the requirement of either clause (i) or (ii) below: (i) (a) is in existence and serviced at certain facilities of the Credit Card Originator or an Affiliate thereof; (b) is payable in United States dollars; (c) except as provided below, has not been identified as an account the credit cards with respect to which have been reported to the Credit Card Originator as having been lost or stolen; (d) has not been, and does not have any Receivables that have been, sold, pledged, assigned or otherwise conveyed to any person (except pursuant to this Agreement or the Bank Purchase Agreement), unless any such pledge or assignment is released on or before the initial Closing Date or the Addition Date, as applicable; (e) except as provided below, does not have any Receivables that are Defaulted Receivables; (f) except as provided below, does not have any Receivables which have been identified by the Credit Card Originator or the relevant Obligor as having been incurred as a result of fraudulent use of any related credit card; and (g) has an Obligor who has provided as his or her most recent billing address, an address located in the United States or its territories or possessions or a United States military address; provided , however , that as of any date of determination, up to 4% (or such greater percentage if prior written notice thereof has been given by the Transferor to each Rating Agency and the Rating Agency Condition has been satisfied) of the number of Accounts may have Obligors who have provided addresses outside of such jurisdictions or (ii) with respect to Supplemental Accounts, the addition of such Accounts (other than an addition required pursuant to subsection 2.9(a)(i)) shall have satisfied the Rating Agency Condition.
“ Eligible Deposit Account ” shall mean either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), and acting as a trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from each Rating Agency in one of its generic credit rating categories which signifies investment grade.
“ Eligible Institution ” shall mean (a) a depository institution (which may be the Trustee or an Affiliate) organized under the laws of the United States or any one of the states thereof which at all times (i) has either (x) a long-term unsecured debt rating of “A2” or better by Moody’s or (y) a certificate of deposit rating of “P-1” by Moody’s, (ii) has either (x) a long-term unsecured debt rating of “AAA” by Standard & Poor’s or (y) a certificate of deposit rating of “A-l+” by Standard & Poor’s and (iii) is a member of the FDIC or (b) any other institution that is acceptable to Moody’s and Standard & Poor’s.
“ Eligible Investments ” shall mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of foreign banks) and subject to supervision and examination by Federal or state banking or depository institution authorities; provided that at the time of the Trust’s investment or contractual commitment to invest therein, the short-term debt rating of such depository institution or trust company shall be in the highest investment category of each Rating Agency;
(c) commercial paper or other short-term obligations having, at the time of the Trust’s investment or contractual commitment to invest therein, a rating from each Rating Agency in its highest investment category;
(d) demand deposits, time deposits and certificates of deposit which are fully insured by the FDIC, with a Person the commercial paper of which has a credit rating from each Rating Agency in its highest investment category;
(e) notes or bankers’ acceptances (having original maturities of no more than 365 days) issued by any depository institution or trust company referred to in clause (b) above;
(f) time deposits, other than as referred to in clause (d) above, with a Person the commercial paper of which has a credit rating from each Rating Agency in its highest investment category; or
(g) any other investments approved in writing by each Rating Agency which would not cause the Trust to become an “investment company” within the meaning of the Investment Company Act.
“ Eligible Receivable ” shall mean each Receivable:
(a) which has arisen under an Eligible Account;
(b) which was created in compliance with the Credit Card Guidelines and all Requirements of Law applicable to the Credit Card Originator, the failure to comply with which would have a material adverse effect on Investor Certificateholders, and pursuant to a Credit Card Agreement which complies with all Requirements of Law applicable to the Credit Card Originator, the failure to comply with which would have a material adverse effect on Investor Certificateholders;
(c) with respect to which all consents, licenses, approvals or authorizations of, or registrations with, any Governmental Authority required to be obtained or given by the Credit Card Originator in connection with the creation of such Receivable or the execution, delivery and performance by the Credit Card Originator under the related Credit Card Agreement, have been duly obtained or given and are in full force and effect as of the date of creation of such Receivable, if, and to the extent that the failure to so obtain or give any such consent, license, approval, authorization or registration would have a material adverse effect on the Investor Certificateholders;
(d) as to which, at the time of its transfer to the Trust, the Transferor or the Trust will have good title free and clear of all Liens (other than any Lien for municipal or other local taxes if such taxes are not then due and payable or if the Transferor is then contesting the validity thereof in good faith by appropriate proceedings and has set aside on its books adequate reserves with respect thereto);
(e) which has been the subject of a valid transfer and assignment from the Transferor to the Trust of all the Transferor’s right, title and interest therein or the grant of a “security interest” (as defined in the UCC) therein;
(f) which at and after the time of transfer to the Trust is the legal, valid and binding payment obligation of the Obligor thereof, legally enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
(g) which constitutes an “account,” a “general intangible” or “chattel paper” under and as defined in Article 9 of the UCC;
(h) which, at the time of its transfer to the Trust, has not been waived or modified except as permitted in accordance with subsection 3.3(h);
(i) which, at the time of its transfer to the Trust, is not subject to any right of rescission, setoff, counterclaim or any other defense of the Obligor (including the defense of usury), other than defenses arising out of Debtor Relief Laws or other similar laws affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit
at law or in equity) or as to which the Servicer is required by Section 3.9 to make an adjustment;
(j) as to which, at the time of its transfer to the Trust, the Transferor has satisfied all obligations to be fulfilled at the time it is transferred to the Trust; and
(k) as to which, at the time of its transfer to the Trust, the Transferor has not taken any action which, or failed to take any action the omission of which, would, at the time of its transfer to the Trust, impair the rights of the Trust or the Certificateholders therein.
“ Eligible Servicer ” shall mean the Trustee, a wholly owned subsidiary of the Trustee or an entity which, at the time of its appointment as Servicer, (a) is servicing a portfolio of consumer open end credit card accounts or other consumer open end credit accounts, (b) is legally qualified and has the capacity to service the Accounts, (c) is qualified (or licensed) to use the software that is then being used to service the Accounts or obtains the right to use, or has its own, software which is adequate to perform its duties under this Agreement, (d) has, in the reasonable judgment of the Trustee, the ability to professionally and competently service a portfolio of similar accounts and (e) has a net worth of at least $50,000,000 as of the end of its most recent fiscal quarter.
“ Enhancement ” shall mean the rights and benefits provided to the Investor Certificateholder of any Series or Class pursuant to any letter of credit, surety bond, insurance policy, cash collateral account, cash collateral guaranty, collateral invested amount, spread account, reserve account, guaranty, guaranteed rate agreement, maturity guaranty facility, tax protection agreement, interest rate swap agreement, interest rate cap agreement or other similar arrangement. The subordination of any Class to another Class, or a cross support feature which requires collections on Receivables allocated to one Series to be paid as principal and/or interest with respect to another Series shall be deemed to be an Enhancement.
“ Enhancement Agreement ” shall mean any agreement, instrument or document governing the terms of any Enhancement or pursuant to which any Enhancement is issued or outstanding.
“ Enhancement Invested Amount ” with respect to any Series, shall have the meaning specified in the related Supplement.
“ Enhancement Provider ” shall mean the Person or Persons providing any Enhancement, other than the Investor Certificateholders of any Class which is subordinated to another Class.
“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ Excess Finance Charge Collections ” shall have the meaning specified in Section 4.5.
“ FASIT ” means a financial asset securitization investment trust.
“ FDIC ” shall mean the Federal Deposit Insurance Corporation or any successor.
“ Finance Charge Receivables ” shall mean, with respect to any Monthly Period, the sum of (i) all amounts billed to the Obligors on any Account at the beginning of such Monthly Period in respect of Periodic Finance Charges, (ii) certain fees and charges, including Late Fees, overlimit fees, return check fees, Deferred Billing Fees and Merchant Fees, (iii) Discount Option Receivables and (iv) all amounts (other than amounts already included in clause (i) of this definition) billed in respect of Receivables that are not Eligible Receivables.
“ Finance Charge Shortfalls ” shall have the meaning specified in Section 4.5.
“ Floating Allocation Percentage ” shall mean, with respect to any Series, the floating allocation percentage specified in the related Supplement.
“ Funding Period ” shall have the meaning specified in Section 4.6.
“ Global Certificate ” shall have the meaning specified in Section 6.13.
“ Governmental Authority ” shall mean the United States of America, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“ Group ” shall mean, with respect to any Series, the group of Series, if any, in which the related Supplement specifies such Series is to be included.
“ Ineligible Receivables ” shall have the meaning specified in subsection 2.5(a).
“ Initial Account ” shall mean each open end credit card account established pursuant to a Credit Card Agreement between the Credit Card Originator and any Person existing on the Trust Cut-Off Date.
“ Insolvency Event ” shall have the meaning specified in subsection 9.1(a).
“ Insurance Proceeds ” shall mean any amounts recovered by the Servicer pursuant to any credit insurance policies covering any Obligor with respect to Receivables under such Obligor’s Account.
“ Interest Funding Account ” shall mean, with respect to any Series, the account, if any, specified as such in the related Supplement.
“ Invested Amount ” shall have, with respect to any Series, the meaning specified in the related Supplement.
“ Investment Company Act ” shall mean the Investment Company Act of 1940, as amended.
“ Investor Certificateholder ” shall mean the Person in whose name a Registered Certificate is registered in the Certificate Register or the holder of any Bearer Certificate (or the Global Certificate, as the case may be) or Coupon.
“ Investor Certificates ” shall mean any one of the certificates (including the Bearer Certificates, the Registered Certificates or any Global Certificate) executed by the Transferor and authenticated by or on behalf of the Trustee, substantially in the form attached to the related Supplement, other than the Transferor Certificate, the Supplemental Certificates, if any, and any Participation.
“ Investor Percentage ” shall have, for any Series, with respect to Principal Receivables, Finance Charge Receivables and Receivables in Defaulted Accounts, the meaning specified in the related Supplement.
“ Late Fees ” shall mean the fees specified in the Credit Card Agreement applicable to each Account for late fees with respect to such Account.
“ Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, participation or equity interest, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing, excluding any lien or filing pursuant to this Agreement; provided , however , that any assignment or transfer pursuant to subsection 6.3(c) or (d) or Section 7.2 shall not be deemed to constitute a Lien.
“ Loss ” shall have the meaning specified in subsection 7.4(b).
“ Merchant Fees ” shall mean the fees paid with respect to the Accounts by the Dayton’s, Hudson’s, Marshall Field’s, Mervyn’s and Target Stores to Retailers National Bank, in its capacity as Credit Card Originator, in connection with Obligor charges for goods and services.
“ Monthly Period ” shall mean, with respect to each Distribution Date, the immediately preceding fiscal month of the Transferor, unless otherwise defined in any Supplement.
“ Monthly Report ” shall have the meaning specified in subsection 3.4(b).
“ Monthly Servicing Fee ” shall have the meaning specified in the related Supplement.
“ Moody’s ” shall mean Moody’s Investors Service, Inc., or its successor.
“ New Discount Option Receivables ” shall mean, as of any date of determination, the product of the Discount Percentage and the amount of Principal Receivables (before subtracting out Finance Charge Receivables which are Discount Option Receivables) arising on such date of determination.
“ Notices ” shall have the meaning specified in subsection 13.5(a).
“ Obligor ” shall mean, with respect to any Account, the Person or Persons obligated to make payments with respect to such Account, including any guarantor thereof.
“ Officer’s Certificate ” shall mean, unless otherwise specified in this Agreement, a certificate delivered to the Trustee signed by the Chief Executive Officer, Chairman of the Board, President, any Vice President or the Treasurer of the Transferor or the Servicer, as the case may be.
“ Opinion of Counsel ” shall mean a written opinion of counsel, who may be counsel for, or an employee of, the Person providing the opinion and which opinion shall be reasonably acceptable to the Trustee.
“ Participation ” shall have the meaning specified in subsection 6.3(e).
“ Participation Interests ” shall have the meaning specified in subsection 2.9(a).
“ Participation Percentage ,” with respect to any Participation, shall have the meaning specified in the related Participation Supplement.
“ Participation Supplement ” shall mean a supplement to this Agreement under which the Trustee issues Participations at the Transferor’s direction.
“ Paying Agent ” shall mean any paying agent and co-paying agent appointed pursuant to Section 6.7.
“ Periodic Finance Charges ” shall have the meaning specified in the Credit Card Agreement applicable to each Account for finance charges (due to periodic rate) or any similar term.
“ Person ” shall mean any legal person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or other entity of similar nature.
“ Portfolio Yield ” shall have the meaning, with respect to any Series, specified in the related Supplement.
“ Pre-Funding Account ” shall have the meaning specified in Section 4.6.
“ Principal Allocation Percentage ” shall mean, with respect to any Series, the principal allocation percentage specified in the related Supplement.
“ Principal Receivable ” shall mean all Eligible Receivables which are not Finance Charge Receivables (and which are not Deferred Billing Fees or Merchant Fees). In calculating the aggregate amount of Principal Receivables on any day, the amount of Principal Receivables shall not include Defaulted Receivables and shall be reduced by the aggregate amount of credit balances in the Accounts on such day.
“ Principal Sharing Series ” shall mean a Series that, pursuant to the Supplement therefor, is entitled to receive Shared Principal Collections.
“ Principal Shortfalls ” shall have the meaning specified in Section 4.4.
“ Principal Terms ” shall mean, with respect to any Series, (i) its name or designation; (ii) its initial principal amount (or method for calculating such amount) and its invested amount in the Trust; (iii) its Certificate Rate (or method for the determination thereof); (iv) the payment date or dates and the date or dates from which interest shall accrue; (v) the method for allocating Collections to Certificateholders of such Series; (vi) the designation of any Series Accounts and the terms governing the operation of any such Series Accounts; (vii) the percentage used to calculate the servicing fee with respect thereto; (viii) the provider, if any, and the terms of any form of Enhancement with respect thereto; (ix) the terms on which the Investor Certificates of such Series may be repurchased by the Transferor or any Affiliate of the Transferor or remarketed to other investors; (x) the Series Termination Date; (xi) the number of Classes of Investor Certificates of such Series and, if such Series consists of more than one Class, the rights and priorities of each such Class; (xii) the extent to which the Investor Certificates of such Series will be issuable in temporary or permanent global form (and, in such case, the depositary for such Global Certificate or Certificates, the terms and conditions, if any, upon which such Global Certificates may be exchanged, in whole or in part, for Definitive Certificates, and the manner in which any interest payable on a Global Certificate will be paid); (xiii) whether the Investor Certificates of such Series may be issued as Bearer Certificates and any limitation imposed thereon; (xiv) the priority of such Series with respect to any other Series; (xv) the Group, if any, to which such Series belongs; and (xvi) any other relevant terms of, or with respect to, such Series.
“ Rating Agency ” shall mean, with respect to any outstanding Series or Class, each statistical rating agency selected by the Transferor to rate the Investor Certificates of such Series or Class.
“ Rating Agency Condition ” shall mean, with respect to any action requiring rating agency approval or consent, that each Rating Agency shall have notified the Transferor, the Servicer and the Trustee in writing that such action will not result in a reduction or withdrawal of the rating of any outstanding Series or Class with respect to which it is a Rating Agency.
“ Reassignment ” shall have the meaning specified in Section 2.10.
“ Receivable ” shall mean any amount owing from time to time by an Obligor under an Account, including amounts owing for purchases of goods and services, and
amounts payable for Finance Charge Receivables (exclusive of Deferred Billing Fees and Merchant Fees). A Receivable shall be deemed to have been created at the end of the day on the Date of Processing of such Receivable. Receivables which become Defaulted Receivables shall not be shown on the Servicer’s records as amounts payable (and shall cease to be included as Receivables) on the day on which they become Defaulted Receivables.
“ Receivables Purchase Agreement ” shall mean (i) the amended and restated receivables purchase agreement, dated as of April 28, 2000, between Target Capital Corporation (formerly known as Dayton Hudson Capital Corporation) and the Transferor and (ii) any receivables purchase agreement between a transferor of the Accounts other than TCC and the Transferor, substantially in the form of the receivables purchase agreement referred to in clause (i) above.
“ Record Date ” shall mean, with respect to any Series Date, the date specified in the related Supplement.
“ Recoveries ” shall mean all amounts, including Insurance Proceeds, received by the Servicer with respect to Principal Receivables which have previously become Defaulted Receivables and, with respect to Finance Charge Receivables, which have been charged off as uncollectible in accordance with the Credit Card Guidelines and the Servicer’s customary and usual servicing procedures for servicing open end credit card account receivables comparable to the Receivables, including the net proceeds of any sale of such Defaulted Receivables and Finance Charge Receivables which have been charged off as uncollectible by the Transferor or the Servicer regardless of whether such Defaulted Receivables and Finance Charge Receivables have been transferred, set over or otherwise conveyed to the Transferor pursuant to Section 2.10.
“ Registered Certificateholder ” shall mean the Holder of a Registered Certificate.
“ Registered Certificates ” shall have the meaning specified in Section 6.1.
“ Removal Date ” shall have the meaning specified in subsection 2.10(a).
“ Removal Notice Date ” shall have the meaning specified in subsection 2.10(a).
“ Removed Accounts ” shall have the meaning specified in Section 2.10.
“ Required Designation Date ” shall have the meaning specified in subsection 2.9(a).
“ Required Principal Balance ” shall mean, as of any date of determination, the sum of the numerators used at such date to calculate (i) the Investor Percentage with respect to Principal Receivables for all Series outstanding on such date and (ii) the Participation Percentages for all Participations outstanding on such date, less the amount on deposit in the Special Funding Account as of the date of determination.
“ Required Retained Transferor’s Percentage ” shall mean, as of any date of determination, the highest of the Required Retained Transferor’s Percentages specified in the Supplements for all outstanding Series.
“ Required Retained Transferor Amount ” shall mean, as of any date of determination, the product of (i) the sum of (a) the aggregate Principal Receivables and (b) the amounts on deposit in the Special Funding Account and any other accounts specified in a Supplement and (ii) the Required Retained Transferor’s Percentage.
“ Requirements of Law ” with respect to any Person shall mean the certificate of incorporation, articles of incorporation or articles of association and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, in each case applicable to or binding upon such Person or to which such Person is subject, whether Federal, state or local.
“ Responsible Officer ” shall mean any officer within the Corporate Trust Department (or any successor group of the Trustee), including any vice president, assistant vice president, assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Trustee’s Corporate Trust Office because of such officer’s knowledge of and familiarity with the particular subject.
“ Restart Date ” shall mean the date specified in the notice delivered by the Transferor to the Trustee pursuant to subsection 2.9(d)(i) or 2.9(d)(iii).
“ Revolving Period ” shall mean, with respect to any Series, the period specified as such in the related Supplement.
“ Rule 144A ” shall mean Rule 144A under the Act, as such Rule may be amended from time to time.
“ Series ” shall mean any series of Investor Certificates established pursuant to a Supplement.
“ Series Account ” shall mean any deposit, trust, escrow or similar account maintained for the benefit of the Investor Certificateholders of any Series or Class, as specified in any Supplement.
“ Series Allocation Percentage ” shall mean with respect to any Series, on any date of determination, the percentage equivalent of a fraction the numerator of which is the Series Invested Amount of such Series and the denominator of which is the sum of the Series Invested Amounts of all Series then outstanding.
“ Series Invested Amount ” shall have, with respect to any Series, the meaning specified in the related Supplement.
“ Series Issuance Date ” shall mean, with respect to any Series, the date on which the Investor Certificates of such Series are to be originally issued in accordance with Section 6.3 and the related Supplement.
“ Series Termination Date ” shall mean, with respect to any Series, the termination date specified in the related Supplement.
“ Service Transfer ” shall have the meaning specified in Section 10.1.
“ Servicer ” shall mean Retailers National Bank, in its capacity as Servicer pursuant to this Agreement, and, after any Service Transfer, the Successor Servicer.
“ Servicer Default ” shall have the meaning specified in Section 10.1.
“ Servicing Fee ” shall mean, with respect to any Series, the servicing fee specified in Section 3.2.
“ Servicing Fee Rate ” shall mean, with respect to any Series, the servicing fee rate specified in the related Supplement.
“ Servicing Officer ” shall mean any officer of the Servicer involved in, or responsible for, the administration and servicing of the Receivables whose name appears on a list of servicing officers furnished to the Trustee by the Servicer on the initial Closing Date, as such list may from time to time be amended.
“ Shared Principal Collections ” shall have the meaning specified in Section 4.4.
“ Special Funding Account ” shall have the meaning specified in Section 4.2.
“ Standard & Poor’s ” shall mean Standard & Poor’s Ratings Group, a division of The McGraw Hill Companies or its successor.
“ Successor Servicer ” shall have the meaning specified in subsection 10.2(a).
“ Supplement ” shall mean, with respect to any Series, a Supplement to this Agreement, executed and delivered in connection with the original issuance of the Investor Certificates of such Series pursuant to Section 6.3, and all amendments thereof and supplements thereto.
“ Supplemental Account ” shall mean each open end credit card account established pursuant to a Credit Card Agreement, which account is designated pursuant to subsection 2.9(a) or 2.9(b) to be included as an Account, and is identified in a computer file, microfiche list or printed list delivered to the Trustee by the Transferor pursuant to Section 2.1.
“ Supplemental Certificate ” shall have the meaning specified in subsection 6.3(c).
“ Tax Opinion ” shall mean, with respect to any action, an Opinion of Counsel to the effect that, for Federal income tax purposes, (a) such action will not adversely affect the tax characterization as debt of Investor Certificates of any outstanding Series or Class with respect to which an Opinion of Counsel was delivered at the time of their issuance that such Investor Certificates would be characterized as debt, (b) such action will not cause the Trust to be classified, for federal income tax purposes, as an association (or publicly traded partnership) taxable as a corporation and (c) such action will not cause or constitute an event in which gain or loss would be recognized by any Investor Certificateholder.
“ TCC ” shall mean Target Capital Corporation (formerly known as Dayton Hudson Capital Corporation), a Minnesota corporation.
“ Termination Notice ” shall have the meaning specified in Section 10.1.
“ Transfer Agent and Registrar ” shall have the meaning specified in subsection 6.4(a).
“ Transfer Date ” shall mean the Business Day immediately preceding each Distribution Date.
“ Transferor ” shall mean Target Receivables Corporation (formerly known as Dayton Hudson Receivables Corporation), a Minnesota corporation, or its permitted successors or assigns under this Agreement and additional transferors, if any, designated in accordance with Sections 2.12 or 6.3(d).
“ Transferor Amount ” shall mean, on any date of determination, the aggregate amount of Principal Receivables on such day, minus the sum of the Series Invested Amounts with respect to all Series then outstanding, minus the amount of any Participation, plus the principal amount on deposit in the Special Funding Account or other account specified in a Supplement.
“ Transferor Certificate ” shall mean the certificate executed by the Transferor and authenticated by or on behalf of the Trustee, substantially in the form of Exhibit A.
“ Transferor Retained Certificates ” shall mean Investor Certificates of any Series which the Transferor retained pursuant to the terms of any Supplement.
“ Transferor’s Interest ” shall have the meaning specified in Section 4.1.
“ Transferor’s Percentage ” shall mean, with respect to Finance Charge Receivables and Defaulted Receivables, 100% less the sum of the Floating Allocation Percentages with respect to all outstanding Series, less the sum of the Participation Percentages with respect to all Participations and with respect to Principal Receivables, 100% less the sum of the Principal Allocation Percentages with respect to all outstanding Series, less the sum of the Participation Percentages with respect to all Participations.
“ Transferred Account ” shall have the meaning set forth in the definition of “ Account .”
“ Transfer Restriction Event ” shall have the meaning specified in Section 2.13.
“ Trust ” shall mean the Target Credit Card Master Trust (formerly known as Dayton Hudson Credit Card Master Trust) created by this Agreement.
“ Trust Assets ” shall have the meaning specified in Section 2.1.
“ Trust Cut-Off Date ” shall mean June 30, 1995.
“ Trust Portfolio Yield ” shall mean, with respect to any Monthly Period, the annualized percentage equivalent of a fraction, the numerator of which is an amount equal to the aggregate amount of Collections of Finance Charge Receivables for such Monthly Period, and the denominator of which is the aggregate amount of Principal Receivables in the Trust as of the first day of such Monthly Period.
“ Trustee ” shall mean Norwest Bank Minnesota, National Association, a national banking association, in its capacity as trustee on behalf of the Trust, or its successor in interest, or any successor trustee appointed as herein provided.
“ UCC ” shall mean the Uniform Commercial Code, as amended from time to time, as in effect in the State of Delaware and in any other state where the filing of a financing statement is required to perfect the Transferor’s or the Trust’s interest in the Receivables and the proceeds thereof or in any other specified jurisdiction.
“ United States ” shall mean the United States of America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.
“ Variable Funding Certificates ” shall have the meaning specified in any Variable Funding Supplement.
“ Variable Funding Supplement ” shall mean a Supplement executed in connection with the issuance of, and otherwise specifying the terms governing the issuance of, Variable Funding Certificates provided for therein.
Section 1.2 Other Definitional Provisions . (a) With respect to any Series, all terms used herein and not otherwise defined herein shall have meanings ascribed to them in the related Supplement.
(b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not
defined, shall have the respective meanings given to them under generally accepted accounting principles. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such certificate or other document shall control.
(d) The agreements, representations and warranties of Target Receivables Corporation and Retailers National Bank in this Agreement in each of their respective capacities as Transferor and as Servicer, shall be deemed to be the separate agreements, representations and warranties of Target Receivables Corporation and Retailers National Bank solely in each such respective capacity for so long as Target Receivables Corporation and Retailers National Bank act in each such capacity under this Agreement.
(e) Any reference to each Rating Agency shall only apply to any specific rating agency if such rating agency is then rating any outstanding Series.
(f) Unless otherwise specified, references to any amount as on deposit or outstanding on any particular date shall mean such amount at the close of business on such day.
(g) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” means “including without limitation.”
CONVEYANCE OF RECEIVABLES
Section 2.1 Conveyance of Receivables . By execution of this Agreement, the Transferor does hereby transfer, assign, set over and otherwise convey to the Trust, for the benefit of the Certificateholders, all its right, title and interest in, to and under (i) the Receivables existing at the close of business on the Trust Cut-Off Date and thereafter created from time to time and arising in the Initial Accounts and the Receivables existing on each applicable Addition Date and thereafter created from time to time and arising in any Automatic Additional Accounts owned by the Credit Card Originator, and in each case, thereafter created from time to time until the termination of the Trust, all Recoveries allocable to the Trust as provided herein, all monies due or to become due and all amounts received with respect to any of the foregoing and all proceeds (including “proceeds” as defined in the UCC) of any of the foregoing, (ii) any Merchant Fees and Deferred Billing Fees, (iii) the Receivables Purchase Agreement and (iv) the Bank Purchase Agreement. Such property, together with all monies on deposit in the Collection Account, the Special Funding Account, the Series Accounts and any Enhancement shall constitute the assets of the Trust (the “ Trust Asset s”). The foregoing does not constitute and is not intended to result in the creation or assumption by the Trust, the Trustee, any Investor Certificateholders or any Enhancement Provider of any obligation of the Credit Card
Originator, the Servicer, the Transferor or any other Person in connection with the Accounts or the Receivables or under any agreement or instrument relating thereto, including any obligation to obligors, merchant banks, merchants clearance systems or insurers.
The Transferor agrees to record and file, at its own expense, financing statements (and continuation statements when applicable) with respect to the Receivables now existing and hereafter created in Accounts and other Trust Assets meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect, and maintain the perfection of, the assignment of such Receivables to the Trust, and to deliver a file-stamped copy of each such financing statement or other evidence of such filing (which may, for purposes of this Section 2.1 consist of telephone confirmation of such filing promptly followed by delivery to the Trustee of a file-stamped copy) to the Trustee on or prior to the initial Closing Date, in the case of such Receivables arising in the Initial Accounts and Automatic Additional Accounts, and (if any additional filing is so necessary) the applicable Addition Date, in the case of such Receivables arising in Supplemental Accounts. The Trustee shall be under no obligation whatsoever to file such financing or continuation statements or to make any other filing under the UCC in connection with such assignment.
The Transferor further agrees, at its own expense, (a) on (x) the Automatic Addition Termination Date or any Automatic Addition Suspension Date, in the case of the Initial Accounts and any Additional Accounts designated pursuant hereto prior to such date, (y) the applicable Addition Date, in the case of Supplemental Accounts, and (z) the applicable Removal Date, in the case of Removed Accounts, to indicate in the appropriate computer files that Receivables created in connection with the Accounts owned by the Credit Card Originator (other than Removed Accounts) have been conveyed to the Trust pursuant to this Agreement for the benefit of the Certificateholders (or conveyed to the Transferor or its designee in accordance with Section 2.10, in the case of Removed Accounts) by including in such computer files the code identifying each such Account (or, in the case of Removed Accounts, either including such a code identifying the Removed Accounts only if the removal occurs prior to the Automatic Addition Termination Date or any Automatic Addition Suspension Date, or subsequent to a Restart Date, or deleting such code thereafter) and (b) on the date referred to in clause (x), (y) or (z) above, as applicable, to deliver to the Trustee a computer file, microfiche list or printed list containing a true and complete list of all such Accounts, specifying for each such Account, as of the Automatic Addition Termination Date or any Automatic Addition Suspension Date, in the case of clause (x) above, the applicable Addition Cut-Off Date, in the case of Supplemental Accounts, and the Removal Date, in the case of Removed Accounts, its account number, the aggregate amount outstanding in such Account and the aggregate amount of Principal Receivables outstanding in such Account. Such file or list shall be supplemented from time to time to reflect Supplemental Accounts and Removed Accounts. Once the code referenced in this paragraph has been included with respect to any Account, the Transferor further agrees not to alter such code during the remaining term of this Agreement unless and until (a) such Account becomes a Removed Account, (b) a Restart Date has occurred on which the Transferor starts including Automatic Additional Accounts as Accounts or (c) the Transferor shall have delivered to the Trustee at least 30 days’ prior written notice of its
intention to do so and has taken such action as is necessary or advisable to cause the interest of the Trustee in the Receivables and other Trust Assets to continue to be perfected with the priority required by this Agreement.
The Transferor hereby grants and transfers to the Trustee, for the benefit of the Certificateholders, a security interest in all of the Transferor’s right, title and interest in, to and under the Receivables and all other Trust Assets, to secure a loan in an amount equal to the unpaid principal amount of the Investor Certificates issued hereunder or to be issued pursuant to this Agreement and the interest accrued at the related Certificate Rate, and agrees that this Agreement shall constitute a security agreement under applicable law.
Section 2.2 Acceptance by Trustee . (a) The Trustee hereby acknowledges its acceptance on behalf of the Trust of all right, title and interest to the property, now existing and hereafter created, conveyed to the Trust pursuant to Section 2.1 and declares that it shall maintain such right, title and interest, upon the trust herein set forth, for the benefit of all Certificateholders.
(b) The Trustee hereby agrees not to disclose to any Person any of the account numbers or other information contained in any computer files, microfiche lists or printed lists delivered to the Trustee from time to time, except (i) to a Successor Servicer or as required by a Requirement of Law applicable to the Trustee, (ii) in connection with the performance of the Trustee’s duties hereunder or (iii) in enforcing the rights of Certificateholders. The Trustee (i) agrees to take such measures as shall be reasonably requested by the Transferor to protect and maintain the security and confidentiality of such information and (ii) in any event will maintain and preserve such files or lists and the confidentiality of the information contained in such files or lists in the same manner and with the same degree of care that it would exercise with respect to similar files, lists or information maintained by it for its own account. The Trustee will also, upon two Business Days’ prior notice, allow the Transferor to inspect the Trustee’s security and confidentiality arrangements from time to time during normal business hours. The Trustee shall provide the Transferor with notice no later than five Business Days prior to any disclosure pursuant to this Section or any shorter period of time as required by any Requirements of Law.
(c) The Trustee shall have no power to create, assume or incur indebtedness or other liabilities in the name of the Trust other than as contemplated in this Agreement or any Supplement.
(d) The Trustee hereby agrees not to use any information it obtains pursuant to this Agreement, including any of the account numbers or other information contained in the computer files, microfiche lists or printed lists delivered by the Transferor to the Trustee pursuant to this Agreement, including Sections 2.1, 2.9, 2.10 or 3.4(c), other than to perform its duties hereunder.
Section 2.3 Representations and Warranties of the Transferor Relating to the Transferor . The Transferor hereby represents and warrants to the Trust (and agrees that the Trustee may rely on each such representation and warranty in accepting the Receivables in trust and in authenticating the Certificates) as of each Closing Date that:
(a) Organization and Good Standing . The Transferor is a corporation validly existing in good standing under the laws of the State of Minnesota, and has full corporate power, authority and legal right to own its properties and conduct its business as such properties are presently owned and such business is presently conducted, to execute, deliver and perform its obligations under this Agreement and each Supplement and to execute and deliver to the Trustee the Certificates pursuant hereto.
(b) Due Qualification . The Transferor is duly qualified to do business and is in good standing as a foreign corporation (or is exempt from such requirements), and has obtained all necessary licenses and approvals in each jurisdiction in which failure to so qualify or to obtain such licenses and approvals would render any Credit Card Agreement relating to an Account owned by the Credit Card Originator or any Receivable transferred to the Trust by the Transferor unenforceable by the Credit Card Originator, the Transferor, the Servicer or the Trustee and would have a material adverse effect on the interests of the Certificateholders hereunder or under any Supplement.
(c) Due Authorization . The execution, delivery and performance of this Agreement and each Supplement by the Transferor, the execution and delivery to the Trustee of the Certificates by the Transferor and the consummation by the Transferor of the transactions provided for in this Agreement and each Supplement have been duly authorized by the Transferor by all necessary corporate action on the part of the Transferor and this Agreement and each Supplement will remain, from the time of its execution, an official record of the Transferor.
(d) No Conflict . The execution and delivery by the Transferor of this Agreement, each Supplement and the Certificates, the performance by the Transferor of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Transferor of the terms hereof and thereof will not conflict with, result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any indenture, contract, agreement, mortgage, deed of trust, or other instrument to which the Transferor is a party or by which it or any of its properties are bound.
(e) No Violation . The execution and delivery by the Transferor of this Agreement, each Supplement and the Certificates, the performance by the Transferor of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Transferor of the terms hereof and thereof will not conflict with or violate any Requirements of Law applicable to the Transferor.
(f) No Proceedings . There are no proceedings or investigations pending or, to the best knowledge of the Transferor, threatened against the Transferor, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (i) asserting the invalidity of this Agreement, any Supplement or the Certificates, (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement, any Supplement or the Certificates, (iii) seeking any determination or ruling that, in the reasonable judgment of the Transferor, would materially and adversely affect the performance by the Transferor of its obligations
under this Agreement or any Supplement, (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of this Agreement, any Supplement or the Certificates or (v) seeking to affect adversely the income tax attributes of the Trust under the Federal or applicable state income or franchise tax systems.
(g) All Consents Required . All approvals, authorizations, consents, orders or other actions of any Person or of any governmental body or official required in connection with the execution and delivery by the Transferor of this Agreement, each Supplement and the Certificates, the performance by the Transferor of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Transferor of the terms hereof and thereof, have been obtained.
(h) Insolvency . No Insolvency Event with respect to the Credit Card Originator, TCC or the Transferor has occurred and the transfer of the Receivables by the Transferor to the Trust has not been made in contemplation of the occurrence thereof.
The representations and warranties of the Transferor set forth in this Section 2.3 shall survive the transfer and assignment by the Transferor of the respective Receivables to the Trust. Upon discovery by the Transferor, the Servicer or the Trustee of a breach of any of the representations and warranties by the Transferor set forth in this Section 2.3, the party discovering such breach shall give prompt written notice to the others and to each Enhancement Provider, if any, entitled thereto pursuant to the relevant Supplement. The Transferor agrees to cooperate with the Servicer and the Trustee in attempting to cure any such breach. For purposes of the representations and warranties set forth in this Section 2.3, each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the relevant Closing Date.
Section 2.4 Representations and Warranties of the Transferor Relating to this Agreement and any Supplement and the Receivables . (a) Representations and Warranties . The Transferor hereby represents and warrants to the Trust (and agrees that the Trustee may rely on each such representation and warranty in accepting the Receivables in trust and in authenticating the Certificates) as of the date of this Agreement and the date of each Supplement, as of each Closing Date and, with respect to Additional Accounts, as of the related Addition Date that:
(i) this Agreement, each Supplement and, in the case of Supplemental Accounts, the related Assignment, each constitutes a legal, valid and binding obligation of the Transferor, enforceable against the Transferor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
(ii) as of the Automatic Addition Termination Date or any Automatic Addition Suspension Date and as of each subsequent Addition
Date with respect to Supplemental Accounts, and as of the applicable Removal Date with respect to the Removed Accounts, the related computer file, microfiche list or printed list delivered pursuant to this Agreement, as supplemented to such date, is an accurate and complete listing in all material respects of all the Accounts owned by the Credit Card Originator as of such date, such Addition Cut-Off Date or such Removal Date, as the case may be, and the information contained therein with respect to the identity of such Accounts and the Receivables existing in such Accounts is true and correct in all material respects as of such date, such Addition Cut-Off Date or such Removal Date, as the case may be;
(iii) the Transferor is the legal and beneficial owner of all right, title and interest in each Receivable and the Transferor has the full right to transfer such Receivables to the Trust, and each Receivable conveyed to the Trust by the Transferor has been conveyed to the Trust free and clear of any Lien of any Person claiming through or under the Transferor or any of its Affiliates (other than Liens permitted under subsection 2.7(b)) and in compliance, in all material respects, with all Requirements of Law applicable to the Transferor;
(iv) all authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given by the Transferor in connection with the conveyance by the Transferor of Receivables to the Trust have been duly obtained, effected or given and are in full force and effect;
(v) this Agreement or, in the case of Supplemental Accounts, the related Assignment constitutes either a valid transfer and assignment to the Trust of all right, title and interest of the Transferor in the Receivables and other Trust Assets conveyed to the Trust by the Transferor and all monies due or to become due with respect thereto and the proceeds thereof or this Agreement or a grant of a “security interest” (as defined in the UCC) in such property to the Trust, which, in the case of existing Receivables and the proceeds thereof, is enforceable upon execution and delivery of this Agreement, or, with respect to then existing Receivables in Additional Accounts, as of the applicable Addition Date, and which will be enforceable with respect to such Receivables hereafter and thereafter created and the proceeds thereof upon such creation, in each case except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity). Upon the filing of the financing statements pursuant to Section 2.1 and, in the case of Receivables hereafter created and the proceeds thereof, upon the creation thereof, the Trust shall have a first priority security interest in such property and “proceeds” (as defined in the UCC) except for Liens permitted under subsection 2.7(b);
(vi) except as otherwise expressly provided in this Agreement or any Supplement, neither the Transferor nor any Person claiming through or under the Transferor has any claim to or interest in the Collection Account, the Special Funding Account, any Series Account or any Enhancement;
(vii) on the Trust Cut-Off Date, with respect to each Initial Account, on the date of its creation, with respect to each Automatic Additional Account and, on the applicable Addition Cut-Off Date, with respect to each related Supplemental Account each Account classified as an “Eligible Account” by the Transferor in any document or report delivered hereunder will satisfy the requirements contained in the definition of Eligible Account and each Receivable classified as an “Eligible Receivable” by the Transferor in any document or report delivered hereunder will satisfy the requirements contained in the definition of Eligible Receivable;
(viii) on the Trust Cut-Off Date, each Receivable then existing is an Eligible Receivable, on the date of creation of each Automatic Additional Account, each Receivable contained in such Automatic Additional Account is an Eligible Receivable and, on the applicable Addition Cut-Off Date, each Receivable contained in any related Supplemental Account is an Eligible Receivable; and
(ix) as of the date of the creation of any new Receivable, such Receivable is an Eligible Receivable.
(b) Notice of Breach . The representations and warranties of the Transferor set forth in this Section 2.4 shall survive the transfer and assignment by the Transferor of Receivables to the Trust. Upon discovery by the Transferor, the Servicer or the Trustee of a breach of any of the representations and warranties by the Transferor set forth in this Section 2.4, the party discovering such breach shall give prompt written notice to the others and to each Enhancement Provider, if any, entitled thereto pursuant to the relevant Supplement. The Transferor agrees to cooperate with the Servicer and the Trustee in attempting to cure any such breach. For purposes of the representations and warranties set forth in this Section 2.4, each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the date of the relevant representations or warranties.
Section 2.5 Reassignment of Ineligible Receivables .
(a) Reassignment of Receivables . In the event that (i) any representation or warranty of the Transferor contained in subsection 2.4(a)(ii), (iii), (iv), (vii), (viii) or (ix) is not true and correct in any material respect as of the date specified therein with respect to any Receivable transferred to the Trust by the Transferor or any Account owned by the Credit Card Originator and as a result of such breach any Receivables in the related Account become Defaulted Receivables or the Trust’s rights in, to or under such Receivables or the proceeds of such Receivables are impaired or such proceeds are not available for any reason to the Trust free and clear of any Lien, unless cured within 60 days (or such longer period, not in excess of 150 days, as may be agreed to by the Trustee) after
the earlier to occur of the discovery thereof by the Transferor or receipt by the Transferor or a designee of the Transferor of notice thereof given by the Trustee, or (ii) it is so provided in subsection 2.7(a) with respect to any Receivables transferred to the Trust by the Transferor, then such Receivable shall be designated an “Ineligible Receivable” and shall be assigned a principal balance of zero for the purpose of determining the aggregate amount of Principal Receivables on any day; provided , however , that such Receivables will not be deemed to be Ineligible Receivables but will be deemed an Eligible Receivable and such Principal Receivables shall be included in determining the aggregate Principal Receivables in the Trust if, on any day prior to the end of such 60-day or longer period, (x) either (A) in the case of an event described in clause (i) above the relevant representation and warranty shall be true and correct in all material respects as if made on such day or (B) in the case of an event described in clause (ii) above the circumstances causing such Receivable to become an Ineligible Receivable shall no longer exist and (y) the Transferor shall have delivered an Officer’s Certificate describing the nature of such breach and the manner in which the relevant representation and warranty became true and correct.
(b) Price of Reassignment . On and after the date of its designation as an Ineligible Receivable, each Ineligible Receivable shall not be given credit in determining the aggregate amount of Principal Receivables used to calculate the Transferor Amount, and the Floating Allocation Percentage and the Principal Allocation Percentage applicable to any Series. If, following the exclusion of such Principal Receivables from the calculation of the Transferor Amount, the Transferor Amount (excluding the interest represented by any Supplemental Certificate) would otherwise be less than the Required Retained Transferor Amount, the Transferor shall make a deposit into the Special Funding Account in immediately available funds prior to the next succeeding Business Day in an amount equal to the amount by which the Transferor Amount (excluding the interest represented by any Supplemental Certificate) would otherwise be less than the Required Retained Transferor Amount (up to the amount of such Principal Receivables). The payment of such deposit amount in immediately available funds shall otherwise be considered payment in full of all of the Ineligible Receivables.
The obligation of the Transferor to make the deposits, if any, required to be made to the Special Funding Account as provided in this Section 2.5, shall constitute the sole remedy respecting the event giving rise to such obligation available to Certificateholders (or the Trustee on behalf of the Certificateholders) or any Enhancement Provider.
Section 2.6 Reassignment of Receivables in Trust Portfolio . If any representation or warranty of the Transferor set forth in subsection 2.3(a), (b) or (c) or subsection 2.4(a)(i), (v) or (vi) is not true and correct in any material respect and such breach has a material adverse effect on the Certificateholders’ Interest in the Receivables transferred to the Trust by the Transferor, then either the Trustee or the Holders of Investor Certificates evidencing not less than 50% of the aggregate unpaid principal amount of all outstanding Investor Certificates, by notice then given to the Transferor and the Servicer (and to the Trustee if given by the Investor Certificateholders), may direct the Transferor to accept a reassignment of the Receivables transferred to the Trust by the Transferor if such breach and any material adverse effect caused by such breach is not cured within 60 days of
such notice (or within such longer period, not in excess of 150 days, as may be specified in such notice), and upon those conditions the Transferor shall be obligated to accept such reassignment on the terms set forth below; provided , however , that such Receivables will not be reassigned to the Transferor if, on any day prior to the end of such 60-day or longer period (i) the relevant representation and warranty shall be true and correct in all material respects as if made on such day and (ii) the Transferor shall have delivered an Officer’s Certificate describing the nature of such breach and the manner in which the relevant representation and warranty became true and correct.
The Transferor shall deposit in the Collection Account in immediately available funds not later than 12:00 noon, New York City time, on the first Distribution Date following the Monthly Period in which such reassignment obligation arises, in payment for such reassignment, an amount equal to the sum of the amounts specified therefor with respect to each outstanding Series in the related Supplement. Notwithstanding anything to the contrary in this Agreement, such amounts shall be distributed on such Distribution Date in accordance with Article IV and the terms of each Supplement. The payment of such deposit amount in immediately available funds shall otherwise be considered payment in full of all of the Receivables.
Upon the deposit, if any, required to be made to the Collection Account as provided in this Section 2.6 and the reassignment of the applicable Receivables, the Trustee, on behalf of the Trust, shall automatically and without further action be deemed to transfer, assign, set over and otherwise convey to the Transferor or its designee, without recourse, representation or warranty (except for the warranty that since the date of transfer by the Transferor, the Trustee has not sold, transferred or encumbered any such Receivables or interest therein), all the right, title and interest of the Trust in and to such Receivables, all monies due or to become due and all amounts received with respect thereto and all proceeds thereof. The Trustee shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Transferor to effect the conveyance of such Receivables pursuant to this Section 2.6. The obligation of the Transferor to accept reassignment of any Receivables, and to make the deposits, if any, required to be made to the Collection Account as provided in this Section 2.6, shall constitute the sole remedy respecting the event giving rise to such obligation available to Certificateholders (or the Trustee on behalf of the Certificateholders).
Section 2.7 Covenants of the Transferor . The Transferor hereby covenants as follows:
(a) Receivables to be Accounts, General Intangibles or Chattel Paper . Except in connection with the enforcement or collection of an Account, the Transferor will take no action to cause any Receivable transferred by it to the Trust to be evidenced by any instrument (as defined in the UCC) and, if any such Receivable is so evidenced (whether or not in connection with the enforcement or collection of an Account), it shall be deemed to be an Ineligible Receivable in accordance with subsection 2.5(a) and shall be reassigned to the Transferor in accordance with subsection 2.5(b).
(b) Security Interests . Except for the conveyances hereunder, the Transferor will not sell, pledge, assign or transfer or otherwise convey to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Receivable, whether now existing or hereafter created, or any interest therein; the Transferor will immediately notify the Trustee of the existence of any Lien on any Receivable of which the Transferor has knowledge; and the Transferor shall defend the right, title and interest of the Trust in, to and under the Receivables, whether now existing or hereafter created, against all claims of third parties claiming through or under the Transferor; provided , however , that nothing in this subsection 2.7(b) shall prevent or be deemed to prohibit the Transferor from suffering to exist upon any of the Receivables any Liens for taxes if such taxes shall not at the time be due and payable or if the Transferor shall currently be contesting the validity thereof in good faith by appropriate proceedings and shall have set aside on its books adequate reserves with respect thereto. Notwithstanding the foregoing, nothing in this subsection 2.7(b) shall be construed to prevent or be deemed to prohibit (i) the transfer of the Transferor Certificate and certain other rights of the Transferor in accordance with the terms of this Agreement and any related Supplement or (ii) the sale of any Defaulted Receivables and Finance Charge Receivables in Accounts that have been reconveyed to the Transferor pursuant to Section 2.10 provided that Recoveries on such Accounts shall be applied as provided herein and that with respect to any Monthly Period, the aggregate amount of sales proceeds received from such sold receivables shall not exceed the greater of (x) 0.20% of the aggregate outstanding balance of all Receivables on the first day of such Monthly Period or (y) $5,000,000.
(c) Transferor’s Interest . Except as otherwise permitted herein, including in Sections 2.12, 6.3 and 7.2, the Transferor agrees not to transfer, assign, exchange or otherwise convey or pledge, hypothecate or otherwise grant a security interest in the Transferor’s Interest represented by the Transferor Certificate or any Supplemental Certificate and any such attempted transfer, assignment, exchange, conveyance, pledge, hypothecation or grant shall be void.
(d) Delivery of Collections or Recoveries . If the Transferor receives Collections or Recoveries, the Transferor agrees to pay the Servicer all such Collections and Recoveries as soon as practicable after receipt thereof but in no event later than two Business Days after the Date of Processing by the Transferor.
(e) Notice of Liens . The Transferor shall notify the Trustee and each Enhancement Provider, if any, entitled to such notice pursuant to the relevant Supplement promptly after becoming aware of any Lien on any Receivable other than the conveyances hereunder or Liens permitted under subsection 2.7(b).
(f) Separate Corporate Existence . The Transferor shall:
(i) Maintain in full effect its existence, rights and franchises as a corporation under the laws of the state of its incorporation and obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and the Receivables Purchase Agreement
and each other instrument or agreement necessary or appropriate to proper administration hereof and permit and effectuate the transactions contemplated hereby.
(ii) Maintain its own deposit account or accounts, separate from those of any Affiliate of the Transferor, with commercial banking institutions. The funds of the Transferor will not be diverted to any other Person or for other than the corporate use of the Transferor, and, except as may be expressly permitted by this Agreement or the Receivables Purchase Agreement, the funds of the Transferor shall not be commingled with those of any Affiliate of the Transferor.
(iii) Ensure that, to the extent that it shares the same officers or other employees as any of its stockholders or Affiliates, the salaries of and the expenses related to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with all such common officers and employees.
(iv) Ensure that, to the extent that it jointly contracts with any of its stockholders or Affiliates to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each such entity shall bear its fair share of such costs. To the extent that the Transferor contracts or does business with vendors or service providers where the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods and services are provided, and each such entity shall bear its fair share of such costs. All material transactions between the Transferor and any of its Affiliates shall be only on an arm’s-length basis.
(v) Maintain a principal executive and administrative office through which its business is conducted separate from those of its stockholders and Affiliates. To the extent that the Transferor and any of its stockholders or Affiliates have offices in contiguous space, there shall be fair and appropriate allocation of overhead costs among them, and each such entity shall bear its fair share of such expenses.
(vi) Conduct its affairs strictly in accordance with its Articles of Incorporation and observe all necessary, appropriate and customary corporate formalities, including, but not limited to, holding all regular and special stockholders’ and directors’ meetings appropriate to authorize all corporate action, keeping separate and accurate minutes of such meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany
transaction accounts. Regular stockholders’ and directors’ meetings shall be held at least annually.
(vii) Ensure that its Board of Directors shall be elected independently from the Boards of Directors of its Affiliates and shall at all times include at least one Independent Director (for purposes hereof, “ Independent Director ” shall mean any member of the Board of Directors of the Transferor who is not and has not at any time been (x) a director, officer, employee or shareholder of any Affiliate of the Transferor within a period of three years prior to such Person’s election to the Board of Directors or (y) a member of the immediate family of any of the foregoing).
(viii) Ensure that decisions with respect to its business and daily operations shall be independently made by the Transferor (although the officer making any particular decision may also be an officer or director of an Affiliate of the Transferor) and shall not be dictated by an Affiliate of the Transferor.
(ix) Act solely in its own corporate name and through its own authorized officers and agents, and no Affiliate of the Transferor shall be appointed to act as agent of the Transferor, except as expressly contemplated by this Agreement or the Receivables Purchase Agreement.
(x) Ensure that no Affiliate of the Transferor shall advance funds to the Transferor, other than capital contributions from TCC made to enable the Transferor to pay the purchase price of Receivables or as is otherwise provided in the Receivables Purchase Agreement, and no Affiliate of the Transferor will otherwise supply funds to, or guaranty debts of, the Transferor; provided , however , that an Affiliate of the Transferor may provide funds to the Transferor in connection with capitalization of the Transferor provided to assure that the Transferor has “substantial assets” as described in Treasury Regulation Section 301.7701-2(d)(2).
(xi) Not enter into any guaranty, or otherwise become liable, with respect to any obligation of any Affiliate of the Transferor other than with respect to Section 7.4.
(xii) Ensure that any financial reports required of the Transferor shall comply with generally accepted accounting principles and shall be issued separately from, but may be consolidated with, any reports prepared for any of its Affiliates.
(g) Continuous Perfection . The Transferor shall not change its name, identity or structure in any manner that could cause any financing or continuation statement filed pursuant to this Agreement to be misleading within the meaning of Section 9-402(7) of the UCC (or any other then applicable provision of the UCC) unless the Transferor shall have delivered to the Trustee at least 30 days’ prior written notice thereof and, no later than
30 days after making such change, shall have taken all action necessary or advisable to amend such financing statement or continuation statement so that it is not misleading. The Transferor shall not change its chief executive office or change the location of its principal records concerning the Receivables, the Trust Assets or the Collections unless it has delivered to the Trustee at least 30 days’ prior written notice of its intention to do so and has taken such action as is necessary or advisable to cause the interest of the Trustee in the Receivables and other Trust Assets to continue to be perfected with the priority required by this Agreement.
(h) Reports to the Commission . The Transferor shall, on behalf of the Trust, cause to be filed with the Commission any periodic reports required to be filed under the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.
(i) Net Worth . The Transferor shall retain in force and shall enforce according to its terms that certain demand note (the “ Demand Note ”) dated as of September 13, 1995, between Dayton Hudson Corporation (now known as Target Corporation), as the maker, and Dayton Hudson Capital Corporation (now known as Target Capital Corporation), as the payee and any other demand note provided by Target Corporation to TCC pursuant to the Demand Note. Notwithstanding the foregoing, at such time as the Demand Note shall become due according to its terms, the Transferor may enter into a new demand note or alternative arrangement (in lieu of retaining the cash paid under the Demand Note) if it obtains an opinion of counsel that use of such replacement demand note or alternative arrangement will not cause the Trust to be classified for federal income tax purposes as an association taxable as a corporation.
Section 2.8 Covenants of the Transferor with Respect to the Bank Purchase Agreement . The Transferor, in its capacity as purchaser of the Receivables from TCC pursuant to the Receivables Purchase Agreement, hereby covenants that the Transferor will at all times enforce the covenants and agreements of the Credit Card Originator in the Bank Purchase Agreement assigned by TCC to the Transferor in the Receivables Purchase Agreement, including, without limitation, covenants to the effect set forth below.
(a) Periodic Finance Charges and Other Fees . Except as otherwise required by any Requirement of Law, or as is deemed by the Credit Card Originator in its sole discretion to be appropriate, it shall not at any time reduce the annual percentage rates of the Periodic Finance Charges assessed on the Receivables or reduce other fees on the Accounts, if, either (a) as a result of such reduction it is reasonably expected that such reduction will cause an Early Amortization Event to occur with respect to a Series or (b) such reduction (x) if the Credit Card Originator owns a comparable segment of receivables, is not applied to any such comparable segment of consumer open end credit accounts owned by the Credit Card Originator that have characteristics the same as or substantially similar to the Receivables that are the subject of such change and (y) if the Credit Card Originator does not own such a comparable segment of receivables, will not be made with the intent to materially benefit the Transferor over the Investor Certificateholders or to materially adversely affect the Investor Certificateholders, except as otherwise restricted by
an endorsement, sponsorship, or other agreement between the Transferor and an unrelated third party or by the terms of the Accounts.
(b) Credit Card Agreements and Credit Card Guidelines . The Credit Card Originator shall comply with and perform its obligations under the Credit Card Agreements relating to the Accounts and the Credit Card Guidelines except insofar as any failure so to comply or perform would not materially and adversely affect the rights of the Trust or the Certificateholders hereunder or under the Certificates. Unless required by law or unless, in its sole discretion, the Credit Card Originator deems it appropriate, it will not change the terms and provisions of the Credit Card Agreements or the Credit Card Guidelines with respect to any of the Accounts in any respect (including the calculation of the amount, or the timing, of charge-offs and the Periodic Finance Charges and other fees to be assessed thereon), if, either (i) as a result of such change it is reasonably expected that such change will cause an Early Amortization Event to occur with respect to a Series or (ii) such change (x) if the Credit Card Originator owns a comparable segment of receivables, is not applied to any such comparable segment of consumer open end credit accounts owned by the Credit Card Originator that have characteristics the same as or substantially similar to the Receivables that are the subject of such change and (y) if the Credit Card Originator does not own such a comparable segment of receivables, will not be made with the intent to materially benefit the Transferor over the Investor Certificateholders or to materially adversely affect the Investor Certificateholders, except as otherwise restricted by an endorsement, sponsorship, or other agreement between the Transferor and an unrelated third party or by the terms of the Accounts.
The Transferor further covenants that the Transferor will not enter into any amendments to the Receivables Purchase Agreement unless the Rating Agency Condition has been satisfied.
Section 2.9 Addition of Accounts . (a) Required Additions .
(i) If, as of the close of business on the last Business Day of any Monthly Period, either (x) the Transferor Amount (excluding the interest represented by any Supplemental Certificate) is less than the Required Retained Transferor Amount on such date or (y) the aggregate amount of Principal Receivables is less than the Required Principal Balance on such date, the Transferor shall on or prior to the close of business on the 10th Business Day following the last Business Day of such Monthly Period (the “ Required Designation Date ”), unless the Transferor Amount (excluding the interest represented by any Supplemental Certificate) equals or exceeds the Required Retained Transferor Amount or the aggregate amount of Principal Receivables equals or exceeds the Required Principal Balance, as the case may be, in either case as of the close of business on any day after the last Business Day of such Monthly Period and prior to the Required Designation Date, designate additional Eligible Accounts to be included as Accounts as of the Required Designation Date or any earlier date in a sufficient amount such that, after giving effect to such addition, the Transferor Amount (excluding the interest represented by any Supplemental Certificate) as of
the close of business on the Addition Date is at least equal to the Required Retained Transferor Amount on such date and the aggregate amount of Principal Receivables equals or exceeds the Required Principal Balance on such date. The failure of any condition set forth in paragraph (c) or (d) below, as the case may be, shall not relieve the Transferor of its obligation pursuant to this paragraph; provided , however , that the failure of the Transferor to transfer Receivables to the Trust as provided in this paragraph solely as a result of the unavailability of a sufficient amount of Eligible Receivables shall not constitute a breach of this Agreement; provided , further , that any such failure which has not been timely cured will nevertheless result in the occurrence of an Early Amortization Event with respect to each Series for which, pursuant to the Supplement therefor, a failure by the Transferor to convey Receivables in Supplemental Accounts or Participation Interests to the Trust by the day on which it is required to convey such Receivables or Participation Interests constitutes an “Early Amortization Event” (as defined in such Supplement).
(ii) In lieu of, or in addition to, designating Supplemental Accounts pursuant to clause (i) above, the Transferor may, subject to the conditions specified in paragraph (c) below, convey to the Trust participations representing undivided interests in a pool of assets primarily consisting of open end credit card receivables generated in credit card accounts owned by a Credit Card Originator, and any interests in the foregoing, including securities representing or backed by such receivables, and other self-liquidating financial assets including, without limitation, any “Eligible Assets” as such term is defined in Rule 3a-7 under the Investment Company Act (or any successor to such Rule) and collections thereon (“ Participation Interests ”); provided that an Opinion of Counsel is delivered that such Participation Interest will not be classified or cause the Trust to be classified as an equity interest in an association taxable as a corporation; provided , further , that to the extent required pursuant to the Act, any Participation Interests transferred to the Trust (a) shall have been (i) registered under the Act or (ii) held for at least the Rule 144(k) holding period, and (b) shall be acquired in secondary market transactions not from the issuer or an affiliate. The addition of Participation Interests in the Trust pursuant to this paragraph (a) or paragraph (b) below shall be effected by a Supplement, dated the applicable Addition Date, pursuant to subsection 13.1(a).
(b) Permitted Additions . The Transferor may from time to time after an Automatic Addition Termination Date or an Automatic Addition Suspension Date (and in the latter case, prior to a Restart Date), at its sole discretion, subject to the conditions specified in paragraph (c) below, designate additional Eligible Accounts to be included as Accounts or Participation Interests to be included as Trust Assets, in either case as of the applicable Addition Date.
(c) Conditions to Addition . On the Addition Date with respect to any Supplemental Accounts or Participation Interests added pursuant to subsection 2.9(a) or
2.9(b), the Credit Card Originator will sell to TCC, TCC will thereafter sell to the Transferor and the Transferor will thereafter transfer to the Trust the Receivables arising in Supplemental Accounts (and such Supplemental Accounts shall be deemed to be Accounts for purposes of this Agreement) and Participation Interests, subject to the satisfaction of the following conditions:
(i) on or before the tenth Business Day immediately preceding the Addition Date, the Transferor shall have given the Trustee, the Servicer, each Rating Agency and any Enhancement Provider entitled thereto pursuant to the relevant Supplement written notice that the Supplemental Accounts or Participation Interests will be included and specifying the applicable Addition Date, the Addition Cut-Off Date, the approximate number of accounts expected to be added and the approximate aggregate balances expected to be outstanding in the accounts to be added;
(ii) in the case of Supplemental Accounts, the Transferor shall have delivered to the Trustee copies of UCC-1 financing statements covering such Supplemental Accounts, if necessary to perfect the Trust’s interest in the Receivables arising therein;
(iii) as of each of the Addition Cut-Off Date and the Addition Date, (x) no Insolvency Event with respect to the Credit Card Originator, TCC or the Transferor shall have occurred, (y) the Credit Card Originator, TCC and the Transferor shall not be insolvent and (z) the transfer of the Receivables arising in the Supplemental Accounts or the Participation Interests to the Trust shall not have been made in contemplation of the occurrence of an Insolvency Event or the insolvency thereof;
(iv) except in the case of an Addition pursuant to subsection 2.9(a), the Rating Agency Condition shall have been satisfied and in the case of an Addition pursuant to subsection 2.9(a) which would exceed the Aggregate Addition Limit, the Transferor shall have provided to Standard & Poor’s at least 10 Business Days’ prior written notice of such Addition and at or prior to the end of such 10 Business Day period, the Transferor shall receive a notice in writing from Standard & Poor’s that such Addition will not result in the lowering or withdrawal of its then existing rating of the Investor Certificates of any Series;
(v) the Transferor shall have delivered to the Trustee and any Enhancement Provider entitled thereto pursuant to the relevant Supplement an Officer’s Certificate, dated the Addition Date, stating that (x) in the case of Supplemental Accounts, as of the applicable Addition Date the Supplemental Accounts are all Eligible Accounts, (y) to the extent applicable, the conditions set forth in clauses (ii) through (iv) above have been satisfied and (z) the Transferor reasonably believes that (A) the addition by the Transferor of the Receivables arising in the Supplemental Accounts or of the Participation Interests to the Trust will not, based on the
facts known to such officer at the time of such certification, then or thereafter cause an Early Amortization Event to occur with respect to any Series and (B) in the case of Supplemental Accounts, no selection procedure was utilized by the Transferor which would result in a selection of Supplemental Accounts (from among the available Eligible Accounts owned by the Credit Card Originator) that would have a result that would be materially less favorable to the interests of the Investor Certificateholders of any Series as of the Addition Date than a random selection; and
(vi) the Transferor shall have delivered to the Trustee, each Rating Agency and any Enhancement Provider entitled thereto pursuant to the relevant Supplement an outside Opinion of Counsel, dated the Addition Date, in accordance with subsection 13.2(d).
(d) Automatic Additional Accounts .
(i) All accounts which meet the definition of Automatic Additional Accounts shall be included as Accounts from and after the date upon which such Automatic Additional Accounts are created and all Receivables in such Automatic Additional Accounts, whether such Receivables are then existing or thereafter created, shall be transferred automatically to the Trust upon purchase by the Transferor. For all purposes of this Agreement, all receivables of such Automatic Additional Accounts shall be treated as Receivables upon their creation. The Transferor may elect at any time to terminate the inclusion in Accounts of new accounts which would otherwise be Automatic Additional Accounts as of any Business Day (the “ Automatic Addition Termination Date ”), or suspend any such inclusion as of any Business Day (an “ Automatic Addition Suspension Date ”) until a date (the “ Restart Date ”) to be notified in writing by the Transferor to the Trustee by delivering to the Trustee, the Servicer and each Rating Agency prior written notice of such election at least 10 days prior to such Automatic Addition Termination Date or Automatic Addition Suspension date. Promptly after an Automatic Addition Termination Date or any Automatic Addition Suspension Date, or a Restart Date, the Transferor and the Trustee agree to execute and the Transferor agrees to record and file at its own expense an amendment to the financing statements referred to in Section 2.1 to specify the accounts then subject to this Agreement (which specification may incorporate a list of accounts by reference) and, except in connection with any such filing made after a Restart Date, to release any security interest in any accounts created after the Automatic Addition Termination Date or any Automatic Addition Suspension Date.
(ii) The Transferor shall not be permitted to continue to designate Automatic Additional Accounts to be included as Accounts pursuant to this subsection 2.9(d) (and the Determination Date on which such determination is made shall be also referred to as an “ Automatic Addition Suspension Date ”) unless:
(I) the arithmetic average for the three Monthly Periods preceding the then current Monthly Period, of the annualized percentage equivalent of a fraction for each respective Monthly Period, the numerator of which is equal to the Defaulted Amount for the respective Monthly Period and the denominator of which is equal to the aggregate Principal Receivables as of the first day of the respective Monthly Period, is less than 10.50%;
(II) the arithmetic average for the three Monthly Periods preceding the then current Monthly Period, of the percentage equivalent of a fraction for each respective Monthly Period, the numerator of which is equal to the amount of Collections received during the respective Monthly Period and the denominator of which is equal to the aggregate Principal Receivables as of the first day of the respective Monthly Period, is greater than or equal to 10.0%;
(III) the arithmetic average for the three Monthly Periods preceding the then current Monthly Period of the Trust Portfolio Yield minus the weighted arithmetic average of the Base Rates for each Series then outstanding for such three Monthly Periods is greater than or equal to 1.5%;
(IV) the number of accounts to be included as Automatic Additional Accounts with respect to the related six-month period is less than or equal to 30% of the number of Accounts as of the first day of such six-month period;
(V) provided , however , that the designation of Automatic Additional Accounts shall be permitted to continue in the event that as of any date of determination on which (x) any of the conditions in clauses (I) through (III) listed above is not met, and if the Aggregate Addition Limit would be exceeded as a result of the inclusion of such Automatic Additional Accounts as Accounts or (y) the condition in
clause (IV) above would not be satisfied because the threshold specified therein would be exceeded as a result of the inclusion of such Automatic Additional Accounts as Accounts, the Rating Agency Condition shall have been satisfied with respect to such inclusion;
(VI) on each Determination Date, the Transferor shall have delivered to the Rating Agencies and the Trustee an Officer’s Certificate, certifying (i) that each Automatic Additional Account designated as an Eligible Account is an Eligible Account and (ii) that either (x) the conditions under clauses (I), (II) or (III) above shall be satisfied or the Aggregate Addition Limit would not be exceeded as a result of the inclusion of such Automatic Additional Accounts as Accounts and the limitation under clause (IV) above will not be exceeded or (y) if the conditions under clauses (I), (II) or (III) shall not be satisfied and the Aggregate Addition Limit would be exceeded as a result of the inclusion of such Automatic Additional Accounts as Accounts, or the condition under clause (IV) above would not be satisfied because the threshold specified therein would be exceeded as a result of the inclusion of Automatic Additional Accounts as Accounts, the Rating Agency Condition has been satisfied with respect to such inclusion; and
(VII) as of the Addition Date, (x) no Insolvency Event with respect to the Credit Card Originator, TCC or the Transferor shall have occurred, (y) the Credit Card Originator, TCC and the Transferor shall not be insolvent and (z) the transfer of the Receivables arising in the Automatic Additional Accounts to the Trust shall not have been made in contemplation of the occurrence of an Insolvency Event or the insolvency thereof.
(iii) If the conditions of clauses (I) through (III) of clause (ii) above are not satisfied and clause (IV) of clause (ii) above is satisfied, the Transferor intends to continue to automatically add accounts so long as the
Aggregate Addition Limit is not exceeded. Upon either (x) any one of the conditions set forth in clauses (I) through (III) of clause (ii) above not being satisfied and the Aggregate Addition Limit being exceeded or (y) the condition set forth in clause (IV) above not being satisfied because the threshold specified therein has been exceeded as specified in an Officer’s Certificate of the Transferor delivered pursuant to clause (ii)(V) above, the Transferor shall cease to designate Automatic Additional Accounts to be included as Accounts pursuant to this subsection 2.9(d) until a date (the “ Restart Date ”) specified in a written notice given by the Transferor to the Trustee; provided , however , that the Transferor shall specify in such notice that on such Restart Date (x) the conditions under clauses (I) through (III) of clause (ii) above will be satisfied or the Aggregate Addition Limit would not be exceeded as a result of the inclusion of Automatic Additional Accounts as Accounts and the condition under clause (ii)(IV) above will be satisfied on the Restart Date and (y) all accounts of the Credit Card Originators shall have been designated Accounts either as Automatic Additional Accounts prior to the Automatic Addition Suspension Date or as Supplemental Accounts.
(e) Representations and Warranties . The Transferor hereby represents and warrants to the Trust as of the related Addition Date as to the matters relating to it set forth in paragraph (d)(iii) above and that the file or list delivered pursuant to paragraph (f) below is, as of the applicable Addition Cut-Off Date, true and complete in all material respects.
(f) Delivery of Documents . In the case of the designation of Supplemental Accounts, the Transferor shall deliver to the Trustee (i) the computer file, microfiche list or printed list required to be delivered pursuant to Section 2.1 with respect to such Supplemental Accounts on the applicable Document Delivery Date and (ii) a duly executed, written Assignment (including an acceptance by the Trustee for the benefit of the Certificateholders), substantially in the form of Exhibit B (the “ Assignment ”), on the Document Delivery Date.
(g) Adjustment to Calculations . The Transferor may direct that the Principal Receivables in the Additional Accounts be treated as Principal Receivables outstanding on the last day of the Monthly Period preceding the Monthly Period in which the Addition is made for purposes of calculating Floating Allocation Percentages and Principal Allocation Percentages for the Monthly Period of such Addition. Such direction may be made on the Addition Date only if all collections with respect to the Additional Accounts for the period from the last day of the preceding Monthly Period through the Addition Date are deposited in the Collection Account on the Addition Date. Following any such Addition, the Servicer shall allocate collections for the balance of such Monthly Period, including the collections deposited on the Addition Date, to the Certificateholders’ Interest of each Series and the Transferor Amount so that each interest receives the same allocations of Finance Charge Receivables, Principal Receivables and Defaulted Amounts that it would have received if such Additional Accounts had been included in the Trust for the entire Monthly Period in which the Addition occurred.
Section 2.10 Removal of Accounts . On any day of any Monthly Period the Transferor shall have the right to require the reassignment to it or its designee of all the Trust’s right, title and interest in, to and under the Receivables then existing and thereafter created, all monies due or to become due and all amounts received with respect thereto and all proceeds thereof in or with respect to the Accounts then owned by the Credit Card Originator and designated by the Transferor (the “ Removed Accounts ”) or Participation Interests (unless otherwise set forth in the applicable Supplement), upon satisfaction of the following conditions:
(a) on or before the tenth Business Day immediately preceding the Removal Date (the “ Removal Notice Date ”) the Transferor shall have given the Trustee, the Servicer, each Rating Agency and any Enhancement Provider entitled thereto pursuant to the relevant Supplement written notice of such removal and specifying the date for removal of the Removed Accounts and Participation Interests (the “ Removal Date ”);
(b) with respect to Removed Accounts, on or prior to the date that is 10 Business Days after the Removal Date, the Transferor shall have delivered to the Trustee a computer file, microfiche list or printed list containing a true and complete list of the Removed Accounts specifying for each such Account, as of the Removal Notice Date, its account number, the aggregate amount outstanding, and the aggregate amount of Principal Receivables outstanding in such Account;
(c) with respect to Removed Accounts, the Transferor shall have represented and warranted as of the Removal Date that the list of Removed Accounts delivered pursuant to paragraph (b) above, as of the Removal Date, is true and complete in all material respects;
(d) the Rating Agency Condition shall have been satisfied with respect to such removal;
(e) the Transferor shall have delivered to the Trustee and any Enhancement Provider entitled thereto pursuant to the relevant Supplement an Officer’s Certificate, dated as of the Removal Date, to the effect that the Transferor reasonably believes that (i) such removal will not, based on the facts known to such officer at the time of such certification, then or thereafter cause an Early Amortization Event or an event which with notice or lapse of time would constitute an Early Amortization Event to occur with respect to any Series and (ii) no selection procedure believed by the Transferor to be materially adverse to the interests of the Investor Certificateholders has been used in removing Removed Accounts from among any pool of Accounts or Participation Interests of a similar type;
(f) the Transferor shall not utilize a selection procedure intended to include a disproportionately higher level of Defaulted Receivables in the Removed Accounts than exist in the Accounts and shall not remove such Accounts for the intended purpose of mitigating losses to the Trust; and
(g) the Transferor shall pay to the Trust the greater of (i) the fair market value (as of the Removal Date) of the Receivables to be removed and (ii) the amount of the Principal Receivables to be removed; to the extent the fair market value of the Receivables exceeds the amount of the Principal Receivables to be removed, the amount of such excess shall be treated as Collections of Finance Charge Receivables.
Upon satisfaction of the above conditions, the Trustee shall execute and deliver to the Transferor or its designee a written reassignment in substantially the form of Exhibit C (the “ Reassignment ”) and shall, without further action, be deemed to transfer, assign, set over and otherwise convey to the Transferor or its designee, effective as of the Removal Date, without recourse, representation or warranty, all the right, title and interest of the Trust in and to the Receivables arising in the Removed Accounts or the Participation Interests, all monies due and to become due and all amounts received with respect thereto and all proceeds thereof. In addition, the Trustee shall execute such other documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Transferor to effect the conveyance of Receivables pursuant to this Section 2.10.
In addition to the foregoing, on the date when any Receivable in an Account becomes a Defaulted Receivable, the Trust shall automatically and without further action or consideration be deemed to transfer, set over and otherwise convey to the Transferor, without recourse, representation or warranty, all right, title and interest of the Trust in and to the Defaulted Receivables and Finance Charge Receivables which have been charged off as uncollectible, in such Account, all monies due or to become due with respect thereto and all proceeds thereof; provided that Recoveries of such Account shall be applied as provided herein. Each such Account shall constitute a Removed Account for which the applicable Removal Date shall be the first date on which any Receivable in such Account became a Defaulted Receivable.
Section 2.11 Discount Option . (a) The Transferor shall have the option to designate at any time a fixed or floating percentage (the “ Discount Percentage ”), of the amount of Receivables arising in the Accounts on or after the date such designation becomes effective that would otherwise constitute Principal Receivables (prior to subtracting from Principal Receivables, Finance Charge Receivables that are Discount Option Receivables) to be treated as Finance Charge Receivables. The Transferor may from time to time increase (subject to the limitations described below), reduce or eliminate the Discount Percentage for Discount Option Receivables arising in the Accounts on and after the date of such change. The Transferor must provide 30 days’ prior written notice to the Servicer, the Trustee and each Rating Agency of any such increase, reduction or elimination, and such increase, reduction or elimination shall become effective on the date specified therein only if (i) the Transferor has delivered to the Trustee an Officer’s Certificate to the effect that, based on the facts known to such officer at the time, the Transferor reasonably believes that such increase, reduction or elimination shall not at the time of its occurrence cause an Early Amortization Event, or an event which with notice or the lapse of time would constitute an Early Amortization Event, to occur with respect to any Series and (ii) the Discount Percentage shall not be greater than 3% at any time, unless the
Transferor, the Servicer and the Trustee shall have received written confirmation from each Rating Agency that the Rating Agency Condition is satisfied.
(b) On each Date of Processing after the date on which the Transferor’s exercise of its discount option takes effect, the Transferor shall treat Discount Option Receivables Collections as Collections of Finance Charge Receivables.
Section 2.12 Additional Transferors . The Transferor may designate additional Persons to be included as Transferors under this Agreement by an amendment to this Agreement (which amendment shall be subject to Section 13.1) and, in connection with such designation, the Transferor shall surrender the Transferor Certificate to the Trustee in exchange for a newly issued Transferor Certificate reflecting such additional Transferor’s interest in the Transferor’s Interest; provided , however , that prior to any such designation and issuance the conditions set forth in subsection 6.3(c) shall have been satisfied with respect thereto.
Section 2.13 Account Allocations . In the event that the Transferor is unable for any reason to transfer Receivables to the Trust in accordance with the provisions of this Agreement, including by reason of the application of the provisions of Section 9.1 or any order of any Governmental Authority (a “ Transfer Restriction Event ”), then, in any such event, (a) the Transferor and the Servicer agree (except as prohibited by any such order) to allocate and pay to the Trust, after the date of such inability, all Collections, including Collections of Receivables transferred to the Trust prior to the occurrence of such event, and all amounts which would have constituted Collections but for the Transferor’s inability to transfer Receivables (up to an aggregate amount equal to the amount of Receivables transferred to the Trust by the Transferor in the Trust on such date), (b) the Transferor and the Servicer agree that such amounts will be applied as Collections in accordance with Article IV and the terms of each Supplement and (c) for so long as the allocation and application of all Collections and all amounts that would have constituted Collections are made in accordance with clauses (a) and (b) above, Principal Receivables and all amounts which would have constituted Principal Receivables but for the Transferor’s inability to transfer Receivables to the Trust which are written off as uncollectible in accordance with this Agreement shall continue to be allocated in accordance with Article IV and the terms of each Supplement. For the purpose of the immediately preceding sentence, the Transferor and the Servicer shall treat the first received Collections with respect to the Accounts as allocable to the Trust until the Trust shall have been allocated and paid Collections in an amount equal to the aggregate amount of Principal Receivables in the Trust as of the date of the occurrence of such event. If the Transferor and the Servicer are unable pursuant to any Requirements of Law to allocate Collections as described above, the Transferor and the Servicer agree that, after the occurrence of such event, payments on each Account with respect to the principal balance of such Account shall be allocated first to the oldest principal balance of such Account and shall have such payments applied as Collections in accordance with Article IV and the terms of each Supplement. The parties hereto agree that Finance Charge Receivables, whenever created, accrued in respect of Principal Receivables which have been conveyed to the Trust shall continue to be a part of the Trust notwithstanding any cessation of the transfer of additional Principal Receivables to the Trust and Collections with respect thereto
shall continue to be allocated and paid in accordance with Article IV and the terms of each Supplement.
ADMINISTRATION AND SERVICING
Section 3.1 Acceptance of Appointment and Other Matters Relating to the Servicer . (a) Retailers National Bank agrees to act as Servicer under this Agreement and the Certificateholders by their acceptance of Certificates consent to Retailers National Bank acting as Servicer.
(b) The Servicer shall service and administer the Receivables, shall collect payments due under the Receivables and shall charge off as uncollectible Receivables, all in accordance with its customary and usual servicing procedures for servicing credit card and other consumer open end credit receivables comparable to the Receivables and in accordance with the Credit Card Guidelines. The Servicer shall have full power and authority, acting alone or through any party properly designated by it hereunder, to do any and all things in connection with such servicing and administration which it may deem necessary or desirable. Without limiting the generality of the foregoing, subject to Section 10.1 and provided Retailers National Bank is the Servicer, the Servicer or its designee (rather than the Trustee) is hereby authorized and empowered (i) to make withdrawals and payments or to instruct the Trustee to make withdrawals and payments from the Collection Account and any Series Account, as set forth in this Agreement or any Supplement, and (ii) to take any action required or permitted under any Enhancement, as set forth in this Agreement or any Supplement. Without limiting the generality of the foregoing and subject to Section 10.1, the Servicer or its designee is hereby authorized and empowered to make any filings, reports, notices, applications and registrations with, and to seek any consents or authorizations from, the Commission and any state securities authority on behalf of the Trust as may be necessary or advisable to comply with any Federal or state securities laws or reporting requirements; provided , however , that initially, the Transferor shall make any filings with the Commission and under state securities laws on behalf of the Trust. The Trustee shall furnish the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder.
(c) The Servicer shall not be obligated to use separate servicing procedures, offices, employees or accounts for servicing the Receivables from the procedures, offices, employees and accounts used by the Servicer in connection with servicing other credit card receivables.
(d) The Servicer shall comply with and perform its servicing obligations with respect to the Accounts and Receivables in accordance with the Credit Card Agreements relating to the Accounts and the Credit Card Guidelines except insofar as any failure to so comply or perform would not materially and adversely affect the Trust or the Investor Certificateholders.
(e) The Servicer shall be liable for the payment, without reimbursement, of all expenses incurred in connection with the Trust and the servicing activities hereunder including expenses related to enforcement of the Receivables, fees and disbursements of the Trustee, any Paying Agent and any Transfer Agent and Registrar (including the reasonable fees and expenses of its counsel) in accordance with Section 11.5, fees and disbursements of independent accountants and all other fees and expenses, including the costs of filing UCC continuation statements and the costs and expenses relating to obtaining and maintaining the listing of any Investor Certificates on any stock exchange, that are not expressly stated in this Agreement to be payable by the Trust, the Investor Certificateholders of a Series or the Transferor (other than Federal, state, local and foreign income, franchise and other taxes, if any, or any interest or penalties with respect thereto, assessed on the Trust).
(f) The Servicer agrees that upon a request by the Transferor it will use its best efforts to obtain and maintain the listing of the Investor Certificates of any Series or Class on any specified securities exchange. If any such request is made, the Servicer shall give notice to the Transferor and the Trustee on the date on which such Investor Certificates are approved for such listing. Within three Business Days following receipt of notice by the Servicer of any actual, proposed or contemplated delisting of such Investor Certificates by any such securities exchange the Servicer, in its sole discretion, may terminate any listing on any such securities exchange.
Section 3.2 Servicing Compensation . As full compensation for its servicing activities hereunder and as reimbursement for any expense incurred by it in connection therewith, the Servicer shall be entitled to receive a servicing fee (the “ Servicing Fee ”) with respect to each Monthly Period, payable monthly on the related Distribution Date, in an amount equal to one-twelfth of the product of (a) the weighted average of the Servicing Fee Rates with respect to each outstanding Series (based upon the Servicing Fee Rate for each Series and the Series Invested Amount (or such other amount as specified in the related Supplement) of such Series, in each case as of the last day of the prior Monthly Period) and (b) the amount of Principal Receivables on the last day of the prior Monthly Period. The share of the Servicing Fee allocable to (i) the Certificateholders’ Interest of a particular Series with respect to any Monthly Period (the “ Monthly Servicing Fee ”) and (ii) the Enhancement Invested Amount, if any, of a particular Series with respect to any Monthly Period will each be determined in accordance with the relevant Supplement. The share of the Servicing Fee allocable to any Participation with respect to any Monthly Period will be determined in accordance with the applicable Participation Supplement. The portion of the Servicing Fee with respect to any Monthly Period not so allocated to the Certificateholders’ Interest or the Enhancement Invested Amount, if any, of a particular Series or any Participation shall be paid from amounts allocable to the Holder of the Transferor Certificate on the related Distribution Date. In no event shall the Trust, the Trustee, the Investor Certificateholders of any Series, the holder of any Participation or any Enhancement Provider be directly liable for the share of the Servicing Fee with respect to any Monthly Period to be paid from amounts allocable to the Holder of the Transferor Certificate.
Section 3.3 Representations, Warranties and Covenants of the Servicer . Retailers National Bank, in its capacity as initial Servicer, hereby makes, and any Successor Servicer by its appointment hereunder shall make, on each Closing Date (and on the date of any such appointment), the following representations, warranties and covenants to the Trust (and agrees that the Trustee may rely on each such representation, warranty and covenant in accepting the Receivables in trust and in authenticating the Certificates):
(a) Organization and Good Standing . The Servicer is a national banking association (or with respect to such Successor Servicer, such other corporate entity as may be applicable) duly organized, validly existing and in good standing under the laws of the United States, and has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Agreement and each Supplement and, in all material respects, to own its properties and conduct its business as such properties are presently owned and as such business is presently conducted.
(b) Due Qualification . The Servicer is duly qualified to do business and is in good standing as a foreign corporation (or is exempt from such requirements), and has obtained all necessary licenses and approvals in each jurisdiction in which failure to so qualify or to obtain such licenses and approvals would have a material adverse effect on the interests of the Investor Certificateholders hereunder or under any Supplement.
(c) Due Authorization . The execution, delivery, and performance of this Agreement and each Supplement have been duly authorized by the Servicer by all necessary corporate action on the part of the Servicer.
(d) Binding Obligation . This Agreement and each Supplement constitutes a legal, valid and binding obligation of the Servicer, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect, affecting the enforcement of creditors’ rights in general (or with respect to such Successor Servicer, such other corporate entity as may be applicable) and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).
(e) No Violation . The execution and delivery of this Agreement and each Supplement by the Servicer, the performance of the transactions contemplated by this Agreement and each Supplement and the fulfillment of the terms hereof and thereof applicable to the Servicer, will not conflict with, violate, result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any Requirement of Law applicable to the Servicer or any indenture, contract, agreement, mortgage, deed of trust or other instrument to which the Servicer is a party or by which it or any of its properties are bound.
(f) No Proceedings . There are no proceedings or investigations pending or, to the best knowledge of the Servicer, threatened against the Servicer before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement or any Supplement, seeking any
determination or ruling that, in the reasonable judgment of the Servicer, would materially and adversely affect the performance by the Servicer of its obligations under this Agreement or any Supplement, or seeking any determination or ruling that would materially and adversely affect the validity or enforceability of this Agreement or any Supplement.
(g) Compliance with Requirements of Law . The Servicer shall duly satisfy all obligations on its part to be fulfilled under or in connection with the Receivables and the related Accounts, will maintain in effect all qualifications required under Requirements of Law in order to properly service the Receivables and the related Accounts and will comply in all material respects with all other Requirements of Law in connection with servicing the Receivables and the related Accounts, the failure to comply with which would have a material adverse effect on the interests of the Investor Certificateholders.
(h) No Rescission or Cancellation . Subject to Section 3.9, the Servicer shall not permit any rescission or cancellation of a Receivable except as ordered by a court of competent jurisdiction or other Governmental Authority or in the ordinary course of its business and in accordance with the Credit Card Guidelines.
(i) Protection of Certificateholders’ Rights . Except as provided in subsections 2.8(a) and (b) hereof wit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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