As filed with the Securities and Exchange Commission on February 21, 2003
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
_______________
TARGET CREDIT CARD MASTER TRUST
(Issuer of the Certificates)
(Exact name of Registrant as Specified in its Charter)
Target Receivables Corporation
(Originator of the Trust Described Herein)
(Exact name of Registrant as Specified in its Charter)
Minnesota 41-1812153
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
Target Receivables Corporation
1000 Nicollet Mall
Suite 3136
Minneapolis, Minnesota 55403
(612) 696-3102
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of the Registrant's Principal Executive Office)
________________
Stephen C. Kowalke
Vice President and Treasurer
Target Corporation
1000 Nicollet Mall
Minneapolis, Minnesota 55403-2467
(612) 304-6073
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
Andrew M. Faulkner
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-2853
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective as determined
by market conditions.
If the only securities registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. /_/
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. /_/____________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/ ______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. /_/
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Proposed Maximum Aggregate
Title of each Class of Amount to be Offering Price Offering Amount of
Securities to be Registered Registered Per Unit(1) Price(1) Registration Fee
--------------------------- ------------ ---------------- ----------------- ----------------
Asset Backed Certificates.......... $1,000,000 100% $1,000,000 $92.00
(1) Estimated solely for the purpose of calculating the Registration Fee.
_______________
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
[Flag]
The information in this prospectus supplement and prospectus is not
complete and may be changed. We cannot sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. Neither this prospectus supplement nor the prospectus is an offer to
sell these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Prospectus Supplement to Prospectus, dated _______, 2003
TARGET CREDIT CARD MASTER TRUST
Issuer
TARGET RECEIVABLES CORPORATION
Transferor
RETAILERS NATIONAL BANK
Servicer
$_________ Floating Rate Class A Asset Backed Certificates, Series 2003-_
______________________________________________________________________________
Principal Amount $
Price $
Underwriters' Commissions $
Proceeds to the Transferor $
Class A Certificate Rate one-month LIBOR + [ ]% p.a.
Interest Payment Dates monthly on the 25th
First Interest Payment Date ________
Class A Expected Final Payment Date ________
Legal Final Maturity Date ________
The Target Credit Card Master Trust is also issuing a $_______ collateral
interest. The collateral interest will be subordinated to the Class A
certificates and initially will be retained by Target Receivables Corporation.
The Class A certificates and the collateral interest are interests in
Target Credit Card Master Trust and are backed only by the assets of the
trust. None of the Class A certificates, the collateral interest or the assets
of the trust are obligations of Target Corporation, Retailers National Bank,
Target Capital Corporation, Target Receivables Corporation, or any of their
affiliates or are obligations insured by the FDIC.
These securities are highly structured. Before you purchase these
securities, you should understand the structure and you should consider
carefully the "Risk Factors" beginning on page S-13 of this prospectus
supplement.
[We have applied to list the Class A certificates on the Luxembourg Stock
Exchange in accordance with the rules of the Luxembourg Stock Exchange.]
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these certificates or passed on the
adequacy or accuracy of the disclosures in this prospectus supplement and the
attached prospectus. Any representation to the contrary is a criminal offense.
The underwriters of the Class A certificates have agreed to purchase the
Class A certificates, subject to the terms and conditions in the underwriting
agreement.
_______________________________________________________________________________
The date of this Prospectus Supplement is _______, 2003.
Table of Contents
Important Notice About Information Presented
in this Prospectus Supplement and the Attached
Prospectus....................................... S-4
Summary of Terms..................................S-5
Structural Summary................................S-6
Transaction Flow Chart...........................S-12
Risk Factors.....................................S-13
Reduced Collections of Finance Charge
Receivables or Increased Defaulted
Receivables Could Result in
Accelerated, Delayed or Reduced
Payments to You.........................S-13
Reduced Collections of Principal
Receivables or an Inadequate Amount of
Principal Receivables Could Result in
Accelerated, Delayed or Reduced
Payments to You.........................S-13
Allocations of Defaulted Receivables Could
Result in Reduced Payments to You...... S-13
Limited Credit Enhancement Provided by the
Collateral Interest Could Result in
Reduced Payments to You ................S-14
A Change in the Terms and Conditions of
the Accounts May Reduce the Amount of
Receivables Arising Under the
Accounts, Reduce the Portfolio Yield,
Reduce the Amount of Collections on
Those Receivables or Otherwise Alter
Payment Patterns and Could Result in
Accelerated, Delayed, or Reduced
Payments to You ........................S-14
Introduction of Target VISA has Caused
Trust Performance to Change, Including
Increased Account Balances, Lower
Trust Portfolio Yield, and Lower
Principal Payment Rates Which Could
Result in Accelerated, Delayed or
Reduced Payments to
You.....................................S-14
Competition in the Credit Card Industry
Could Impact RNB's Ability to Generate
New Accounts and Receivables and Might
Also Affect Payment Patterns on the
Existing Receivables Which Could
Result in Accelerated, Delayed or
Reduced Payments to
You.....................................S-15
Fluctuations in the Rate of Receivables
Growth and Principal Payment Rates Due
to the Dependence on the Target
Corporation Stores Could Result in
Accelerated, Delayed or Reduced
Payments to You ........................S-15
TRC May Not be Able to Add Accounts to the
Trust. This Could Result in
Accelerated, Delayed or Reduced
Payments to You ........................S-15
Currently All New Accounts are
Automatically Designated as Additional
Accounts. These Additional Accounts
May Have Different Terms and
Conditions and May Be of Lower Credit
Quality than Existing Accounts. This
Could Result in Accelerated, Delayed
or Reduced Payments to You .............S-15
If any Rating of the Class A Certificates
is Lowered or Withdrawn, the Market
Value of the Class A Certificates
Could
Decrease................................S-16
You May Not Be Able to Resell Your Class A
Certificates ...........................S-16
If RNB, TCC or TRC Breaches
Representations and Warranties
Relating to the Receivables, It Could
Result in Accelerated, Delayed or
Reduced Payments to You.................S-17
Changes to Consumer Protection Laws May
Impede RNB's Collection Efforts or
Alter the Timing or Amount of
Collections. This Could Result in
Accelerated, Delayed or Reduced
Payments to You ........................S-17
Insolvency or Bankruptcy of RNB, TCC or
TRC Could Result in Accelerated,
Delayed or Reduced Payments to You......S-17
Early Amortization of a Paired Series May
Reduce or Delay Payments to You ........S-19
Issuance of Additional Series by the Trust
May Result in Delayed or Reduced
Payments to You ........................S-19
Shortfalls in Investment Earnings on
Amounts Deposited in the Special
Funding Account and the Principal
Funding Account Could Result in
Accelerated or Reduced Payments to
You.................................... S-19
You Will Have Limited Control of Trust
Actions ................................S-20
Retailers National Bank's Credit Card
Business................................S-21
Target VISA.................................S-21
Private Label Credit Card Business..........S-21
Marketing Programs and Account Origination..S-22
RNB's Underwriting Processes and
Authorizations..........................S-22
Servicing of Accounts.......................S-23
Terms of Accounts...........................S-24
Delinquency and Collections Procedures for
RNB Credit Cards .......................S-24
The Trust Portfolio..............................S-25
General.....................................S-25
Principal Receivables Outstanding...........S-25
Delinquency Experience......................S-25
Charge-Off Rate Experience..................S-26
Principal Payment Rate Experience...........S-27
Trust Portfolio Yield Experience............S-27
Characteristics of the Trust Portfolio......S-28
Use of Proceeds..................................S-30
Description of the Class A Certificates..........S-30
General.....................................S-30
Interest Payments...........................S-31
Principal Payments..........................S-32
Subordination...............................S-32
Allocation Percentages......................S-33
Application of Collections..................S-34
Postponement of Accumulation Period.........S-40
Sharing of Excess Finance Charge
Collections.............................S-40
Shared Principal Collections................S-41
Excess Transferor Finance Charge
Collections and Shared Transferor
Principal Collections ..................S-41
Reallocation of Cash Flows; Defaulted
Receivables; Investor Charge-Offs ......S-42
Principal Funding Account...................S-43
Reserve Account.............................S-43
Transfer of the Collateral Interest.........S-44
Issuance of Additional Certificates.........S-44
Paired Series...............................S-45
Early Amortization Events...................S-45
Servicing Fees and Expenses.................S-47
Defeasance..................................S-47
Optional Termination........................S-48
Purchase of Class A Certificates by the
Transferor .............................S-48
Series Termination..........................S-48
[Luxembourg Listing And] General Information.....S-48
Underwriting.....................................S-50
Other Series Issued and Outstanding..............S-51
Glossary of Terms for Prospectus Supplement......S-55
Important Notice About Information Presented in this
Prospectus Supplement and the Attached Prospectus
The attached prospectus provides general information about the Target
Credit Card Master Trust, including terms and conditions that are generally
applicable to certificates issued by the trust. The specific terms of the
Series 2003-__ certificates are described in this prospectus supplement.
This prospectus supplement begins with several introductory sections
describing your series and the Target Credit Card Master Trust in abbreviated
form:
o Summary of Terms provides important dates, amounts and other terms
of your series,
o Structural Summary gives a brief introduction to the key structural
features of your series and directions for locating further
information,
o Transaction Flow Chart illustrates the flow of receivables, and
o Risk Factors describes some of the risks that apply to your
certificates.
As you read through these sections, cross-references will direct you to
more detailed descriptions in the attached prospectus and elsewhere in this
prospectus supplement. You can also directly reference key topics by looking
at the table of contents in this prospectus supplement and the attached
prospectus.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the attached prospectus. We have
not authorized anyone to provide you with different information.
We are not offering these certificates in any state where the offer is
not permitted.
We do not make any representation as to the accuracy of the information
in this prospectus supplement as of any date other than the date set forth on
its cover.
You can find a glossary with definitions of important terms that appear
in this document under the caption "Glossary of Terms for Prospectus
Supplement" beginning on page S-55 in this prospectus supplement or under the
caption "Glossary of Terms for Prospectus" beginning on page 62 in the
attached prospectus.
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To understand the structure and terms of these securities,
you must read carefully this prospectus supplement and the
attached prospectus in their entirety.
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Summary of Terms
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Trust: Target Credit Card Master Trust
Transferor: Target Receivables Corporation-- "TRC"
Servicer: Retailers National Bank-- "RNB"
Trustee: Wells Fargo Bank Minnesota, National
Association
Pricing Date:
Closing Date:
Clearance and Settlement: DTC/Clearstream/Euroclear
Trust Assets: Receivables originated in consumer open-end
credit card accounts of RNB.
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Series Structure: Amount % of Total Series
------ -----------------
Class A Certificates $
Collateral Interest $
Annual Servicing Fee Rate: 2%
Credit Enhancement for Class A: subordination of the collateral
interest
Class A Certificate Rate: one-month LIBOR + [ ]% p.a.
Interest Accrual Method: actual/360
Interest Payment Dates: monthly on the 25th
First Interest Payment Date:
Class A Expected Final Payment Date: __________________ distribution date
Legal Final Maturity Date: __________________ distribution date
[Application for Exchange
Listing:] [Luxembourg Stock Exchange]
[CUSIP Number:]
[ISIN:]
[Common Code:]
Class A Anticipated Ratings
(Moody's/Standard & Poor's): Aaa/AAA
Structural Summary
This summary briefly describes certain major structural components of
Series 2003-__. To fully understand the terms of Series 2003-__ you will need
to read both this prospectus supplement and the attached prospectus in their
entirety.
Target Credit Card Master Trust
Target Credit Card Master Trust is the issuer of the certificates and is
referred to in this prospectus supplement as the trust. Your series is one of
five series issued by the trust which will be outstanding as of the closing
date. The trust is maintained by the trustee for the benefit of the holders of
the securities of each outstanding series, including your series as of the
closing date.
Target Corporation
Target Corporation operates three retail divisions under the brand names
Target, Marshall Field's and Mervyn's. The receivables in the trust portfolio
primarily arise under Target VISA accounts and under revolving private label
credit card accounts relating to the sale of merchandise and services by
stores in one of these three retail divisions.
For more information on Target Corporation, see "Target Corporation" in the
attached prospectus.
Retailers National Bank
Retailers National Bank, referred to as RNB, originates the Target VISA
accounts and the revolving private label credit card accounts. RNB also is the
servicer of these accounts.
For more information on RNB, see "Retailers National Bank" in the attached
prospectus.
Target Financial Services
Target Financial Services, a unit of Target Corporation, performs many of the
services which RNB, as servicer, would typically perform, including marketing,
underwriting, authorizations, guest services, collections and systems support.
For more information on Target Financial Services, see "Target Financial
Services" in the attached prospectus.
Target Capital Corporation
Target Capital Corporation, referred to as TCC, purchases the receivables
originated by RNB and subsequently sells the receivables to Target Receivables
Corporation.
For more information on TCC, see "Target Capital Corporation" in the attached
prospectus.
Target Receivables Corporation
Target Receivables Corporation, referred to as TRC, is the transferor of the
receivables to the trust. TRC holds the transferor certificate and initially
will retain the collateral interest. The mailing address of TRC is 1000
Nicollet Mall, Suite 3136, Minneapolis, Minnesota 55403 and the telephone
number is (612) 696-3102.
For more information on TRC, see "Target Receivables Corporation" in the
attached prospectus.
The Trustee
Wells Fargo Bank Minnesota, National Association is the trustee under the
Pooling and Servicing Agreement. The Corporate Trust Department of the trustee
is located at Sixth and Marquette, MAC N9311-161, Minneapolis, Minnesota
55479.
For more information on the trustee, see "The Trustee" in the attached
prospectus.
The Receivables
The primary assets of the trust are a pool of receivables arising under:
o Target VISA accounts relating to the sale of merchandise and services by
Target Corporation Stores and other merchants and vendors participating
in the worldwide VISA network, and
o revolving private label credit card accounts relating to the sale of
merchandise and services by Target Corporation's Target, Marshall
Field's and Mervyn's retail divisions.
For more information on the receivables, see "Retailers National Bank's Credit
Card Business" and "The Trust Portfolio" in this prospectus supplement.
Interests in the Trust
The trustee maintains the trust for several beneficiaries:
o the Series 2003-__ certificateholders,
o certificateholders of other series issued by the trust,
o RNB, as the holder of a participation in the assets of the trust, and
o TRC, as the holder of the transferor certificate.
Each series has a claim to a specific dollar amount of the trust's assets,
regardless of the total amount of principal receivables in the trust at any
time. TRC, as holder of the transferor certificate, and RNB, as holder of the
participation, hold the remaining claims to the trust's assets. The sizes of
these claims fluctuate with the total amount of principal receivables in the
trust.
For more information on interests in the trust, see "Description of the
Certificates--Allocation of Trust Assets" in the attached prospectus.
Series 2003-__
Your series represents the right to receive a portion of collections on the
underlying trust assets and will also be allocated a portion of net losses on
the principal receivables, called the investor defaulted amount. Any
collections allocated to your series in excess of the amount owed to you or
the servicer of the receivables will be shared with other series of
certificates issued by the trust or returned to TRC. In no case will you
receive more than the principal and interest owed to you under the terms
described in this prospectus supplement.
For more information on your certificates, see "Description of the Class A
Certificates" in this prospectus supplement. For more information on the
allocation of collections to and payments to Series 2003-__, see "Description
of the Class A Certificates--Interest Payments," "--Principal Payments" and
"--Allocation Percentages" in this prospectus supplement.
Interest Payments
Interest on your Class A certificates will be paid monthly on each
distribution date. A distribution date will occur on the 25th day of each
month, or if that day is not a business day, the next business day, beginning
on _______. Your Class A certificates will bear interest at one-month LIBOR
plus___ % per year.
Interest for your Class A certificates will be calculated as follows:
Class A actual Class A
outstanding number of certificate
principal days in rate for
balance at end x interest x interest
of prior month period period
---------
360
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Each interest period will begin on and include a distribution date and end on
but exclude the next distribution date. However, the first interest period
will begin on and include the closing date and end on but exclude the first
distribution date for your certificates.
You may obtain the interest rates for the current interest period and the
immediately preceding interest period by telephoning the trustee at (612)
667-2484.
For more information on the payment of interest on the Class A certificates,
see "Description of the Class A Certificates--Interest Payments" and
"--Application of Collections--Payment of Interest, Fees and Other Items" in
this prospectus supplement.
Principal Payments
Your Class A certificates are expected to be paid in full on the ______
distribution date, which is the Class A expected final payment date. If an
early amortization period has not commenced, the trust will accumulate
collections of principal receivables in a principal funding account during the
accumulation period for payment to the Class A certificates on the Class A
expected final payment date. The length of the accumulation period prior to
the month in which the Class A expected final payment date occurs will be as
many months as is expected to be necessary for the accumulation of the Class A
invested amount, but will not be more than twelve months or less than one
month. The accumulation period will end on the first to occur of the
following:
o the date on which an early amortization period begins,
o the date on which the Class A invested amount and the collateral
invested amount have been paid in full, and
o the ________ distribution date.
If your Class A certificates are not paid in full on the Class A expected
final payment date, an early amortization event will occur, the early
amortization period will begin and the Class A certificates will begin to
receive monthly payments of interest and principal until the earlier of the
date on which they are paid in full and the ________ distribution date.
The Class A certificates will mature, and any remaining principal and interest
will be payable, on the ________ distribution date. No further payments on the
Class A certificates will be made after that date.
For more information on the payment of principal on the Class A certificates
and the accumulation period, see "Description of the Class A
Certificates--Principal Payments" and "--Application of Collections--Payment
of Principal" in this prospectus supplement.
Credit Enhancement
Your Class A certificates are credit enhanced through the subordination of the
collateral interest.
The effect of subordination of the collateral interest is that collections of
principal receivables allocated to your series, in an amount not to exceed the
collateral invested amount, will be reallocated to make up shortfalls in the
collections of finance charge receivables and other amounts available to make
interest payments to the Class A certificates and to pay the monthly servicing
fee. In addition, the collateral interest will be allocated-- and the
collateral invested amount will be reduced by-- any investor defaulted amount
not funded by collections of finance charge receivables and other amounts
available to cover the investor defaulted amount before the Class A
certificates are affected. The Class A certificates may suffer a loss of
principal and shortfalls in interest payments if the collateral invested
amount is reduced to zero and there are shortfalls in collections of finance
charge receivables and other amounts available to make interest payments and
to cover the investor defaulted amount.
For a more detailed description of the subordination provisions of Series
2003-__, see "Description of the Class A Certificates--Subordination" in this
prospectus supplement.
Allocations of Collections
Each month the servicer will allocate collections received on the receivables
among:
o your series,
o other series issued and outstanding,
o the interests of any holders of participations in assets of the
trust, and
o the transferor's interest in the trust.
Generally, you are entitled to receive payments of interest and principal only
from collections and other trust assets allocated to your series.
The amount allocated to your series will be based generally upon the size of
the invested amount of your series compared to the total amount of principal
receivables in the trust. The invested amount of your series is the sum of:
o the Class A invested amount, plus
o the collateral invested amount.
On the closing date, the invested amount for Series 2003-__ will be $_________.
During the accumulation period, collections of finance charge receivables
allocated to your series and the investor defaulted amount will be based upon
the adjusted invested amount, which is equal to the invested amount less
amounts accumulated in the principal funding account for payment to the Class
A certificateholders on the Class A expected final payment date.
If the invested amount of your series is reduced due to investor charge-offs,
collections of principal receivables and finance charge receivables allocated
and available for payment to your series may be reduced.
For a more detailed description of the allocation percentages used for your
series, see "Description of the Class A Certificates--Allocation Percentages"
in this prospectus supplement. For a description of the events which may lead
to these reductions, see "Description of the Class A Certificates--Allocation
Percentages" and "--Reallocation of Cash Flows; Defaulted Receivables;
Investor Charge-Offs" in this prospectus supplement.
Application of Collections
Collections of Finance Charge Receivables
Collections of finance charge receivables allocated to your series will be
used each month in the following order:
o to pay interest on the Class A certificates,
o to pay the monthly servicing fee,
o to cover the investor defaulted amount,
o to reimburse writedowns of the invested amount due to investor
charge-offs,
o to pay interest, if any, on the collateral interest,
o to fund the reserve account, if TRC, at its option, designates a
reserve account funding date, and
o to be applied as excess finance charge collections.
Collections of Principal Receivables
So long as the collateral invested amount is greater than zero, collections of
principal receivables allocated to your series will be used each month first
to fund shortfalls, if any, in:
o interest payments on the Class A certificates, and
o payments of the monthly servicing fee, and
then as follows:
o during the revolving period:
-- first, at the request of TRC, provided that rating agency
confirmation is received, used to reduce the collateral
invested amount, and
-- second, treated as shared principal collections,
o during the accumulation period:
-- first, deposited up to the Class A controlled deposit amount in
the principal funding account for payment to the Class A
certificateholders on the Class A expected final payment date,
-- second, after the deposit in the principal funding account of
an amount equal to the Class A invested amount, applied to pay
principal on the collateral interest until the collateral
invested amount has been paid in full, and
-- third, treated as shared principal collections, and
o during an early amortization period:
-- first, applied to pay principal on the Class A certificates
until the Class A invested amount has been paid in full,
-- second, applied to pay principal on the collateral interest
until the collateral invested amount has been paid in full, and
-- third, treated as shared principal collections.
For a more detailed description of the application of collections, see
"Description of the Class A Certificates--Application of Collections" in this
prospectus supplement.
Group I
Your series is included in Group I and will share excess finance charge
collections with other series in Group I. All of the series listed under
"Other Series Issued and Outstanding" in this prospectus supplement are
included in Group I. Additional series issued by the trust may be included in
Group I or may be included in other groups that may be established.
For more information on sharing of excess finance charge collections among
series in Group I, see "Description of the Class A Certificates--Sharing of
Excess Finance Charge Collections" in this prospectus supplement.
Shared Principal Collections
Your series is a principal sharing series. All of the series listed under
"Other Series Issued and Outstanding" in this prospectus supplement are
principal sharing series. Each principal sharing series that has a principal
shortfall will receive a portion of the total amount of shared principal
collections based on the amount of the principal shortfall for that series
divided by the total principal shortfalls for all principal sharing series.
For more information on shared principal collections and principal sharing
series, see "Description of the Class A Certificates--Shared Principal
Collections" in this prospectus supplement.
Early Amortization Events
Your series is subject to several early amortization events, which could cause
principal to be paid on the Class A certificates prior to the Class A expected
final payment date. If your series or the trust experiences an early
amortization event, the early amortization period may begin. If the early
amortization period begins, the Class A certificates will receive monthly
payments of principal and interest until the earlier of the date on which they
are paid in full and the ______ distribution date.
Early amortization events may occur if the transferor fails to make required
deposits or payments, violates certain covenants and agreements or makes
representations and warranties that are materially incorrect.
The following are also early amortization events:
o the average portfolio yield for any three consecutive months is less
than the average base rate for those three consecutive months,
o failure to pay the Class A certificates in full on the Class A
expected final payment date, and
o bankruptcy, insolvency or similar events relating to the transferor,
the servicer, TCC or the holder of the transferor certificate.
For more information on early amortization events, see "Description of the
Class A Certificates--Application of Collections--Payment of Principal" and
"--Early Amortization Events" in this prospectus supplement.
Optional Termination
TRC, as the holder of the transferor certificate, has the right to purchase
your certificates on any distribution date on or after the distribution date
on which the Class A invested amount is less than or equal to 10% of the
highest Class A invested amount outstanding at any time. The purchase price
will be equal to the outstanding principal balance of the Class A certificates
plus accrued and unpaid interest.
For more information on optional termination, see "Description of the Class A
Certificates--Optional Termination" in this prospectus
supplement.
Federal Income Tax Characterization of Class A Certificates and the Target
Credit Card Master Trust
Skadden, Arps, Slate, Meagher & Flom LLP, special federal income tax counsel
to TRC, will render the opinion, in connection with the issuance of the Class
A certificates and subject to the assumptions and qualifications stated in its
opinion, that:
o under existing law the Class A certificates will be classified as
debt for U.S. federal income tax purposes, and
o the trust will not be an association or publicly traded partnership
taxable as a corporation for U.S. federal income tax purposes.
For more information regarding the application of U.S. federal income tax
laws, see "Federal Income Tax Consequences" in the attached prospectus.
ERISA Considerations
The underwriters anticipate that the Class A certificates will be held by at
least 100 persons who are independent of TRC and each other. TRC anticipates
that the Class A certificates will meet the other criteria for treatment as
"publicly offered securities." If so, subject to important considerations
described under "Employee Benefit Plan Considerations" in the attached
prospectus, the Class A certificates will be eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.
For more information regarding the application of ERISA, see "Employee Benefit
Plan Considerations" in the attached prospectus.
Risk Factors
Investment in the certificates involves risks. You should consider carefully
the risk factors beginning on page S-13 in this prospectus supplement.
Registration, Clearance and Settlement
The certificates offered by this prospectus supplement and the attached
prospectus will be registered in the name of The Depository Trust Company or
its nominee. The purchasers of those certificates will not be entitled to
receive physical delivery of those certificates in definitive paper form
except under limited circumstances. Owners of those certificates may elect to
hold their certificates through The Depository Trust Company in the United
States or through Clearstream Banking, societe anonyme, or the Euroclear
system in Europe. Transfers will be made in accordance with the rules and
operating procedures of those clearing systems.
For more information regarding registration, clearance and settlement
procedures, see "Description of the Class A Certificates--General" in this
prospectus supplement and "Description of the Certificates" in the attached
prospectus.
[Exchange Listing]
[Target Credit Card Master Trust has applied to list the Class A certificates
on the Luxembourg Stock Exchange in accordance with its rules. There can be no
guarantee that the application for the listing will be accepted. You should
consult with [listing agent], the Luxembourg listing agent for the Class A
certificates, to determine whether the Class A certificates have been listed
on the Luxembourg Stock Exchange.]
[For more information on the listing of the Class A certificates on the
Luxembourg Stock Exchange, see "[Luxembourg Listing and] General Information"
in this prospectus supplement.]
Certificate Ratings
Upon issuance, the Class A certificates are required to be rated in the
highest rating category by at least one nationally recognized rating
organization. It is anticipated that the Class A certificates will be rated
"Aaa" by Moody's and "AAA" by Standard & Poor's.
Transaction Flow Chart
[Graphic omitted]
Risk Factors
You should consider the following risk factors in deciding whether to
purchase the Class A certificates described in this prospectus supplement.
Reduced Collections of Finance Charge If your series' average portfolio yield,
Receivables or Increased Defaulted which is net of defaulted receivables, for
Receivables Could Result in Accelerated, any three consecutive months is less than
Delayed or Reduced Payments to You. the average base rate for the same three
consecutive months, an early amortization
event will occur, the early amortization
period will begin and you may receive
principal payments earlier or
later than the Class A expected
final payment date or reduced
payments on your Class A
certificates.
Reduced Collections of Principal Reductions in collections of principal
Receivables or an Inadequate Amount of receivables may cause the period necessary
Principal Receivables Could Result in to repay your Class A certificates to go
Accelerated, Delayed or Reduced Payments beyond the Class A expected final payment
to You. date. In addition, an inadequate amount of
principal receivables could result in an
early amortization event, thereby resulting
in early or delayed repayment or reduced
payments on your Class A certificates.
The receivables transferred to the trust may
be paid at any time. We cannot assure the
creation of additional receivables in the
trust accounts or that any particular
pattern of cardholder payments will occur.
The amount of outstanding receivables will
vary due to changes in credit terms and
conditions, seasonal variations, the
availability of other sources of credit,
legal factors, general economic conditions,
and the spending and borrowing habits of
individual cardholders.
We can give you no assurance that sufficient
collections of principal receivables will be
available when expected, either to
accumulate during the accumulation period or
to pay your principal on the Class A
expected final payment date. Collections of
principal receivables may or may not be
constant from month to month or be similar
to historical experience. The monthly
principal payment rates on the receivables
may vary due to any of the following:
cardholders failing to make required minimum
payments, cardholders paying only the
minimum required amount, variations in the
trust portfolio receivables balance and
changing payment habits of the cardholders.
This could result in accelerated, delayed
or reduced payments to you.
Allocations of Defaulted Receivables Could RNB will write off defaulted receivables
Result in Reduced Payments to You. arising in accounts in the trust portfolio.
If the amount of defaulted receivables
allocated to your series exceeds the amount
of funds available for reimbursement of
those defaulted receivables, you may receive
reduced payments on your Class A
certificates. See "Retailers National Bank's
Credit Card Business--Delinquency and
Collections Procedures for RNB Credit
Cards," "The Trust Portfolio--Delinquency
Experience," and "--Net Charge-Off Rate
Experience," and "Description of the Class A
Certificates--Subordination," "--Application
of Collections," and "--Reallocation of Cash
Flows; Defaulted Receivables; Investor
Charge-Offs" in this prospectus supplement.
Limited Credit Enhancement Provided by The credit enhancement provided for your
the Collateral Interest Could Result in Class A certificates from the subordination
Reduced Payments to You. of the collateral interest is limited. The
Class A certificates may suffer a loss of
principal and shortfalls in interest
payments if the collateral invested amount
is reduced to zero and there are shortfalls
in collections of finance charge receivables
and other amounts available to make interest
payments and to cover the investor defaulted
amount. This could result in reduced
payments to you. See "Description of the
Class A Certificates Subordination" in this
prospectus supplement.
A Change in the Terms and Conditions of the RNB will sell receivables arising under
Accounts May Reduce the Amount of specified credit card accounts to TCC which
Receivables Arising Under the Accounts, will sell those receivables to TRC. TRC will
Reduce the Portfolio Yield, Reduce the transfer those receivables to the trust, but
Amount of Collections on Those Receivables RNB will continue to own the credit card
or Otherwise Alter Payment Patterns and accounts. As the owner of the accounts, RNB
Could Result in Accelerated, Delayed, or retains the right to change account terms
Reduced Payments to You. and conditions, including finance charges
and other fees it charges and the required
minimum monthly payment. For example, RNB
has converted and expects to continue
converting certain of its existing Target
Guest Card accounts to Target VISA accounts
which carry terms that differ from those of
the Target Guest Card accounts. Certain
changes in the terms of the accounts may
reduce the amount of receivables arising
under the accounts, reduce the portfolio
yield, reduce the amount of collections on
those receivables or otherwise alter payment
patterns. Payments to you could be
accelerated, delayed or reduced as a result
of these changes.
Introduction of Target VISA has Caused Target VISA was introduced in the fall of
Trust Performance to Change, Including 2000 as a pilot program, and the national
Increased Account Balances, Lower Trust rollout of Target VISA began in the fall of
Portfolio Yield, and Lower Principal 2001. Prior to the national rollout, the
Payment Rates Which Could Result in trust portfolio did not include a
Accelerated, Delayed or Reduced significant amount of receivables arising in
Payments to You. Target VISA accounts. The percentage of
Target VISA receivables in the trust
portfolio increased significantly at the end
of 2001 and during 2002, and Target
Corporation expects the percentage of Target
VISA receivables in the trust portfolio to
continue to increase, but at a more moderate
pace.
Target VISA is accepted not only at Target
Corporation Stores but throughout the VISA
network. Target VISA accounts have a higher
average account balance than the private
label credit card accounts. As a result,
there has been an increase in the average
account balance in the trust portfolio.
Target VISA also has lower finance charge
rates than the private label credit cards,
which has resulted in a reduction in trust
portfolio yield. The inclusion of Target
VISA in the trust portfolio has also
resulted in a reduction of the principal
payment rate. Therefore, the historic
performance of the trust portfolio described
in this prospectus supplement may not be
predictive of the future performance of the
trust portfolio. A reduction in trust
portfolio yield or a reduction in the
principal payment rate due to the
introduction of Target VISA could result in
accelerated, delayed or reduced payments to
you.
Competition in the Credit Card Industry The credit card industry is highly
Could Impact RNB's Ability to Generate competitive. As the issuer of Target VISA,
New Accounts and Receivables and Might RNB competes with other issuers of VISA
Also Affect Payment Patterns on the credit cards and with issuers of MasterCard,
Existing Receivables Which Could Result American Express, Discover Card and other
in Accelerated, Delayed or Reduced credit cards and charge cards. As new credit
Payments to You. card companies enter the market and
companies try to expand their market share,
effective advertising, target marketing,
pricing and technology related strategies
grow in importance. The ability of RNB to
compete in this industry environment will
affect its ability to generate new accounts
and receivables and might also affect
payment patterns on the receivables. This
could result in accelerated, delayed or
reduced payments to you.
Fluctuations in the Rate of Receivables Retailing is highly competitive. Target
Growth and Principal Payment Rates Due to Corporation and its subsidiaries compete not
the Dependence on the Target Corporation only with other discount and traditional
Stores Could Result in Accelerated, department stores in the area in which they
Delayed or Reduced Payments to You. operate but also with direct marketers and
numerous types of retail outlets, including
online retailers. Target Corporation Stores
currently accept most major credit cards.
Target Corporation's ability to compete in
this environment will affect its ability to
generate new receivables from RNB credit
cards, including Target VISA to the extent
it is used for purchases in Target
Corporation Stores, and might also affect
payment patterns on those receivables.
Target Corporation Stores may not be able to
continue generating new receivables at the
same rate as in previous years. Target
Corporation may decide at any time to sell
all or any portion of the business or assets
of the Target Corporation Stores. A
significant decline in the amount of new
receivables generated by the accounts in the
trust or a decline in the principal payment
rate could result in reduced collections.
This could result in accelerated, delayed or
reduced payments to you.
TRC May Not be Able to Add Accounts If TRC's percentage interest in the
to the Trust. This Could Result in principal receivables and certain trust
Accelerated, Delayed or Reduced Payments accounts in the trust falls to a minimum
to You. level, currently set at [2%], TRC will be
required to maintain that level of interest
in the trust assets by designating
additional accounts for the trust portfolio
and transferring the receivables in those
accounts to the trust. TRC may not be able
to designate additional accounts when
required. If TRC fails to designate
additional accounts when required, an early
amortization event will occur and the early
amortization period will begin. This could
result in accelerated, delayed or reduced
payments to you. See "The Pooling and
Servicing Agreement Addition of Trust
Assets" in the attached prospectus.
Currently All New Accounts are So long as certain conditions are satisfied,
Automatically Designated as Additional TRC currently intends to automatically
Accounts. These Additional Accounts May designate all new accounts as additional
Have Different Terms and accounts and transfer the receivables in
Conditions and May Be of Lower Credit those accounts to the trust. Credit card
Quality than Existing Accounts. This accounts purchased by RNB and originated by
Could Result in Accelerated, Delayed other credit card originators may also be
or Reduced Payments to You. included as additional accounts if certain
conditions are satisfied. Any additional
accounts may have different terms and
conditions than the accounts currently
designated to have their receivables
included in the trust. These additional
accounts and the related receivables may
perform differently than the current
accounts and receivables already included in
the trust. This could result in accelerated,
delayed or reduced payments to you.
If any Rating of the Class A Certificates is Any rating of the Class A certificates by a
Lowered or Withdrawn, the Market Value of rating agency will indicate:
the Class A Certificates Could Decrease.
o its view on the likelihood that Class A
certificateholders will receive timely
payments of interest and payments of
principal by the __________ distribution
date, and
o its evaluation of the receivables and the
availability of any enhancement for the Class
A certificates provided by the subordination
of the collateral interest.
Among the things a rating will not indicate
are:
o the likelihood of payment in full of the
Class A certificates by the Class A expected
final payment date,
o the likelihood that an early amortization
event will occur,
o the marketability of the Class A
certificates,
o the market price of the Class A certificates,
o the likelihood that a United States
withholding tax will be imposed on non-U.S.
certificateholders, or
o whether the Class A certificates are an
appropriate investment for you.
Rating agencies other than those requested
could assign a rating to the Class A
certificates and that rating could be lower
than any rating assigned by a rating agency
chosen by TRC.
A rating is not a recommendation to buy, sell
or hold the Class A certificates. A rating may
be lowered or withdrawn at any time by a rating
agency. The market value of the Class A
certificates could decrease if any rating of
the Class A certificates is lowered or
withdrawn.
You May Not Be Able to Resell Your Class A The underwriters may assist in resales of your
Certificates. Class A certificates but they are not required
to do so. A secondary market for the Class A
certificates may not develop. If a secondary
market does develop, it might not continue or
it might not be sufficiently liquid to allow
you to resell any of your Class A certificates.
If RNB, TCC or TRC Breaches Representations RNB represents and warrants to TCC, TCC
and Warranties Relating to the Receivables, represents and warrants to TRC and TRC
It Could Result in Accelerated, Delayed or represents and warrants to the trust, the
Reduced Payments to You. eligibility, validity and enforceability of the
receivables arising under the accounts in the
trust portfolio, and the perfection and
priority of the security interest in the
transferred receivables. The trustee for the
trust does not make any examination of the
receivables or the related records for the
purpose of determining the presence or absence
of defects, compliance with representations or
warranties, or for any other purpose. If a
representation or warranty relating to the
receivables is violated, the cardholders may
have defenses to payment or offset rights, or
creditors of RNB or TCC, as the case may be,
may claim rights to these receivables. This
could result in accelerated, delayed or reduced
payments to you. See "The Pooling and Servicing
Agreement" and "The Bank Receivables Purchase
Agreement and the Receivables Purchase
Agreement" in the attached prospectus.
Changes to Consumer Protection Laws Federal and state consumer protection laws
May Impede RNB's Collection Efforts regulate the creation and enforcement of
or Alter the Timing or Amount of consumer loans, including credit card accounts
Collections. This Could Result in and receivables. Changes or additions to those
Accelerated, Delayed or Reduced laws or failure to comply with those laws could
Payments to You. make it more difficult for RNB to collect
payments on the receivables or could reduce the
finance charges and other fees that RNB can
charge on credit card account balances, or
could render some receivables uncollectible.
Receivables which arise under accounts that do
not comply with consumer protection laws may
not be valid or enforceable in accordance with
their terms against the obligor on those
receivables. This could result in accelerated,
delayed or reduced payments to you. See "The
Pooling and Servicing
Agreement--Representations and Warranties,"
"The Bank Receivables Purchase Agreement and
the Receivables Purchase Agreement" and "Legal
Aspects of the Receivables--Consumer Protection
Laws" in the attached prospectus.
Insolvency or Bankruptcy of RNB, RNB owns the credit card accounts under which
TCC or TRC Could Result in Accelerated, the receivables arise. If RNB becomes insolvent
Delayed or Reduced Payments to You. or is in an unsound condition, the Comptroller
of the Currency is authorized to appoint the
FDIC as receiver. Under these circumstances,
the FDIC would have the statutory authority to
take any of the following actions:
o require the trustee to go through an
administrative claims procedure under which
the FDIC could have up to 180 days to
determine the trustee's right to payments
collected on the receivables in the trust,
o request a stay of up to 90 days of any
judicial action or proceeding involving RNB,
and
o repudiate any contract of RNB within a
reasonable time following the date of
receivership and limit the trust's resulting
claim to "actual direct compensatory damages"
-- not including lost profits or opportunity
-- measured as of the date of receivership,
not the date of payment.
If the FDIC were to take any of these actions,
your payments could be accelerated, delayed or
reduced. See "Legal Aspects of the
Receivables--Matters Relating to Bankruptcy or
Receivership" in the attached prospectus.
The receivables in which you have an interest
are conveyed to the trust by TRC. TRC acquires
them from TCC which in turn acquired the
receivables from RNB. The conveyances from RNB
to TCC and from TCC to TRC are intended to be
treated as sales. However, a court could
conclude that TCC or RNB still owns the
receivables and has only conveyed a security
interest in the receivables. The receivables
may then be subject to tax or other
governmental liens and to administrative
expenses of the bankruptcy or bank receivership
proceeding of a predecessor in interest of
those receivables. Also, a bankruptcy trustee
or a creditor may attempt to cause TRC to be
substantively consolidated with a predecessor
in interest of the receivables.
Recharacterization of the conveyance of the
receivables as a pledge or substantive
consolidation can delay or reduce payments on
your certificates.
The FDIC, as conservator or receiver, would
have the statutory authority to repudiate any
contract of RNB. This authority may permit the
FDIC to repudiate the transfers of receivables
to TCC. Under an FDIC regulation, however, the
FDIC, as conservator or receiver, will not use
its repudiation authority to reclaim, recover
or recharacterize financial assets, such as the
receivables, transferred by a bank if certain
conditions are met. These conditions include
that the transfer by RNB must qualify for sale
accounting treatment, be made for adequate
consideration, and not be made fraudulently, in
contemplation of insolvency, or with the intent
to hinder, delay or defraud the bank or its
creditors. RNB believes that this FDIC
regulation applies to the transfer of
receivables under the bank receivables purchase
agreement and that the conditions of the
regulation have been satisfied.
If specified events related to the
conservatorship or receivership of RNB, or the
bankruptcy or insolvency of TCC or TRC were to
occur then an early amortization event would
occur for all outstanding series and new
principal receivables would cease to be
transferred to the trust. The FDIC, as
conservator or receiver, may nonetheless have
the power regardless of the terms of the bank
receivables purchase agreement, the receivables
purchase agreement, or the pooling and
servicing agreement:
o to prevent the beginning of an early
amortization period,
o to require new principal receivables to
continue to be sold by RNB to TCC, or
o to prohibit the continued transfer of
receivables to TCC.
In addition, the FDIC, as conservator or
receiver, may have the power to prevent the
trustee or the certificateholders from
appointing a new servicer under the pooling
and servicing agreement. The events described
in this paragraph could result in accelerated,
delayed or reduced payments to you.
Early Amortization of a Paired The transferor may cause the trust to issue
Series May Reduce or Delay another series that will be paired with your
Payments to You. series after the accumulation period begins.
The outstanding principal balance of that
paired series may vary and the base rate for
that series may be different from the base rate
for your series. If your series is paired with
another series and an early amortization period
begins for the other paired series before
payment is made in full on your Class A
certificates, it could cause a reduction in the
percentage of collections of principal
receivables allocated to your series and the
final payment of principal on your Class A
certificates may be reduced or delayed. See
"Description of the Class A
Certificates--Paired Series" in this prospectus
supplement.
Issuance of Additional Series by The trust has issued other series of
the Trust May Result in Delayed certificates and is expected to issue
or Reduced Payments to You. additional series from time to time. The trust
may issue additional series with terms that are
different from your series without the prior
review or consent of any certificateholders. It
is a condition to the issuance of each new
series that each rating agency that has rated
an outstanding series confirm in writing that
the issuance of the new series will not result
in a reduction or withdrawal of its rating.
However, the terms of a new series could affect
the timing and amount of payments on any other
outstanding series and may result in delayed or
reduced payments to you. See "Description of
the Certificates--New Issuances" in the
attached prospectus.
Shortfalls in Investment Earnings on Any amounts deposited in the special funding
Amounts Deposited in the Special account and in the principal funding account
Funding Account and the Principal will be invested in investments earning a rate
Funding Account Could Result in that is likely to be less than the yield from
Accelerated or Reduced Payments collections of finance charge receivables and
to You. that is likely to be less than the base rate.
Excess transferor finance charge collections
will and any amounts on deposit in a reserve
account may be used to fund shortfalls in
investment earnings on amounts in the principal
funding account during the accumulation period;
however, there can be no assurances that these
funds will be available or sufficient to cover
the shortfalls in investment earnings.
Shortfalls in investment earnings may result in
the occurrence of an early amortization event
and the commencement of the early amortization
period. This could result in accelerated or
reduced payments to you.
You Will Have Limited Control of Trust You will have limited voting rights relating to
Actions. actions of the trust and the trustee. You will
not have the right to vote to direct the
trustee to take any actions other than the
right to vote to commence an early amortization
period or declare a servicer default. Moreover,
actions taken or not taken by controlling
certificateholders may be contrary to the
actions that you determine to be in your best
interest.
During the revolving period, the transferor may
issue additional Series 2003-__ certificates.
The issuance of any additional Series 2003-__
certificates will dilute your voting rights.
This prospectus supplement and the attached prospectus use defined terms.
Any capitalized term used but not defined in this prospectus supplement is
defined in the attached prospectus. Both the attached prospectus and this
prospectus supplement contain a glossary of important terms where definitions
can be found.
Retailers National Bank's Credit Card Business
RNB's credit card business is comprised of Target Guest Card, Marshall
Field's and Mervyn's credit cards, referred to collectively as private label
credit cards, and Target VISA.
The composition of RNB's credit card business as of _________, 2003, is as
follows.
Composition of
Retailers National Receivables in RNB
Bank redit Card Portfolio
Credit Cards as of _______, 2003
---------------- --------------------
Target VISA %
Target Guest Card %
Marshall Field's %
Mervyn's %
Target VISA
The pilot introduction of Target VISA in the fall of 2000 was focused on
leveraging RNB's credit card operations to strengthen the loyalty of Target
stores' higher credit quality guests. The approaches to account acquisition,
credit-granting, and the features of Target VISA were tailored to encourage
guests to both shop more frequently at Target stores and purchase more on each
visit. Accordingly, the primary origination channel was to substitute Target
VISA for the Target Guest Cards of qualifying accountholders. Target VISA is
accepted by Target Corporation Stores as well as by other merchants and
service providers throughout the VISA network.
In the fall of 2001, Target VISA was rolled out nationally with the
conversion of approximately 4 million qualifying and primarily active Target
Guest Card accounts to Target VISA accounts. In conjunction with the national
rollout, RNB and Target Corporation introduced chip technology for Target
VISA. Target Corporation anticipates that chip technology will be used to
improve marketing and loyalty programs as well as security for online
transactions.
Since the national rollout, expanding existing relationships with Target
stores' higher credit quality guests continues to remain the focus of Target
VISA. New Target VISA accounts have been generated through applications
initially offered at Target stores and online through Target Corporation
websites. In addition, certain existing Target Guest Card accounts, which meet
applicable underwriting standards, have also been converted to Target VISA
accounts. In the future, RNB expects to continue to originate new Target VISA
accounts and may convert select existing Target Guest Card accounts to Target
VISA accounts as these accounts meet Target VISA underwriting standards. As a
result, Target VISA accounts are expected to constitute a greater portion of
the accounts designated to have their receivables included in the trust.
Target VISA cardholders may currently use their Target VISA for purchases
and cash advance transactions. Cardholders make purchases when using their
Target VISA to buy goods or services. A cash advance is made when Target VISA
is used to obtain cash from a financial institution or an automated teller
machine to draw against the cardholder's credit line. RNB currently limits the
amount of credit available for cash advances on Target VISA accounts to 15% of
the total credit line. RNB may from time to time offer additional credit card
features.
Private Label Credit Card Business
Target Corporation Stores have offered private label credit to their
guests for over a century. Currently, private label credit cards are used to
purchase products from Target Corporation Stores and online through Target
Corporation websites. Although Target Corporation Stores accept VISA,
MasterCard, Discover Card and American Express, transactions on private label
credit cards represented approximately 13% of the total sales of Target
Corporation Stores in 2001. Private label credit cards are offered under the
brand name of the Target Corporation Store through which the account was
opened. Cards may bear the insignia of Target, Marshall Field's or Mervyn's.
Customers may have accounts from more than one Target Corporation Store, and
each private label credit card can also be used for purchases at any of the
Target Corporation Stores. RNB may test and introduce new private label credit
card products from time to time. Credit cards issued by RNB in the future may
contain terms different from RNB's current credit cards.
Marketing Programs and Account Origination
Account Origination. Over 97% of all new account originations in 2001
were the result of in-store origination channels. The major vehicle that RNB
uses for in-store account origination is "instant credit." Applicants provide
information, including name, address, and social security number, which allows
the credit underwriting department to access their credit history and to score
their applications. For identification purposes, applicants must also present
a valid picture identification and major credit card. In Target stores, store
team members obtain this information and enter it into a terminal located at
the guest service desk when originating new Target Guest Card accounts or
Target VISA accounts. In Marshall Field's and Mervyn's stores, the store team
members enter the same information directly into the point-of-sale terminal.
Another vehicle that RNB uses for in-store account origination is the use of
"Take-One" applications. RNB also originates new accounts through online
applications via store websites and pre-approved account solicitation.
New Accounts. Application information on all new accounts is entered into
a new account processing system. Each application is source-coded to allow
future tracking of activation rates, sales trends, delinquencies and
charge-offs for various new account sources and promotional programs. Opening
a new credit card account may entitle the cardholder to discounts on
purchases.
For approved applications, the account is automatically established and a
credit card is generated and mailed to the new cardholder. For instant credit
accounts, a temporary card is issued which can be used immediately for
purchases.
Stimulation of Account Usage. Each of the Target Corporation Stores
operates various account loyalty and purchase frequency reward programs.
Target Corporation encourages Target Guest Card and Target VISA usage by
contributing a specified percentage of cardholder purchases to the
cardholder's designated K-12 school. Account usage is stimulated for Target
VISA, Marshall Field's and Mervyn's by rewarding cardholders with discounts on
future purchases. Additional account loyalty and reward programs may be used
in the future.
RNB's Underwriting Processes and Authorizations
Account Underwriting and Credit Guidelines. RNB develops or adopts
systems and specifications for underwriting and authorizations. It contracts
with Target Corporation for services, including the implementation of these
systems and of the underwriting and authorization specifications. RNB's
underwriting process involves the purchase of credit bureau information. RNB
obtains credit reports from Experian, Inc., Equifax Credit Information
Services, Inc. or Trans Union Corp. based on the applicant's mailing address
and the perceived strength of each credit bureau service in that geographic
region. The information obtained is electronically fed into proprietary
scoring models developed for RNB to calculate a credit score. This proprietary
score is used along with other bureau information to make approval and credit
limit assignment decisions. RNB periodically analyzes performance trends of
accounts originated at different score levels as compared to projected
performance, and adjusts the minimum score or the opening credit limit to
manage risk. Different scoring models may be used depending upon bureau type,
account source and type of credit card. All new Target VISA accounts are
underwritten by RNB using FICO -- Fair, Isaac & Co., Inc. -- scores and
proprietary scoring models. All Target VISA accounts converted from Target
Guest Card accounts are re-underwritten by RNB using updated credit bureau
information.
Ongoing Credit Monitoring. To control the quality of its portfolio of
credit cards, RNB uses an adaptive control system in conjunction with
statistical scoring models to evaluate each active account on its monthly
cycle date. The models are used with other factors such as delinquency status,
time on books and utilization to evaluate whether or not credit limits should
be increased or decreased. If a credit limit change is warranted, based on
this strategy, the change is made effective immediately.
Up to three types of scoring models are used for credit monitoring and
strategy settings:
o Internal behavior score: Incorporates payment and usage behavior to
predict the likelihood of an account going three or more cycles past
due over the next six to twelve months. Internal models are customized
at the product level to evaluate specific factors and their respective
weighting. Scores are refreshed every month at billing.
o External credit bureau score (FICO): Reviews utilization, payment
patterns and other behavior with external credit grantors to predict
the likelihood of an account going two or more cycles past due over
the next twelve months. All active accounts within the Target VISA
portfolio receive refreshed scores on a quarterly basis and the active
private label credit card accounts are refreshed semi-annually.
o External bankruptcy score: Includes transactional information from
other credit card issuers to predict the likelihood of an
accountholder filing for bankruptcy within the next twelve months. All
active accounts within the Target VISA portfolio receive refreshed
scores on a monthly basis. In addition, Target VISA accounts
previously assigned low-risk status that have migrated to high-risk
status are refreshed on a daily basis.
Credit monitoring also includes segmentation and trend analysis to
identify opportunities that may increase profitability. Standard analysis
includes acquisition channel performance, risk score migration, utilization
patterns, geographic variances and early stage delinquency trends.
Opportunities are evaluated to determine the impact on both credit losses and
revenues before they are implemented.
Credit Authorization. For private label credit cards, point-of-sale
terminals in Target Corporation Stores have an online connection with RNB's
credit authorization system and allow real-time updating of accounts. Every
sales transaction is passed through a proprietary authorization system which
looks at a variety of behavioral and risk factors to determine whether each
transaction should be declined, approved or referred for further review.
For Target VISA, point-of-sale terminals in Target Corporation Stores
have an online connection with a TSYS (Total System Services, Inc.)
authorization system and allow account authorization decisions to be made in
real-time. The system looks at a variety of behavioral factors and predictive
scoring models to set over the credit limit allowances that will be in effect
for an account for a period of time until the account's status changes.
Target VISA also incorporates authorization settings that limit the
transaction amount, daily cash advances, and daily total purchases.
Fraud Investigation. Target Financial Services researches and
investigates different types of fraud such as fraud rings, new account fraud
and transactional fraud. RNB has developed a proprietary fraud model to
identify new account fraud. In addition, RNB uses several neural and rules
based systems for detecting transactional fraud. The neural systems are able
to identify transaction purchase behavior which falls outside a cardholder's
established pattern while the rules based systems focus on historical
fraudulent patterns.
Servicing of Accounts
RNB performs the majority of full application new account data entry,
review of new account worklists, all billing statement preparation and
mailing, the production and mailing of credit cards, the mailed communication
of adverse credit decisions, and the mailing of collection letters at its
offices in Sioux Falls, South Dakota. Credit card production and mailing of
Target VISA are also performed at Target Financial Services' facility in
Tempe, Arizona. Credit card production at both sites is performed in a secured
environment, including a separately alarmed secure area and audit procedures
that are designed to maintain an accurate count of all cards produced, stored,
destroyed and mailed.
An internal credit system supports the private label credit card accounts
by: housing all guest account information, providing data interfaces for guest
service and collections functions, enabling various credit account management
functions, such as automated bill calculation and generation, and interfacing
with other key systems. Such systems include Accounts Receivable, Collections,
Credit Authorization, Point-of-Sale and Remittance Processing. These
interfaces facilitate all key account maintenance and reconciliation
functions. TSYS is currently under contract to provide similar account
maintenance functions for Target VISA accounts.
RNB sends monthly billing statements to cardholders. Statement mailing is
highly automated, utilizing pre-sorting, bar coding and an on-site postal
representative to increase efficiency. The billing statements present the
total amount due and show the allocation among current fees, current finance
charges, and the minimum payment due. Under the account agreement and as
allowed by law, late fees, returned check fees and other applicable fees may
also be added to a cardholder's outstanding balance. No issuance or annual
fees are presently charged to any cardholders. The processing of cardholder
remittances is serviced by Target Financial Services in Minneapolis, Minnesota
using automated payment processing equipment and systems.
Terms of Accounts
The annual periodic finance charge rate generally is a fixed rate which
ranges from 21.0% to 21.6% for private label credit cards and from 9.9% to
18.9% for purchases and from 18.9% to 21.9% for cash advances for Target VISA.
RNB may change its finance charge rates at any time at its discretion, subject
to applicable law. Late payment fees of $25-- on private label credit card
accounts-- and $29-- on Target VISA accounts-- are assessed each month on
accounts that are delinquent in payment. In addition to late fees, the annual
periodic finance charge rate may increase if the account is delinquent. RNB
from time to time tests different rate structures.
Finance charges for RNB credit card accounts are calculated by
multiplying the daily outstanding balance during a billing period by the daily
periodic rate and adding these daily calculations together, subject to a
minimum finance charge. Periodic finance charges on Target VISA cash advances
are assessed from the date of the advance with no grace period. All other
periodic finance charges are assessed from the date of purchase, although a
grace period of approximately 25 to 30 days applies on purchases if the
account is paid in full by the due date.
The private label credit card accounts generally have a minimum payment
of the greater of $10 or 5% of the outstanding balance. Currently, some Target
Guest Card accounts have a minimum payment of the greater of $20 or 10% of the
outstanding balance. The Target VISA accounts have a minimum payment of the
greater of $10 or 2.5% of the outstanding balance.
Delinquency and Collections Procedures for RNB Credit Cards
Efforts to collect delinquent receivables are made for RNB by the Target
Financial Services collection department, collection agencies and outside
attorneys. The collection department consists of approximately [600] full-time
equivalents. New collectors undergo training which includes courses in
professional debt collection, collection laws and regulations and negotiating
skills. These courses are also available on a "refresher" basis for
experienced collectors. Approximately [4,000] accounts per month are referred
to various law firms to assist in collection efforts.
An account is considered delinquent if the minimum payment due is not
received by the billing due date. At that time, the account is given a status
of one day delinquent. Under current policies, a message requesting payment is
printed on a cardholder's billing statement after a scheduled payment has been
missed. Soon after an account becomes delinquent, a proprietary collection
model automatically scores the risk of the account and assigns a collection
strategy to the account. The strategy dictates the contact schedule and
collections priority for the account.
Accounts which become 180 days delinquent are charged off. However,
subject to regulatory standards, RNB has the ability, but not the obligation,
to re-age accounts during delinquency if the obligor demonstrates a
willingness and ability to repay by making at least three consecutive minimum
payments and other conditions are satisfied. When RNB receives notice of the
bankruptcy of an obligor for an account, that account is charged off at the
beginning of that account's next billing cycle.
The Trust Portfolio
General
The trust portfolio includes credit card receivables generated through
accounts originated by RNB that TRC has designated as trust accounts.
The trust accounts consist of:
o accounts which were designated as trust accounts when the trust was
initially established,
o Automatic Additional Accounts designated upon creation as trust
accounts since the establishment of the trust, and
o Supplemental Accounts which have been designated as trust accounts
after they were created and since the establishment of the trust.
All new accounts originated since the establishment of the trust have
been designated as Automatic Additional Accounts. To date, no Supplemental
Accounts have been designated as trust accounts. TRC is permitted to designate
accounts, provided that certain conditions are satisfied, and at times is
required to designate accounts, the receivables of which will be added to the
trust. TRC can designate accounts, the receivables of which will be removed
from the trust, if the conditions to removal are satisfied. As a result, the
composition of the trust is expected to change over time.
The following information reflects the historical performance and
composition of the trust portfolio of credit card accounts. For the "Principal
Receivables Outstanding", "Delinquency Experience", "Charge Off Rate
Experience", "Principal Payment Rate Experience" and "Trust Portfolio Yield
Experience" tables below, "As of Year End" refers to the last day of Target
Corporation's December fiscal month and "For the Year Ended" means the annual
period ending on the last day of Target Corporation's December fiscal month.
The last day of Target Corporation's December fiscal month for Year Ended 2002
means January 4, 2003, for Year Ended 2001 means January 5, 2002, and for Year
Ended 2000 means December 30, 2000.
Principal Receivables Outstanding
The following table provides the amount of principal receivables
outstanding as of the indicated dates. In the following table:
o "Principal Receivables Outstanding" means the aggregate amount of
principal receivables outstanding at the end of the period shown.
Principal Receivables Outstanding
for Trust Portfolio
(Dollars in Thousands)
As of Year End,
2002 2001 2000
Principal Receivables Outstanding......
Delinquency Experience
The following table provides the delinquency experience for the trust
portfolio as of the indicated dates. In the following table:
o "Number of Days Delinquent" means the number of days following the
original billing due date. For example, 30 to 59 days delinquent means
that the minimum payment has not been received and that between 30 and
59 days have elapsed since the original billing due date,
o "Delinquent Amount" represents the outstanding amount of total
receivables that are delinquent in each delinquency category at the
end of the period shown, and
o the percentages result from dividing the "Delinquent Amount" by the
total receivable balances at the end of the month.
Delinquency Experience
for Trust Portfolio
(Dollars in Thousands)
As of Year End,
---------------------------------------------------------------------------------------------
2002 2001 2000
--------------------------- ----------------------------- -----------------------------
Number of
------------------------------- Delinquent Delinquent Delinquent
Days Amount % Amount % Amount %
Delinquent --------------- -------- ----------------- -------- ----------------- --------
30 to 59 Days............... $ 107,654 1.75% $ 66,267 1.58% $ 60,064 1.88%
60 to 89 Days............... 75,259 1.22 41,694 1.00 36,739 1.15
90 Days or More............. 152,048 2.46 91,288 2.18 77,133 2.41
Total.................. $ 334,961 5.43% $ 199,249 4.76% $ 173,936 5.44%
==============================================================================================================================
Charge-Off Rate Experience
The following table provides the highest, lowest and average monthly
gross and net charge-off rates for the trust portfolio during any month in the
periods shown. The average monthly gross and net charge-off rate for all
months during the periods shown, in each case, is calculated as an arithmetic
average of the gross or net charge-off rate for each month during the
indicated period. In the following table:
o "Gross Charge-Off Rates" are calculated as the amount of gross
charge-offs for each month expressed as an annualized percentage of the
total amount of Principal Receivables in the trust as of the first day
of that month.
o The amount of gross charge-offs for any month is the amount of
charged-off principal receivables recorded in the month.
o "Net Charge-Off Rates" are calculated as the amount of net charge-offs
for each month expressed as an annualized percentage of the total amount
of Principal Receivables in the trust as of the first day of that month.
o The amount of net charge-offs for any month is the amount of gross
charge-offs for that month, net of any recoveries from earlier
charge-offs on principal receivables.
Charge-Off Rate Experience
for Trust Portfolio
For the Year Ended,
2002 2001 2000
Highest Monthly Gross Charge-Off Rate.................. % % %
Lowest Monthly Gross Charge-Off Rate................... % % %
Average Monthly Gross Charge-Off Rate.................. % % %
Highest Monthly Net Charge-Off Rate.................... % % %
Lowest Monthly Net Charge-Off Rate..................... % % %
Average Monthly Net Charge-Off Rate.................... % % %
----------------------------------------------------------------------------------------------------------
Charge-offs depend on a variety of factors, including:
o general economic conditions and trends in consumer bankruptcy filings,
o underwriting policies and standards,
o the mix of credit card products in the trust portfolio,
o terms and conditions of the accounts, and
o growth and maturity of the portfolio.
As the Target VISA portfolio continues to grow and mature, charge-off
patterns for the total trust portfolio may change. As a result, this table
does not necessarily indicate the future charge-off rate experience of the
trust portfolio at any later time.
Principal Payment Rate Experience
The following table provides the highest and lowest cardholder monthly
principal payment rates for the trust portfolio during any month in the
periods shown and the average cardholder monthly principal payment rate for
all months during the periods shown, in each case calculated as an arithmetic
average of the principal payment rate for each month during the indicated
period. In the following table:
o "Principal Payment Rates" are calculated as principal payments
collected during each month as a percentage of the total amount
of Principal Receivables in the trust as of the first day of
that month.
Principal Payment Rate Experience
for Trust Portfolio
For the Year Ended,
2002 2001 2000
Highest Monthly Principal Payment Rate............... % % %
Lowest Monthly Principal Payment Rate................ % % %
Average Monthly Principal Payment Rate............... % % %
Trust Portfolio Yield Experience
------------------------------------------------------------------------------------------------------------
The following table provides the highest and lowest monthly Trust
Portfolio Yields during any month in the periods shown and the average monthly
Trust Portfolio Yield for all months during the periods shown, in each case
calculated as an arithmetic average of the Trust Portfolio Yield for each
month during the indicated period. In the following table:
o "Trust Portfolio Yield" means for any month, the annualized percentage
equivalent of a fraction:
-- whose numerator equals the total collections of Finance Charge
Receivables for that month, and
-- whose denominator is the total amount of Principal Receivables in
the trust as of the first day of that month.
Trust Portfolio Yield Experience
for Trust Portfolio
For the Year Ended,
2002 2001 2000
Highest Trust Portfolio Yield........................ % % %
Lowest Trust Portfolio Yield......................... % % %
Average Trust Portfolio Yield........................ % % %
Characteristics of the Trust Portfolio
------------------------------------------------------------------------------------------------------------
The receivables and the accounts in the trust portfolio, at the end of
the day on _______, 2003:
o included $___________ of Principal Receivables and $___________ of
Finance Charge Receivables,
o had an average receivables balance of $___, excluding accounts with a
zero balance,
o had an average credit limit of $_____, of which the average receivables
balance represented approximately __%, excluding accounts with a zero
balance,
o had an average account age of __ months,
o had billing addresses in all 50 states, the District of Columbia and in
U.S. territories and possessions and on U.S. military bases, and less
than 1% of the obligors have billing addresses outside of the United
States,
o included the following percentages of total receivable balances: Target
VISA __%, Target Guest Card __%, Marshall Field's __% and Mervyn's __%,
and
o included the following percentages of total number of accounts: Target
VISA __%, Target Guest Card __%, Marshall Field's __% and Mervyn's __%.
The following tables summarize characteristics of the trust portfolio at
the end of the day on _______, 2003. Because the composition of the trust
portfolio may change in the future, these tables are not necessarily
indicative of the composition of the trust portfolio at any later time.
Composition by Account Balance
Trust Portfolio
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Account Balance Range Accounts of Accounts Outstanding Outstanding
---------------- ----------------- ------------------- -------------------
Credit Balance................. % $ %
$0.............................
$0.01 to $500.00...............
$500.01 to $1,000.00...........
$1,000.01 to $3,000.00.........
$3,000.01 to $5,000.00.........
$5,000.01 to $10,000.00........
Over $10,000.00................
---------------- ----------------- ------------------- -------------------
Total........................ % $ %
================ ================= =================== ===================
Composition by Credit Limit
Trust Portfolio
Credit Limit Range Number of Percentage Receivables Percentage
of Total of Total
Number Receivables
Accounts of Accounts Outstanding Outstanding
$0 to $250.99.................. % $ %
$251.00 to $500.99.............
$501.00 to $750.99.............
$751.00 to $1,000.99...........
$1,001.00 to $2,000.99.........
$2,001.00 to $2,500.99.........
$2,501.00 to $3,000.99.........
$3,001.00 to $3,500.99.........
$3,501.00 to $4,000.99.........
$4,001.00 to $4,500.99.........
$4,501.00 to $5,000.99.........
$5,001.00 to $6,000.99.........
$6,001.00 to $7,500.99.........
$7,501.00 to $10,000.00........
Over $10,000.00................
Total......................... ---------------- ------------------ ------------------
% $ %
==================================================================================================================
Composition by Period of Delinquency
Trust Portfolio
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Number of Days Delinquent Accounts of Accounts Outstanding Outstanding
Current........................ % $ %
1 to 29 days...................
30 to 59 days..................
60 to 89 days..................
90 days or more................
Total......................... ---------------- ------------------ ------------------
% $ %
==================================================================================================================
In the table "Composition by Account Age" below, "Account Age" is
determined by the number of months elapsed since the account was originally
opened. In the case of converted Target VISA accounts, the "Account Age" is
determined by the number of months elapsed since the original Target Guest
Card account opening date.
Composition by Account Age
Trust Portfolio
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Account Age Accounts of Accounts Outstanding Outstanding
Less than or equal to 1 year... % $ %
Over 1 year to 2 years.........
Over 2 years to 3 years........
Over 3 years to 5 years........
Over 5 years...................
Total......................... ---------------- ------------------ ------------------
% $ %
==================================================================================================================
In the table "Composition of Accounts by State" below, "Other" means not in excess of 5% of the percentage of
total number of accounts and includes U.S. military, U.S. territories and non-U.S. accounts. The states are ranked
by percentage of total receivables outstanding.
Composition of Accounts by State
Trust Portfolio
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
State Accounts of Accounts Outstanding Outstanding
California..................... % $ %
Michigan.......................
Illinois.......................
Texas..........................
Minnesota......................
Florida........................
Other..........................
Total......................... ---------------- ------------------ ------------------
% $ %
====================================================================================================================
Use of Proceeds
The net proceeds from the sale of the Class A Certificates [will be used
to make an initial deposit to the Collection Account in the amount of $_______
to be allocated to the Series 2003-__ certificates and applied as Available
Series 2003-__ Finance Charge Collections. The remainder] will be paid to TRC
and used for general corporate purposes.
Description of the Class A Certificates
The following is a summary of the material provisions of the Class A
Certificates. This summary is not a complete description of the terms of the
Class A Certificates. You should refer to "Description of the Certificates"
and "The Pooling and Servicing Agreement" in the attached prospectus as well
as the Pooling and Servicing Agreement and the Series 2003-__ Supplement for a
complete description.
General
The Class A Certificates will be issued under the Pooling and Servicing
Agreement and the Series 2003-__ Supplement. Each Class A Certificate
represents the right to receive payments from collections of Finance Charge
Receivables and Principal Receivables allocated to your series. In addition,
each Class A Certificate also represents the right to receive payments, if
available, from Excess Finance Charge Collections and Shared Principal
Collections allocated to your series.
Class A Certificateholders will also be entitled to amounts in the
Principal Funding Account and, if TRC, at its option, designates a Reserve
Account Funding Date, the Reserve Account and the series' share of amounts in
the Special Funding Account and the Collection Account, and investment
earnings on amounts in these accounts, as applicable.
The Class A Certificates will be issued in $1,000 denominations and will
be available only in book-entry form through DTC in the name of its nominee
Cede & Co. Your interest in the Class A Certificates will be represented
through financial institutions acting on their behalf as direct and indirect
participants in DTC. As a result, Clearstream and Euroclear will hold
positions on behalf of their customers or participants through their
respective depositaries, which will hold positions in accounts as DTC
participants. Custody accounts of investors who elect to hold certificates
through DTC will be credited with their holdings against payment in same-day
funds on the settlement date. Investors who elect to hold certificates through
Clearstream or Euroclear accounts will follow the settlement procedures that
apply to conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted periods. Class A Certificates will be
credited to securities custody accounts on the settlement date against payment
in same-day funds.
As described in the attached prospectus, as long as the Class A
Certificates are held in book-entry form, you will only be able to transfer
your Class A Certificates through the facilities of DTC. You will receive
payments and notices through DTC and its participants. Payments of interest
will be made on each Distribution Date, and payments of principal will be made
on the Class A Expected Final Payment Date and on any other Distribution Date
on which principal is to be paid, to Class A Certificateholders in whose names
certificates are registered on the Record Date, to the extent of available
funds.
The trust has also issued the Transferor Certificate and a Participation.
TRC owns the Transferor Certificate. RNB owns the Participation. TRC may
transfer the Transferor Certificate in whole or in part under the limitations
and conditions described in the Pooling and Servicing Agreement. See
"Description of the Certificates--The Transferor Certificate" and
"--Participations" in the attached prospectus.
Interest Payments
Class A Certificateholders will be entitled to receive from available
funds payment of Class A Monthly Interest plus Class A Carryover Interest on
the 25th day of each month, or if such day is not a business day, the next
business day-- each a Distribution Date-- that the Class A Certificates are
outstanding.
On each Distribution Date, you will receive an interest payment based on
the certificate rate for your Class A Certificates for the related Interest
Period, the outstanding principal balance of your Class A Certificates as of
the end of the prior month and the number of days in the related Interest
Period.
The Class A Certificates are floating rate securities and will bear
interest for each Interest Period at a rate determined by reference to
one-month LIBOR. The trustee will calculate the interest rate on the Class A
Certificates for each Interest Period on the applicable LIBOR Determination
Date. All determinations of interest by the trustee shall, in the absence of
manifest error, be conclusive for all purposes and binding on the Class A
Certificateholders. All percentages resulting from any calculation of the rate
of interest will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward. If
you do not receive your interest in full on any Distribution Date, you will be
entitled to receive a payment equal to the shortfall amount on the next
succeeding Distribution Date together with interest on such shortfall amount,
called Class A Carryover Interest, to the extent that there are funds
available to make that payment.
Interest payments on the Class A Certificates on each Distribution Date
will be funded from:
o the Floating Allocation Percentage of collections of Finance Charge
Receivables received during the preceding Monthly Period, plus
o other amounts treated as Available Series 2003-__ Finance Charge
Collections for that Monthly Period.
To the extent Available Series 2003-__ Finance Charge Collections are
insufficient to make the specified interest payment for your Class A
Certificates, Excess Finance Charge Collections allocated to your series will
be applied to cover the shortfall. See "--Application of Collections--Payment
of Interest, Fees and Other Items--Excess Finance Charge Collections."
The Required Amount referred to in this prospectus supplement means for
any Distribution Date, the shortfall, if any, in the amount of Available
Series 2003-__ Finance Charge Collections and Excess Finance Charge
Collections allocated to your series and available to make required payments
of Class A Monthly Interest, any Class A Carryover Interest and the Monthly
Servicing Fee. If for any Distribution Date there is a Required Amount, the
Principal Allocation Percentage of collections of Principal Receivables for
the Monthly Period preceding that Distribution Date, in an amount not to
exceed the Collateral Invested Amount, will be reallocated to pay the Required
Amount. These collections of Principal Receivables applied to cover the
Required Amount are referred to in this prospectus supplement as Reallocated
Collateral Principal Collections. Reallocated Collateral Principal Collections
will not be available to make principal payments on the Class A Certificates
and will result in a reduction in the Collateral Invested Amount.
See "--Reallocation of Cash Flows; Defaulted Receivables; Investor Charge-Offs."
Principal Payments
Class A Certificateholders are scheduled to receive the full amount of
their principal on the Class A Expected Final Payment Date. Principal may be
paid earlier if an Early Amortization Period begins. Final payment of
principal may be delayed if the rate of repayment of principal is slower than
expected or if this series is paired with another series or in certain other
circumstances. See "Risk Factors."
Principal deposits to the Principal Funding Account or payments on the
Class A Certificates on each Distribution Date with respect to the
Accumulation Period or an Early Amortization Period will be funded from:
o the Principal Allocation Percentage of collections of Principal
Receivables received during the preceding Monthly Period, plus
o other amounts treated as Available Series 2003-__ Principal Collections
for that Monthly Period.
To the extent Available Series 2003-__ Principal Collections are
insufficient to make the designated deposits or payments on your Class A
Certificates, Shared Principal Collections and, at the option of TRC, Shared
Transferor Principal Collections allocated to your series will be applied to
cover the shortfall. See "--Application of Collections--Payment of Principal."
Principal payments on the Collateral Interest will generally not be made
until the Class A Certificates have been paid in full. See "--Subordination."
Collections of Principal Receivables allocated to your series but not needed
to make payments to your series may be applied as Shared Principal Collections
for the benefit of other series.
Subordination
The Collateral Interest will be subordinated to the Class A Certificates.
The Collateral Interest may be in certificated or uncertificated form,
although holders of the Collateral Interest will be considered
certificateholders as such term is used in both this prospectus supplement and
the attached prospectus. At closing, the Collateral Interest will not have a
stated interest rate and will not be entitled to payments of interest.
Principal payments on the Collateral Interest will not begin until the Class A
Certificates have been paid in full unless:
o TRC requests a reduction of the Collateral Invested Amount during the
Revolving Period, and
o the Rating Agency Condition is satisfied.
The Collateral Invested Amount will be reduced by the amount of
Reallocated Collateral Principal Collections utilized to fund any Required
Amount. See "--Reallocation of Cash Flows; Defaulted Receivables; Investor
Charge-Offs." In addition, if on any Distribution Date there is a shortfall in
the amount of Available Series 2003-__ Finance Charge Collections and Excess
Finance Charge Collections available to cover the Investor Defaulted Amount,
the Collateral Invested Amount will be reduced by the amount of that
shortfall. See "--Reallocation of Cash Flows; Defaulted Receivables; Investor
Charge-Offs." Reductions in the Collateral Invested Amount may be reimbursed
from subsequent Available Series 2003-__ Finance Charge Collections and Excess
Finance Charge Collections.
Allocation Percentages
For each Monthly Period, the servicer will allocate collections of
Finance Charge Receivables, collections of Principal Receivables and the
Defaulted Amount among:
o your series,
o the interests of certificateholders of all other series issued and
outstanding,
o the Transferor's Interest, and
o the interests of the holders of any Participations.
Collections of Finance Charge Receivables and the Defaulted Amount will
be allocated to your series based on the Floating Allocation Percentage.
Collections of Principal Receivables will be allocated to your series based on
the Principal Allocation Percentage.
For any Monthly Period, the Floating Allocation Percentage is the
percentage equivalent of a fraction:
o whose numerator equals the Adjusted Invested Amount at the end of the
last day of:
(1) the immediately preceding Monthly Period, or in the case of the
first Monthly Period, the Closing Date, during the Revolving
Period or the Accumulation Period for collections of Finance
Charge Receivables and at all times for the Defaulted Amount,
and
(2) the Monthly Period before an Early Amortization Event occurs
during the Early Amortization Period for collections of Finance
Charge Receivables, and
o whose denominator equals:
(1) with respect to the Defaulted Amount, the sum of (a) the
Principal Receivables in the trust and (b) any amount on deposit
in the Special Funding Account at the end of the last day of the
Monthly Period used to determine the numerator, and
(2) with respect to collections of Finance Charge Receivables, the
greater of (a) the amount described above in (1) and (b) the sum
of the numerators used to calculate the applicable allocation
percentages for collections of Finance Charge Receivables for
all classes of all series and Participations then outstanding.
For any Monthly Period, the Principal Allocation Percentage is the
percentage equivalent of a fraction:
o whose numerator equals:
(1) during the Revolving Period, the Invested Amount at the end of
the last day of the immediately preceding Monthly Period, or in
the case of the first Monthly Period, the Closing Date, and
(2) during the Accumulation Period, the Invested Amount at the end
of the last day of the Revolving Period,
provided that on the date of issuance of any new series during
the Accumulation Period, this amount may be reduced by TRC, upon
receipt by the trustee of confirmation that the Rating Agency
Condition is satisfied, to an amount not less than the greater
of:
-- the Adjusted Invested Amount on that date, and
-- the amount that would result in a Principal Allocation Percentage
that when multiplied by collections of Principal Receivables for the
preceding Monthly Period would equal:
o the Class A Controlled Deposit Amount for that Monthly Period plus 10%
of the Class A Controlled Accumulation Amount or, if that date is on or
after the Class A Expected Final Payment Date and the Class A Invested
Amount has been paid in full, the Collateral Invested Amount, minus
o the amount of any available Shared Principal Collections for that
Monthly Period, and
(3) during an Early Amortization Period, the Invested Amount at the
end of the last day of the Revolving Period or, if less, the
last numerator used to calculate the principal allocation
percentage in the Accumulation Period, if any, and
o whose denominator equals the greater of: (1) if only one series is
outstanding:
(A) during the Revolving Period, the sum of (x) the Principal
Receivables in the trust and (y) the principal amount on
deposit in the Special Funding Account at the end of the
last day of the immediately preceding Monthly Period, and
(B) during the Accumulation Period and an Early Amortization
Period, the sum of (x) the Principal Receivables in the
trust and (y) the principal amount on deposit in the Special
Funding Account at the end of the last day of the Revolving
Period, and
(2) if more than one series is outstanding, the greater of:
(A) the sum of (x) the Principal Receivables in the trust and
(y) the principal amount on deposit in the Special Funding
Account at the end of the last day of the immediately
preceding Monthly Period, and
(B) the sum of the numerators used to calculate the principal
allocation percentages for all series and Participations
outstanding as of the date of determination.
The Floating Allocation Percentage and the Principal Allocation
Percentage are subject to adjustment upon the direction of the transferor,
pursuant to the Pooling and Servicing Agreement, to give effect to additions
of Additional Accounts.
Application of Collections
Payment of Interest, Fees and Other Items.
On each Distribution Date, Available Series 2003-__ Finance Charge
Collections for the related Monthly Period will be applied in the following
order:
o an amount equal to Class A Monthly Interest and Class A Carryover
Interest will be paid to Class A Certificateholders,
o an amount equal to the Monthly Servicing Fee and any unpaid Monthly
Servicing Fee from prior periods will be paid to the servicer,
o an amount equal to the Investor Defaulted Amount for that Distribution
Date will be treated as Available Series 2003-__ Principal Collections,
o an amount equal to any reduction in the Invested Amount due to
unreimbursed Investor Charge-Offs will be applied to reinstate the
Invested Amount and treated as Available Series 2003-__ Principal
Collections,
o an amount equal to Collateral Monthly Interest and Collateral Carryover
Interest, if any, will be paid to the holders of the Collateral
Interest,
o on each Distribution Date from and after the Reserve Account Funding
Date-- if any Reserve Account Funding Date has been established by TRC
at its option-- but before the date the Reserve Account is terminated,
an amount up to the excess, if any, of the Required Reserve Account
Amount over the Available Reserve Account Amount, will be deposited in
the Reserve Account, and
o the balance, if any, will constitute Excess Finance Charge Collections.
The following diagram provides you with an outline of the allocation of
Available Series 2003-__ Finance Charge Collections. This diagram is a
simplified demonstration of the allocation and payment provisions contained in
this prospectus supplement and the attached prospectus.
Application of Available Series 2003-__ Finance Charge Collections
---------------------------------------------------
|Available Series 2003-__ Finance Charge Collections|
---------------------------------------------------
|
|
---------------------------------------------------------|
|1. Class A Interest Payment |
|2. Monthly Servicing Fee |
|3. Investor Defaulted Amount |
|4. Reimbursement of reductions in the Invested |
| Amount due to Investor Charge-Offs |
|5. Interest Payment for Collateral Interest, if any |
|6. Optional funding of the Reserve Account
---------------------------------------------------------
|
|
-----------------------------------
|Excess Finance Charge Collections |
-----------------------------------
Excess Finance Charge Collections. On each Distribution Date, Excess
Finance Charge Collections allocated to Series 2003-__ from other series in
Group I will be applied to pay the shortfall arising from the excess, if any,
of the sum of:
o Class A Monthly Interest and Class A Carryover Interest,
o the Monthly Servicing Fee and any unpaid Monthly Servicing Fees from
prior periods,
o the Investor Defaulted Amount,
o unreimbursed Investor Charge-Offs,
o Collateral Monthly Interest and Collateral Carryover Interest, if any,
and
o if TRC, at its option, designates a Reserve Account Funding Date, the
amount to be funded in the Reserve Account, over
the Available Series 2003-__ Finance Charge Collections.
Excess Finance Charge Collections from Series 2003-__ will be applied in
the following order:
o to make payments to certificateholders of other series in Group I to the
extent of any shortfalls covered from Excess Finance Charge Collections,
o to make payments of any unpaid expenses or liabilities of the trust,
o as Excess Transferor Finance Charge Collections, and
o paid to TRC.
Payment of Principal.
Available Series 2003-__ Principal Collections will be applied on each
Distribution Date as described below:
Revolving Period. The Revolving Period begins on the Closing Date and
ends on the day before the Accumulation Period or Early Amortization Period
begins. During the Revolving Period no principal payments will be made to
Class A Certificateholders. On each Distribution Date during the Revolving
Period, Available Series 2003-__ Principal Collections will be treated as
Shared Principal Collections and may be used to make principal payments to
other series, except that if the Rating Agency Condition is satisfied in
connection with a requested reduction of the Collateral Invested Amount, those
amounts will first be used to reduce the Collateral Invested Amount to the
requested level.
Accumulation Period. The Accumulation Period will begin on the first day
of the [ ] Monthly Period unless postponed by the servicer as described in
"--Postponement of Accumulation Period," and will end on the earlier of:
o the date an Early Amortization Period begins, and
o the Series 2003-__ Termination Date.
During the Accumulation Period prior to the accumulation in the Principal
Funding Account of an amount equal to the Class A Invested Amount, Available
Series 2003-__ Principal Collections plus Shared Principal Collections and, at
the option of TRC, Shared Transferor Principal Collections, if any, allocated
to your series will be deposited in the Principal Funding Account on each
Distribution Date in an amount not to exceed the Class A Controlled Deposit
Amount or the Class A Adjusted Invested Amount.
On the Class A Expected Final Payment Date, the trustee will pay to Class
A Certificateholders the principal amount on deposit in the Principal Funding
Account. If an Early Amortization Event occurs during the Accumulation Period
and the Early Amortization Period begins, the amount on deposit in the
Principal Funding Account will be paid to Class A Certificateholders on the
first Special Payment Date.
During the Accumulation Period, after the accumulation in the Principal
Funding Account of an amount equal to the Class A Invested Amount, Available
Series 2003-__ Principal Collections plus Shared Principal Collections and, at
the option of TRC, Shared Transferor Principal Collections, if any, will be
applied to make principal payments to the holders of the Collateral Interest
until the Collateral Invested Amount is paid in full. Any remaining Available
Series 2003-__ Principal Collections will be treated as Shared Principal
Collections.
Early Amortization Period. An Early Amortization Period begins on the day
an Early Amortization Event is deemed to have occurred and ends on the Series
2003-__ Termination Date. During an Early Amortization Period, you will
receive payments of principal and interest on each Special Payment Date. See
"--Early Amortization Events" for additional discussion.
On each Special Payment Date during an Early Amortization Period:
o the Class A Certificateholders will be entitled to receive Available
Series 2003-__ Principal Collections, Shared Principal Collections and,
at the option of TRC, Shared Transferor Principal Collections, if any,
allocated to the Class A Certificates, until the earlier of:
-- the date the Class A Invested Amount has been paid in full, and
-- the__________ Distribution Date, and
o after payment in full of the Class A Invested Amount, holders of the
Collateral Interest will be entitled to receive Available Series 2003-__
Principal Collections for the related Monthly Period, Shared Principal
Collections and, at the option of TRC, Shared Transferor Principal
Collections, if any, until the Series 2003-__ Termination Date.
The average life and maturity of your certificates can be significantly
reduced if an Early Amortization Period begins.
You will receive the final payment of principal and interest on the Class
A Certificates no later than the __________ Distribution Date. After that date
the trust will have no further obligation to pay principal or interest on the
Class A Certificates.
The following diagram provides you with an outline of the application of
collections of Principal Receivables and amounts treated as collections of
Principal Receivables. This diagram is a simplified demonstration of the
allocation and payment provisions contained in this prospectus supplement and
the attached prospectus.
Application of Principal Collections
[Graphic omitted]
Postponement of Accumulation Period
The Accumulation Period is scheduled to begin 12 months prior to the
month in which the Class A Expected Final Payment Date occurs. However, the
servicer may elect to extend the Revolving Period and postpone the start of
the Accumulation Period. The servicer may make this election only if the
number of months needed to fund the Principal Funding Account to pay the Class
A Invested Amount in full by the Class A Expected Final Payment Date is less
than 12. In that event, the servicer may elect to postpone the start of the
Accumulation Period so that the number of months included in the Accumulation
Period prior to the month in which the Class A Expected Final Payment Date
occurs will be equal to or exceed the number of months determined by the
servicer to be required to fully fund the Class A Invested Amount on or prior
to the Class A Expected Final Payment Date. On the third business day before
each Distribution Date beginning in ________ until the Accumulation Period
begins, the servicer will determine the number of months expected to be
required to fully fund the Principal Funding Account and be able to pay the
Class A Invested Amount no later than the Class A Expected Final Payment Date.
In making this determination, the servicer is required to assume that:
o the principal payment rate will be no greater than the lowest monthly
principal payment rate for the previous 12 months,
o no additional series will be issued,
o the total amount of Principal Receivables will remain the same
throughout the Accumulation Period, and
o no Early Amortization Event will occur for any series.
The servicer will determine the length of the Accumulation Period on the
basis of:
o the monthly collections of Principal Receivables expected to be
allocable to all Principal Sharing Series during the Accumulation Period
for your series, and
o the amount of collections of Principal Receivables expected to be
distributable to holders of other Principal Sharing Series that are
expected to be in their accumulation or amortization periods during the
Accumulation Period for your series.
In addition, prior to the servicer making its initial determination of
the number of months in the Accumulation Period prior to the Class A Expected
Final Payment Date, TRC will determine whether or not it will utilize Shared
Transferor Principal Collections to fund the Principal Funding Account. If, at
its option, TRC elects to utilize Shared Transferor Principal Collections to
fund the Principal Funding Account, the servicer will include Shared
Transferor Principal Collections expected to be available to your series in
its determination of the number of months in the Accumulation Period prior to
the Class A Expected Final Payment Date and the length of the Accumulation
Period may be significantly shorter than it would have been had TRC elected
not to make Shared Transferor Principal Collections available to fund the
Principal Funding Account.
After making an election to postpone the start of the Accumulation Period
but before the Accumulation Period begins, the servicer may elect to further
postpone the start of the Accumulation Period or be required to extend the
Accumulation Period in accordance with the requirements described above. The
length of the Accumulation Period may not be less than one month.
Sharing of Excess Finance Charge Collections
Available Series 2003-__ Finance Charge Collections in excess of the
amount required to make deposits or payments for the certificates of your
series will be made available to other series included in Group I whose
allocation of collections of Finance Charge Receivables and other amounts are
not sufficient to make their required deposits or payments. If Available
Series 2003-__ Finance Charge Collections are insufficient to make required
deposits or payments for the certificates of your series, you will have access
to Excess Finance Charge Collections from other series in Group I. Each series
that is part of Group I and that has a shortfall will receive a share of the
total amount of Excess Finance Charge Collections available for that month
based on the amount of the shortfall for that series divided by the total
shortfall for all series in Group I for that same month. For a description of
how Excess Finance Charge Collections are allocated to Series 2003-__, see
"--Application of Collections--Payment of Interest, Fees and Other
Items--Excess Finance Charge Collections" and for a more detailed description
of the sharing of Excess Finance Charge Collections, see "Description of the
Certificates--Sharing of Excess Finance Charge Collections and Excess
Transferor Finance Charge Collections" in the attached prospectus.
Shared Principal Collections
Your series is a Principal Sharing Series. Available Series 2003-__
Principal Collections in excess of:
o during the Revolving Period, if the Rating Agency Condition is
satisfied, any amounts applied to reduce the Collateral Invested Amount,
o during the Accumulation Period, the Class A Controlled Deposit Amount
until the Class A Expected Final Payment Date and thereafter the
Collateral Invested Amount, and
o during an Early Amortization Period, the Invested Amount of your series,
will be made available to other Principal Sharing Series as Shared Principal
Collections. If Available Series 2003-__ Principal Collections are
insufficient to make required principal deposits or payments for your series,
you will share in the excess available from other Principal Sharing Series.
Each Principal Sharing Series that has a Principal Shortfall with respect to
any month will receive a share of the total amount of Shared Principal
Collections available for that month based on the amount of the Principal
Shortfall for that series divided by the total Principal Shortfalls for all
Principal Sharing Series for that month.
If Shared Principal Collections exceed shortfalls for all Principal
Sharing Series, the trustee will distribute the remaining amount to TRC to the
extent that the Transferor Amount-- excluding the interest represented by any
Supplemental Certificate-- exceeds the Required Retained Transferor Amount or
deposit it into the Special Funding Account.
Shared Principal Collections may be used to cover Principal Shortfalls
for the Series 2003-__ certificates and, in specified circumstances, may allow
the length of the Accumulation Period to be shortened. See "-- Postponement of
Accumulation Period." This type of reallocation of collections of Principal
Receivables does not result in a reduction in the Invested Amount of the
series to which the collections were initially allocated. There can be no
assurance that there will be any Shared Principal Collections for any Monthly
Period.
If Shared Principal Collections are not sufficient to cover Principal
Shortfalls for your series, TRC may elect to apply Shared Transferor Principal
Collections to the remaining Principal Shortfalls.
Excess Transferor Finance Charge Collections and Shared Transferor
Principal Collections
Excess Transferor Finance Charge Collections will consist of:
o collections of Finance Charge Receivables and other amounts treated as
collections of Finance Charge Receivables for any Monthly Period
allocable to the Transferor's Interest remaining after payments to
holders of any Supplemental Certificates, and
o collections of Finance Charge Receivables and other amounts treated as
collections of Finance Charge Receivables for any Monthly Period
allocated to each series but not used to make payments to any series.
Excess Transferor Finance Charge Collections will be used to fund
investment earnings shortfalls during the Accumulation Period associated with
amounts on deposit in the Principal Funding Account and will be deposited in
the Collection Account on each Transfer Date to be applied as Available Series
2003-__ Finance Charge Collections.
Shared Transferor Principal Collections will consist of:
o collections of Principal Receivables and other amounts treated as
collections of Principal Receivables for any Monthly Period allocated to
the Transferor's Interest remaining after payments to the holders of any
Supplemental Certificates,
o collections of Principal Receivables and other amounts treated as
collections of Principal Receivables for any Monthly Period allocated to
any series and not applied to make principal deposits or payments for
any outstanding series, and
o any Excess Transferor Finance Charge Collections remaining after being
applied as specified in the applicable Supplement for each outstanding
series.
Prior to the servicer initially determining the number of months expected
to be required to fully fund the Principal Funding Account in order to pay the
Class A Invested Amount no later than the Class A Expected Final Payment Date,
TRC will determine whether Shared Transferor Principal Collections will be
applied to fund the Principal Funding Account during the Accumulation Period.
If TRC elects to make Shared Transferor Principal Collections available to
fund the Principal Funding Account, those amounts will be applied to cover any
Principal Shortfalls not covered by Shared Principal Collections during the
Accumulation Period. In addition, at the option of TRC, Shared Transferor
Principal Collections may be applied for the benefit of your series during an
Early Amortization Period. For a more detailed description of Excess
Transferor Finance Charge Collections and Shared Transferor Principal
Collections, see "Description of the Certificates--Sharing of Excess Finance
Charge Collections and Excess Transferor Finance Charge Collections" and
"--Shared Principal Collections and Shared Transferor Principal Collections"
in the attached prospectus and for a description of how Shared Transferor
Principal Collections may be allocated, see "--Application of
Collections--Payment of Principal--Accumulation Period" and "--Payment of
Principal--Early Amortization Period" in this prospectus supplement.
Reallocation of Cash Flows; Defaulted Receivables; Investor Charge-Offs
On each Distribution Date for which the servicer determines there is a
Required Amount, the Principal Allocation Percentage of collections of
Principal Receivables for the Monthly Period preceding that Distribution Date
will be reallocated in an amount not to exceed the lesser of the Required
Amount and the Collateral Invested Amount. Those amounts that are reallocated
are referred to in this prospectus supplement as Reallocated Collateral
Principal Collections. The Collateral Invested Amount will be reduced by the
amount of Reallocated Collateral Principal Collections.
On or before the third business day before each Distribution Date, the
servicer will calculate the Investor Defaulted Amount for your series for the
immediately preceding Monthly Period. The Investor Defaulted Amount represents
the investors' share of Principal Receivables charged-off as uncollectible.
The Investor Defaulted Amount for each Monthly Period will be paid from
Available Series 2003-__ Finance Charge Collections and Excess Finance Charge
Collections from other series allocated to Series 2003-__. If on any
Distribution Date, the Investor Defaulted Amount exceeds the amount of
Available Series 2003-__ Finance Charge Collections and Excess Finance Charge
Collections allocated to Series 2003-__ applied to cover the Investor
Defaulted Amount, then the Collateral Invested Amount will be reduced by the
amount of that excess.
If a reduction as a result of an unfunded Investor Defaulted Amount would
cause the Collateral Invested Amount to be a negative number, then:
o the Collateral Invested Amount will be reduced to zero, and
o the Class A Invested Amount will be reduced by the amount by which the
Collateral Invested Amount would have been reduced below zero.
Any reductions in the Collateral Invested Amount or Class A Invested
Amount as a result of Reallocated Collateral Principal Collections or to cover
the unfunded Investor Defaulted Amount are collectively referred to as an
Investor Charge-Off and may have the effect of reducing the percentage of
collections of Finance Charge Receivables and collections of Principal
Receivables allocated to your series. If the Collateral Invested Amount is
reduced to zero, Class A Certificateholders will bear directly the credit and
other risks associated with their interests in the trust.
Reductions of the Collateral Invested Amount or the Class A Invested
Amount described above will be reimbursed, and the Collateral Invested Amount
or the Class A Invested Amount increased, on later Distribution Dates to the
extent of Available Series 2003-__ Finance Charge Collections and Excess
Finance Charge Collections from other series allocated to Series 2003-__
available for that purpose.
Principal Funding Account
The trustee will establish and maintain a Principal Funding Account into
which it will deposit Available Series 2003-__ Principal Collections and any
Shared Principal Collections and Shared Transferor Principal Collections, as
applicable, allocated to the Class A Certificateholders during the
Accumulation Period.
Amounts deposited in the Principal Funding Account will be used to pay
principal to Class A Certificateholders on the earlier of:
o the Class A Expected Final Payment Date, and
o if an Early Amortization Event occurs during the Accumulation Period,
the first Special Payment Date.
Amounts on deposit in the Principal Funding Account will be invested
until the following Distribution Date by the trustee in Eligible Investments.
Any Principal Funding Investment Proceeds will be withdrawn from the Principal
Funding Account and deposited in the Collection Account on each Distribution
Date to be applied as Available Series 2003-__ Finance Charge Collections.
Reserve Account
The trustee will establish and maintain a Reserve Account that may be
used to fund investment earnings shortfalls during the Accumulation Period
associated with amounts on deposit in the Principal Funding Account. TRC, at
its option, may designate a Reserve Account Funding Date. If TRC does not
designate a Reserve Account Funding Date, there will be no funding of the
Reserve Account for your series. If TRC designates a Reserve Account Funding
Date, on and after the Reserve Account Funding Date but before the date the
Reserve Account is terminated, the trustee will deposit into the Reserve
Account Available Series 2003-__ Finance Charge Collections and Excess Finance
Charge Collections allocated to Series 2003-__ until the account balance
equals the Required Reserve Account Amount.
TRC will invest money on deposit in the Reserve Account in Eligible
Investments. Interest and investment income in the Reserve Account in excess
of the Required Reserve Account Amount will be withdrawn on each Transfer Date
from the Reserve Account and deposited in the Collection Account for
application as Available Series 2003-__ Finance Charge Collections.
On each Transfer Date during the Accumulation Period, the servicer will
withdraw from the Reserve Account and apply as Available Series 2003-__
Finance Charge Collections the lesser of:
o the amount available to be withdrawn from the Reserve Account, and
o the Principal Funding Investment Shortfall for that Transfer Date.
Upon the earliest to occur of:
o the date the Class A Invested Amount is paid in full,
o the first Transfer Date with respect to an Early Amortization Period,
and
o the Class A Expected Final Payment Date,
the trustee will withdraw from the Reserve Account and apply as Available
Series 2003-__ Finance Charge Collections all amounts remaining in the Reserve
Account and the Reserve Account will be terminated.
Transfer of the Collateral Interest
TRC will initially retain the Collateral Interest in certificated form.
In the future, TRC may sell all or a portion of the Collateral Interest in
certificated or uncertificated form. If TRC does sell the Collateral Interest,
TRC will enter into an agreement with the trustee that will specify the
interest rate for the Collateral Interest as well as other relevant
provisions. TRC can only sell the Collateral Interest if:
o TRC notifies the trustee, the servicer and the rating agencies of the
proposed transfer of the Collateral Interest,
o the transfer satisfies the Rating Agency Condition,
o no Early Amortization Event has occurred before the transfer,
o TRC delivers an officer's certificate to the trustee stating that the
transferor believes that the transfer will not cause an Early
Amortization Event to occur, and
o the transferor delivers a tax opinion to the trustee regarding the
transfer.
Regardless of whether the Collateral Interest is sold in certificated or
uncertificated form, any holder of the Collateral Interest will be treated as
a certificateholder for the purpose of this prospectus supplement and the
attached prospectus.
Issuance of Additional Certificates
During the Revolving Period, the transferor may, subject to certain
conditions, cause the trustee to issue additional Class A Certificates. When
issued, the additional Class A Certificates will be identical in all material
respects to the other outstanding certificates and will be entitled to the
benefits of the Pooling and Servicing Agreement and the Series 2003-__
Supplement.
Upon any additional issuance:
o the Class A Invested Amount and the Collateral Invested Amount shall be
increased proportionately, and
o the Class A Controlled Accumulation Amount shall be increased to reflect
the additional outstanding principal balance of Class A Certificates.
Additional Class A Certificates will only be issued upon satisfaction of
the following conditions:
o before the date they are issued, the transferor will have given the
trustee, the servicer and the rating agencies notice of the date and
terms of the additional issuance,
o the total amount of Principal Receivables will equal or exceed the
Required Principal Balance after the additional issuance,
o the additional issuance satisfies the Rating Agency Condition,
o the transferor will have delivered to the trustee a certificate which
states that, the transferor believes that the additional issuance will
not have a material adverse effect on the Class A Certificates or the
Collateral Interest; for the purposes of making this determination, a
dilution of voting rights will not constitute a material adverse effect
on the Class A Certificates, see "Risk Factors--You Will Have Limited
Control of Trust Actions" in this prospectus supplement,
o as of the date of the additional issuance, the amount of unreimbursed
Investor Charge-Offs shall be zero, and
o the transferor will have delivered to the trustee a tax opinion relating
to the additional issuance.
Paired Series
The Series 2003-__ certificates may be paired with one or more other
series. The paired series either:
o will be pre-funded with an initial deposit in a pre-funding account up
to the initial principal balance of that paired series, or
o will have a variable principal amount.
Any pre-funding account will be for the benefit of the paired series. As
principal is paid to the Series 2003-__ certificates, either:
o in the case of a pre-funded paired series, the amount of funds on
deposit in any pre-funding account for that paired series will be
released to TRC which is equal to, but not in excess of, such payment of
principal to the Series 2003-__ certificates, or
o in the case of a paired series with a variable principal amount, an
interest in that paired series up to the amount paid to your series may
be sold by the trust.
The invested amount of that paired series in the trust will increase by
an amount equal to the principal paid on your series. Upon payment of the
Series 2003-__ certificates, assuming no reductions on the invested amount due
to unreimbursed Investor Charge-Offs for any related paired series, the total
invested amount of the related paired series will have been increased by an
amount up to the total amount paid to Series 2003-__ certificateholders since
the issuance of that paired series.
Early Amortization Events
The following chart describes the Early Amortization Events for your
series and indicates whether each Early Amortization Event is an event which
automatically triggers an Early Amortization Period or an event which requires
the vote of a majority of the certificateholders or the trustee to trigger an
Early Amortization Period and whether the event will cause an early
amortization for all outstanding series issued by the trust.
Automatically
Requires a Automatically Causes an Early
Majority Vote of Causes an Early Amortization for
Certificateholders Amortization of all Series
Early Amortization Events or the Trustee Series 2003-__ Outstanding
--------------------------- ------------------ --------------- ------------------
1. The transferor fails to make a payment or |X|
deposit when required to under the Pooling and
Servicing Agreement or the Series 2003-__
Supplement within five business days after the
required date.
2. The sale, pledge, assignment or transfer by |X|
the transferor or grant of any lien on any
receivable other than as permitted under the
Pooling and Servicing Agreement or the Series
2003-__ Supplement.
3. RNB, TCC or the transferor fails to observe or |X|
perform any covenant or agreement and that
failure has a material adverse effect on you
and the failure continues unremedied for 60
days after written notice to the transferor.
4. RNB, TCC or the transferor makes a |X|
representation or warranty that was materially
incorrect when made and that continues to be
materially incorrect for 60 days after written
notice and as a result you are materially and
adversely affected, unless the transferor
accepts designation of the related receivables
as Ineligible Receivables.
5. The average of the Portfolio Yields for three |X|
consecutive Monthly Periods is less than the
average of the Base Rates for the same period.
6. TCC or the transferor fails to transfer |X|
receivables under Additional Accounts or
Participation Interests when required under
the Pooling and Servicing Agreement.
7. A Servicer Default occurs which has a material |X|
adverse effect on the Series 2003-__
certificates.
8. Any of RNB, TCC or any holder of the |X| |X|
Transferor Certificate or the transferor
admits in writing its inability to pay its
debts, or is subject to a bankruptcy
proceeding that with respect to the transferor
or any holder of the Transferor Certificate is
in effect and not dismissed for 60 days or
enters receivership or conservatorship or
otherwise becomes subject to an insolvency
event.
9. The transferor becomes unable to transfer |X| |X|
receivables to the trust in accordance with
the Pooling and Servicing Agreement.
10. The trust becomes subject to regulation as an |X| |X|
"investment company" under the Investment
Company Act.
11. The principal amount in the Special Funding |X|
Account as a percentage of the sum of (1) the
Principal Receivables plus (2) the principal
amount of the Special Funding Account, shall
equal or exceed 30% at the end of the last day
of three consecutive Monthly Periods.
12. The Transferor Amount is less than the |X| |X|
Required Retained Transferor Amount.
13. The Class A Invested Amount is not paid in |X|
full on the Class A Expected Final Payment
Date.
Servicing Fees and Expenses
The Monthly Servicing Fee for any Distribution Date means the amount
equal to one-twelfth of the product of:
o the Servicing Fee Rate, and
o an amount equal to:
-- the sum of the Class A Adjusted Invested Amount and the
Collateral Invested Amount at the end of the last day of the
Monthly Period second preceding the related Distribution
Date, minus
-- the product of the amount, if any, on deposit in the Special
Funding Account at the end of the last day of the Monthly
Period second preceding that Distribution Date and the
Floating Allocation Percentage for that Monthly Period,
except for the first Distribution Date for which the Monthly Servicing Fee
will be $_______.
The remainder of the servicing fee will be paid from amounts allocable to
the holder of the Transferor Certificate, holders of Participations or the
certificateholders of other series. The trust, the trustee or the Series
2003-__ certificateholders will not be liable for the share of the servicing
fee to be paid from amounts allocable to the holder of the Transferor
Certificate, holders of Participations or the certificateholders of any other
series.
Defeasance
On any date before an Early Amortization Period if:
o the transferor has deposited:
-- into the Principal Funding Account, an amount equal to the
outstanding principal balance of the Class A Certificates, and
-- if TRC, at its option, had designated a Reserve Account Funding
Date, into the Reserve Account, an amount equal to or greater than
the Class A Covered Amount, as estimated by the transferor, for the
period from the date of the deposit to the Principal Funding Account
through the Class A Expected Final Payment Date,
o the transferor has delivered to the trustee an opinion of counsel that
the deposit and termination of obligations will not result in the trust
being required to register as an "investment company" within the meaning
of the Investment Company Act and that following the deposit none of the
trust, the Reserve Account or the Principal Funding Account will be
considered to be an association, or publicly traded partnership, taxable
as a corporation,
o the transferor has delivered to the trustee, a certificate of an officer
of the transferor stating that it believes that the deposit and
termination of its obligations will not constitute an Early Amortization
Event or any event that would cause an Early Amortization Event to
occur, and
o the Rating Agency Condition has been satisfied,
then the Class A Certificates will no longer be entitled to the security
interest of the trust in the receivables and, except those set forth in the
first bullet point above, the other trust assets, and the Floating Allocation
Percentage and the Principal Allocation Percentage applicable to the
allocation to the Class A Certificateholders of collections of Principal
Receivables, Finance Charge Receivables and the Defaulted Amount will be
reduced to zero. If the Collateral Interest is outstanding but is not being
held by the transferor or an affiliate of the transferor on the date the
transferor decides to defease the Class A Certificates, the transferor will
have the option to defease the Collateral Interest, if certain additional
requirements are satisfied, so that the Collateral Interest will not be
entitled to the security interest of the trust in the receivables. If the
Collateral Interest is held by the transferor or an affiliate of the
transferor on the date the transferor defeases the Class A Certificates, the
Collateral Invested Amount will be reduced to zero.
Optional Termination
The Class A Certificates may be repurchased by the transferor at its
option on any Distribution Date on or after the Distribution Date on which the
Class A Invested Amount is less than or equal to 10% of the highest Class A
Invested Amount outstanding at any time. The purchase price for the Class A
Certificates will equal:
o the outstanding principal balance of the Class A Certificates, plus
o any accrued and unpaid interest on the outstanding principal balance of
the Class A Certificates through the day preceding the Distribution Date
on which the repurchase occurs at the applicable Class A Certificate
Rate.
Purchase of Class A Certificates by the Transferor
The transferor may purchase Class A Certificates in the secondary market
and request that the trustee cancel those Class A Certificates and reduce the
Class A Invested Amount by a corresponding amount.
Series Termination
RNB will solicit bids for the sale of some of the Principal Receivables
together with the related Finance Charge Receivables if the Invested Amount is
greater than zero on the Distribution Date two months before the __________
Distribution Date. The amount of receivables to be sold will not be more than
110% of the Invested Amount on the __________ Distribution Date. TRC will be
allowed to participate in, and to receive a copy of, each bid submitted in
connection with any bidding process. RNB will determine:
o which bid is the highest cash purchase offer, and
o the amount of collections that will be available in the Collection
Account on the ________ Distribution Date for distribution to you.
RNB will sell these receivables on the _________ Distribution Date to the
bidder who provided the highest cash bid and will deposit the proceeds in the
Collection Account for allocation to your certificates. You will incur a loss
if the proceeds of the sale, together with the amount of collections available
in the Collection Account, are less than the Class A Adjusted Invested Amount
plus accrued and unpaid interest on your certificates.
[Luxembourg Listing And] General Information
[Application has been made to list the Class A Certificates on the
Luxembourg Stock Exchange. We cannot guarantee that the application for the
listing will be accepted. You should consult with [Listing Agent], the
Luxembourg listing agent for the Class A Certificates, to determine whether
the Class A Certificates are listed on the Luxembourg Stock Exchange.
The trust will appoint a paying agent in Luxembourg for so long as the
Class A Certificates are outstanding. The name and address of the paying agent
in Luxembourg are set forth at the end of this prospectus supplement. If
definitive Class A Certificates are issued, the Luxembourg paying agent also
will act as co-transfer agent and co-registrar with respect to the definitive
Class A Certificates, and transfers of the definitive Class A Certificates may
be made through the facilities of such co-transfer agent. In addition, upon
maturity or final payment, definitive Class A Certificates may be presented
for payment at the offices of such paying agent in Luxembourg up to two years
after maturity or final payment.
The trustee will make available free of charge for review at the main
office of the listing agent for the trust in Luxembourg, [name of Listing
Agent], the information described under the section titled "Where You Can Find
More Information" in the attached prospectus.
In connection with the listing application, the Amended and Restated
Articles of Association and Bylaws of TRC, as well as legal notice relating to
the issuance of the Class A Certificates, will be deposited before listing
with the Chief Registrar of the District Court in Luxembourg (Greffier en Chef
du Tribunal d'Arrondissement de et a Luxembourg), where copies thereof may be
obtained upon request. Once the Class A Certificates have been listed, trading
of the Class A Certificates may be effected on the Luxembourg Stock Exchange.
The Class A Certificates have been accepted for clearance through the
facilities of DTC, Clearstream Banking, societe anonyme and Euroclear. The
CUSIP number for the Class A Certificates is ____________. The ISIN number for
the Class A Certificates is ____________. The Common Code number for the Class
A Certificates is ____________.
The transactions contemplated in this prospectus supplement and the
attached prospectus were authorized by a consent of [the Board of Directors of
[ ] as of [________], 2003].
The trust has no assets other than those described in this prospectus
supplement and the attached prospectus. Except as disclosed in this prospectus
supplement and the attached prospectus, [since , there has been no material
adverse change in the condition of the trust or [ ] that is material to the
issuance of the Class A Certificates.]
[Copies of the Pooling and Servicing Agreement, the Series 2003-__
Supplement, the Bank Receivables Purchase Agreement, the Receivables Purchase
Agreement, the documents listed in "Where You Can Find More Information" in
the attached prospectus and the reports to certificateholders referred to in
"Reports to Certificateholders" in the attached prospectus will be available
at the office of the listing agent in Luxembourg. Financial information
regarding TRC is included in the consolidated audited financial statements of
Target Corporation in its Annual Report for the fiscal year ended, February 2,
2002, which documents are also available without charge at the office of the
listing agent in Luxembourg. The trust does not prepare financial statements.]
On or before the first day of each Interest Period, the Luxembourg Stock
Exchange will be advised of the amount of interest which will accrue in
respect of the Class A Certificates for the related Interest Period. Also, on
or before the first day of each Interest Period, the trustee will make
available for review at the main office of the listing agent in Luxembourg a
notice specifying the information described above. In addition, the trustee
will publish or cause to be published in a daily newspaper in Luxembourg
(expected to be the Luxemburger Wort), as long as the rules of the Luxembourg
Stock Exchange so require, all notices other than notices with respect to
changes in the Class A Certificate Rate. In the event that definitive Class A
Certificates are issued, notices to holders of the Class A Certificates will
be published in a daily newspaper in Luxembourg (expected to be the
Luxemburger Wort) and given by mail to the addresses of such holders as they
appear in the certificate register.
TRC has taken all reasonable care to ensure that the information
contained in this prospectus supplement and the attached prospectus in
relation to the trust and the Class A Certificates is true and correct in all
material respects, and that in relation to the trust and the Class A
Certificates there are no facts, the omission of which would make misleading
any statement in this prospectus supplement or in the attached prospectus,
whether fact or opinion. TRC accepts responsibility accordingly. In addition,
no person is authorized to give any information or to make any representation
not contained in this prospectus supplement or in the attached prospectus and,
if given or made, such information or representation must not be relied upon.]
Underwriting
TRC has agreed to sell to the underwriters listed below the amount of
Class A Certificates indicated next to each underwriter's name. Each
underwriter has agreed to purchase that amount of the Class A Certificates.
Principal
Amount of
Class A
Underwriters Certificates
................................................
................................................
................................................
................................................
................................................
---------------
Total..................................... $
===============
The purchase commitment of the underwriters may be increased or ended if
any underwriter defaults. The price to public, underwriters' discounts and
commissions, the concessions that the underwriters may allow to some dealers,
and the discounts that those dealers may reallow to other dealers, each
expressed as a percentage of the outstanding principal balance of the Class A
Certificates, shall be as follows:
Selling
Underwriting Concessions Reallowance
Price to Discounts and Not to Not to
Public Commissions Exceed Exceed
-------- ------------- ----------- -----------
% % % %
Class A Certificates.......
After the offering is completed, TRC will receive the proceeds, after
deduction of the underwriting and other expenses, listed below:
Proceeds to
TRC
(as % of the
outstanding Underwriting
principal balance of Discounts
Proceeds to the Class A And
TRC Certificates) Commissions
----------- -------------------- ------------
Class A Certificates....... $ % $
After the public offering, the public offering price and other selling
terms may be changed by the underwriters. Additional offering expenses are
estimated to be $________.
Any underwriter may engage in the following transactions, to the extent
permitted by Regulation M under the Securities Exchange Act:
o over-allotment transactions, which involve syndicate sales in excess of
the offering size creating a syndicate short position,
o stabilizing transactions, which permit bids to purchase the Class A
Certificates so long as the stabilizing bids do not exceed a specified
maximum,
o syndicate covering transactions, which involve purchases of the Class A
Certificates in the open market after the distribution has been
completed to cover syndicate short positions, and
o penalty bids, which permit the underwriters to reclaim a selling
concession from a syndicate member when the Class A Certificates
originally sold by the syndicate member are purchased in a syndicate
covering transaction.
The use of the above transactions may cause the price of the Class A
Certificates to be higher than it would otherwise be. These transactions, if
or once commenced, may be stopped without notice.
Each underwriter has represented and agreed that:
o it has not offered or sold, and prior to the date which is six months
after the date of issue of the Class A Certificates, will not offer or
sell any Class A Certificates to persons in the United Kingdom, except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes
of the Public Offers of Securities Regulations 1995,
o if that underwriter is an authorized person under the Financial Services
and Markets Act 2000, it has promoted and will only promote to the
following persons: (i) persons falling within one of the categories of
"investment professionals" as defined in article 14(5) of the Financial
Services and Markets Act 2000 (Promotion of Collective Investment
Schemes) (Exemptions) Order 2001 and (ii) persons falling within any
categories of persons described in article 22(2) (a) to (d) of the
Financial Services and Markets Act 2000 (Promotion of Collective
Investment Schemes) (Exemptions) Order 2001,
o it has complied and will comply with all applicable provisions of the
Financial Services and Markets Act 2000 with respect to anything done by
it in relation to the Class A Certificates in, from or otherwise
involving the United Kingdom, and
o it has only communicated or caused to be communicated and it will only
communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of section 21 of the
Financial Services and Markets Act 2000) received by it in connection
with the issue or sale of any Class A Certificates in circumstances in
which section 21(1) of the Financial Services and Markets Act 2000 does
not apply to the trust.
TRC may indemnify the underwriters against liabilities which include
liabilities under the federal securities laws. TRC may also contribute to
payments the underwriters may be required to make on these liabilities.
The underwriters and their respective affiliates have engaged and may in
the future engage in investment banking or commercial banking transactions
with TCC, TRC and their affiliates.
Other Series Issued and Outstanding
The trust has previously issued four other series that remain
outstanding. The table below discusses the principal characteristics of these
series. For more specific information relating to any series, any prospective
investor should contact the transferor at (612) 696-3102. The transferor will
provide, without charge, to any prospective purchaser of the certificates, a
copy of the disclosure documents for any previous publicly issued series.
Series 1996-1 Variable Funding Certificates
Class A Invested Amount as of pricing date for
Series 2003-__....................................... $100,000,000
Class A Maximum Investment Amount....................... $100,000,000
Class B Invested Amount as of pricing date for 17,647,059
Series 2003-__....................................... $
Certificate Rate........................................ Variable
Commencement of Amortization Period..................... January 9, 2004 (subject to adjustment)
Annual Servicing Fee Percentage......................... 2%
Scheduled Series Termination Date....................... January 25, 2007 (subject to adjustment)
Series Issuance Date.................................... August 28, 1996
Series 1998-1
1. Class A Certificates
Class A Initial Invested Amount........................ $400,000,000
Certificate Rate....................................... 5.90%
Class A Controlled Accumulation Amount................. $200,000,000 (subject to adjustment)
Commencement of Accumulation Period.................... [May 4, 2003] (subject to adjustment)
Annual Servicing Fee Rate.............................. 2%
Credit Support......................................... Subordination of Series 1998-1 Class B
Certificates
Class A Expected Final Payment Date.................... July 25, 2003
Scheduled Series Termination Date...................... May 25, 2006
Series Issuance Date................................... August 12, 1998
2. Class B Certificates
Class B Initial Invested Amount........................ $122,875,817
Annual Servicing Fee Rate.............................. 2%
Scheduled Series Termination Date...................... May 25, 2006
Series Issuance Date................................... August 12, 1998
Series 2001-1
1. Class A Certificates
Class A Initial Invested Amount........................ $750,000,000
Certificate Rate....................................... one-month LIBOR + 0.11% p.a.
Class A Controlled Accumulation Amount................. $62,500,000 (subject to adjustment)
Commencement of Accumulation Period.................... July 6, 2003 (subject to adjustment)
Annual Servicing Fee Rate.............................. 2%
Credit Support......................................... Subordination of Series 2001-1 Class B
Certificates
Class A Expected Final Payment Date.................... July 26, 2004
Scheduled Series Termination Date...................... July 25, 2008
Series Issuance Date................................... August 22, 2001
2. Class B Certificates
Class B Initial Invested Amount........................ $250,000,000
Annual Servicing Fee Rate.............................. 2%
Scheduled Series Termination Date...................... July 25, 2008
Series Issuance Date................................... August 22, 2001
Series 2002-1
1. Class A Certificates
Class A Initial Invested Amount........................ $750,000,000
Certificate Rate....................................... three-month LIBOR + 0.125% p.a.
Class A Controlled Accumulation Amount................. $62,500,000 (subject to adjustment)
Commencement of Accumulation Period.................... May 27, 2006 (subject to adjustment)
Annual Servicing Fee Rate.............................. 2%
Credit Support......................................... Subordination of Series 2002-1 Class B
Certificates
Class A Expected Final Payment Date.................... June 25, 2007
Scheduled Series Termination Date...................... June 27, 2011
Series Issuance Date................................... July 2, 2002
2. Class B Certificates
Class B Initial Invested Amount........................ $250,000,000
Annual Servicing Fee Rate.............................. 2%
Scheduled Series Termination Date...................... June 27, 2011
Series Issuance Date................................... July 2, 2002
Glossary of Terms for Prospectus Supplement
"Accumulation Period" means the period described under "Description of
the Class A Certificates--Application of Collections--Payment of
Principal--Accumulation Period" during which collections of Principal
Receivables and other available amounts are first accumulated in a Principal
Funding Account for payment to Class A Certificateholders on the Class A
Expected Final Payment Date and then applied to make principal payments to the
holders of the Collateral Interest.
"Adjusted Invested Amount" means for any business day, an amount equal
to:
o the Class A Adjusted Invested Amount on that day, plus
o the Collateral Invested Amount on that day.
"Available Reserve Account Amount" equals for any Transfer Date, the
lesser of:
o the amount on deposit in the Reserve Account, before any withdrawals
from that account on that date, and
o the Required Reserve Account Amount on that date.
"Available Series 2003-__ Finance Charge Collections" means for any
Distribution Date, the sum of:
o the Floating Allocation Percentage of collections of Finance Charge
Receivables from the preceding Monthly Period,
o any Principal Funding Investment Proceeds and, if TRC, at its option,
designates a Reserve Account Funding Date, available investment earnings
on amounts on deposit in the Reserve Account,
o the amount of Excess Transferor Finance Charge Collections needed to
cover the Principal Funding Investment Shortfall, if any,
o [the initial deposit to the Collection Account in the amount of
$_____________ allocated for that Distribution Date], and
o any amount withdrawn from the Reserve Account-- if TRC, at its option,
had designated a Reserve Account Funding Date-- and deposited into the
Collection Account with respect to a Principal Funding Investment
Shortfall or upon termination of the Reserve Account.
"Available Series 2003-__ Principal Collections" means for any
Distribution Date, the sum of:
o the Principal Allocation Percentage of collections of Principal
Receivables from the preceding Monthly Period minus Reallocated
Collateral Principal Collections for that Monthly Period, and
o any amounts applied with respect to the Investor Defaulted Amount and
Investor Charge-Offs and treated as Available Series 2003-__ Principal
Collections as specified under "Description of the Class A
Certificates--Application of Collections--Payment of Interest, Fees and
Other Items."
"Base Rate" means for any Monthly Period, the annualized percentage
equivalent of the sum of the weighted average Class A Certificate Rate and the
collateral certificate rate, both for the related Interest Period (weighted by
the Class A Invested Amount and the Collateral Invested Amount, both as of the
end of the last day of the Monthly Period, or in the case of the first Monthly
Period, the Closing Date), and 2%.
"Class A Adjusted Invested Amount" means for any business day, an amount
equal to:
o the Class A Invested Amount, minus
o the principal amount on deposit in the Principal Funding Account on that
day.
"Class A Carryover Interest" means for any Distribution Date:
o any Class A Monthly Interest due but not paid to the Class A
Certificateholders on any previous Distribution Date, plus
o an amount equal to the product of:
- the excess, if any, of Class A Monthly Interest for the preceding
Distribution Date over the amount available to pay interest to Class
A Certificateholders on the preceding Distribution Date,
- a fraction, whose numerator is the actual number of days in the
related Interest Period and whose denominator is 360, and
- the sum of the Class A Certificate Rate plus 2% per annum.
"Class A Certificate Rate" means a rate equal to one-month LIBOR plus __%
per annum.
"Class A Certificateholder" means any holder of Series 2003-_ Class A
Certificates.
"Class A Certificates" means $[ ] Floating Rate Class A
Asset Backed Certificates, Series 2003-__.
"Class A Controlled Accumulation Amount" means for any Distribution Date
during the Accumulation Period, $_________; except if the servicer postpones
the start of the Accumulation Period:
o the Class A Controlled Accumulation Amount will exceed the amount stated
above and will be determined by the servicer according to the Pooling
and Servicing Agreement, and
o the sum of the Class A Controlled Accumulation Amounts for all
Distribution Dates for that modified Accumulation Period shall not be
less than the Class A Invested Amount.
This amount may be increased if the trust issues additional Class A
Certificates.
"Class A Controlled Deposit Amount" means for any Distribution Date
during the Accumulation Period, an amount equal to:
o the Class A Controlled Accumulation Amount, plus
o any Class A Deficit Controlled Accumulation Amount for the preceding
Distribution Date.
"Class A Covered Amount" means for any Interest Period, the product of:
o the Class A Certificate Rate for that Interest Period,
o a fraction, whose numerator is the actual number of days in that
Interest Period and whose denominator is 360, and
o the balance of the Principal Funding Account on the first day of that
Interest Period.
"Class A Deficit Controlled Accumulation Amount" means on each
Distribution Date during the Accumulation Period, the excess, if any, of:
o the Class A Controlled Deposit Amount for that Distribution Date, over
o the amount distributed from the Collection Account as principal for the
benefit of the Class A Certificates for that Distribution Date.
"Class A Expected Final Payment Date" means the ______ Distribution Date.
"Class A Initial Invested Amount" means $__________.
"Class A Invested Amount" means for any date, an amount equal to:
o the Class A Initial Invested Amount, plus
o the outstanding principal balance of any additional Class A Certificates
issued after the Closing Date, minus
o the total amount of principal paid to Class A Certificateholders before
that date, minus
o the total amount of unreimbursed Investor Charge-Offs allocable to the
Class A Invested Amount, minus
o the amount of any reduction in the Class A Invested Amount because of
the purchase by the transferor and subsequent cancellation of Class A
Certificates.
"Class A Monthly Interest" means for any Distribution Date, an amount
equal to the product of:
o the Class A Certificate Rate for the related Interest Period,
o a fraction equal to the actual number of days in the related Interest
Period divided by 360, and
o the outstanding principal balance of the Class A Certificates on the
last business day of the preceding Monthly Period or, with respect to
the first Distribution Date, the Class A Initial Invested Amount.
"Closing Date" means _________.
"Collateral Additional Interest" means the amount, if any, distributable
in respect of the Collateral Interest as calculated pursuant to a supplemental
agreement entered into in accordance with the Series 2003-__ Supplement.
"Collateral Carryover Interest" means for any Distribution Date:
o any Collateral Monthly Interest due but not paid on any previous
Distribution Date, plus
o any Collateral Additional Interest.
"Collateral Interest" means the $[ ] Collateral
Interest, Series 2003-__.
"Collateral Invested Amount" means for any date, an amount equal to:
o $__________, plus
o the amount of any additional Collateral Interest issued after the
Closing Date, minus
o the total amount of principal paid to holders of the Collateral Interest
before that date, minus
o the total amount of unreimbursed Investor Charge-Offs for all previous
Distribution Dates.
"Collateral Monthly Interest" means, initially, zero. However, TRC may
set an interest rate for the Collateral Interest after the Closing Date
without the consent of Class A Certificateholders.
"Distribution Date" means the 25th day of each month, or if the 25th day
is not a business day, the next business day.
"Early Amortization Event" means any of the events described under
"Description of the Class A Certificates--Early Amortization Events."
"Early Amortization Period" means the period described under "Description
of the Class A Certificates--Application of Collections--Payment of
Principal--Early Amortization Period" during which collections of Principal
Receivables allocable to Series 2003-__ will be paid to certificateholders on
each Special Payment Date.
"Floating Allocation Percentage" means for any Monthly Period, the
investor percentage described under "Description of the Class A
Certificates--Allocation Percentages."
"Group I" means the group of series under the trust to which the Series
2003-__ certificates belong.
"Interest Period" means in relation to any Distribution Date, the period
from and including the previous Distribution Date to and excluding that
Distribution Date, except the first Interest Period will begin on and include
the Closing Date and end on but exclude the first Distribution Date.
"Invested Amount" means the sum of the Class A Invested Amount and the
Collateral Invested Amount.
"Investor Charge-Off" means for any Monthly Period, the amount by which
first the Collateral Invested Amount and then the Class A Invested Amount are
reduced, as described under "Description of the Class A
Certificates--Reallocation of Cash Flows; Defaulted Receivables; Investor
Charge-Offs."
"Investor Defaulted Amount" means for any Monthly Period, an amount equal
to the product of the Defaulted Amount and the Floating Allocation Percentage
as of the related Distribution Date.
"LIBOR" means the London Interbank Offered Rate indexed to the offered
rates for deposits in United States dollars, which for each Interest Period
will be determined by the trustee for the Class A Certificates as follows:
o On the LIBOR Determination Date, the trustee will determine LIBOR on the
basis of the rate for deposits in United States dollars for a one-month
period which appears on Telerate Page 3750 or on such comparable system
as is customarily used to quote LIBOR as of 11:00 a.m., London time, on
such date.
o If that rate does not appear on Telerate Page 3750 or on such comparable
system as is customarily used to quote LIBOR, the rate for that LIBOR
Determination Date shall be determined on the basis of the rates at
which deposits in United States dollars are offered by the Reference
Banks at approximately 11:00 a.m., London time, on that day to prime
banks in the London interbank market for a one-month period. The trustee
shall request the principal London office of each of the Reference Banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that LIBOR Determination Date will be the
arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that LIBOR Determination Date will
be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the servicer at approximately 11:00 a.m., New York
City time, on that day for loans in United States dollars to leading
European banks for a one-month period.
"LIBOR Determination Date" means (i) _________ for the first Interest
Period and (ii) the second day prior to the commencement of the second and
each subsequent Interest Period, provided that the day is other than (i) a
Saturday or Sunday, (ii) any 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 (iii) any other day on which banking
institutions in London, England trading in United States dollar deposits in
the London interbank market are authorized or obligated by law or executive
order to be closed.
"Monthly Servicing Fee" means for any Monthly Period, the amount
described under "Description of the Class A Certificates--Servicing Fees and
Expenses."
"Portfolio Yield" means for any Monthly Period, the annualized percentage
equivalent of a fraction:
o whose numerator is the sum of:
-- the Floating Allocation Percentage of collections of Finance Charge
Receivables for that Monthly Period, minus
-- if the Required Reserve Account Amount is greater than zero, the
excess of the Principal Funding Investment Shortfall over the amount
applied from the Reserve Account with respect to that shortfall,
minus
-- the Investor Defaulted Amount for that Monthly Period, and
o whose denominator is the Adjusted Invested Amount as of the last day of
the preceding Monthly Period, or in the case of the first Monthly
Period, the Closing Date.
[For the first Monthly Period, the initial deposit of $_____ made to the
Collection Account on the Closing Date for application as Available Series
2003-__ Finance Charge Collections will be added to the numerator described
above.]
"Principal Allocation Percentage" means for any Monthly Period, the
investor percentage described under "Description of the Class A
Certificates--Allocation Percentages."
"Principal Funding Account" means an Eligible Deposit Account held for
the benefit of the Class A Certificateholders in which collections of
Principal Receivables allocated to Class A Certificateholders are accumulated
during the Accumulation Period as described under "Description of the Class A
Certificates--Principal Funding Account."
"Principal Funding Investment Proceeds" means on each Distribution Date
during the Accumulation Period:
o the investment earnings on funds in the Principal Funding Account, minus
o investment expenses and losses,
for the related Interest Period.
"Principal Funding Investment Shortfall" means for any Distribution Date
during the Accumulation Period, the deficiency that occurs if the Principal
Funding Investment Proceeds are less than the Class A Covered Amount for the
related Interest Period.
"Principal Sharing Series" means a series that, under the terms of its
Supplement, is entitled to receive and has agreed to share Shared Principal
Collections.
"Reallocated Collateral Principal Collections" means for each Monthly
Period, collections of Principal Receivables allocable to your series for that
Monthly Period in an amount not to exceed the lesser of:
o the Collateral Invested Amount, and
o the amount applied to fund the Required Amount, if any.
"Record Date" means the last business day of the calendar month preceding
a Distribution Date which is the day a certificateholder must be the
registered holder of a certificate to receive a payment on that Distribution
Date.
"Reference Banks" shall mean four major banks in the London interbank
market selected by the servicer.
"Required Amount" means the amount of any shortfall in amounts required
to be paid from Available Series 2003-__ Finance Charge Collections and Excess
Finance Charge Collections as described under "Description of the Class A
Certificates--Interest Payments."
"Required Reserve Account Amount" means for any Distribution Date on or
after the Reserve Account Funding Date, an amount specified by the transferor.
"Required Retained Transferor's Percentage" means [2%] as may be adjusted
from time to time under the Series 2003-__ Supplement.
"Reserve Account" means an Eligible Deposit Account in which the servicer
will deposit the Required Reserve Account Amount on or after the Reserve
Account Funding Date to provide additional funds from which to make payments
of interest on the certificates during the Accumulation Period.
"Reserve Account Funding Date" means the date, if any, specified by TRC
for the start of funding of the Reserve Account.
"Revolving Period" means the period described under "Description of the
Class A Certificates--Application of Collections--Payment of
Principal--Revolving Period" during which collections of Principal Receivables
allocable to Series 2003-__ are not paid to Class A Certificateholders or
accumulated but are generally treated as Shared Principal Collections.
"Series 2003-__ Supplement" means the supplement to the Pooling and
Servicing Agreement relating to the Series 2003-__ certificates.
"Series 2003-__ Termination Date" means the earlier of the day after the
Distribution Date on which the Invested Amount is paid in full and the
________ Distribution Date which is the final Distribution Date on which
principal and accrued and unpaid interest are to be paid.
"Servicing Fee Rate" means 2.00% per annum.
"Special Payment Date" means each Distribution Date following:
o the Monthly Period in which an Early Amortization Event occurs, and
o the Class A Expected Final Payment Date.
"Telerate Page 3750" means the display designated as page "3750" by
Telerate, Inc. (or such other page as may replace Telerate Page 3750 on that
service or a comparable service for the purpose of displaying London interbank
offered rates of major banks).
"Transfer Date" means the business day immediately before a Distribution
Date.
PROSPECTUS
TARGET CREDIT CARD MASTER TRUST
Issuer
Target Receivables Corporation
Transferor
Retailers National Bank
Servicer
Asset Backed Certificates
|------------------------------------------|
|A certificate is not a deposit and | The trust--
|neither the certificates nor the | o may periodically issue asset backed certificates in one or more
|underlying accounts or receivables are | series with one or more classes, and
|insured or guaranteed by the FDIC or any |
|other governmental agency. | o will own--
|----------------------------------------- |
| | -- receivables in a portfolio of consumer open-end
|The certificates will represent an | credit card accounts,
|interest in the trust only and do not |
|represent interests in or recourse | -- payments due on those receivables, and
|obligations of Target Corporation, |
|Retailers National Bank, Target Capital | -- other property described in this prospectus and in
|Corporation, Target Receivables | the related prospectus supplement.
|Corporation or any of their affiliates. |
| | The certificates offered by this prospectus and the related prospectus
|This prospectus may be used to offer and | supplement--
|sell any series of certificates only if | o will represent interests in the trust and will be paid only from the
|accompanied by the prospectus supplement | assets of the trust,
|for that series. |
| | o will be rated in one of the four highest rating categories by at
| | least one nationally recognized rating organization,
| |
| | o may have one or more forms of enhancement, and
| |
| | o will be issued as part of a designated series which may include
| | one or more classes of certificates
|------------------------------------------|
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these certificates or passed on the
adequacy or accuracy of the disclosures in this prospectus and the related
prospectus supplement. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is _______, 2003
Table of Contents
Important Notice About Information Presented in
this Prospectus and the Related
Prospectus Supplement ..............................4
The Target Credit Card Master Trust.................5
Target Corporation..................................5
Retailers National Bank.............................5
Target Financial Services...........................6
Target Capital Corporation..........................6
Target Receivables Corporation......................6
The Trustee.........................................6
Description of the Certificates.....................7
General........................................7
Allocation of Trust Assets.....................8
The Transferor Certificate.....................8
Supplemental Certificates......................9
Participations.................................9
Interest.......................................9
Principal.....................................10
Early Amortization Events.....................11
Defaulted Receivables and
the Defaulted Amount..........................11
Dilution......................................11
Sharing of Excess Finance Charge
Collections and Excess Transferor
Finance Charge Collections....................12
Shared Principal Collections and
Shared Transferor Principal Collections.......12
New Issuances.................................13
Collection Account............................15
Deposits in the Collection Account............16
Special Funding Account.......................17
Paired Series.................................17
Funding Period................................17
Defeasance....................................17
List of Certificateholders....................17
Form of Your Certificates.....................18
DTC 18
Clearstream...................................19
Euroclear.....................................19
Book-Entry Registration.......................20
Definitive Certificates.......................23
Secondary Market Trading......................24
Enhancement........................................25
Specific Forms of Enhancement.................25
The Pooling and Servicing Agreement................27
Conveyance of Receivables.....................27
Addition of Trust Assets......................27
Removal of Accounts...........................30
Eligible Accounts and Eligible Receivables....31
Representations and Warranties................32
Discount Option Receivables...................34
Indemnification...............................34
Collection and Other Servicing Procedures.....35
Servicing Compensation and
Payment of Expenses...........................36
Servicer Covenants............................36
Certain Matters Regarding the Servicer........37
Servicer Default..............................37
Evidence as to Compliance.....................38
Amendments....................................39
Termination of the Trust......................40
The Bank Receivables Purchase
Agreement and the Receivables
Purchase Agreement............................40
Sale of the Receivables.......................40
Representations and Warranties................41
Covenants.....................................42
Transfer of Accounts and Assumption of
RNB's, TCC's and TRC's Obligations............43
Amendment.....................................43
Termination...................................43
Legal Aspects of the Receivables...................43
Transfer of Receivables.......................43
Matters Relating to Bankruptcy
or Receivership...............................44
Consumer Protection Laws......................46
Claims and Defenses of
Cardholders Against the Trust.................47
Industry Litigation...........................48
Federal Income Tax Consequences....................49
Tax Characterization of the Trust.............49
Tax Considerations Relating
to Certificateholders.........................50
Non-U.S. Certificate Owners...................52
Information Reporting and Backup Withholding..54
Tax Return Disclosure and Investor
List Requirements.............................54
Employee Benefit Plan Considerations...............55
Regulation Under ERISA and the Tax Code.......55
Final Regulation Issued by the DOL............55
Exemptions to Prohibited Transactions.........56
Special Considerations for
Insurance Companies...........................56
General Investment Considerations.............57
Plan of Distribution for the Offered Certificates..58
Legal Matters......................................58
Reports to Certificateholders......................59
Forward-Looking Statements.........................60
Where You Can Find More Information................61
Glossary of Terms for Prospectus...................62
Important Notice About Information Presented in this Prospectus
and the Related Prospectus Supplement
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (1) this prospectus, which
provides general information, some of which may not apply to a particular
series of certificates, including your series, and (2) the prospectus
supplement for your series, which will describe the specific terms of your
series of certificates, including:
1. the timing and amount of interest and principal payments,
2. information about the receivables,
3. information about enhancement for each offered class,
4. credit ratings, and
5. the method for selling the certificates.
You should rely only on the information provided in this prospectus and
the related prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information.
We include cross-references in this prospectus and in the related
prospectus supplement to captions in these materials where you can find
further related discussions. The table of contents in this prospectus and the
table of contents included in the related prospectus supplement provide the
pages on which captions are located.
You can find a glossary with definitions of important terms that appear
in this document under the caption "Glossary of Terms for Prospectus"
beginning on page 62 in this prospectus.
The Target Credit Card Master Trust
The Target Credit Card Master Trust was formed when Target Receivables
Corporation, as transferor of the receivables, Retailers National Bank, as
servicer and originator of the receivables, and Wells Fargo Bank Minnesota,
National Association, as trustee, entered into the Pooling and Servicing
Agreement. The Pooling and Servicing Agreement is governed by the laws of the
State of Delaware. The trust was formed to issue certificates representing
interests in a pool of credit card receivables held by the trust. Certificates
issued by the trust will be issued in amounts, at prices and on terms to be
determined at the time of sale as described in the related prospectus
supplement.
The trust will only engage in the following business activities:
o acquiring and holding receivables,
o issuing series of certificates and related enhancements that may be
uncertificated interests in the trust, Participations, Supplemental
Certificates and a Transferor Certificate,
o making payments on these certificates, related enhancements,
Participations, Supplemental Certificates and the Transferor
Certificate,
o obtaining any credit enhancement or entering into any enhancement
contract necessary to issue certificates, and
o engaging in related activities.
Target Corporation
Target Corporation is one of America's largest general merchandise
retailers with 1,476 stores in 47 states as of November 2, 2002. Target
Corporation currently conducts its store operations through three retail
divisions operating under three brand names (collectively known as the Target
Corporation Stores):
o Target,
o Marshall Field's, and
o Mervyn's.
Dayton Company was founded in 1902 and Dayton Hudson Corporation was
formed in 1969 through the merger of Dayton Company and J.L. Hudson Company.
In 1962, Dayton Company started Target stores, an upscale discounter. In 1978,
Dayton Hudson Corporation acquired Mervyn's department stores. In 1990, Dayton
Hudson Corporation acquired Marshall Field & Co. Effective on January 30,
2000, the name of Dayton Hudson Corporation was changed to Target Corporation.
Target Corporation is a public company and is listed on the New York Stock
Exchange and the Pacific Stock Exchange under the symbol TGT.
Target Corporation's revenues and net earnings for the past three years
are as follows (in millions):
2002 2001 2000
Revenues......... $ $39,888 $36,903
Net Earnings..... $ $1,368 $ 1,264
Retailers National Bank
Retailers National Bank, referred to herein as RNB, is chartered as a
national banking association and is subject to regulation and supervision by
the Office of the Comptroller of the Currency. RNB is a wholly owned
subsidiary of Target Corporation. It was formed on January 7, 1994, to
streamline Target Corporation's credit operations by eliminating
inefficiencies associated with the different retail credit regulations of the
various states in which Target Corporation operates. RNB issues and services
the private label credit cards of the Target Corporation Stores and Target
VISA.
For a detailed description of the Retailers National Bank credit card
business and the trust portfolio, see "Retailers National Bank's Credit Card
Business" and "The Trust Portfolio" in the related prospectus supplement.
Target Financial Services
Target Financial Services, referred to herein as TFS, is a unit of Target
Corporation. TFS contracts to perform many of the services which RNB, as
servicer, would typically perform. These services include:
o marketing,
o implementation of underwriting,
o implementation of transaction authorizations,
o guest services,
o collections, and
o systems support.
RNB has developed or adopted systems and specifications for underwriting
and authorizations and determines the underwriting standards to which TFS must
adhere.
TFS operates out of its primary facility in Minneapolis, Minnesota and an
additional facility in Tempe, Arizona.
Target Capital Corporation
Target Capital Corporation, referred to herein as TCC, was formed in
Minnesota on September 27, 1994, for general business purposes. TCC is a
wholly owned subsidiary of Target Corporation.
Target Receivables Corporation
Target Receivables Corporation, referred to herein as TRC, is a wholly
owned subsidiary of TCC. It was formed in Minnesota on May 15, 1995 for
limited purposes, including:
o buying, holding and selling receivables,
o transferring receivables to one or more trusts pursuant to one or more
pooling and servicing agreements, and
o engaging in other related activities.
TCC and TRC's board of directors do not intend to change these business
purposes.
The Trustee
Wells Fargo Bank Minnesota, National Association is the trustee under the
Pooling and Servicing Agreement. The Corporate Trust Department of the trustee
is located at Sixth and Marquette, MAC N9311-161, Minneapolis, Minnesota
55479.
The trustee undertakes to perform the duties described in the Pooling and
Servicing Agreement, including examining documents furnished to the trustee to
determine whether they conform on their face to the requirements of the
Pooling and Servicing Agreement, authenticating certificates, establishing and
maintaining accounts for the trust and providing notice to certificateholders.
The trustee and its affiliates may:
o enter into normal banking and trust relationships with the transferor,
the servicer and their affiliates,
o hold certificates of any series in its name but will not be allowed to
participate in any decisions or instructions to be given to the trust by
certificateholders as a group,
o appoint a co-trustee or separate trustees for all or any part of the
trust, or
o resign at any time.
If the trustee appoints a co-trustee or separate trustees, all rights,
powers, duties and obligations of the trustee will be conferred or imposed on
the trustee and each separate trustee or co-trustee jointly. In any
jurisdiction in which the trustee is incompetent or unqualified to perform
some acts, those rights, powers, duties and obligations will be conferred or
imposed on each separate trustee or co-trustee individually. If so, each
separate trustee or co-trustee will exercise and perform those rights, powers,
duties and obligations only at the direction of the trustee.
If the trustee resigns, TRC will be required to appoint a successor
trustee. The trustee may also be removed by the servicer if the trustee
becomes ineligible to continue as a trustee under the Pooling and Servicing
Agreement or if the trustee becomes insolvent. The servicer will then be
required to appoint a successor trustee. Any resignation or removal of the
trustee and appointment of a successor trustee will not become effective until
the successor trustee accepts the appointment.
Description of the Certificates
Following is a summary describing the material provisions common to each
series. If you are purchasing certificates, the related prospectus supplement
describes any series-specific provisions supplementing the information in this
prospectus. Each series will be issued through the Pooling and Servicing
Agreement and a Supplement to that agreement. This prospectus and the related
prospectus supplement do not contain all information about your certificates.
For a detailed description of the certificates, also read the Pooling and
Servicing Agreement and the Supplement for your series.
General
The certificates offered through this prospectus and the related
prospectus supplement will be issued in "series." Each series will represent
an interest in the trust distinct from the Transferor Certificate, any
Supplemental Certificate, any Participation and any other series issued by the
trust. Each series will evidence the right to receive a specified portion of
collections on the receivables in the trust.
Each series may consist of one or more classes, one or more of which may
be senior certificates, and one or more of which may be subordinated
certificates or other interests in the trust that provide enhancement for
senior certificates. Each class of a series will have the right to receive a
specified portion of each distribution of principal or interest or both. Each
class of a series may differ from other classes in some aspects, including:
o maturity date,
o interest rate, and
o availability and amount of enhancement.
Certificates offered through this prospectus and the related prospectus
supplement will be:
o represented by certificates registered in the name of DTC or its
nominee,
o available for purchase in minimum denominations and integral multiples
of $1,000, and
o available for purchase in book-entry form only.
The certificates in book-entry form, in which you will hold a beneficial
interest, as described under "--Book-Entry Registration," are "global
securities." The related prospectus supplement will specify if:
o your series of certificates, or one or more classes of your series, may
be issued in a different form, and
o your certificates have any other characteristics different from those
listed above.
Certificates described in this prospectus and in the related prospectus
supplement may include uncertificated interests in the trust, such as an
uncertificated collateral interest, that provide enhancement for other classes
of certificates. The related prospectus supplement will specify if any
uncertificated interests are included in your series.
[The related prospectus supplement may state that application will be
made to list your series or class of certificates on the Luxembourg Stock
Exchange or another exchange.]
Payments will be made to certificateholders in whose names the
certificates were registered on the Record Date specified in the related
prospectus supplement.
Allocation of Trust Assets
The assets of the trust are allocated among:
o each series,
o the holder of the Transferor Certificate and, if applicable, the holders
of any Supplemental Certificates, and
o the holders of Participations.
Each series represents interests in the assets of the trust. Each series
will receive varying amounts of collections of Principal Receivables and
Finance Charge Receivables, and will also be allocated a varying portion of
receivables in defaulted accounts written off during each month. The related
prospectus supplement describes how these amounts are allocated to your
series. If your series is comprised of multiple classes, collections allocated
to your series may be further allocated among each class.
As a certificateholder, your right to collections is limited to the
amounts needed to make required payments to you. Collections allocated to your
series or your class of certificates might be reallocated. The related
prospectus supplement and the Pooling and Servicing Agreement explain how
collections will be allocated to, or reallocated from, your certificates.
Each series may be included in a group of series. Each series in a group
may share Excess Finance Charge Collections among themselves. The related
prospectus supplement will state if your series is in a group. In addition,
the related prospectus supplement will state whether your series is entitled
to Shared Principal Collections, Shared Transferor Principal Collections or
Excess Transferor Finance Charge Collections.
Each series represents interests in the trust only and does not represent
interests in or recourse obligations of Target Corporation, RNB, TCC, TRC or
any of their affiliates. A certificate is not a deposit and neither the
certificates nor the underlying trust accounts or receivables are insured or
guaranteed by the FDIC or any other governmental agency.
The Transferor Certificate
The Transferor's Interest in the trust is evidenced by the Transferor
Certificate and any Supplemental Certificates. The Transferor Certificate
represents the undivided interest in the trust not represented by the
certificates of any series or the rights of any enhancement providers to
receive payments from the trust or any Supplemental Certificate or
Participation. The holder of the Transferor Certificate will be allocated a
portion of all collections of Principal Receivables and Finance Charge
Receivables. The holder of the Transferor Certificate will also receive Excess
Finance Charge Collections, Shared Principal Collections and certain other
amounts allocated to each series that are not applied to make payments to any
series. TRC currently holds the Transferor Certificate.
Supplemental Certificates
The Pooling and Servicing Agreement provides that the transferor may
exchange a portion of the Transferor Certificate for one or more Supplemental
Certificates representing an interest in the Transferor's Interest for
transfer or assignment to a person named by the transferor after the execution
and delivery of a supplement to the Pooling and Servicing Agreement, only if:
o the Rating Agency Condition is satisfied,
o the Transferor Amount, excluding the interest represented by any
Supplemental Certificate, will not be less than the Required Retained
Transferor Amount as of the date of the exchange, and
o the transferor delivers to the trustee and each rating agency a tax
opinion.
Any Supplemental Certificates may be transferred or assigned upon satisfaction
of the first and third bullet points above. Currently, no Supplemental
Certificates have been issued.
Participations
The Pooling and Servicing Agreement provides for one or more
participation supplements under which the transferor may require the trustee
to issue one or more Participations on behalf of the trust. Each Participation
will entitle its holder to a specified percentage of collections of Principal
Receivables and Finance Charge Receivables and any other assets of the trust
that the holder of any Participation is entitled to under a participation
supplement to the Pooling and Servicing Agreement.
A Participation may be issued only upon the satisfaction of the following
conditions:
o the Rating Agency Condition is satisfied,
o the Transferor Amount, excluding the interest represented by any
Supplemental Certificate, will not be less than the Required Retained
Transferor Amount, and
o the transferor delivers to the trustee and each rating agency a tax
opinion, dated the date of the issuance.
Any Participation may be transferred or exchanged upon the satisfaction of the
first and third bullet points above. The trust has issued a Participation to
RNB.
Interest
From the date of issuance of a series, interest will accrue on the
related principal balance of the series or the applicable class, or other
amount, at the interest rate specified in the related prospectus supplement.
The interest rate may be a fixed, floating or variable rate as specified in
the related prospectus supplement. Interest will be distributed to
certificateholders on the distribution dates specified in the related
prospectus supplement.
Interest payments on any distribution date will generally be funded from
collections of Finance Charge Receivables allocated to the applicable series
during the previous Monthly Period. Interest payments on any distribution date
may also be funded, to the extent specified in the related prospectus
supplement, from:
o investment earnings on funds held in accounts of the trust,
o Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections,
o any applicable enhancement, if necessary, or
o other amounts as specified in the related prospectus supplement.
If the distribution date for payment of interest for a series or class
occurs less frequently than monthly, any collections or other amounts may be
deposited in one or more trust accounts for distribution to that series or
class. Each class may have a separate interest funding account if a series has
more than one class.
Principal
Principal payments for any series or class will be funded from
collections of Principal Receivables allocated to that series and, if that
series has been designated as a principal sharing series, from Shared
Principal Collections. In addition, at its option, the transferor as holder of
the Transferor Certificate may elect to apply Shared Transferor Principal
Collections to your series to the extent that required principal deposits or
payments exceed collections of Principal Receivables allocable to your series,
Shared Principal Collections, if applicable, and other sources as specified in
the related prospectus supplement.
If a series has more than one class, the holders of one or more classes
may receive payments of principal at different times. The related prospectus
supplement will describe the manner, timing and priority of payments of
principal to the holders of each class. Principal will be paid on each class
in the amounts and on the distribution dates specified in the related
prospectus supplement or will be accumulated in a principal funding account
for later distribution on the related expected final payment date.
The revolving period for each series or each class of a series will begin
on the closing date for that series or class and end upon the commencement of
the accumulation period or amortization period for that series or class. No
principal payments will be made to a series or class of a series during its
revolving period, except to the extent specified in the related prospectus
supplement.
Following the revolving period, each series or class of a series is
expected to begin to accumulate principal or begin to distribute principal.
The related prospectus supplement describes the conditions under which the
accumulation period or amortization period will begin for your series or
class.
Principal will accumulate in a principal funding account if your series
or class features an accumulation period and this periods begins. During the
accumulation period, collections of Principal Receivables and other amounts
allocable to a series will be deposited in the principal funding account on
each distribution date for payment on the expected final payment date for that
series or a specified class of that series. If your series or class features a
controlled accumulation period, the amount deposited in the principal funding
account on each distribution date will be limited to a specified amount plus
shortfalls in amounts specified to be deposited on prior distribution dates.
If so specified in the related prospectus supplement, the commencement of the
accumulation period may be postponed and the accumulation period may be
shortened.
Funds on deposit in any principal funding account may be invested in
Eligible Investments or may have the benefit of a guaranteed rate or
investment agreement or other arrangement intended to assure a specific rate
of return on the investment of the funds. The related prospectus supplement
will specify if investment earnings shortfalls associated with amounts on
deposit in the principal funding account will be covered by Excess Transferor
Finance Charge Collections. These shortfalls may also be covered by funds in a
reserve account if the transferor designates a reserve account funding date
and funds are available for that purpose. A principal guaranty or other
similar arrangement may be used to enhance the likelihood of the payment in
full of the principal amount of a series or class on its expected final
payment date.
If your series or class features a controlled amortization period and
this period begins, principal will be paid to you in increments, up to the
amount specified in the related prospectus supplement. During the controlled
amortization period, collections of Principal Receivables and other amounts
allocable to a series, up to an amount specified in the related prospectus
supplement, will be paid to that series or class on each distribution date.
The controlled amortization period will end on the expected final payment date
for your series or class, or earlier if an event that is designated as an
early amortization event occurs and an early amortization period begins.
If your series or class features a rapid accumulation period, certain
events -- which may be referred to as rapid accumulation events -- will
trigger the commencement of the rapid accumulation period for your series. If
the rapid accumulation period begins for your series, the full amount of
principal available to your series or a specified class of your series will be
deposited in the principal funding account on each distribution date, up to
the amount specified in the related prospectus supplement. This accumulated
principal will be paid to you on the expected final payment date for your
series or class, or earlier if an event that is designated as an early
amortization event occurs and the rapid accumulation period ends and an early
amortization period begins.
Your series will begin to pay principal to you if an early amortization
event occurs and an early amortization period begins for your series or class
as described in the related prospectus supplement. The prospectus supplement
for any series will specify the early amortization events that apply to that
series. You may begin receiving distributions of principal earlier than
expected if an early amortization period begins before the scheduled
amortization period or accumulation period or before the expected final
payment date for your series or class in that series. This may shorten the
average life of your series or class.
Early Amortization Events
Early amortization events are comprised of events that will affect all
series and events that apply specifically to designated series. The related
prospectus supplement will describe the early amortization events for your
series and indicate for each early amortization event whether it is an event
which automatically triggers an early amortization period or an event which
requires the vote of a majority of the affected certificateholders or the
trustee to trigger an early amortization period. If your series features a
rapid accumulation period, certain events that may otherwise have been
designated as early amortization events will be designated as rapid
accumulation events and will cause the commencement of a rapid accumulation
period rather than an early amortization period. See "Description of the Class
A Certificates--Early Amortization Events" in the related prospectus
supplement.
Defaulted Receivables and the Defaulted Amount
The servicer will charge-off receivables in accounts in accordance with
the Credit Card Guidelines. See "Retailers National Bank's Credit Card
Business--Delinquency and Collections Procedures for RNB Credit Cards" in the
related prospectus supplement. Defaulted Receivables are automatically removed
from the trust and may be sold after reconveyance to TRC.
The Defaulted Amount for any Monthly Period will be an amount, not less
than zero, equal to the amount of Defaulted Receivables for each day in that
Monthly Period minus the sum of:
o the amount of any Defaulted Receivables for which the Transferor Amount
is reduced because of the assignment of a principal balance of zero for
purposes of determining the total amount of Principal Receivables or for
which the servicer becomes obligated to accept assignment during that
Monthly Period, in either case because of a breach of a representation,
warranty or covenant contained in the Pooling and Servicing Agreement,
o the total amount of recoveries received in the Monthly Period for both
Finance Charge Receivables and Principal Receivables which were
previously charged-off as uncollectible, and
o the excess, if any, for the immediately preceding Monthly Period of the
total amount subtracted under these bullet points over the amount of
Principal Receivables that became Defaulted Receivables.
Each outstanding series issued by the trust will be allocated a portion of the
Defaulted Amount-- referred to as the investor defaulted amount.
Dilution
The amount of the Principal Receivables in the trust will be reduced if:
o the servicer adjusts downward the amount of any Principal Receivable
(except Ineligible Receivables that have been or are to be reassigned to
the transferor), because of a rebate, refund, counterclaim, defense,
error, fraudulent charge or counterfeit charge to a cardholder,
o the Principal Receivable was created with respect to merchandise that
was refused or returned by a cardholder, or
o the servicer adjusts downward the amount of any Principal Receivable
without receiving collections or without charging off the amount as
uncollectible.
If the reduction of any Principal Receivables would cause the Transferor
Amount, excluding the interest represented by any Supplemental Certificate, to
be less than the Required Retained Transferor Amount, the transferor will be
required to deposit an amount equal to such deficiency into the Special
Funding Account.
Sharing of Excess Finance Charge Collections and Excess Transferor Finance
Charge Collections
If your series is designated as belonging to an Excess Finance Charge
Collections sharing group, collections of Finance Charge Receivables and other
amounts treated as collections of Finance Charge Receivables in excess of the
amount required to make deposits or payments for your series will be made
available to other series included in the same group, whose allocations of
collections of Finance Charge Receivables and other amounts treated as
collections of Finance Charge Receivables are not sufficient to make their
required deposits or payments. These amounts are referred to as Excess Finance
Charge Collections.
Excess Finance Charge Collections will be distributed to each series in
the same Excess Finance Charge Collections sharing group based on the amount
of the shortfall, if any, for that series relative to the amount of the
shortfalls, if any, for each other series in that group. While any series
offered may be included in a group that shares Excess Finance Charge
Collections, there can be no assurance that any other series will be included
in that group or that there will be any Excess Finance Charge Collections
available to that group for any Monthly Period.
Collections of Finance Charge Receivables allocable to the Transferor's
Interest will first be used to make payments on any Supplemental Certificates
and then treated as Excess Transferor Finance Charge Collections. Collections
of Finance Charge Receivables allocated to each series but not used to make
payments to any series will also be treated as Excess Transferor Finance
Charge Collections. If so specified in the prospectus supplement for your
series, Excess Transferor Finance Charge Collections may then be applied to
cover investment earnings shortfalls associated with amounts on deposit in the
principal funding account during the accumulation period. In addition, if so
specified in the prospectus supplement for your series, Excess Transferor
Finance Charge Collections may be applied to cover any shortfalls in amounts
payable after application of collections of Finance Charge Receivables and
other amounts treated as collections of Finance Charge Receivables allocated
to your series and Excess Finance Charge Collections allocated to your series
from other series. Any Excess Transferor Finance Charge Collections remaining
after covering shortfalls to all designated series will be treated as Shared
Transferor Principal Collections.
There can be no assurance that the transferor will use Excess Transferor
Finance Charge Collections to cover any shortfalls for your series or that
there will be any Excess Transferor Finance Charge Collections in any Monthly
Period. The prospectus supplement for your series will specify if the
transferor, as holder of the Transferor Certificate, has elected to apply
Excess Transferor Finance Charge Collections to cover such shortfalls for your
series.
Shared Principal Collections and Shared Transferor Principal Collections
The related prospectus supplement will specify if collections of
Principal Receivables and other amounts treated as collections of Principal
Receivables allocated to a series for any Monthly Period, after required
principal deposits or payments for that series, will be available to other
series whose allocations of collections of Principal Receivables and other
amounts treated as collections of Principal Receivables are not sufficient to
make required principal deposits or payments for those series. Such shortfalls
are referred to as Principal Shortfalls. These amounts plus any collections
related to the purchase of or investments in a Participation are referred to
as Shared Principal Collections. Shared Principal Collections permit coverage
of Principal Shortfalls by using collections that would have otherwise been
paid to the transferor. In some circumstances this sharing may allow the
length of the accumulation period or amortization period for a series or class
to be shorter than it otherwise would be.
The servicer will allocate Shared Principal Collections to cover
Principal Shortfalls. If Principal Shortfalls exceed Shared Principal
Collections for any Monthly Period, Shared Principal Collections will be
allocated among the applicable series based on the respective Principal
Shortfalls of each series. If Shared Principal Collections exceed Principal
Shortfalls for all series entitled to receive Shared Principal Collections,
the balance will be distributed to the holder of the Transferor Certificate to
the extent that the Transferor Amount-- excluding the interest represented by
any Supplemental Certificate-- exceeds the Required Retained Transferor
Amount. Otherwise, it will be deposited into the Special Funding Account.
Any reallocation of collections of Principal Receivables as Shared
Principal Collections will not result in a reduction in the Invested Amount of
the series to which collections were initially allocated.
There can be no assurance that Shared Principal Collections will be
available to cover Principal Shortfalls for your series or that there will be
any Shared Principal Collections in any Monthly Period.
The servicer will determine the amount of any Shared Transferor Principal
Collections. Shared Transferor Principal Collections consist of:
o collections of Principal Receivables and other amounts treated as
collections of Principal Receivables for any Monthly Period allocated to
the Transferor's Interest remaining after payments are made to the
holders of any Supplemental Certificates,
o collections of Principal Receivables and other amounts treated as
collections of Principal Receivables for any Monthly Period allocated to
each series or class that are not applied to make required principal
deposits or payments for any outstanding series or class, and
o the amount of Excess Transferor Finance Charge Collections remaining
after being applied as specified in the applicable Supplement for each
outstanding series.
As specified in the prospectus supplement for your series, the transferor
may elect to allocate Shared Transferor Principal Collections to cover any
Principal Shortfalls for your series that have not been covered out of Shared
Principal Collections. In some circumstances this sharing may allow the length
of the accumulation period or amortization period for a series or class to be
shorter than it otherwise would be. If Principal Shortfalls remaining after
the application of Shared Principal Collections for all series to which the
transferor has elected to allocate Shared Transferor Principal Collections
exceed the amount of Shared Transferor Principal Collections for any Monthly
Period, Shared Transferor Principal Collections will be allocated among these
series based on the respective remaining Principal Shortfalls of each series.
To the extent that Shared Transferor Principal Collections exceed
Principal Shortfalls remaining after application of Shared Principal
Collections for all series to which the transferor has elected to allocate
Shared Transferor Principal Collections, the excess will be paid to the holder
of the Transferor Certificate.
As described in the prospectus supplement for your series, use of Shared
Transferor Principal Collections to cover Principal Shortfalls for your series
is at the discretion of the transferor as holder of the Transferor Certificate
and there can be no assurance that the transferor will elect to use Shared
Transferor Principal Collections to cover Principal Shortfalls for your series
or that there will be any Shared Transferor Principal Collections in any
Monthly Period.
New Issuances
The Pooling and Servicing Agreement allows the transferor to direct the
trustee to issue a new series. There is no limit to the number of new
issuances the transferor may issue under the Pooling and Servicing Agreement.
Each new issuance will have the effect of decreasing the Transferor Amount by
the initial Invested Amount of such series.
For each series, the Invested Amount on any date generally will be equal
to the initial principal amount for that series reduced by:
o the amount of principal paid to the holders of such series,
o the amount of unreimbursed Investor Charge-Offs for that series, and
o the amount of any reduction in the Invested Amount because of the
purchase by TRC and later cancellation of any portion of that series or
any class.
The Invested Amount may further be adjusted by:
o the amount of principal on deposit in any specified account, and
o any other amount stated in the related prospectus supplement.
Any class of subordinated certificates in a series will also be included
in that series' Invested Amount. If your series includes one or more
subordinated certificates, a description will be included in the related
prospectus supplement. During each series' revolving period, the Invested
Amount is expected to remain constant to the extent noted in the related
prospectus supplement unless certificates are purchased by TRC.
The transferor, the servicer, the trustee and the trust are not required
to and do not intend to obtain the consent of, or allow prior review by, any
holder of any outstanding series or class to issue any additional series.
There can be no assurance that the terms of any series might not have an
impact on the timing and amount of payments received by another series. The
transferor may offer any series to the public under a prospectus or other
disclosure document in transactions either registered under the Securities Act
of 1933, as amended, or exempt from registration. Each new series may be
offered:
o directly, through one or more underwriters or placement agents,
o in fixed-price offerings, or
o in negotiated transactions or otherwise.
Any new series may be issued in fully registered or book-entry form in
minimum denominations determined by the transferor.
Under the Pooling and Servicing Agreement, the transferor will designate
the terms of each series. The related prospectus supplement will specify
whether collections of Principal Receivables and other amounts otherwise
allocable to a series that is not amortizing or accumulating principal or that
exceeds the designated amounts of deposits or payments of principal for that
series may be treated as Shared Principal Collections and reallocated to a
series that is amortizing or accumulating principal. The related prospectus
supplement will also specify whether a series will be part of a group that
shares Excess Finance Charge Collections. In addition, the related prospectus
supplement will specify whether collections of Principal Receivables and
collections of Finance Charge Receivables otherwise payable to the transferor
may be paid to a series. Each series may have the benefits of enhancement
issued by enhancement providers different from the enhancement providers used
in any other series. Under the Pooling and Servicing Agreement, the trustee
will hold any enhancement only on behalf of the series or class designated to
receive the benefit of that enhancement.
A new issuance may only be issued after the satisfaction of the
conditions specified in the Pooling and Servicing Agreement and under the
related Supplement. The obligation of the trustee to authenticate the
certificates of each new series and to execute and deliver the related
Supplement is subject to the prior satisfaction of the following conditions:
o the transferor gives the trustee, the servicer and each rating agency
written notice of the new issuance and its date of issuance, at least
five business days before the date of the new issuance,
o the transferor delivers to the trustee the related Supplement, in a form
satisfactory to the trustee, executed by each party to the Pooling and
Servicing Agreement except the trustee,
o the transferor delivers to the trustee the related enhancement
agreement, if any, executed by each party to that agreement,
o the transferor, the servicer, and the trustee receive confirmation that
the Rating Agency Condition is satisfied,
o the transferor delivers to the trustee and enhancement providers, if
any, a certificate of an authorized officer, dated the date of the new
issuance, stating that the transferor reasonably believes that the
issuance will not, based on the facts known to the officer at the time
of the certification, cause an early amortization event to occur for any
series,
o the transferor delivers to the trustee and each rating agency an opinion
of counsel acceptable to the trustee that for federal income tax
purposes:
-- the certificates of the new series will be characterized as
indebtedness or as partnership interests, and
-- the new issuance will not adversely affect the federal income tax
characterization of any outstanding series,
o the Transferor Amount, excluding the interest represented by any
Supplemental Certificate, will not be less than the Required Retained
Transferor Amount on the date of the new issuance, and
o any other conditions specified in any Supplement for each outstanding
series.
After satisfaction of these conditions, the trustee will execute the
Supplement and issue to the transferor the certificates of the new series for
execution and redelivery to the trustee for authentication.
The transferor also has the option under the Pooling and Servicing
Agreement to vary among series the terms on which a series may be repurchased
by the transferor or remarketed to other investors.
Collection Account
The servicer has established and will maintain in the name of the trust
and for the benefit of the certificateholders of each series, an Eligible
Deposit Account called the Collection Account. An Eligible Deposit Account is
either:
o a segregated account with a United States depository institution or any
other institution that is acceptable to each rating agency, or
o a segregated trust account with the corporate trust department of a
depository institution or any domestic branch of a foreign bank having
securities rated as investment grade from each rating agency.
The Collection Account will initially be maintained with the trustee. If
at any time the Collection Account cannot be maintained as an Eligible Deposit
Account, the Collection Account will be moved so that it will again be
qualified as an Eligible Deposit Account.
Funds on deposit in the Collection Account will be invested in the
following Eligible Investments:
o obligations fully guaranteed by the United States,
o demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies having, at the time of investment, the
highest short-term debt rating from Moody's and Standard & Poor's,
o commercial paper, or other short-term obligations, having, at the time
of the trust's investment, a rating in the highest rating category from
Moody's and Standard & Poor's,
o demand deposits, time deposits and certificates of deposit which are
fully insured by the FDIC, with an entity the commercial paper of which
is rated in the highest rating category from Moody's and Standard &
Poor's,
o notes or bankers' acceptances issued by any depository institution or
trust company having the highest rating from Moody's and Standard &
Poor's,
o time deposits with an entity having the highest rating from Moody's and
Standard & Poor's,
o investments in money market funds having, at the time of the trust's
investment, a rating in the highest rating category from Moody's and
Standard & Poor's or otherwise approved in writing by Moody's and
Standard & Poor's, and
o 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 of 1940, as amended.
Any earnings, net of losses and investment expenses, on funds on deposit
in the Collection Account will be treated as collections of Finance Charge
Receivables for the related Monthly Period. The servicer has the revocable
power to withdraw funds from the Collection Account and to instruct the
trustee to make withdrawals and payments from the Collection Account for the
purpose of carrying out its duties under the Pooling and Servicing Agreement
and any Supplement for each outstanding series. In addition, under the Pooling
and Servicing Agreement a paying agent will be appointed having the revocable
power to withdraw funds from the Collection Account to make distributions to
each class of a series. The paying agent will initially be the trustee.
Deposits in the Collection Account
The servicer will make the deposits and payments to the accounts and
parties as described in the applicable Supplement for each series. RNB, as
servicer, may use for its own benefit all collections received from the
receivables in each Monthly Period until the business day preceding the
related distribution date as long as one of the following two conditions is
met:
o RNB gives the trustee a letter of credit covering collection risk of the
servicer acceptable to each rating agency, or
o Target Corporation has and maintains a commercial paper rating of at
least "A-1" by Standard & Poor's and at least "Prime-1" by Moody's.
Except as provided below, if neither of the above conditions is met, then
the servicer will deposit all collections received from the receivables in
each Monthly Period into the Collection Account not later than two business
days after the date of processing. Target Corporation currently maintains the
required rating for use of the collections received during each Monthly
Period.
If so specified in the applicable Supplement for any outstanding series,
the servicer will only be required to deposit collections into the Collection
Account up to the total amount of collections required to be deposited into an
account established for that series, or, without duplication, distributed on
the related distribution date or payment date to holders of each class of that
series as described in the related Supplement or such other amount
satisfactory to the rating agencies. If at any time before the distribution
date or payment date the amount of collections deposited in the Collection
Account exceeds the amount required to be so deposited, the servicer will be
permitted to withdraw the excess from the Collection Account.
Special Funding Account
The servicer has established and will maintain in the name of the trust,
for the benefit of the certificateholders of all series, a Special Funding
Account which is an Eligible Deposit Account. Whenever the Transferor Amount,
excluding the interest represented by any Supplemental Certificate, would
otherwise be less than the Required Retained Transferor Amount, funds
otherwise payable to the transferor will be deposited in the Special Funding
Account on each business day until the Transferor Amount, excluding the
interest represented by any Supplemental Certificate, is at least equal to the
Required Retained Transferor Amount. Deposits into and withdrawals from the
Special Funding Account may be made on any business day.
Funds on deposit in the Special Funding Account may be withdrawn on any
business day and paid to the transferor provided that following the payment,
the Transferor Amount, excluding the interest represented by any Supplemental
Certificate, will continue to exceed the Required Retained Transferor Amount.
If one or more series is in an amortization period or accumulation period
and has a Principal Shortfall, the servicer will allocate principal amounts on
deposit in the Special Funding Account to the applicable series based on their
Principal Shortfalls.
Funds on deposit in the Special Funding Account will be invested by the
trustee at the direction of the servicer in Eligible Investments selected by
the servicer. All net investment income earned on amounts in the Special
Funding Account will be withdrawn from the Special Funding Account on each
distribution date and treated as collections of Finance Charge Receivables for
the preceding Monthly Period.
Paired Series
A series may be paired with another series if so specified in the
prospectus supplement for that series. A paired series is a series which has
been paired with a previously issued series and has an Invested Amount that
increases as the Invested Amount of the previously issued series decreases, or
any series designated as a paired series in the related Supplement. The
prospectus supplement for that series will specify the relationship between
the paired series.
Funding Period
The related prospectus supplement will specify if there will be a funding
period for any series. During the funding period, the outstanding principal
balance of a pre-funded series may be greater than the investment of that
series in the receivables in the trust and an amount equal to this difference
will be held in a pre-funding account for the benefit of that series.
During the funding period, funds on deposit in the pre-funding account
for a series will be withdrawn and paid to the transferor to the extent there
are any increases in the Invested Amount of that series. The Invested Amount
will increase as receivables are delivered to the trust or as the Invested
Amounts of other series are reduced. The prospectus supplement for a series
will specify the applicable terms for the funding period and the pre-funding
account.
Defeasance
If so specified for any series in the related prospectus supplement, the
transferor may, at its option, be discharged from its obligations on that
series after satisfying the conditions described in the related prospectus
supplement. The transferor may then cause collections from the defeased series
to be used to buy Eligible Investments rather than additional receivables.
List of Certificateholders
Certificateholders representing 10% or more of the total outstanding
principal balance of the certificates of a series, or of all outstanding
series, may request access to the current list of certificateholders of the
series, or of all outstanding series, for purposes of communicating with other
certificateholders about their rights under the Pooling and Servicing
Agreement, any Supplement or the certificates. See "--Book-Entry Registration"
and "--Definitive Certificates" for a description of the circumstances in
which Definitive Certificates may be issued.
The Pooling and Servicing Agreement does not provide for any annual or
other meetings of certificateholders.
Form of Your Certificates
The following description of the form of your certificates includes how
they are transferred and how the trust makes payments to you. One or more of
the following clearing systems performs transactions in your certificates:
o The Depository Trust Company or "DTC,"
o Clearstream Banking, societe anonyme or "Clearstream," and
o the system operated by Euroclear Bank, under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation, referred to
as "Euroclear."
DTC provided the information in this prospectus concerning DTC and its
book-entry system. TRC has not independently verified the accuracy of this
information.
DTC has informed TRC that its nominee is Cede & Co. or "Cede." Cede is
expected to be the holder of record of each class of certificates offered
under this prospectus. This means that you, as an owner of certificates, will
only be entitled to a Definitive Certificate representing your interest in the
issued certificates under specified circumstances. Instead, you will own
certificates through a book-entry record maintained by DTC. All references in
this document to:
o distributions, reports, notices and statements will be made to DTC or
Cede, as the registered holder of the certificates, for distribution to
you following DTC procedures, and
o actions by certificateholders refer to actions taken by DTC upon
instructions from DTC participants.
You may hold your certificates through DTC in the U.S., Clearstream or
Euroclear in Europe or in any other manner described in the related prospectus
supplement. You may hold your certificates directly with one of these systems
if you are a participant in the system, or indirectly through organizations
which are participants. Descriptions of the clearing systems follow.
DTC
DTC is:
o a limited-purpose trust company organized under the New York Banking
Law,
o a "banking organization" within the meaning of the New York Banking Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered under the Securities Exchange Act of
1934, as amended.
DTC performs various services for its participating organizations,
referred to as DTC participants. These services include:
o holding securities that DTC participants deposit with it, and
o providing a system where DTC participants may clear and settle
securities transactions, including transfers and pledges, in deposited
securities through electronic book-entry changes in their accounts, so
there is no physical movement of securities certificates.
DTC participants:
o include securities brokers and dealers, banks, trust companies, and
clearing corporations, and
o may include other organizations, including the underwriters of any
series of certificates issued through this document.
A number of DTC participants, the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. own DTC. Securities brokers and dealers, banks, trust companies
and other financial organizations that clear through or maintain a custodial
relationship with a DTC participant, either directly or indirectly, have
indirect access to the DTC system. The rules applicable to DTC and its DTC
participants are on file with the SEC.
Clearstream
Clearstream is incorporated under the laws of Luxembourg as a
professional depository and:
o holds securities for Clearstream customers,
o provides a system where Clearstream customers may clear and settle
securities transactions through electronic book-entry changes in their
accounts, so there is no physical movement of securities certificates,
o settles transactions in any of 36 currencies, including United States
dollars,
o provides for Clearstream customers, among other services, safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing, and
o deals with domestic securities markets in over 30 countries through
established depository and custodial relationships.
Clearstream has established an electronic bridge with Euroclear Bank,
acting as Euroclear operator, to facilitate settlement of trades between
Clearstream and Euroclear. Clearstream currently accepts over 110,000
securities issues on its books. As a professional depository, Clearstream is
regulated by the Luxembourg Commission for the Supervision of the Financial
Sector, which supervises Luxembourg banks.
Clearstream customers:
o are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and other organizations,
o may include the underwriters of any series of certificates issued
through this document, and
o in the U.S., are limited to securities brokers, dealers and banks.
Currently, Clearstream has approximately 2,000 customers located in over
80 countries, including all major European countries, Canada and the United
States. Banks, brokers, dealers, trust companies and other organizations that
clear through or maintain a custodial relationship with a Clearstream
customer, either directly or indirectly, have indirect access to Clearstream.
Euroclear
The Euroclear system was created in 1968:
o to hold securities of its participating organizations, referred to as
Euroclear participants, and
o to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment, so there
is:
-- no need for physical movement of securities certificates, and
-- no risk from lack of simultaneous transfers of securities and cash.
The Euroclear system's various services include:
o settlement of transactions in any of 34 currencies, including United
States dollars, and
o securities lending and borrowing and interfaces with domestic markets in
several countries similar to the arrangements for cross-market transfers
with DTC.
The Euroclear system is operated by Euroclear Bank, acting as Euroclear
operator, under contract with the Euroclear Clearance System, S.C., a Belgian
cooperative corporation, which establishes policy for the Euroclear system on
behalf of Euroclear participants. Euroclear participants:
o include central banks and other banks, securities brokers and dealers
and other professional financial intermediaries, and
o may include the underwriters of any series of certificates offered
through this document.
Other firms that clear through or maintain a custodial relationship with
a Euroclear participant, either directly or indirectly, have indirect access
to the Euroclear system.
The Euroclear operator conducts all operations for Euroclear, and holds
all Euroclear securities clearance accounts and cash accounts. The Euroclear
operator is the Belgian branch of a New York banking corporation which is a
member bank of the Federal Reserve System. It is regulated and examined by the
Board of Governors of the Federal Reserve System and the New York State
Banking Department, as well as the Belgian Banking Commission.
The Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear system and applicable Belgian law
govern:
o securities clearance accounts and cash accounts with the Euroclear
operator,
o transfers of securities and cash within the Euroclear system,
o withdrawal of securities and cash from the Euroclear system, and
o receipts of payments for securities in the Euroclear system.
The Euroclear system holds all securities (1) on a fungible basis and (2)
without knowledge of the actual owners holding through Euroclear participants
and to whose accounts the securities are credited. The Euroclear operator acts
under these terms and conditions only on behalf of Euroclear participants and
has no record of or relationship with persons holding through Euroclear
participants.
Book-Entry Registration
Cede, as DTC's nominee, holds the global securities. Clearstream will
hold omnibus positions on behalf of organizations participating in
Clearstream's book-entry system, referred to as "Clearstream customers," while
Euroclear will do the same on behalf of participants in the Euroclear system,
referred to as "Euroclear participants," through customers' securities
accounts in the names of Clearstream and Euroclear on the books of each of
their depositaries. These depositaries will, in turn, hold these positions in
customers' securities accounts in the depositaries' names on DTC's books.
Transfers between:
o DTC participants occur under the DTC rules, and
o Clearstream customers and Euroclear participants occur in the ordinary
way under their applicable rules and operating procedures.
Cross-market transfers occur through DTC, under its rules, on behalf of
Clearstream or Euroclear by each of their depositaries, whether between
persons holding securities directly or indirectly:
o through DTC, on the one hand, and
o through Clearstream customers or Euroclear participants, on the other
hand.
However, these cross-market transactions will require delivery of instructions
to Clearstream or Euroclear by the counterparty in its system under either
clearing system's rules and procedures, and within its established European
time deadlines. Clearstream or Euroclear will, if the transaction meets its
settlement requirements, deliver instructions to its depositary to take action
to accomplish final settlement on its behalf by:
o delivering or receiving securities in DTC, and
o making or receiving payment under normal procedures for same-day funds
settlement applicable to DTC.
Clearstream customers and Euroclear participants may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits of securities in Clearstream or
Euroclear due to a transaction with a DTC participant will be made during the
subsequent securities settlement processing, dated the business day following
the DTC settlement date. These credits or any other transactions in the
securities settled during that processing will be reported to the relevant
Clearstream customers or Euroclear participants on that day. Cash received in
Clearstream or Euroclear because of sales of securities by or through a
Clearstream customer or a Euroclear participant:
o will be received with value on the DTC settlement date, and
o will only be available in the relevant Clearstream or Euroclear cash
account only as of the business day following settlement in DTC.
Your purchases of certificates under the DTC system must be made by or
through DTC participants, which will receive a credit for the certificates on
DTC's records. Your ownership interest is, in turn, recorded on the DTC
participants' and indirect participants' records. You will not receive written
confirmation from DTC of their purchase, but you can expect to receive written
confirmation providing details of the transaction, as well as periodic
statements of your holdings, from the DTC participant or indirect participant
through which you entered into the transaction. Transfers of ownership
interests in the certificates are accomplished by entries made on the books of
DTC participants acting on behalf of you and other certificateholders. You
will not receive certificates representing your ownership interest in the
certificates offered through this document, unless use of the book-entry
system for these certificates has ended.
DTC registers all certificates deposited with it by DTC participants in
the name of its nominee, Cede, to make all later transfers of certificates
easier. The deposit of certificates with DTC and their registration in the
name of Cede will not change beneficial ownership of the certificates. DTC has
no knowledge of the actual owners of the certificates; its records reflect
only the identity of the DTC participants to whose accounts the certificates
are credited, which may or may not be the actual certificate owners. DTC
participants remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by:
o DTC to DTC participants,
o DTC participants to indirect participants, and
o DTC participants and indirect participants to certificateholders,
will be governed by arrangements among them, under any applicable statutory or
regulatory requirements.
Neither DTC nor Cede will consent or vote on these certificates. Under
its usual procedures, DTC mails an omnibus proxy to TRC as soon as possible
after the Record Date. In this way, DTC assigns Cede's consenting or voting
rights to those DTC participants to whose accounts these certificates are
credited on the relevant Record Date.
For each distribution date:
o the trustee makes principal and interest payments on the certificates to
DTC, and
o DTC credits each of those payments to DTC participants' accounts on that
date according to each of the participants' holdings shown on DTC's
records unless DTC has reason to believe that it will not receive
payment on that date.
Payments by any DTC participant to certificateholders will be:
o governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form
or registered in "street name," and
o the responsibility of that DTC participant and not of DTC, the trustee
or TRC, under any applicable statutory or regulatory requirements.
The responsibility for:
o payment of principal and interest to DTC belongs to the trustee,
o disbursement of these payments to DTC participants belongs to DTC, and
o disbursement of these payments to certificateholders belongs to DTC
participants and indirect participants.
DTC may stop providing its services as securities depository for these
certificates at any time by giving reasonable notice to TRC or the trustee. If
this occurs and if a successor securities depository is not obtained,
Definitive Certificates will be printed and delivered. TRC may decide to end
use of the system of book-entry transfers through DTC or a successor
securities depository. If so, Definitive Certificates will be delivered to
each certificateholder. See "--Definitive Certificates" for a description of
the circumstances under which the trust will issue Definitive Certificates to
you.
Clearstream or Euroclear will credit distributions on certificates held
through it to the cash accounts of Clearstream customers or Euroclear
participants under its rules and procedures, to the extent received by its
depositary. These distributions will require tax reporting under relevant U.S.
tax laws and regulations as described under "Federal Income Tax Consequences."
Clearstream or the Euroclear operator will take any other action permitted to
be taken by a certificateholder under the Pooling and Servicing Agreement on
behalf of a Clearstream customer or Euroclear participant:
o only under its relevant rules and procedures, and
o to the extent its depositary can carry out those actions on its behalf
through DTC.
Although DTC, Clearstream and Euroclear have agreed to the procedures
above to provide a system that makes transfers of certificates among their
participants or customers easier:
o they are under no obligation to perform or continue to perform these
procedures, and
o they may stop these procedures at any time.
Definitive Certificates
The certificates offered through this prospectus will be initially issued
in book-entry form. Definitive Certificates in fully registered, certificated
form will not be issued to any party except DTC or its nominee unless:
o TRC advises the trustee in writing:
-- that DTC is no longer willing or able to discharge properly its
responsibilities as depository for this series of certificates, and
the trustee or TRC is unable to locate a qualified successor,
-- that it chooses to end the book-entry system through DTC, or
o after a Servicer Default occurs:
-- certificateholders representing (1) not less than 50% or (2) another
percentage specified in the related prospectus supplement of the
total unpaid principal amount of the certificates advise the trustee
and DTC through DTC participants in writing that the continuation of
a book-entry system through DTC or its successor is no longer in the
best interests of the certificateholders.
If any of these events occurs, DTC must notify all DTC participants of
the availability through DTC of Definitive Certificates. Once DTC gives the
definitive certificate representing these certificates and instructions for
re-registration to the trustee:
o the trustee will issue the certificates as Definitive Certificates, and
o afterwards, the trustee will recognize the holders of these Definitive
Certificates as holders under the Pooling and Servicing Agreement.
The trustee then makes payments:
o directly to holders of Definitive Certificates under the procedures
provided in this prospectus and in the Pooling and Servicing Agreement,
and
o on each distribution date, to holders in whose names the Definitive
Certificates were registered at the close of business on the related
Record Date.
If you own Definitive Certificates, payments will be made by check and
mailed to you at an address maintained by the trustee.
The final payment will be made only when a certificate is presented and
surrendered at the office or agency specified in the notice of final
distribution to certificateholders, whether it is:
o a Definitive Certificate, or
o a certificate registered in the name of DTC or its nominee.
The trustee will provide this notice to registered certificateholders no later
than the fifth day of the month in which the final distribution will occur.
Definitive Certificates will be transferable and exchangeable at the
office of the transfer agent and registrar, which shall initially be the
trustee. The transfer agent and registrar will impose no service charge but
may require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection with the transfer or exchange. The transfer agent
and registrar shall not be required to register the transfer or exchange of
Definitive Certificates for a period of fifteen days preceding the due date
for any payment on the Definitive Certificates.
Secondary Market Trading
Trading between DTC participants. Secondary market trading between
investors holding certificates through DTC will be conducted according to the
rules and procedures for U.S. corporate debt obligations. Secondary market
trading between DTC participants will be settled in same-day funds.
Trading between Clearstream customers and/or Euroclear participants.
Secondary market trading between investors holding certificates through
Clearstream and Euroclear will be conducted in the ordinary way under:
o their normal rules and operating procedures, and
o conventional eurobond practice (which means a seven calendar day
settlement).
Secondary market trading between Clearstream customers or Euroclear
participants will be settled using the procedures for conventional eurobonds
in same-day funds.
Trading between DTC seller and Clearstream or Euroclear purchaser.
Transfers of certificates from the account of a DTC participant to the account
of a Clearstream customer or a Euroclear participant usually occur as follows:
o the purchaser sends instructions to Clearstream or Euroclear through
that customer or participant at least one business day before
settlement,
o Clearstream or Euroclear instructs its depositary to receive the
securities against payment, which includes interest accrued on the
securities from and including the last coupon payment date to and
excluding the settlement date,
o that depositary credits payments to the DTC participant's account
against delivery of the securities, and
o after settlement has been completed, the depositary credits securities
to the relevant clearing system, which, in turn, under its usual
procedures, credits those securities to that customer's or participant's
account.
The securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the securities will accrue
from, the value date-- which would be the preceding day when settlement
occurred in New York. If settlement is not completed on the intended value
date, which means the trade fails, the Clearstream or Euroclear cash debit
will be valued instead as of the actual settlement date.
Clearstream customers or Euroclear participants will need to make
available to each of their clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within Clearstream or
Euroclear. Under this approach, they may take on credit exposure to
Clearstream or Euroclear until the securities are credited to their accounts
one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream customers or Euroclear participants can elect not
to pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Clearstream customers or Euroclear
participants purchasing securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the securities were credited to their
accounts. However, interest on the securities would accrue from the value
date. So, the investment income on the securities earned during that one-day
period may substantially reduce or offset the amount of the overdraft charges,
although this result will depend on each Clearstream customer's or Euroclear
participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can use their usual procedures for sending securities to their
depositaries for the benefit of Clearstream customers or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. In this way, to the DTC participant a cross-market
transaction will settle no differently than a trade between two DTC
participants.
Trading between Clearstream or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Clearstream customers and Euroclear
participants may use their customary procedures for transfers of securities by
a clearing system, through its depositary, to a DTC participant. Trading
usually occurs as follows:
o the seller sends instructions to Clearstream or Euroclear through a
Clearstream customer or Euroclear participant at least one business day
before settlement,
o Clearstream or Euroclear instructs its depositary to deliver the bonds
to the DTC participant's account against payment, which includes
interest accrued on the securities from and including the last coupon
payment date to and excluding the settlement date, and
o the payment is reflected in the account of that customer or participant
the next day, and receipt of the cash proceeds in that customer's or
participant's account is back-valued to the value date-- the preceding
day when settlement occurred in New York.
Should the Clearstream customer or Euroclear participant have a line of credit
with its clearing system and elect to be in debit in anticipation of receipt
of the sale proceeds in its account, the back-valuation will cancel out any
overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date, which means the trade fails, receipt of
the cash proceeds in the Clearstream customer's or Euroclear participant's
account would instead be valued as of the actual settlement date. Finally, day
traders that use Clearstream or Euroclear and that purchase securities from
DTC participants for delivery to Clearstream customers or Euroclear
participants should note that these trades would automatically fail on the
sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
o borrowing through Clearstream or Euroclear for one day-- until the
purchase side of the day trade is reflected in their Clearstream or
Euroclear accounts-- under the clearing system's customary procedure,
o borrowing the securities in the U.S. from a DTC participant no later
than one day before settlement which would give the securities
sufficient time to be reflected in their Clearstream or Euroclear
account to settle the sale side of the trade, or
o staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at
least one day before the value date for the sale to the Clearstream
customer or Euroclear participant.
Enhancement
The related prospectus supplement will state if the trust provides
enhancement for one or more classes of a series, including your series. If so,
any form of enhancement may be structured so as to be utilized by more than
one class to the extent described in that prospectus supplement.
Enhancement will not provide protection against all risks of loss or
guarantee repayment of the entire outstanding principal balance of the
certificates and/or payment of interest. If losses occur which exceed the
amount covered by enhancement or which are not covered by enhancement,
certificateholders will bear their allocable share of deficiencies.
Specific Forms of Enhancement
The related prospectus supplement will specify the manner and to what
extent the following forms of enhancement or other enhancement applies to your
series or any class of your series:
Subordination
One or more classes of certificates of any series may be subordinated as
described in the related prospectus supplement to the extent necessary to fund
payments on the senior certificates. The rights of the holders of any
subordinated certificates to receive distributions of principal and/or
interest on any distribution date for that series will be subordinated in
right and priority to the rights of the holders of senior certificates, but
only to the extent described in the related prospectus supplement. The related
prospectus supplement may specify if subordination may apply only for some
types of losses not covered by another enhancement.
If collections of receivables otherwise distributable to holders of a
subordinated class of a series will be used as support for a class of another
series, the related prospectus supplement will specify the manner and
conditions for applying this cross-support feature.
Collateral Interest
An interest in the assets of the trust, referred to as the collateral
interest, in an amount specified in the related prospectus supplement, may
provide support for one or more classes of a series. The rights of the holders
of any collateral interest to receive distributions of principal and/or
interest on any distribution date for that series will be subordinated in
right and priority to the rights of the holders of senior certificates, but
only to the extent described in the related prospectus supplement. The
collateral interest may be certificated or uncertificated. If so specified in
the applicable Supplement, the holder of an uncertificated collateral interest
will have the rights and remedies of a certificateholder under the Pooling and
Servicing Agreement.
Cash Collateral Guaranty or Account
Enhancement for a series or one or more classes may be provided by:
o a cash collateral guaranty secured by the deposit of cash or some
eligible investments in a cash collateral account reserved for the
beneficiaries of the cash collateral guaranty, or
o a cash collateral account.
The amount available from the cash collateral guaranty or the cash
collateral account will be the lesser of (1) amounts on deposit in the cash
collateral account and (2) an amount specified in the related prospectus
supplement. The related prospectus supplement will describe the circumstances
under which payments are made to beneficiaries of the cash collateral guaranty
from the cash collateral account or from the cash collateral account directly.
Letter of Credit
One or more letters of credit may provide enhancement for a series or one
or more classes of certificates. The letter of credit may be used in
conjunction with other forms of enhancement to provide limited protection
against some losses. The issuer of the letter of credit will be obligated to
honor demands as to the letter of credit, to the extent of the amount
available under the letter of credit, to provide funds under the circumstances
and under the conditions specified in the related prospectus supplement.
Surety Bond or Insurance Policy
A surety bond may be purchased for the benefit of the holders of any
series or class of certificates to assure distributions of interest or
principal for that series or class in the manner and amount specified in the
related prospectus supplement.
One or more insurance companies may provide insurance, to a series or one
or more classes, to guarantee, for one or more classes, distributions of
interest or principal in the manner and amount specified in the related
prospectus supplement.
Spread Account
Support for a series or one or more classes may be provided by the
periodic deposit of available excess cash from the trust assets into a spread
account, intended to assist with subsequent distribution of interest and
principal on that series or class in the manner specified in the related
prospectus supplement.
Reserve Account
The establishment of a reserve account may provide support for a series
or one or more classes of certificates. The reserve account may be funded, to
the extent provided in the related prospectus supplement, by:
o an initial cash deposit,
o the retention of available excess cash,
o periodic distributions of principal or interest or both otherwise
payable to one or more classes of certificates, including subordinated
certificates,
o the provision of a letter of credit, guarantee, insurance policy or
other form of credit, or
o any combination of these items.
The reserve account may assist with the subsequent distribution of
principal or interest on that series or class in the manner provided in the
related prospectus supplement.
The Pooling and Servicing Agreement
Conveyance of Receivables
Under the Pooling and Servicing Agreement, TRC has transferred to the
trust its interest in:
o all receivables and proceeds existing on and after the Cut-Off Date in
the initial accounts and all receivables and proceeds existing on and
after each Addition Date in any Automatic Additional Accounts,
o any Merchant Fees and deferred billing fees,
o the Receivables Purchase Agreement, and
o the Bank Receivables Purchase Agreement.
TRC must file all UCC (Uniform Commercial Code) financing statements
necessary to perfect the security interest of the trustee, for the benefit of
the certificateholders, in the receivables.
If TRC elects to suspend the inclusion of Automatic Additional Accounts
or designates an Automatic Addition Termination Date, those accounts
designated to have their receivables transferred to the trust will be marked
on RNB's computer records to differentiate them from other RNB credit card
accounts. TRC will then provide the trustee with a computer file, microfiche
list or printed list containing an accurate and complete list of each initial
account, Additional Account and Supplemental Account.
The physical documentation relating to the accounts or the receivables
will not be stamped or marked to show the transfer of receivables to the
trust. RNB will retain all other records or agreements about the accounts and
the receivables.
Addition of Trust Assets
Currently all new accounts originated by RNB are designated as Automatic
Additional Accounts. The receivables in these accounts are immediately sold by
RNB to TCC. These receivables are then sold by TCC to TRC and then transferred
by TRC to the trust. Each Automatic Additional Account will be included as an
account from the date it is created, and all existing and future receivables
in these accounts will be transferred to the trust after being purchased by
TRC to the extent they are not removed at a later date.
TRC will be permitted to continue designating Automatic Additional
Accounts if the Aggregate Addition Limit would not be exceeded because of the
inclusion of the Automatic Additional Accounts as accounts. The Aggregate
Addition Limit is the limit on 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 without prior notice to the rating
agencies.
The Aggregate Addition Limit means a number of accounts which either:
o for any of the three consecutive Monthly Periods beginning in January,
April, July and October of each calendar year, may not exceed 15% of the
number of accounts as of the first day of the calendar year during which
those Monthly Periods begin, or
o for any twelve-month period, equals 20% of the number of accounts as of
the first day of that twelve-month period.
If the Aggregate Addition Limit would be exceeded, TRC will be permitted
to continue designating Automatic Additional Accounts without rating agency
consent, provided:
o the three-month average default rate is less than 10.5%,
o the three-month average payment rate is greater than or equal to 10.0%,
and
o the three-month average Trust Portfolio Yield, less the three-month
average of the weighted average base rates for each outstanding series,
is greater than or equal to 1.5%.
In addition, if any of the conditions set forth above are not met and if
the Aggregate Addition Limit would be exceeded, the designation of Automatic
Additional Accounts will be permitted to continue if the designation satisfies
the Rating Agency Condition.
In any event, the number of accounts to be included as Automatic
Additional Accounts for the related six-month period must be less than or
equal to 30% of the number of accounts as of the first day of the six-month
period, unless the inclusion satisfies the Rating Agency Condition.
TRC intends to continue automatically adding accounts. However, TRC may
elect at any time to end or suspend the inclusion of accounts that would
otherwise be Automatic Additional Accounts by delivering to the trustee, the
rating agencies and the servicer, 10 days' written notice of this election. If
TRC stops the automatic designation of new accounts, TRC will not restart
designating Automatic Additional Accounts until a date specified in a written
notice given by TRC to the trustee. TRC will specify in the notice that on the
Restart Date the conditions described above will be satisfied on the Restart
Date.
TRC must make an addition to the trust on the required designation date
if, on the last business day of any Monthly Period, either:
o the Transferor Amount, excluding the interest represented by any
Supplemental Certificate, is less than the Required Retained Transferor
Amount, or
o the amount of Principal Receivables in the trust is less than the
Required Principal Balance.
TRC will not be required to add receivables in Additional Accounts if the
Transferor Amount, excluding the interest represented by any Supplemental
Certificate, equals or exceeds the Required Retained Transferor Amount or the
total amount of Principal Receivables in the trust equals or exceeds the
Required Principal Balance before the proposed Addition Date.
The receivables to be added will be generated from accounts owned by RNB
or another Credit Card Originator. Alternatively, Participation Interests or
certificates of undivided interests in a pool of assets primarily from
open-end credit card receivables originated by RNB or another Credit Card
Originator may be added to the trust. These Participation Interests may, for
example, include rights in TRC's interests in other trusts which have as their
primary assets open-end credit card receivables originated by RNB or another
Credit Card Originator. Any Participation Interests transferred to the trust
must be registered under the Securities Act or held for at least the
Securities Act Rule 144(k) holding period before transfer to the trust.
Participation Interests can be added to the trust only upon satisfaction of
the conditions specified in the Pooling and Servicing Agreement. There are
currently no Participation Interests held by the trust.
In connection with an addition of a Supplemental Account or Participation
Interest, RNB or another Credit Card Originator may sell to TCC or TRC, and
TCC if it has purchased will then sell to TRC and TRC will then transfer to
the trust the receivables from these accounts on the following conditions:
o on or before the tenth business day before any addition, TRC has given
the trustee, the servicer, each rating agency and the enhancement
providers, if any, written notice that the receivables from Supplemental
Accounts or Participation Interests will be included as trust assets,
o for Supplemental Accounts, on or before the date the receivables are
added to the trust, TRC has delivered to the trustee a written
assignment and a computer file, microfiche list or printed list
containing a true and complete list of these Supplemental Accounts
specifying for each account its account number, the aggregate amount
outstanding in the account and the aggregate amount of Principal
Receivables outstanding in the account,
o for an addition of Supplemental Accounts or Participation Interests
other than a required addition, TRC has received confirmation that the
Rating Agency Condition has been satisfied,
o for a required addition of Supplemental Accounts which exceeds the
Aggregate Addition Limit, TRC has provided Standard & Poor's at least 10
business days' written notice of each addition and Standard & Poor's has
notified TRC that the addition will not result in the lowering or
withdrawal of its then existing rating of the certificates of any
series, and
o on or before the date any receivables in Supplemental Accounts or
Participation Interests are added to the trust, TRC has delivered to the
trustee and any enhancement providers entitled to receive it under any
Supplement a certificate of an authorized officer stating that:
-- the Supplemental Accounts are eligible accounts, and
-- TRC reasonably believes that:
o the addition will not cause an early amortization event for any
series based on the facts known to the officer at the time of the
certification, and
o no selection procedure was used by TRC that would result in a
selection of Supplemental Accounts, from the available eligible
accounts owned by RNB, that would have a result that would be
materially less favorable to the interests of the
certificateholders of any series on the date of the addition than
a random selection.
TRC may direct that the Principal Receivables in the Additional Accounts
be treated as 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. This
direction may be made on the Addition Date only if all collections from the
Additional Accounts for the current Monthly Period are deposited in the
Collection Account.
RNB or its affiliates may originate or acquire portfolios of open-end
credit card accounts. The receivables in an acquired portfolio, or a
Participation Interest, may be sold to TCC, and later sold to TRC and then
transferred to the trust. These sales must meet the conditions for additions
of Supplemental Accounts or Participation Interests.
Additional Accounts or Participation Interests may include accounts
originated using criteria different from those that were applied to the
initial accounts. These accounts may have been originated at a later date or
may have been part of a portfolio of open-end credit card accounts that were
not part of the trust portfolio as of the Cut-Off Date. For example,
Additional Accounts have included new Target VISA accounts which were not
included on the Cut-Off Date and which were not converted from existing Target
Guest Card accounts. Some Additional Accounts may have been acquired from
other institutions. Additional Accounts and accounts included in Participation
Interests may not be of the same type as those previously included in the
trust. Additional Accounts may contain receivables which consist of fees,
charges and amounts that are different from the fees, charges and amounts
described in the related prospectus supplement. Additional Accounts may also
have different credit limits, balances and ages. For these reasons, there can
be no assurance that the Additional Accounts or Participation Interests will
be of the same credit quality or have the same payment characteristics as the
initial accounts or the Additional Accounts previously included in the trust.
Additional Accounts and accounts included in Participation Interests may
contain receivables which consist of fees, charges and amounts that are
different from the Finance Charge Receivables and Principal Receivables in the
initial trust portfolio. The servicer will designate the portions of funds
collected or to be collected for these receivables or Participation Interests
to be treated for purposes of the Pooling and Servicing Agreement as Principal
Receivables and Finance Charge Receivables.
Target Guest Card accounts that were converted to Target VISA accounts
remained designated to the trust and were not treated as new Additional
Accounts at the time of conversion. Target Guest Card accounts that are
converted to Target VISA accounts in the future will not be treated as new
Additional Accounts at the time of conversion.
Removal of Accounts
TRC has the right to require reassignment to itself, or another company
designated by it, of all of the trust's rights in and to the receivables from
Removed Accounts or Participation Interests under the following conditions:
o on or before ten business days before the removal date, TRC gives the
trustee, the servicer, each rating agency and any enhancement provider
written notice of the removal including the date for removal of the
Removed Accounts and Participation Interests,
o on or before ten business days after the removal date, TRC delivers to
the trustee a computer file, microfiche list or printed list containing
an accurate and complete list of the Removed Accounts specifying the
account number, the receivables outstanding in the account and Principal
Receivables outstanding in the account,
o TRC will represent and warrant that as of the removal date the list of
Removed Accounts delivered to the trustee is accurate and complete in
all material respects,
o TRC receives confirmation that the Rating Agency Condition has been
satisfied,
o TRC delivers to the trustee and any enhancement provider entitled to
receive it under any Supplement a certificate of an authorized officer,
dated the removal date, stating that TRC reasonably believes that:
-- the removal will not cause an early amortization event to occur for
any series based on the facts then known to such officer, and
-- no selection procedure materially adverse to the interests of the
certificateholders has been used in removing Removed Accounts from
any pool of accounts or Participation Interests of a similar type,
and
o TRC pays the fair market value of the receivables in the Removed
Accounts to the trust.
The removal can occur for a number of reasons including a determination
by TRC that the trust contains more receivables than TRC is obligated to
retain in the trust under the Pooling and Servicing Agreement and any
Supplements and a determination that TRC does not desire to obtain additional
financing through the trust at that time.
After satisfying the above conditions, the trustee will execute and
deliver to TRC or its designee a written reassignment. The trustee will then
be considered to sell, transfer, assign, set over and otherwise convey to TRC
or its designee, all of its rights in the receivables arising in the Removed
Accounts or Participation Interests.
In addition, on the date when any receivable in an account becomes a
Defaulted Receivable, the trustee will automatically transfer to TRC, all of
its rights to the Defaulted Receivables, any Finance Charge Receivables which
have been charged off as uncollectible in that account, and all monies due or
to become due and proceeds in that account. Each account with a Defaulted
Receivable will be a Removed Account and the date for removal will be the
first date that any receivable in that account became a Defaulted Receivable.
Collections received from the cardholder or from the sale of the defaulted
account will be treated as recoveries. See "Description of
Certificates--Defaulted Receivables and Defaulted Amount."
Eligible Accounts and Eligible Receivable
An eligible account is an open-end credit card account, which is not a
commercial account, owned by the Credit Card Originator as of the Cut-Off Date
for the initial account, on the date of creation for an Automatic Additional
Account, or as of any date TRC designates any Supplemental Account for
inclusion in the trust, and:
o is in existence and serviced at the facilities of the Credit Card
Originator or any of its affiliates,
o is payable in United States dollars,
o has not been identified as an account where the credit cards were
reported to the Credit Card Originator as lost or stolen,
o has not been, and does not have any receivables that have been, sold,
pledged, assigned or otherwise conveyed to any person unless the pledge
or assignment is released on or before the date of issuance of a series
or the Addition Date,
o does not have any receivables that are Defaulted Receivables,
o does not have any receivables that have been identified as having been
incurred because of fraudulent use of any related credit card, and
o has a cardholder who has provided as his or her billing address, an
address located in the United States or its territories or possessions
or a United States military address, except, as of any date of
determination, up to 4% of the number of accounts in the trust portfolio
may have cardholders who have provided addresses outside of that
jurisdiction.
An Eligible Receivable is a receivable:
o which was created in an eligible account,
o which was created under the Credit Card Guidelines and all requirements
of law, and under a cardholder agreement which follows all requirements
of law applicable to the Credit Card Originator, the failure to comply
with which would have a material adverse effect on certificateholders,
o which has obtained or received all consents, licenses, approvals or
authorizations of, or registrations with, any governmental authority
required for the creation of the receivable or the execution, delivery
and performance by the Credit Card Originator of the related cardholder
agreement and such items are in full force and effect as of the date of
the creation of the receivable,
o to which TRC or the trust has good title free and clear of all liens and
security interests at the time of its transfer to the trust, other than
any lien for municipal or other local taxes,
o which has been validly transferred and assigned from TRC to the trust or
was granted a security interest,
o which is the legal, valid and binding payment obligation of the
cardholder at and after the time of transfer to the trust, legally
enforceable against the cardholder under its terms,
o which is recognized as an "account," a "general intangible" or "chattel
paper" as defined in Article 9 of the UCC,
o which has not been waived or modified at the time of its transfer to the
trust, except as permitted by the Pooling and Servicing Agreement,
o which is not under any right of rescission, setoff, counterclaim or
other defense of the cardholder at the time of its transfer to the
trust, including the defense of usury, other than bankruptcy or other
debtor relief and equity-related defenses and adjustments permitted by
the Pooling and Servicing Agreement to be made by the servicer,
o for which TRC has satisfied all obligations to be fulfilled at the time
it is transferred to the trust, and
o for which TRC 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.
It is not required or anticipated that the trustee will make any initial
or periodic general examination of any documents or records of the receivables
or the accounts for the purpose of:
o establishing the presence or absence of defects,
o ensuring compliance with TRC's representations and warranties, or
o for any other purpose.
In addition, it is not anticipated or required that the trustee make any
initial or periodic general examination of the servicer for the purpose of
establishing the compliance by the servicer with its representations or
warranties or the performance by the servicer of its obligations under the
Pooling and Servicing Agreement or for any other purpose. The servicer,
however, will deliver to the trustee on or before March 31 of each calendar
year an opinion of counsel as to the validity of the interest of the trust in
and to the receivables.
Representations and Warranties
On the date of issuance of a series, TRC will represent and warrant to
the trustee on behalf of the trust that:
o on the Cut-Off Date for each initial account, on the date of creation
for each Automatic Additional Account, and on any date TRC designates
any Supplemental Account for inclusion in the trust, each account that
TRC classifies as an "eligible account" satisfied or will satisfy the
requirements of an eligible account,
o on the Cut-Off Date for each initial account, on the date of
creation for each Automatic Additional Account, and on any date
TRC designates any Supplemental Account for inclusion in the
trust, each receivable that TRC classifies as an "eligible
receivable" satisfied or will satisfy the requirements of an
Eligible Receivable, and
o on the date of creation of any new receivable, that receivable will be
an Eligible Receivable.
Receivables will be designated as Ineligible Receivables and will be
assigned a principal balance of zero for the purpose of determining the total
amount of Principal Receivables if any representation or warranty of TRC is
not true and correct in any material respect for those receivables transferred
to the trust by TRC and, as a result:
o the receivables become Defaulted Receivables, or
o the trust's rights in and to those receivables or the proceeds of those
receivables are impaired or are not available to the trust free and
clear of any lien.
TRC may cure any breach of a representation or warranty of eligibility
within 60 days after the earlier to occur of the discovery by TRC or the
receipt by TRC of written notice given by the trustee of the breach. These
receivables will not be considered Ineligible Receivables and these Principal
Receivables will be included in determining the total Principal Receivables in
the trust if, on any day before the end of the period:
o the relevant representation and warranty is true and correct in all
material respects as if made on that day, and
o TRC has delivered to the trustee a certificate of an authorized officer
describing the nature of the breach and the manner in which the
representation and warranty became true and correct.
On and after the date of its designation as an Ineligible Receivable,
each Ineligible Receivable will not be given credit in determining the total
amount of Principal Receivables used to calculate the Transferor Amount, the
Floating Allocation Percentage and the Principal Allocation Percentage. If,
following the exclusion of Principal Receivables that are Ineligible
Receivables from the calculation of the Transferor Amount, the Transferor
Amount, exclusive of the interest represented by any Supplemental Certificate,
would be less than the Required Retained Transferor Amount, TRC will deposit
into the Special Funding Account an amount, not to exceed the amount of those
Principal Receivables, equal to the Required Retained Transferor Amount less
the Transferor Amount as reduced by the amount of the Ineligible Receivable
and exclusive of the interest represented by any Supplemental Certificate. The
obligation of TRC to make these deposits is the sole remedy for any breach of
the representations and warranties for the receivable available to
certificateholders of any series, the trustee on behalf of certificateholders,
or any enhancement provider.
TRC will also make representations and warranties to the trust that as of
the date of issuance of a series:
o it is a corporation validly existing and in good standing under the laws
of the State of Minnesota,
o it has the authority to consummate the transactions contemplated by the
Pooling and Servicing Agreement and the related Supplement and each of
these agreements constitutes a valid, binding and enforceable agreement
of TRC,
o the transfer of receivables by it to the trust under the Pooling and
Servicing Agreement constitutes either a valid transfer and assignment
to the trust of all right, title and interest of TRC in and to the
receivables and the proceeds or the grant of a security interest under
the UCC in the receivables, and
o the transfer of the proceeds for each receivable then existing on the
date of its transfer to the trust or, for each receivable arising later,
upon its creation, is either:
-- a valid transfer and assignment to the trust of all right, title and
interest of TRC in and to the proceeds, or
-- the grant of a security interest under the UCC in the proceeds,
which will be enforceable in each case except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting the enforcement of creditors' rights and by
general principles of equity, whether considered in a suit at law or in
equity.
If TRC breaches these representations and warranties and that breach has
a material adverse effect on the certificateholders' interest in the
receivables, either:
o the trustee or the holders of certificates evidencing not less than 50%
of the total unpaid principal amount of the certificates of all series,
by written notice to TRC and the servicer and to the trustee, may direct
TRC to accept the reassignment of the receivables transferred to the
trust by TRC within 60 days of the notice, or within a longer period not
in excess of 150 days specified in the notice, or
o the receivables will not be reassigned to TRC if, on any day before the
end of a 60-day or longer period:
-- the relevant representation and warranty is true and correct in all
material respects as if made on that day, and
-- TRC has delivered to the trustee a certificate of an authorized
officer describing the nature of the breach and the manner in which
the relevant representation and warranty became true and correct.
TRC must accept the reassignment of these receivables on the first
distribution date following the Monthly Period in which the reassignment
obligation arises.
The payment of the reassignment price will be considered a payment in
full of the receivables and those funds will be deposited into the Collection
Account. The obligation of TRC to make any deposit will be the only remedy for
a breach of the representations and warranties available to certificateholders
of all series, the trustee on behalf of these certificateholders, or any
enhancement provider.
Discount Option Receivables
TRC may designate a specified fixed or floating percentage of the amount
of Principal Receivables from the accounts to be treated as Finance Charge
Receivables. The circumstances under which TRC may exercise its option to
discount Principal Receivables may include a time when the Trust Portfolio
Yield is declining and Principal Receivables are available in sufficient
quantity to allow for discounting.
TRC may increase, reduce or eliminate the percentage used to calculate
Discount Option Receivables without notice to or consent of the
certificateholders in accordance with the Pooling and Servicing Agreement. For
the increase, reduction or elimination to become effective, TRC must give 30
days' notice in writing to the servicer, the trustee and each rating agency
specifying the effective date of the change and deliver to the trustee a
certificate of an authorized officer stating that the increase, reduction or
elimination will not cause an early amortization event or an event which with
notice or the lapse of time would cause an early amortization event to occur.
If TRC intends to increase this percentage above 3%, TRC, the servicer and the
trustee must also receive confirmation that the Rating Agency Condition is
satisfied.
Collections on the date of processing during the time Discount Option
Receivables are effective will be considered collections of Finance Charge
Receivables in an amount equal to the product of:
o a fraction whose numerator is the amount of Discount Option Receivables
and whose denominator is the amount of all Principal Receivables,
including Discount Option Receivables, at the end of the previous
Monthly Period, and
o collections of Principal Receivables, before any reduction for Finance
Charge Receivables which are Discount Option Receivables.
Any designation of Discount Option Receivables would result in an
increase in the amount of Finance Charge Receivables and a corresponding
increase in the portfolio yield for each series and a reduction in the amount
of Principal Receivables. For this reason, the effect on certificateholders
will be to:
o decrease the likelihood of an early amortization event based on a
reduction of the average portfolio yield for any designated period to a
rate below the average base rate,
o increase the likelihood that the transferor will be required to add
Principal Receivables to the trust, and
o increase the likelihood of an early amortization event if additional
Principal Receivables are not available.
Indemnification
The Pooling and Servicing Agreement provides that the servicer will
indemnify the trust and the trustee from and against any loss, liability,
expense, damage or injury suffered or sustained, from the servicer's actions
or omissions relating to the trust.
Under the Pooling and Servicing Agreement, TRC and any holder of the
Transferor Certificate have agreed to be liable directly to an indemnity for
the entire amount of any losses, claims, damages or liabilities relating to or
based on:
o the arrangement created by the Pooling and Servicing Agreement, or
o the actions of the servicer taken pursuant to the Pooling and Servicing
Agreement
as though the Pooling and Servicing Agreement created a partnership under the
Delaware Revised Uniform Partnership Act in which TRC and any other holder of
the Transferor Certificate were general partners, to the extent that the trust
assets that would remain after the certificateholders and enhancement
providers, if any, were paid in full would be insufficient to pay those
amounts.
This liability for losses, claims, damages or liabilities excludes those
incurred by a certificateholder in the capacity of an investor in the
certificates of any series because of the performance of the receivables,
market fluctuations, a shortfall or failure to make payment under any
enhancement or other similar market or investment risks associated with
ownership of certificates. The servicer will indemnify and hold harmless TRC
and any holder of a Transferor Certificate, excluding any Supplemental
Certificate or Participation, for any losses, claims, damages and liabilities
of TRC and the holder relating to the actions or omissions of the servicer.
Except as already mentioned, none of TRC, any holder of the Transferor
Certificate, the servicer or any of their directors, officers, employees or
agents will be under any other liability to the trust, the trustee, the
holders of certificates of any series, any enhancement provider or any other
person for any action taken, or for refraining from taking any action, in good
faith under the Pooling and Servicing Agreement. However, none of TRC, any
holder of the Transferor Certificate, the servicer or any of their directors,
officers, employees or agents will be protected against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence of any person in the performance of their duties or by reason
of reckless disregard of the person's obligations and duties under the Pooling
and Servicing Agreement.
The servicer is also not under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its servicing
responsibilities under the Pooling and Servicing Agreement. The servicer may,
in its own discretion, undertake any legal action which it may believe is
necessary or desirable for the benefit of holders of certificates of any
series relating to the Pooling and Servicing Agreement and the rights and
duties of the parties to that agreement and the interest of those
certificateholders.
Collection and Other Servicing Procedures
The servicer is responsible for servicing, collecting, enforcing and
administering the receivables under the Credit Card Guidelines.
Servicing activities to be performed by the servicer include:
o collecting and recording payments,
o communicating with cardholders,
o collection activities for delinquent accounts,
o evaluating the increase of credit limits and the issuance of credit
cards,
o providing billing and tax records, if any, to cardholders, and
o maintaining internal records for each account.
Managerial and custodial services performed by the servicer on behalf of
the trust include:
o providing assistance in any inspections of the documents and records
relating to the accounts and receivables by the trustee under the
Pooling and Servicing Agreement,
o maintaining the agreements, documents and files relating to the accounts
and receivables under the Credit Card Guidelines as custodian for the
trust, and
o providing data processing and reporting services for certificateholders
of any series and on behalf of the trustee.
TFS performs many of the services that the servicer is responsible for
providing. See "Target Financial Services" for more information about TFS and
the services it performs for the servicer. Under the Pooling and Servicing
Agreement, RNB, as servicer, has the right to delegate any of its
responsibilities and obligations as servicer to any of its affiliates and to
any third-party service providers that agree to conduct RNB's servicing duties
under the Pooling and Servicing Agreement and the Credit Card Guidelines.
Servicing Compensation and Payment of Expenses
As compensation for its servicing activities and as reimbursement for its
expenses for any Monthly Period, the servicer will receive a servicing fee
payable monthly on each distribution date in an amount equal to one-twelfth of
the product of:
o the weighted average of the servicing fee rates as specified in the
applicable Supplements, and
o the amount of Principal Receivables in the trust at the end of the last
day of the prior Monthly Period.
The share of the servicing fee for any particular series, if any, will be
determined by the provisions of the applicable Supplement. The share of the
servicing fee for any Monthly Period not allocated to a particular series will
be paid from amounts allocated to the holder of the Transferor Certificate and
any holder of a Participation on that distribution date. None of the trust,
the trustee, the certificateholders of any series or any enhancement provider
will be directly liable to pay the share of the servicing fee for any Monthly
Period to be paid by any holder of the Transferor Certificate or any holder of
a Participation.
Each month, the servicer will pay from its servicing compensation any
expenses incurred in connection with servicing the receivables including:
o expenses related to the enforcement of the receivables,
o payment of the fees and disbursements of the trustee and independent
accountants, and
o other fees that are not expressly stated in the Pooling and Servicing
Agreement to be payable by the trust, the certificateholders of a series
or TRC (except federal, state, local and foreign income, franchise or
other taxes or any interest or penalties imposed upon the trust).
If RNB is acting as servicer and fails to pay the fees and disbursements
of the trustee, the trustee will be entitled to receive the portion of the
servicing fee that is equal to the unpaid amounts. Certificateholders will not
be liable to the trustee for the servicer's failure to pay those amounts, and
any amounts so paid to the trustee will be treated as paid to the servicer for
all other purposes of the Pooling and Servicing Agreement.
Servicer Covenants
In the Pooling and Servicing Agreement, the servicer covenants that:
o it will duly fulfill all obligations on its part to be fulfilled under
or relating to the receivables and the related accounts, and will
maintain in effect all qualifications required by law to service the
receivables and the related accounts, the failure to comply with which
would have a material adverse effect on the interests of the
certificateholders,
o under the Pooling and Servicing Agreement, it will 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 business and under the Credit Card Guidelines,
o it will not do, or omit to do, anything that would substantially impair
the rights of the certificateholders in any receivable or account,
o it will not reschedule, revise or defer payments due on the receivables
except in the ordinary course of its business and under the Credit Card
Guidelines, and
o except in connection with its enforcement or collection of an account,
it will take no action to cause any receivables to be evidenced by any
instrument, except an instrument that, together with one or more other
writings, constitutes chattel paper, and if any receivable is so
evidenced, it will be reassigned or assigned to the servicer.
If any of the representations, warranties or covenants of the servicer
for any receivable or the related account are breached, the servicer can cure
the breach within 60 days of the earlier to occur of the discovery of that
breach by the servicer or receipt by the servicer of written notice of that
breach given by the trustee. The trustee, however, may agree to a cure period
of up to 150 days. If the breach is not cured, all receivables in the account
or accounts to which the breach relates will be reassigned or assigned to the
servicer if because of the breach the trust's rights in and to any of the
receivables are impaired or the proceeds are not available to the trust free
and clear of any lien.
Receivables will not be reassigned or assigned to the servicer if the
breach is cured such that the relevant representation and warranty is true and
correct, or the relevant covenant has been complied with, in all material
respects. The servicer must deliver to the trustee a certificate of an
authorized officer describing the nature of the breach and the manner in which
the breach was cured.
Any assignment and transfer will be made when the servicer deposits an
amount equal to the amount of the receivables in the Collection Account on the
business day before the distribution date after the Monthly Period during
which the obligation arises. The amount of the deposit will be treated as
Shared Principal Collections. This reassignment or transfer and assignment to
the servicer is the only remedy available to the certificateholders of any
series if a covenant or warranty of the servicer is not satisfied. The trust's
interest in any reassigned receivables will be automatically assigned to the
servicer. See "Description of the Certificates--Shared Principal Collections
and Shared Transferor Principal Collections" for more information about these
collections.
Certain Matters Regarding the Servicer
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except:
o on the determination that its duties are no longer permissible under
applicable law, or
o as may be required for any merger or consolidation of the servicer or
the conveyance or transfer of all or substantially all of the servicer's
assets.
No resignation will become effective until the trustee or a successor to
the servicer has assumed the servicer's responsibilities and obligations under
the Pooling and Servicing Agreement. RNB may also transfer its servicing
obligations to an affiliate and be relieved of its obligations and duties
under the Pooling and Servicing Agreement.
Any person with whom the servicer may be merged or consolidated or any
person resulting from any merger or consolidation to which the servicer is a
party, or any person succeeding to the business of the servicer, will be the
successor to the servicer under the Pooling and Servicing Agreement.
Servicer Default
A Servicer Default refers to:
o any failure by the servicer to make any payment, transfer or deposit or
to give instructions or notice to the trustee as required by the Pooling
and Servicing Agreement or any Supplement on or before the date
occurring five business days after the date the payment, transfer or
deposit or instruction or notice is required to be made or given,
o failure by the servicer to observe or perform any other covenants or
agreements of the servicer as described in the Pooling and Servicing
Agreement or any Supplement which has a material adverse effect on the
interests of the certificateholders of any series or class, regardless
of whether funds are available from any enhancement, and which continues
unremedied for 60 days after written notice was given to the servicer
requiring that the situation be remedied,
o delegation by the servicer of its duties under the Pooling and Servicing
Agreement in a manner not permitted by the Pooling and Servicing
Agreement, which delegation continues unremedied for 15 days after the
date written notice was given to the servicer requiring that the
situation be remedied,
o any representation, warranty or certification made by the servicer in
the Pooling and Servicing Agreement or any Supplement or in any
certificate delivered under the Pooling and Servicing Agreement or any
Supplement which proves to have been incorrect when made, and has a
material adverse effect on the rights of the certificateholders of any
series or class, regardless of whether funds are available from any
enhancement, and which continues unremedied for 60 days after written
notice was given to the servicer requiring that the situation be
remedied, or
o the occurrence of some events of bankruptcy, insolvency or receivership
of the servicer.
If the delay or failure was caused by an act of God or other similar
occurrence and could not be prevented by the use of reasonable diligence, the
servicer is allowed an additional 60 days to remedy the situation. However, in
the case of a failure to make payment, transfer or deposit, or notice, the
servicer is allowed an additional five business days to remedy the situation
before a Servicer Default occurs.
The servicer agrees to provide the trustee, each rating agency,
enhancement providers, if any, the holder of the Transferor Certificate and
the certificateholders of each series with a description of any failure or
delay by it to perform its obligation, together with its notice to the
trustee. The servicer shall not be relieved from using its best efforts to
perform its obligations in a timely manner after a Servicer Default occurs.
If a Servicer Default occurs, the trustee may end all of the rights and
obligations of the servicer under the Pooling and Servicing Agreement by
sending a termination notice, in writing, to the servicer. Certificateholders
holding certificates comprising more than 50% of the total unpaid principal
amount of all outstanding series may also end all the rights and obligations
of the servicer under the Pooling and Servicing Agreement by sending
termination notices, in writing, to the servicer, the trustee and to any
enhancement providers. If the trustee within 60 days of receipt of a
termination notice is unable to obtain any bids from eligible successor
servicers and the servicer delivers an officer's certificate stating that the
servicer cannot in good faith cure the Servicer Default that gave rise to the
termination notice, then the trustee will offer TRC the right at its option to
purchase the certificateholders' interest for all series. The purchase price
for the purchase will be paid on the distribution date occurring in the month
after receipt of the termination notice and will equal, after allowing for any
deposits and distributions to be made on that distribution date, the Portfolio
Reassignment Price.
The trustee will appoint a successor servicer after giving a termination
notice. All rights, authority, power and obligations of the servicer under the
Pooling and Servicing Agreement will pass to and be vested in the trustee if:
o no successor servicer is appointed by the trustee, or
o no successor servicer has accepted the appointment by the time the
servicer stops acting as servicer.
Before any successor servicer is appointed, the trustee will seek to
obtain bids from potential servicers meeting eligibility requirements
described in the Pooling and Servicing Agreement to serve as a successor
servicer for servicing compensation not more than the servicing fee. The
rights and interest of TRC as holder of the Transferor Certificate will not be
affected by any termination notice or appointment of a successor servicer.
Evidence as to Compliance
The Pooling and Servicing Agreement requires the servicer to furnish an
annual report prepared by a firm of nationally recognized independent public
accountants stating:
o that the firm has applied some procedures agreed upon with the servicer
and examined specified documents and records relating to the servicing
of the accounts during the servicer's preceding fiscal year, and
o that, on the basis of the agreed upon procedures, nothing came to the
attention of the firm that caused them to believe that the servicing was
not conducted in compliance with the Pooling and Servicing Agreement and
the applicable provisions of each Supplement, except for exceptions or
errors as the firm believes to be immaterial and any other exceptions as
described in the report.
The Pooling and Servicing Agreement requires TRC to deliver to the
trustee, each rating agency and enhancement providers, if any, an annual
statement stating that the servicer has performed its obligations in all
material respects under the Pooling and Servicing Agreement throughout the
preceding fiscal year. If there has been a default in the performance of any
obligation during the preceding year, the annual statement will specify the
nature and status of the default.
Both the report and the statement are expected to be provided within
ninety days after the end of each fiscal year. Copies of all statements,
certificates and reports furnished to the trustee may be obtained by a request
in writing delivered to the trustee.
Amendments
The Pooling and Servicing Agreement and each Supplement may be amended
without the consent of the certificateholders of any series to:
o add covenants, restrictions or conditions of the transferor as
considered by TRC's board of directors and the trustee to be for the
benefit or protection of the certificateholders,
o make the occurrence, or the occurrence and continuance, of a default in
any additional covenants, restrictions or conditions a default or early
amortization event and to provide for grace periods, immediate
enforcement or limits on available remedies to the added default,
o fix any ambiguity or correct or supplement any provision that may be
defective or inconsistent with any other provision,
o surrender any right or power of the transferor,
o issue a Supplemental Certificate or Participation,
o add a Participation Interest to the trust,
o designate an additional transferor,
o provide additional enhancement for the benefit of certificateholders of
any series,
o enable the trust or a portion of the trust to elect to qualify as a
financial asset securitization investment trust or comparable tax entity
for the securitization of financial assets, or
o add, change or eliminate any provisions or modify in any manner the
rights of certificateholders of any series then issued and outstanding,
only if:
-- the transferor delivers to the trustee a certificate of an
authorized officer stating that the transferor reasonably believes
based on facts then known that the amendment will not adversely
affect in any material respect the interests of any
certificateholder,
-- except for adding covenants, restrictions or conditions and fixing
any ambiguity or correcting or supplementing a provision or
surrendering any right or power of the transferor, the amendment
satisfies the Rating Agency Condition, and
-- a tax opinion is provided.
The Pooling and Servicing Agreement and each Supplement may also be
amended at any time by the transferor, the servicer and the trustee with the
consent of the holders of certificates that represent at least 662/3% of the
total unpaid principal amount of the certificates of all adversely affected
series. Any amendment may add any provisions, change or eliminate any
provisions, or modify in any manner the rights of the certificateholders in
the affected series.
However, without the consent of each affected certificateholder, no
amendment may:
o reduce the amount of or delay the timing of any distributions to be made
to certificateholders or deposits of amounts to be so distributed or the
amount available under any enhancement except to amend the terms of an
early amortization event,
o change the definition of or the manner of calculating the interest on
any certificate, or
o reduce the percentage required to consent to any amendment.
The trustee will provide written notice of the substance of any amendment
requiring the consent of certificateholders. The notice will be sent to each
certificateholder as soon as possible after any amendment becomes effective.
Termination of the Trust
Unless TRC instructs the trustee otherwise, the trust will terminate on
the earlier to occur of:
o the day following the distribution date on which the Invested Amount,
and any subordinated interest, of each series is zero, provided that TRC
has delivered a written notice to the trustee electing to terminate the
trust, and
o September 30, 2095.
Once the trust has ended, all right, title and interest in and to the
receivables and other funds of the trust will be conveyed and transferred to
the holder of the Transferor Certificate, any Supplemental Certificate and any
Participation except for amounts in accounts maintained by the trust for the
final payment of principal and interest to certificateholders.
The Bank Receivables Purchase Agreement
and the Receivables Purchase Agreement
The receivables are transferred from RNB to TCC and from TCC to TRC
before being transferred to the trust. The Bank Receivables Purchase Agreement
governs the transfer of the receivables from RNB to TCC. The Receivables
Purchase Agreement governs the transfer of the receivables from TCC to TRC.
TRC could also enter into other purchase agreements directly with Credit Card
Originators.
Sale of the Receivables
Under the Purchase Agreements, RNB as seller to TCC or TCC as seller to
TRC, each referred to in that capacity as the seller, sold to TCC or TRC,
referred to in that capacity as the purchaser, all of its right, title and
interest in and to:
o the receivables existing at the close of business on the Cut-Off Date
and later created at any time from the initial accounts until the end of
the trust,
o the receivables existing on each Addition Date and later created at any
time from any Automatic Additional Accounts until the end of the trust,
o any Merchant Fees and deferred billing fees,
o all recoveries from the initial accounts and from the Automatic
Additional Accounts,
o all recoveries from specific Defaulted Receivables, and
o all monies due or to become due, all amounts received, and all proceeds
under the applicable Purchase Agreement.
In addition, under the Receivables Purchase Agreement TCC has sold to TRC
all of TCC's rights under the Bank Receivables Purchase Agreement.
In connection with any sale of the receivables after the Automatic
Addition Termination Date or the date TRC determines to suspend the inclusion
of Automatic Additional Accounts and before the Restart Date, the seller will
indicate in its computer files or other relevant microfiche or printed records
that the receivables were sold to the purchaser and subsequently transferred
to the trust. Additionally, the seller will provide to the purchaser a
computer file, a microfiche list or a printed list containing an accurate and
complete list showing each account identified by account number and by total
outstanding balance in each account as of the Automatic Addition Termination
Date, the date TRC determines to suspend the inclusion of Automatic Additional
Accounts or on any date TRC designates any Supplemental Account for inclusion
in the trust.
The seller will also indicate in its computer files or other records that
receivables in Removed Accounts have been repurchased by the seller. The
records and agreements of the accounts and receivables are not segregated by
either seller from other documents and agreements relating to other credit
card accounts and receivables and are not stamped or marked to reflect the
sale or transfer of the receivables to the purchaser. The computer records,
other relevant microfiche or printed records of each seller will be marked to
evidence the sale or transfer after the Automatic Addition Termination Date or
the date TRC determines to suspend the inclusion of Automatic Additional
Accounts and before the Restart Date. TCC has filed one or more UCC financing
statements meeting the requirements of state law in the jurisdictions which
are necessary to perfect the transfer of the receivables. See "Legal Aspects
of the Receivables" for more discussion.
Under each Purchase Agreement, the seller will be required in specified
circumstances to, and the purchaser is required to cause the seller to,
designate Supplemental Accounts under the Pooling and Servicing Agreement to
be included as trust accounts. See "The Pooling and Servicing
Agreement--Addition of Trust Assets" for information on the conditions to any
addition of accounts.
Representations and Warranties
In each Purchase Agreement, the seller represents and warrants to the
purchaser as of the date of issuance of a series and on each Addition Date
that, among other things:
o the seller has full corporate power, authority and legal right to
execute, deliver and perform its obligations under the Purchase
Agreement,
o the Purchase Agreement constitutes a valid and binding obligation of the
seller, enforceable against the seller under its terms, according to
customary bankruptcy- and equity-related exceptions,
o the seller is the legal and beneficial owner of all right, title and
interest in and to each receivable,
o the seller has the full right, power and authority to transfer the
receivables under the Purchase Agreement,
o the Purchase Agreement, or the supplement to the Purchase Agreement for
Supplemental Accounts, to be delivered by the seller, forms a valid
transfer and assignment to the purchaser of all right, title and
interest of the seller in and to:
-- the receivables,
-- all monies due or to become due, and
-- all related proceeds, and
o on the Cut-Off Date for each initial account, on the date of creation
for each Automatic Additional Account, and on any date TRC designates
any Supplemental Account for inclusion in the trust:
-- each account classified as an "eligible account" by the seller in
any document or report delivered under the Purchase Agreement will
satisfy the requirements for an eligible account, and
-- each receivable classified as an "eligible receivable" by the seller
in any document or report delivered under the Purchase Agreement
will satisfy the requirements for an Eligible Receivable.
In addition, RNB represents and warrants to TCC that it is validly
existing and in good standing as a national banking association under the laws
of the United States and TCC represents and warrants to TRC that it is validly
existing and in good standing as a corporation under the laws of the State of
Minnesota.
If any representation or warranty is not true and correct in any material
way as of the date specified in the Purchase Agreement and, as a result, the
value of the receivable used to determine the total Principal Receivables in
the trust is reduced to zero, then, the principal balance of that receivable
under the Purchase Agreement will be changed to show that the receivable was
an Ineligible Receivable when sold. If so, the seller will repay to the
purchaser the amount of the purchase price originally paid to the seller less
the amount of any collections already received from that receivable.
If any representation or warranty described above is not true and correct
in any material way on the date specified in the Purchase Agreement and, as a
result, the purchaser is required to accept a reassignment of all of the
receivables transferred to the trust by paying the Portfolio Reassignment
Price, the seller will be required to accept a reassignment of the purchaser's
interest in those receivables. The seller will also be required to deposit
into the Collection Account an amount equal to the Portfolio Reassignment
Price on the next distribution date.
Covenants
It is the intention of the parties to each Purchase Agreement that the
transfer of the receivables by the seller to the purchaser under that Purchase
Agreement be viewed as an absolute sale of the receivables. Each transfer is
not intended to be a pledge of the receivables by the seller to the purchaser
to secure a debt or other obligation of the seller. Each Purchase Agreement
will also be considered a security agreement within the meaning of Article 9
of the UCC and the conveyance described in that Purchase Agreement will be
considered a grant by the seller to the purchaser of a "security interest"
within the meaning of Article 9 of the UCC in all of the seller's right, title
and interest in and to the receivables.
RNB continues to be the owner of the accounts and, under the Bank
Receivables Purchase Agreement, is permitted to reduce the annual percentage
rates of the periodic finance charges assessed on the receivables, reduce
other fees charged on any of the accounts or change the other terms of the
accounts as required by law or as RNB may determine to be appropriate.
However, RNB may not otherwise take these actions if, either:
o as a result of a reduction or change it is reasonably expected that the
reduction or change will cause an early amortization event to occur for
the related series, or
o a reduction or change:
-- when RNB owns a comparable segment of receivables, is not applied to
the comparable segment of consumer open-end credit card accounts
owned by RNB with the same characteristics as the receivables that
are being reduced or changed, and
-- when RNB does not own a comparable segment of receivables, will be
made with the intent to benefit TRC over the certificateholders or
to materially adversely affect the certificateholders, unless
restricted by an endorsement, sponsorship, or other agreement
between TRC and an unrelated third party or by the terms of the
accounts.
Transfer of Accounts and Assumption of RNB's, TCC's and TRC's Obligations
The Purchase Agreements and the Pooling and Servicing Agreement allow
RNB, TCC and TRC to assign, convey and transfer all or a portion of RNB's
consumer open-end credit card accounts and the receivables arising under those
accounts and all servicing functions and other obligations to an assuming
entity, without the consent or approval of certificateholders if the following
conditions are met:
o the assuming entity, the trustee and any of RNB, TCC or TRC have entered
into an assumption agreement providing for the assuming entity to assume
all servicing functions and other obligations, including the obligations
under the Purchase Agreements and the Pooling and Servicing Agreement,
to transfer the receivables generated by the accounts to any of TCC, TRC
or the trust, as the case may be,
o all filings required to perfect the interest of TCC, TRC or the trustee
in the receivables generated by the accounts were made and copies have
been delivered to the trustee,
o TCC, TRC or the trustee, as the case may be, has received confirmation
that the Rating Agency Condition is satisfied, and copies of the
confirmation notice were sent to the servicer and the trustee,
o TCC, the transferor, or the trustee, as the case may be, has received an
opinion of counsel as to matters specified by TCC, TRC or the trustee,
and
o the trustee has received a tax opinion.
The Purchase Agreements and the Pooling and Servicing Agreement provide
that the parties to each document may enter into amendments to that document
to permit a transfer and assumption without the consent of the
certificateholders. After any permitted transfer and assumption, RNB and TCC
will have no further liability or obligation under the Purchase Agreements and
the Pooling and Servicing Agreement, other than any liabilities that existed
before the transfer. RNB and TCC will remain liable for all representations,
warranties and covenants made by them before the transfer.
Amendment
The Purchase Agreements may be amended without the consent of the
certificateholders. No amendment to either Purchase Agreement will be allowed
unless the Rating Agency Condition is satisfied.
Termination
The Bank Receivables Purchase Agreement will end upon the mutual
agreement of the parties to that agreement. The Receivables Purchase Agreement
will end immediately after the trust has ended. Additionally, if a bankruptcy
trustee or receiver is appointed for the seller under either Purchase
Agreement, the seller will immediately stop selling Principal Receivables to
the purchaser and promptly give notice of the event to the purchaser and to
the trustee.
Legal Aspects of the Receivables
Transfer of Receivables
The transfer of the receivables by TRC to the trust constitutes either a
valid transfer and assignment of all of TRC's interest in and to the
receivables or a grant of a security interest in the receivables. See "The
Pooling and Servicing Agreement--Representations and Warranties."
The receivables are accounts, general intangibles or chattel paper for
purposes of the UCC. Both the transfer and assignment of accounts and the
transfer of accounts as security for an obligation are treated under Article 9
of the UCC as creating a security interest. The filing of a financing
statement is required to perfect the trust's interest. If a transfer of
general intangibles is considered the creation of a security interest, rather
than a sale, Article 9 of the UCC applies and the filing of one or more
financing statements is also required to perfect the trust's security
interest. Financing statements covering the receivables of the trust will be
filed under the UCC.
If a transfer of general intangibles is treated as a sale, the UCC is not
applicable and no further action is required to protect the trust's interest.
Although the priority of general intangibles that come into existence after
the date of issuance of the initial series in this case is not as clear, RNB,
TCC and TRC believe that it would not be consistent for a court to give the
trust less favorable treatment if the transfer of the receivables is
considered to be a sale than if it were considered to be creating a security
interest.
There are some limited circumstances under the UCC in which an earlier or
later transferee of receivables could have an interest in the receivables with
priority over the trust's interest. Under the Pooling and Servicing Agreement,
TRC will represent and warrant that it has transferred the receivables to the
trust free and clear of all liens and security interests other than tax liens
and the interest of TRC as holder of the Transferor Certificate. In addition,
TRC will covenant that it will not sell, pledge, assign or transfer, or grant,
create, incur, assume or suffer to exist any lien on, any receivable except to
the trust or in connection with any transfer of the accounts selected for the
trust. A tax or other governmental lien on TRC's property arising before a
receivable comes into existence also may have priority over the interest of
the trust in the receivable. There is a good possibility that the trust may
not have a perfected security interest in any of the receivables created after
the filing of a petition for relief by or against TCC or TRC under the U.S.
bankruptcy code or after the appointment of a receiver or conservator for RNB.
It is anticipated that the trust will either own or have a perfected security
interest in receivables existing on the date of filing a petition by or
against TCC or TRC under the U.S. bankruptcy code or after the date of
appointment of a receiver or conservator for RNB and will be able to make
payments of principal and interest on the investor certificates, although
there can be no assurance that any of these payments would be timely.
Because the trust's interest in the receivables is dependent upon TRC's
interest in the receivables, which is dependent upon TCC's interest in the
receivables, any negative change in the priority or perfection of TRC's or
TCC's security interest would correspondingly affect the trust's interest in
the affected receivables. In addition, if a receiver or conservator were
appointed for RNB, some administrative expenses of the receiver or conservator
also may have priority over the interest of the trust in those receivables.
While RNB is the servicer, some cash collections on the receivables may be
held by RNB and commingled with its funds for brief periods, and if an
insolvency event occurs, the trust may not have a perfected interest in the
commingled collections.
Matters Relating to Bankruptcy or Receivership
RNB has represented and warranted to TCC, and TCC has represented and
warranted to TRC that the conveyance of the receivables is a valid sale. In
addition, RNB, TCC and TRC have treated and will treat the conveyances of the
receivables from RNB to TCC and from TCC to TRC as sales. TCC has taken or
will take all actions that are required by the UCC to perfect TCC's and TRC's
ownership interest in the receivables. If TCC were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of the debtor or the
debtor itself were to take the position that the sale of receivables from TCC
to TRC should be recharacterized as a pledge of the receivables to secure a
borrowing from that debtor, then delays in payments of collections of
receivables to TRC, to the trust and to certificateholders could occur and
reductions in the amount of those payments could result.
RNB is chartered as a national banking association and is subject to
regulation and supervision by the Office of the Comptroller of the Currency.
If RNB becomes insolvent, is in an unsound condition or engages in violations
of its bylaws or regulations, or if other similar circumstances occur, the
Comptroller of the Currency is authorized to appoint the FDIC as conservator
or receiver. If the FDIC is appointed as conservator or receiver for RNB, then
an early amortization event will occur for all outstanding series and new
principal receivables will cease to be transferred to the trust. The FDIC, as
conservator or receiver, may nonetheless have the power, regardless of the
terms of the bank receivables purchase agreement, the receivables purchase
agreement, or the pooling and servicing agreement, to prevent the beginning of
an early amortization period, to require new principal receivables to continue
to be sold by RNB to TCC, or to prohibit the continued transfer of receivables
to TCC.
The FDIC, as conservator or receiver, is authorized by statute to
repudiate any contract of RNB within a reasonable time following the date of
receivership and limit the trust's resulting claim to "actual direct
compensatory damages"-- not including lost profits or opportunity-- measured
as of the date of receivership, not the date of payment. This authority may
permit the FDIC to repudiate the transfer of receivables by RNB to TCC under
the Bank Receivables Purchase Agreement. In addition, this authority may
affect the transfer of receivables from TCC to TRC and from TRC to the trust,
and it might affect the granting of a security interest from RNB to TCC, from
TCC to TRC and from TRC to the trust in the transferred receivables. Under an
FDIC regulation, however, the FDIC, as conservator or receiver, will not use
its repudiation authority to reclaim, recover or recharacterize financial
assets, such as the receivables, transferred by a bank if certain conditions
are met. These conditions include transfers that qualify for sale accounting
treatment, were made for adequate consideration, and were not made
fraudulently, in contemplation of insolvency, or with the intent to hinder,
delay or defraud the bank or its creditors. RNB believes that the transfer of
the receivables from RNB to TCC qualifies for sale accounting treatment, that
this FDIC regulation applies to the transfer of receivables under the Bank
Receivables Purchase Agreement, the Receivables Purchase Agreement and the
Pooling and Servicing Agreement and that the conditions of the regulation have
been satisfied.
The FDIC has the right to require the trustee to establish its right to
payments by submitting to and completing the administrative claims procedure
established under the Financial Institutions Reform, Recovery and Enforcement
Act of 1989. The conservator or receiver has the right to request a stay of
proceedings as to RNB. This could result in delays in payments on the
certificates and possible losses to you.
In addition, if TCC is a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of the debtor or the debtor itself requests a court to
order TCC substantively consolidated with TRC, an early amortization event
will occur and payments on the investor certificates may be accelerated or
delayed. If the bankruptcy court rules in favor of any creditor,
trustee-in-bankruptcy or debtor, reductions in payments may result.
TRC has taken or will take all actions that are required under the UCC to
perfect the trust's interest in the receivables. TRC has also warranted to the
trust that the trust will have a first priority interest in the receivables
and, with some exceptions, in the proceeds as well. However, a tax or other
government lien on property of RNB, TCC or TRC which predates the time a
receivable is conveyed to the trust may have priority over the interest of the
trust in that receivable. TRC's articles of incorporation state that it shall
not file a voluntary petition for relief under the U.S. bankruptcy code
without the unanimous affirmative vote of all of its directors, including the
independent directors. According to the Pooling and Servicing Agreement, the
trustee will covenant that it will not at any time institute against TRC any
bankruptcy, reorganization or other proceedings under any federal or state
bankruptcy or similar law. In addition, other steps have been or will be taken
to avoid TRC's becoming a debtor in a bankruptcy case. Aside from these steps,
if TRC is a debtor in a bankruptcy case, and a bankruptcy trustee for TRC or a
creditor of TRC takes the position that the transfer of the receivables from
TRC to the trust should be recharacterized as a pledge of the receivables,
then delays in payments on the certificates and, should the court rule in
favor of the bankruptcy trustee or any creditor, reductions in the amount of
the payments could result.
TRC has been structured in a manner intended to reduce the likelihood of
the voluntary or involuntary application for relief under the U.S. bankruptcy
code or similar applicable state laws. TRC is also structured to avoid the
substantive consolidation of TRC with TCC. TRC is a separate, special purpose
subsidiary, whose articles of incorporation contain limitations on the nature
of TRC's business and restrictions on the ability of TRC to commence voluntary
or involuntary cases or proceedings under these laws without the unanimous
vote of all its directors. Additionally, TRC does not intend to file, and TCC
has agreed that it will not file, a voluntary petition for relief under the
U.S. bankruptcy code or any similar state laws as to TRC.
If TRC is a debtor in a bankruptcy case causing an early amortization
event to occur, then, under the Pooling and Servicing Agreement, additional
Principal Receivables will not be transferred to the trust. On the occurrence
of some events of bankruptcy, insolvency or receivership, if no early
amortization event except the commencement of the bankruptcy or similar event
exists, the trustee-in-bankruptcy may have the power to continue to require
TRC to transfer new receivables to the trust and to prevent the commencement
of an early amortization period or, if applicable for any series as specified
in the related prospectus supplement, the rapid accumulation period.
The Pooling and Servicing Agreement provides that, upon the appointment
of a conservator or receiver, with respect to RNB, an early amortization event
will occur with respect to all series then outstanding and a Servicer Default
will occur. Pursuant to the Bank Receivables Purchase Agreement, the
Receivables Purchase Agreement and the Pooling and Servicing Agreement, newly
created Principal Receivables will not be transferred from RNB to TCC, from
TCC to TRC, or from TRC to the trust on and after the appointment of a
conservator or receiver for RNB. The FDIC, as conservator or receiver,
however, may have the power, regardless of the Bank Receivables Purchase
Agreement, the Receivables Purchase Agreement and the Pooling and Servicing
Agreement to prevent the commencement of an early amortization period with
respect to any series in the trust or to require new assets to continue to be
transferred to TCC. In addition, the FDIC, as conservator or receiver, may
have the power to prohibit the continued transfer of assets. The FDIC as
conservator or receiver for the servicer may have the power to prevent the
termination of RNB as servicer and may have the power to prevent the trustee
or the certificateholders from appointing a successor servicer under the
Pooling and Servicing Agreement if no Servicer Default exists except the
commencement of a receivership or similar event.
Payments made on repurchases of receivables by TCC or TRC may be
recoverable by TCC or TRC, or by a creditor, conservator, receiver or a
trustee-in-bankruptcy of TCC or TRC, as a preferential transfer from TCC or
TRC if these payments are made within one year before the filing of a
bankruptcy case as to TCC or TRC.
Consumer Protection Laws
The relationship of the cardholder and credit card issuer is extensively
regulated by federal and state consumer protection and related laws. For
credit cards issued by RNB, the most significant laws include:
o the Truth-in-Lending Act,
o the Fair Credit Billing Act,
o the Fair Debt Collection Practices Act,
o the Equal Credit Opportunity Act,
o the Fair Credit Reporting Act,
o the Electronic Funds Transfer Act,
o the National Banking Act, and
o applicable state laws.
Claims may be brought under these statutes by private consumers as well
as federal and state regulators. These statutes impose disclosure requirements
when a credit card account is advertised, when it is opened, at the end of
monthly billing cycles and at year end and, in addition, prohibit
discriminatory practices in extending credit and impose limitations on the
type of account-related charges that may be assessed. Federal law requires
credit card issuers to disclose to consumers:
o the interest rates,
o cardholder fees,
o grace periods, and
o balance calculation methods.
In addition, cardholders are entitled under current laws to have payments
and credits applied to the credit card account promptly, to receive prescribed
notices and to require billing errors to be resolved promptly.
Some laws, including the laws described above, may limit RNB's ability to
collect amounts owing on the receivables regardless of any act or omission on
the part of RNB. For example, under the Fair Credit Billing Act, a credit card
issuer is open to all claims, other than tort claims, and defenses arising out
of transactions in which a credit card is used as a method of payment or
extension of credit, if:
o the obligor has made a good faith attempt to obtain satisfactory
resolution of a disagreement or problem relative to the transaction from
the person honoring the credit card, and
o except in cases where there is a relationship between the person
honoring the card and the credit card issuer, the amount of the initial
transaction exceeds $50 and the place where the initial transaction
occurred was in the same state as the cardholder's mailing address or
within 100 miles of that address.
These statutes further provide that in some cases cardholders cannot be
held liable for, or the cardholder's liability is limited with respect to,
charges to the credit card account that result from unauthorized use of the
credit card.
Additional consumer protection laws may be enacted that would impose
requirements on the making, enforcement and collection of consumer credit
loans. The potential effect of any legislation which limits the amount of
finance charges and fees that may be charged on credit cards could be to
reduce the portfolio yield on the accounts. If the portfolio yield is reduced,
an early amortization event may occur, and the early amortization period or,
if applicable for any series as specified in the related prospectus
supplement, the rapid accumulation period would commence. Any new laws or
rulings that may be adopted, and existing consumer protection laws, may
adversely affect the ability to collect on the receivables. In addition,
failure of the servicer to comply with those requirements could adversely
affect the servicer's ability to enforce the receivables.
Some jurisdictions may attempt to require out-of-state credit card
issuers to comply with their consumer protection laws in connection with their
operations in those jurisdictions. These laws may include a limitation on the
charges imposed by credit card issuers. If it were determined that
out-of-state credit card issuers must comply with a jurisdiction's laws
limiting the charges imposed by credit card issuers, those actions could have
an adverse impact on RNB's credit card operations. Application of federal and
state bankruptcy and debtor relief laws, including the Soldiers' and Sailors'
Civil Relief Act of 1940, would affect the interests of the holders of the
certificates if the protection provided to debtors under those laws result in
any receivables of the trust being written off as uncollectible.
The trust may be liable for violations of consumer protection laws that
apply to the receivables transferred to it, either as assignee from TRC for
obligations arising before the transfer or as a party directly responsible for
obligations arising after the transfer. In addition, a cardholder may be
entitled to assert these violations by way of set-off against his or her
obligation to pay the amount of receivables owing. TRC will warrant to the
trust in the Pooling and Servicing Agreement that all receivables transferred
to the trust have been and will be created in compliance with the requirements
of these laws. See "The Pooling and Servicing Agreement--Representations and
Warranties" for additional discussion.
Claims and Defenses of Cardholders Against the Trust
The UCC provides that unless a cardholder has made an enforceable
agreement not to assert defenses or claims arising out of a transaction, the
rights of the trust are limited by:
o all the terms of the cardholder agreement between RNB and the
cardholder,
o any defense or claim of the cardholder,
o rights of set-off, and
o any other defense or claim of the cardholder against RNB that accrues
before the cardholder receives notification of the assignment.
The UCC also provides that any cardholder is authorized to continue to
pay RNB until:
o the cardholder receives notification, reasonably identifying the rights
assigned, that the amount due or to become due has been assigned and
that payment is to be made to the trustee or successor servicer, and
o if requested by the cardholders, the trustee or successor servicer has
furnished reasonable proof of assignment.
No agreement as to defenses has been entered into and no notice of the
assignment of the receivables to the trust will be sent to the cardholders
obligated on the accounts in connection with the transfer of the receivables
to the trust.
Industry Litigation
On October 9, 2001, the United States District Court for the Southern
District of New York issued its decision in an antitrust lawsuit brought by the
federal government against VISA U.S.A., Inc., VISA International Inc. and
MasterCard International Incorporated. The court ordered the repeal of rules
adopted by these associations prohibiting members from offering credit cards of
some competitors. The court rejected the government's challenges to the
governance structure of VISA U.S.A., Inc., VISA International Inc. and
MasterCard International Incorporated.
VISA U.S.A., Inc., VISA International Inc. and MasterCard International
Incorporated have appealed portions of the decision. The court has stayed final
judgment pending the outcome of the appeal. RNB is not able at this time to
determine what the effect, if any, of this final judgment would be on RNB's
credit card business.
In 1996, Wal-Mart Stores, Inc. and several other retailers sued
MasterCard International Incorporated, VISA U.S.A., Inc. and VISA
International Inc. in the U.S. District Court for the Eastern District of New
York. The suit asserts that the rules of both associations regarding the
uniform acceptance of all VISA and MasterCard cards, including debit VISA and
MasterCard cards, constitute an illegal tying arrangement. The U.S. Court of
Appeals for the Second Circuit affirmed the trial court's decision
conditionally certifying a class of U.S. merchants and on June 10, 2002 the
U.S. Supreme Court denied a petition for a writ of certiorari. Both MasterCard
and VISA have stated that they believe the suit to be without merit and have
denied the material allegations. Both sides argued motions for summary
judgment in January 2003. A trial date has been set for April 2003. RNB is not
able at this time to determine what effect, if any, this suit would have on
RNB's credit card business.
Federal Income Tax Consequences
The following general discussion summarizes the material U.S. federal
income tax consequences relating to the purchase, ownership and disposition of
a certificate. This discussion applies only to certificates offered under this
prospectus. This summary deals primarily with U.S. Certificate Owners who
acquire their certificates at their original issue price in the original
issuance of those certificates and who hold their certificates as capital
assets.
This discussion is based on present provisions of the Code, as amended,
the proposed, temporary and final Treasury regulations under the Code,
administrative rulings or pronouncements and judicial decisions:
o all as in effect on the date of this prospectus, and
o all of which are subject to change, possibly with retroactive effect.
This discussion does not address all of the U.S. federal tax consequences
that may be relevant to a certificateholder because of that
certificateholder's particular circumstances. It does not address the U.S.
federal income tax consequences that may be relevant to some types of
certificateholders that are subject to special treatment under the Code,
including:
o dealers in securities or currencies,
o financial institutions,
o tax-exempt entities,
o insurance companies,
o persons holding certificates as a part of a hedging, integrated,
conversion or constructive sale transaction or a straddle,
o persons whose functional currency is not the United States dollar, or
o partnerships and partners in such partnerships.
Also, the following discussion does not consider the alternative minimum tax
consequences, if any, of an investment in the certificates, or the state,
local or foreign tax consequences of an investment. Each prospective
certificateholder is urged to consult its own tax advisor in determining the
U.S. federal, state, local and foreign income and any other tax consequences
of the purchase, ownership and disposition of a certificate.
No ruling will be sought from the IRS regarding any of the U.S. federal
income tax consequences discussed in this prospectus. Furthermore, the
opinions of Skadden, Arps, Slate, Meagher & Flom LLP described below are not
binding on the IRS or the courts. As a result, no assurance can be given that
the IRS will not take positions contrary to those described below. In
addition, such opinions are based on the representations and assumptions
described in those opinions, including, but not limited to, the assumption
that all of the relevant parties will comply with all terms of the Pooling and
Servicing Agreement, the Supplement, the Receivables Purchase Agreement, and
the Bank Receivables Purchase Agreement. The conclusions of tax counsel
described in the opinions and the discussion of the U.S. federal income tax
consequences in this prospectus may not be accurate:
o if those representations are inaccurate, and/or
o if the relevant parties fail to comply with the terms of these
agreements.
Tax Characterization of the Trust
The transferor anticipates that Skadden, Arps, Slate, Meagher & Flom LLP
will furnish an opinion to the transferor, in relation to the issuance of
certificates of any series offered by this prospectus, that the trust will not
be classified as an association or as a publicly traded partnership taxable as
a corporation for U.S. federal income tax purposes. The opinion will be based
on the assumptions and qualifications described in that opinion and on certain
representations or covenants. As discussed in the previous paragraph, however,
this opinion is not binding on the IRS and no assurance can be given that this
characterization will prevail. See the last two paragraphs of this subsection
for a discussion of possible alternative characterizations of the trust.
The assumptions and qualifications described in the opinion will include:
o an assumption that any secondary transactions entered into with respect
to any certificates or other interests in the trust, for example, the
deposit of certificates into a second trust and the issuance of
securities out of that trust, will not adversely affect the U.S. federal
income tax status of the trust, and
o the qualification that the opinion is limited to the issuance of the
certificates of that series by the trust.
If other interests in the trust, excluding the certificates, for which no
opinion will be rendered that those interests would constitute debt for U.S.
federal income tax purposes, are characterized as equity interests in a
partnership, or if all or part of the trust were treated as a partnership in
which some or all holders of one or more series of certificates were partners,
that partnership could be classified as a publicly traded partnership taxable
as a corporation. Unless specified exceptions apply, a partnership will be
classified as a publicly traded partnership taxable as a corporation if equity
interests in that partnership:
o are traded on an "established securities market," or
o are "readily tradable" on a "secondary market" or its "substantial
equivalent."
The Pooling and Servicing Agreement and each Supplement contain provisions
designed to reduce the risk that the trust could be classified as a publicly
traded partnership taxable as a corporation due to trading of interests in the
trust, other than the certificates for which an opinion is furnished that the
certificates constitute debt for U.S. federal income tax purposes. There can
be no assurance, however, that the trust could not become a publicly traded
partnership taxable as a corporation, because some of the actions that may be
necessary to avoid publicly traded partnership status are not fully within the
control of the transferor.
If the trust were treated in whole or in part as a publicly traded
partnership taxable as a corporation, the taxable income of the trust would be
subject to U.S. federal income tax at the applicable corporate income tax
rates. This entity-level tax could result in reduced distributions to
certificateholders. In addition, the distributions from the trust would not be
deductible in computing the taxable income of the deemed corporation, except
to the extent that:
o any certificates were treated as debt of the corporation, and
o distributions to the related certificateholders were treated as payments
of interest on the certificates.
Furthermore, distributions to certificateholders not treated as holding debt
would be treated as dividends for U.S. federal income tax purposes to the
extent of the current and accumulated earnings and profits of the trust.
Tax Considerations Relating to Certificateholders
Tax Characterization of the Certificates as Debt
The transferor will express in the Pooling and Servicing Agreement its
intent that the certificates will be treated as debt for all U.S. tax
purposes. The transferor, by entering into the Pooling and Servicing
Agreement, and each certificateholder, by the acceptance of a beneficial
interest in a certificate, will agree to treat the certificates as debt for
U.S. tax purposes. However, the Pooling and Servicing Agreement generally
refers to the transfer of receivables as a "transfer, assignment and
conveyance," and the transferor will treat the Pooling and Servicing
Agreement, for some non-tax accounting purposes, as causing a transfer of an
ownership interest in the receivables and not as creating a debt obligation.
For U.S. federal income tax purposes, the economic substance of a
transaction usually determines its tax consequences. The form of a
transaction, while a relevant factor, is generally not conclusive evidence of
the economic substance of the transaction. In appropriate circumstances, the
courts have allowed the IRS, as well as taxpayers (in more limited
circumstances) to treat a transaction in accordance with its economic
substance, as determined under U.S. federal income tax law, even though the
participants in the transaction have characterized it differently for non-tax
purposes. In a 1967 case, however, the courts substantially limited the
circumstances in which a taxpayer for tax purposes could ignore the form of a
transaction. Nevertheless, Skadden, Arps, Slate, Meagher & Flom LLP has
advised that, in a properly presented case, this would not prevent a
determination of the tax characterization of the certificates based on the
economic substance of the transaction.
The IRS and the courts have determined whether the economic substance of
a purported sale of an interest in property is, instead, a loan secured by the
transferred property based on numerous factors designed to determine whether
the seller has relinquished and the purchaser has obtained substantial
incidents of ownership in the transferred property. The primary factors
examined are whether the purchaser has the opportunity for gain if the
property increases in value and has the risk of loss if the property decreases
in value. It is anticipated that Skadden, Arps, Slate, Meagher & Flom LLP will
furnish an opinion, in relation to the issuance of certificates of any series
offered by this prospectus, that such certificates will be properly
characterized as indebtedness for U.S. federal income tax purposes. The
discussion below assumes that the certificates will be considered debt for
U.S. federal income tax purposes.
Taxation of Interest Income on the Certificates
General. The transferor intends to take the position that a U.S.
Certificate Owner generally will include the stated interest on a certificate
in gross income when that interest is received or accrued according to that
U.S. Certificate Owner's regular method of tax accounting. This conclusion is
based on the transferor's position that the stated interest on a certificate
is "unconditionally payable," as that term is defined in the applicable
Treasury regulations.
Under the applicable Treasury regulations, the stated interest on the
certificates will be considered unconditionally payable only if reasonable
legal remedies exist to compel timely payment or the terms and conditions of
the certificates make the likelihood of late payment or non-payment of the
stated interest a remote contingency. The transferor believes that the late
payment or non-payment of stated interest on the certificates is a remote
contingency:
o because the trust and the trustee will have no discretion to withhold,
delay or otherwise defer scheduled monthly payments of stated interest
on the certificates, if the trust has sufficient cash on hand to allow
the trustee to make those interest payments, and
o based on the ratings of the certificates.
If, however, the stated interest on the certificates is not considered to
be unconditionally payable:
o the stated interest on the certificates will be considered original
issue discount, and
o a U.S. Certificate Owner will be required to include that stated
interest in income in the manner described below in "--Original Issue
Discount Obligations."
Original Issue Discount Obligations. Assuming that the stated interest on
the certificates is considered to be "unconditionally payable," a series of
certificates will not be considered to have been issued with original issue
discount unless:
o a substantial amount of that series of certificates is sold, in the
original issuance of those certificates, to investors at a price that is
less than the stated principal amount of those certificates, and
o the amount of such discount exceeds a statutory de minimis amount of
original issue discount.
Under applicable regulations, a holder of a certificate issued with de minimis
original issue discount must include the original issue discount in income
proportionately as principal payments are made on a class of certificates.
If a certificate is considered to have been issued with original issue
discount, a U.S. Certificate Owner of such certificate must include the amount
of the original issue discount in income on a daily economic accrual basis
without regard to that person's method of accounting and without regard to
receipt of cash related to that income. Receipt of cash representing original
issue discount that has been reported will not give rise to additional income.
The relevant prospectus supplement will disclose whether the transferor
believes that any series of certificates issued pursuant to such prospectus
supplement is issued with original issue discount.
A certificateholder who purchases a certificate at a discount from its
adjusted issue price may be subject to the "market discount" rules of the
Code. The relevant provisions of these rules generally provide:
o for gain equal to accrued market discount to be treated as ordinary
income when the certificate is sold or disposed of,
o for partial principal payments to be treated as ordinary income to the
extent of accrued market discount, and
o for certain interest deductions related to any debt incurred to acquire
or carry the market discount certificate to be deferred.
A certificateholder that purchases a certificate for an amount greater
than the sum of all amounts payable on that certificate after the purchase
date other than payments of "qualified stated interest," will be considered to
have purchased the certificate at a premium. That certificateholder may
generally choose to amortize the premium as an offset to interest income using
a constant yield method over the remaining term of the certificate.
Sale, Exchange or Retirement of Certificates
Upon a sale or other taxable exchange, retirement or disposition of a
certificate, a U.S. Certificate Owner will generally recognize gain or loss
equal to the difference between:
o the amount realized on that sale, exchange, retirement or other
disposition (less an amount equal to any accrued but unpaid interest),
and
o the U.S. Certificate Owner's adjusted tax basis in that certificate:
-- as increased by any original issue discount or market discount
previously included in income by the holder, and
-- as decreased by any deductions previously allowed for amortizable
bond premium and by any payments reflecting principal or original
issue discount received for that certificate.
This gain or loss generally will be capital gain or loss and generally will be
considered long-term capital gain or loss if the U.S. Certificate Owner held
the certificate for more than one year at the time of the sale, exchange,
retirement or other disposition (subject to the market discount provisions of
the Code described above). The long-term capital gains of individuals,
estates, and trusts generally are eligible for reduced rates of taxation. The
use of capital losses is subject to limitation. Non-U.S. Certificate Owners
Taxation of Interest Income on the Certificates
Assuming that all of the certificates issued to Non-U.S. Certificate
Owners are considered to be debt for U.S. federal income tax purposes, and the
interest on the certificates is not "contingent interest," under present U.S.
federal income and estate tax law, and subject to the discussion on backup
withholding below under "--Information Reporting and Backup Withholding":
o no withholding of U.S. federal income tax will be required on the
payment by the transferor or any withholding agent of principal or
interest on a certificate owned by a Non-U.S. Certificate Owner if:
-- the beneficial owner does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of
the transferor entitled to vote within the meaning of section
871(h)(3) of the Code and the Treasury regulations under the Code,
-- the beneficial owner is not a controlled foreign corporation that is
related to the transferor through stock ownership,
-- the beneficial owner is not a bank whose receipt of interest on a
certificate is pursuant to a loan agreement entered into in the
ordinary course of its trade or business, and
-- the beneficial owner satisfies the statement requirements.
To satisfy the statement requirements referred to above, the
certificateholder or a financial institution holding the certificate on behalf
of the owner, must provide, in accordance with specified procedures, the
transferor or any withholding agent with a statement to the effect that the
certificateholder is not a U.S. Certificate Owner. Currently, these
requirements will be met if:
o the certificateholder provides its name and address, and certifies,
under penalties of perjury, that it is not a U.S. Certificate Owner,
which certification may be made on an IRS Form W-8BEN or successor form,
and
o a financial institution holding the certificate on behalf of a
certificate owner certifies, under penalties of perjury, that
the statement has been received by it and furnishes any
withholding agent with a copy.
If a Non-U.S. Certificate Owner cannot satisfy the requirements described
above, payments of interest made to that beneficial owner will be subject to a
30% withholding tax unless that beneficial owner provides the transferor or
any withholding agent with a properly executed:
o IRS Form W-8BEN, or successor form, claiming an exemption from, or a
reduction in the rate of, that withholding tax under the benefit of an
applicable U.S. income tax treaty, or
o IRS Form W-8ECI, or successor form, stating that the interest paid on
the certificate is not subject to that withholding tax because it is
effectively connected with the certificateholder's conduct of a trade or
business in the United States.
The Non-U.S. Certificate Owner, although exempt from the U.S. withholding
tax discussed above, will be subject to U.S. federal income tax on the
interest on a net income basis in the same manner as if it were a U.S.
Certificate Owner if:
o it is engaged in a trade or business in the United States, and
o the interest on its certificates is effectively connected with the
conduct of that trade or business.
In addition, if that Non-U.S. Certificate Owner is a corporation for U.S.
federal income tax purposes, it may be subject to a U.S. branch profits tax
equal to 30%, or any lower applicable treaty rate, of its effectively
connected earnings and profits for the taxable year, subject to adjustments.
For this purpose, the interest income will be included in that corporation's
earnings and profits.
Sale, Exchange or Retirement of Certificates
Any gain realized by a Non-U.S. Certificate Owner upon the sale,
exchange, retirement or other disposition of a certificate generally will not
be subject to U.S. federal income or withholding tax unless:
o the gain is effectively connected with a U.S. trade or business of the
Non-U.S. Certificate Owner in the United States, or
o for a Non-U.S. Certificate Owner who is an individual, that individual
is present in the United States for 183 days or more in the taxable year
of the sale, exchange, retirement or other disposition, and other
conditions are met.
Alternative Characterizations
If the certificates were treated as an interest in a partnership, other
than a publicly traded partnership taxable as a corporation, a Non-U.S.
Certificate Owner may be treated as engaged in a trade or business in the
United States as a result of owning a certificate. In such case, the Non-U.S.
Certificate Owner:
o would be required to file a U.S. federal income tax return, and
o generally, would be subject to U.S. federal income tax, including, for a
Non-U.S. Certificate Owner that is a corporation, the U.S. branch
profits tax, on its allocable share of the net income from the
partnership.
Furthermore, withholding may apply to partnership income that is allocable to
a Non-U.S. Certificate Owner that is considered to be a partner in the
partnership. That withholding would be imposed on the holder's deemed share of
the trust's income at a rate equal to the highest marginal U.S. federal income
tax rate applicable to the Non-U.S. Certificate Owner. Alternatively, if some
or all of the certificates were treated as equity interests in a publicly
traded partnership taxable as a corporation, the gross amount of any related
dividend distributions to a Non-U.S. Certificate Owner generally would be
subject to U.S. withholding tax at the rate of 30%, unless that rate were
reduced under an applicable U.S. income tax treaty. See the last two
paragraphs of "--Tax Characterization of the Trust" above for discussion of
possible alternative characterizations of the trust.
Special rules may apply for Non-U.S. Certificate Owners who:
o have an office or other fixed place of business in the U.S.,
o are former U.S. citizens,
o are engaged in a banking, financing, insurance or similar business in
the U.S., or
o are "controlled foreign corporations," "foreign personal holding
companies," "passive foreign investment companies" or corporations that
accumulate earnings in order to avoid U.S. federal income tax.
These persons should consult their own U.S. tax advisors before investing in
the certificates.
Information Reporting and Backup Withholding
Information returns will be required to be filed with the IRS reporting
payments made to certain U.S. Certificate Owners. In addition, certain U.S.
Certificate Owners may be subject to U.S. backup withholding tax in respect of
such payments if such a holder does not provide its taxpayer identification
number to the transferor or if the IRS notifies the transferor that such a
holder is subject to backup withholding due to a failure to report certain
interest or dividend income. Certain U.S. Certificate Owners may also be
subject to information reporting and backup withholding requirements with
respect to proceeds from a sale of certificates. Non-U.S. Certificate Owners
may be required to comply with applicable certification procedures to
establish that they are not U.S. persons in order to avoid the application of
U.S. information reporting requirements and backup withholding tax.
Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be refunded or credited against the holder's
U.S. federal income tax liability, provided that the required information is
furnished to the IRS.
Tax Return Disclosure and Investor List Requirements
Recently issued Treasury regulations, referred to as the Disclosure
Regulations, require participants in a "reportable transaction" to disclose
certain information about the transaction on IRS Form 8886 -- which is not yet
available in other than draft form -- and retain certain information relating
to the transaction. Legislative proposals are expected to be introduced in
Congress that, if enacted, would impose significant penalties for failure to
comply with these disclosure requirements. A transaction may be a reportable
transaction based upon any of several indicia, one or more of which may be
present with respect to the transaction described in this prospectus and the
related prospectus supplement. While the Disclosure Regulations are directed
towards "abusive tax shelters," as currently drafted, they are quite broad and
apply to transactions that would not commonly be considered tax shelters. The
IRS has announced that it plans to revise the Disclosure Regulations to
exclude certain transactions that are clearly not potentially abusive. The
applicability to a transaction of the Disclosure Regulations as revised will
depend upon the substance of and the effective date for the revised Disclosure
Regulations. Nevertheless, an investor may elect to apply the revised
Disclosure Regulations to transactions entered into before the effective date
of the revised Disclosure Regulations. No assurance can be given regarding the
transactions that will be excluded from the provisions of the revised
Disclosure Regulations. In addition, the Disclosure Regulations require
organizers, sellers, and certain advisors of reportable transactions to
maintain lists identifying the transaction participants (including its
investors) and to furnish to the IRS upon demand that investor information as
well as detailed information regarding the transaction. However, the Treasury
Department has delayed the effective date of the Disclosure Regulations
relating to maintaining and furnishing investor lists. Whether the Disclosure
Regulations relating to maintaining and furnishing investor lists will apply
to this transaction will depend on the substance of and the effective date for
the revised Disclosure Regulations. Investors should consult their tax
advisors concerning any possible disclosure obligation with respect to their
investment, the applicability of the revised Disclosure Regulations, and the
potential to elect to apply the revised Disclosure Regulations. Investors
should also be aware that the transferor and other participants in this
transaction intend to comply with all of the requirements of the Disclosure
Regulations that they determine apply to them with respect to this
transaction.
Employee Benefit Plan Considerations
A plan fiduciary considering an investment in the offered certificates
should consider that an investment might constitute or give rise to a
prohibited transaction under the Employee Retirement Income Security Act of
1974, as amended, and the Code or any substantially similar federal, state or
local law. ERISA and the Code impose restrictions on:
o employee benefit plans as defined in Section 3(3) of ERISA,
o plans described in Section 4975(e)(1) of the Code, including retirement
accounts and Keogh plans,
o entities whose underlying assets include plan assets by reason of a
plan's investment in these entities, and
o persons who have specified relationships to a plan described as "parties
in interest" under ERISA and "disqualified persons" under the Code.
Regulation Under ERISA and the Tax Code
ERISA imposes duties on persons who are fiduciaries of a plan. Under
ERISA, any person who exercises any authority or control over the management
or disposition of a plan's assets is considered to be a fiduciary of that
plan. Both ERISA and the Code prohibit some transactions involving "plan
assets" between a plan and parties in interest or disqualified persons.
Violations of these rules may result in the imposition of an excise tax or
penalty.
The term "plan assets" is not defined by ERISA or the Code. However, a
plan's assets may be considered to include an interest in the underlying
assets of the trust if the plan acquires an "equity interest" in the trust. An
equity interest includes the certificates. If so, the operation of the trust
may result in a prohibited transaction under ERISA and the Code.
Final Regulation Issued by the DOL
The U.S. Department of Labor, referred to as the DOL, issued a final
regulation which provides exceptions to the rule described above under certain
circumstances. For example, if a plan acquires a "publicly-offered security,"
the issuer of the security is not treated as holding plan assets. A
publicly-offered security is a security that:
o is freely transferable,
o is part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another, and
o is either:
-- part of a class of securities registered under Section 12(b) or
12(g) of the Securities Exchange Act, or
-- sold to the plan as part of an offering of securities to the public
under an effective registration statement under the Securities Act
and the class of securities of which that security is a part is
registered under the Securities Exchange Act within the requisite
time.
In addition, the final regulation provides that if at all times more than
75% of the value of all classes of equity interests in certificates of a
series are held by investors other than plan investors, an investing plan's
assets will not include any of the underlying assets of the trust.
Although it is anticipated that the conditions of these exceptions may be
met for some classes of certificates, no assurances can be given and no
monitoring will be done.
If the criteria for publicly-offered securities or other exceptions are
not met for any class of offered certificates, the trust assets may be treated
as including assets of plans that are certificateholders. If so, transactions
involving the trust and parties in interest or disqualified persons relating
to plans that are certificateholders might be prohibited under ERISA and the
Code. For example, if a participant in any plan is a cardholder of one of the
accounts, under DOL interpretations, the holding of interests in certificates
by that plan could constitute a prohibited transaction.
Regardless of whether the assets of the trust are treated as plan assets,
if TRC, any underwriter of that series or any other service provider to the
trust is a party in interest or a disqualified person for an investing plan,
the purchase of an interest in certificates by that plan could constitute a
prohibited transaction. An investment by a plan in certificates could result
in liability under ERISA and the Code unless a statutory or administrative
exemption exists and all conditions for exemptive relief are satisfied.
Exemptions to Prohibited Transactions
There are five class exemptions issued by the DOL that could apply in the
event of a prohibited transaction. These DOL Prohibited Transaction Class
Exemptions apply to:
o transactions determined by independent qualified professional asset
managers (PTE 84-14),
o transactions involving bank collective investment funds (PTE 91-38),
o transactions involving insurance company pooled separate accounts (PTE
90-1),
o transactions involving insurance company general accounts (PTE 95-60),
and
o transactions determined by in-house asset managers (PTE 96-23).
We can provide no assurance that these exemptions or any other exemption
will apply, even if all of the conditions specified are satisfied.
Special Considerations for Insurance Companies
Based on the reasoning of the United States Supreme Court in John Hancock
Life Ins. Co. v. Harris Trust and Savings Bank, 114 S. Ct. 517 (1993), an
insurance company's general account may be deemed to include assets of the
plans investing in the general account (e.g., through the purchase of an
annuity contract), and the insurance company might be treated as a party in
interest with respect to a plan by virtue of that investment.
Any purchaser that is an insurance company using the assets of an
insurance company general account should take note of Section 401(c) of ERISA
relating to the status of the assets of insurance company general accounts
under ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the DOL
issued final regulations effective January 5, 2000 with respect to insurance
policies issued on or before December 31, 1998 that are supported by an
insurer's general account. As a result of these regulations, assets of an
insurance company general account will not be treated as "plan assets" for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975
of the Code to the extent those assets relate to contracts issued to employee
benefit plans on or before December 31, 1998 and the insurer satisfies various
conditions.
The plan asset status of insurance company separate accounts is
unaffected by Section 401(c) of ERISA, and separate account assets continue to
be treated as the plan assets of any of those plans invested in a separate
account. Potential investors considering the purchase of certificates of any
series on behalf of an insurance company general account should consult their
legal advisors regarding the effect of these regulations on the investment.
General Investment Considerations
Prospective fiduciaries of a plan considering the purchase of interests
in certificates of any series should consult with their legal advisors
concerning the impact of ERISA and the Code and the potential consequences of
making an investment in the certificates based on their specific
circumstances. Each plan fiduciary should take into account, among other
considerations:
o whether the fiduciary has the authority to make the investment,
o the composition of the plan's portfolio as to diversification by type of
asset,
o the plan's funding objectives,
o the tax effects of the investment,
o whether the assets of the trust which are represented by these interests
would be considered plan assets, and
o whether, under the general fiduciary standards of investment prudence
and diversification, an investment in certificates of any series is
appropriate for the plan taking into account the overall investment
policy of the plan and the composition of the plan's investment
portfolio.
Some employee benefit plans, for example, governmental plans and some
church plans, are not subject to the provisions of Title I of ERISA and
Section 4975 of the Code. For this reason, assets of these plans may be
invested in the certificates of each series without regard to the ERISA
considerations described here, subject to the provisions of any other
applicable federal and state law. It should be noted that any plan that is
qualified and exempt from taxation under the Code is subject to the prohibited
transaction rules described in the Code.
Plan of Distribution for the Offered Certificates
The place and time of delivery for any offered series of certificates
will be described in the prospectus supplement for that series. TRC may sell
certificates:
o through underwriters or dealers,
o directly to one or more purchasers, or
o through agents.
The prospectus supplement for any offered series will describe the terms
of the offering of the offered certificates, including:
o the name or names of any underwriters for the certificates,
o the purchase price of the certificates,
o the proceeds to TRC from the sale,
o any underwriting discounts and commissions,
o any other compensation of the underwriters,
o the initial offering price, and
o any discounts or concessions allowed or reallowed or paid to dealers.
Under each underwriting agreement, TRC will agree to sell to each of the
underwriters in the related prospectus supplement the principal amount of the
offered certificates. In turn, each of those underwriters will agree to
purchase from TRC the principal amount of certificates described in the
underwriting agreement and in the related prospectus supplement. The
underwriting agreement may allow for a proportional adjustment in the event of
an increase or decrease in the full amount of the offered certificates. If
there is a default by any underwriter, the underwriting agreement will provide
that, in some circumstances, purchase commitments of the nondefaulting
underwriters may be increased or the underwriting agreement may be ended.
Each underwriting agreement will provide that TRC will indemnify the
related underwriters against some liabilities, including liabilities under the
federal securities laws.
Legal Matters
Legal matters relating to the issuance of certificates will be passed
upon for RNB, TCC, TRC and the trust by James T. Hale, Executive Vice
President, Corporate Secretary and General Counsel of Target Corporation.
Legal matters relating to the certificates will be passed upon for the
underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Mr. Hale owns or has the right to acquire a number of shares of common stock
of Target Corporation which total less than 1% of the outstanding common stock
of Target Corporation. Federal income tax matters will be passed upon for TRC
by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Reports to Certificateholders
The servicer will provide to the trustee and each rating agency, by the
third business day before each distribution date, a monthly report providing
the following information:
o the total amount of Principal Receivables and Finance Charge Receivables
as of the end of that Monthly Period,
o the Invested Amount for each series and the Invested Amount allocated to
each class,
o the Floating Allocation Percentage and Principal Allocation Percentage,
o the amount of collections of Principal Receivables and collections of
Finance Charge Receivables processed during that Monthly Period and the
portion allocated to the certificateholders' interest,
o the total outstanding balance of accounts which were 30, 60, 90 and 120
days or more delinquent at the end of the Monthly Period,
o the Defaulted Amount and the portion allocated to the series,
o the amount, if any, of charge-offs for the series and the portion
allocable to each class,
o the monthly servicing fee,
o the portfolio yield, and
o the base rate for that series.
On each payment date, the monthly report will include the following
additional information about the other outstanding series:
o the total amount distributed,
o the amount of principal distributed,
o the amount of interest distributed, and
o the excess of the unpaid principal balance over the Invested Amount as
of the Record Date.
On each distribution date the trustee will provide each certificateholder
of record with a copy of the monthly report. The servicer and the trustee will
not be required to provide any reports directly to beneficial owners. See
"Description of the Certificates--Book-Entry Registration" for a general
description of DTC procedures.
On or before January 31 of each calendar year, the trustee will provide
to any certificateholder of record during the preceding year a statement
containing the information required to be given by an issuer of debt under the
Code along with any other customary information which is necessary to allow
the certificateholders to prepare their tax returns. See "Federal Income Tax
Consequences" for a detailed discussion.
Unless and until Definitive Certificates are issued, monthly and annual
reports, which contain unaudited information concerning the trust and which
are prepared by the servicer, will be sent on behalf of the trust to Cede &
Co., as nominee of DTC and registered holder of the related certificates.
These reports will not constitute financial statements prepared under
generally accepted accounting principles. TRC does not intend to send any of
its financial reports to registered holders of certificates or to owners of
beneficial interests in the certificates. TRC will file with the SEC the
periodic reports relating to the trust that are required under federal
securities laws. TRC may suspend the filing of periodic reports to the extent
the filings are no longer required of TRC. See "Description of the
Certificates--Book-Entry Registration" and "The Pooling and Servicing
Agreement--Evidence as to Compliance."
Forward-Looking Statements
This prospectus and the related prospectus supplement, including
information included or incorporated by reference in this prospectus and the
related prospectus supplement, may contain certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. In
addition, certain statements made in future SEC filings by TRC, in press
releases and in oral and written statements made by or with TRC's approval
that are not statements of historical fact may constitute forward-looking
statements. Forward-looking statements may relate to, without limitation, the
performance of the trust portfolio, RNB's, TCC's or TRC's financial condition,
results of operations, plans, objectives, future performance or business.
Words such as "believes," "anticipates," "expects," "intends," "plans,"
"estimates" and similar expressions are intended to identify forward-looking
statements but are not the only means to identify these statements.
Forward-looking statements involve risks and uncertainties. Actual
conditions, events or results may differ materially from those contemplated by
the forward-looking statements. Factors that could cause this difference--many
of which are beyond TRC's control-- include the following, without limitation:
o Changes in credit card use, payment patterns and default rates as well
as RNB's ability to extend credit and collect payments may be different
than anticipated,
o Local, regional and national business, political or economic conditions
may differ from those expected,
o The effects and changes in trade, monetary and fiscal policies and laws,
including the interest rate policies of the Federal Reserve Board, may
adversely affect RNB's, TCC's and TRC's business and the performance of
the trust portfolio,
o The effects of changes in interest rates, recession, inflation,
deflation, consumer credit availability, consumer debt levels, tax rates
and policy, unemployment trends, energy costs and other matters that
influence consumer confidence and spending may differ from those
expected,
o The timely development of new products and services by RNB and Target
Corporation, including the use of chip related technology, and
acceptance by consumers of these products and services, including Target
VISA, may be different than anticipated,
o The ability to increase market share by RNB and Target Corporation may
be more difficult than anticipated,
o Competitive pressures among retailers and issuers of credit cards and
charge cards may increase significantly,
o Changes in laws and regulations may adversely affect RNB, TCC and TRC
and their business and the performance of the trust portfolio,
o The costs, effects and outcomes of litigation may adversely affect RNB,
TCC and TRC or their business and the performance of the trust
portfolio, and
o RNB, TCC and TRC may not manage the risks involved in each of the
foregoing factors as well as anticipated.
Forward-looking statements speak only as of the date they are made. TRC
undertakes no obligation to update any forward-looking statement to reflect
subsequent circumstances or events.
Where You Can Find More Information
TRC filed a registration statement relating to the securities with the
SEC. This prospectus is part of the registration statement, but the
registration statement includes additional information.
The SEC allows us to incorporate information by reference to SEC filings.
This means that we can disclose information to you by referring to those
documents. The information incorporated by reference is considered to be part
of this prospectus. We refer you to the registration statement for additional
information, including any amendments and exhibits. We also incorporate by
reference any future annual, monthly and special SEC reports and proxy
materials filed by or on behalf of the trust until the offering of the
certificates has ended.
Information that we file later with the SEC will automatically update the
information in this prospectus. You should always rely on the later
information over different information included in this prospectus or the
related prospectus supplement.
Copies of the filings may be obtained from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Please call the SEC at (800) SEC-0330 for further information on the
operation of the public reference rooms. In addition, the SEC maintains a
website at "http://www.sec.gov" that contains filings and information
regarding registrants that file electronically with the SEC.
Glossary of Terms for Prospectus
"Addition Date" means the date TRC, under the conditions specified in the
Pooling and Servicing Agreement, adds the following to the trust:
o receivables arising in designated accounts owned by RNB or another
Credit Card Originator, or
o any Participation Interest.
"Additional Account" means each Automatic Additional Account and
Supplemental Account.
"Aggregate Addition Limit" means the limit on 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 without prior
notice to the rating agencies, as described under "The Pooling and Servicing
Agreement--Addition of Trust Assets."
"Automatic Addition Termination Date" means the date on which new
open-end credit card accounts owned by the Credit Card Originators will cease
to become Automatic Additional Accounts.
"Automatic Additional Accounts" means each open-end credit card account
established under a credit card agreement with a Credit Card Originator
arising:
o after the Cut-Off Date and before the earlier of the date TRC determines
to suspend the inclusion of Automatic Additional Accounts or the
Automatic Addition Termination Date, and
o after a Restart Date and before any subsequent date TRC determines to
suspend the inclusion of Automatic Additional Accounts or the Automatic
Addition Termination Date,
provided, with respect to any accounts initially originated by an entity other
than RNB or any transferees of accounts from RNB, that account will be deemed
to be an Automatic Additional Account only upon satisfaction of the Rating
Agency Condition.
"Bank Receivables Purchase Agreement" means the Amended and Restated Bank
Receivables Purchase Agreement, dated as of April 28, 2000, between TCC, as
purchaser of the receivables, and RNB, as seller of the receivables, as may be
amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means an Eligible Deposit Account for the benefit of
the certificateholders into which the servicer deposits collections on the
receivables.
"Credit Card Guidelines" means the written policies and procedures of the
Credit Card Originator relating to the operation of its consumer revolving
lending business, including:
o determining the creditworthiness of credit card customers,
o the extension of credit to credit card customers, and
o relating to the maintenance of credit card accounts and collection of
receivables,
as these policies and procedures may be modified in accordance with
requirements of law, the failure to comply with which would have a material
adverse effect on interests of the certificateholders.
"Credit Card Originator" means RNB and any transferee, successor or
assign of RNB or any other originator of consumer open-end credit card
accounts designated to have their receivables included in the trust.
"Cut-Off Date" means June 30, 1995.
"Defaulted Amount" means the amount of receivables described under
"Description of the Certificates--Defaulted Receivables and the Defaulted
Amount."
"Defaulted Receivables" means for any date of determination, Principal
Receivables that are charged-off as uncollectible on that day.
"Definitive Certificates" means certificates in fully registered,
certificated form that are only issued to certificateholders under the
circumstances described under "Description of the Certificates--Definitive
Certificates."
"Disclosure Regulations" means the Treasury regulations described under
"Federal Income Tax Consequences--Tax Return Disclosure and Investor List
Requirements."
"Discount Option Receivables" means those receivables that otherwise
would have been treated as Principal Receivables that are to be treated as
Finance Charge Receivables at TRC's option.
"Eligible Deposit Account" means any bank account satisfying the
requirements listed in "Description of the Certificates--Collection Account."
"Eligible Investments" means those investments described under
"Description of the Certificates--Collection Account."
"Eligible Receivable" means each receivable satisfying the requirements
listed in "The Pooling and Servicing Agreement--Eligible Accounts and Eligible
Receivables."
"Excess Finance Charge Collections" means those collections of Finance
Charge Receivables and other amounts treated as collections of Finance Charge
Receivables described under "Description of the Certificates--Sharing of
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections."
"Excess Transferor Finance Charge Collections" means those collections of
Finance Charge Receivables described under "Description of the
Certificates--Sharing of Excess Finance Charge Collections and Excess
Transferor Finance Charge Collections."
"Finance Charge Receivables" means, with respect to any Monthly Period:
o all amounts billed to the obligors at the beginning of that Monthly
Period for periodic finance charges,
o fees and charges, including late fees, overlimit fees, return check
fees, deferred billing fees and Merchant Fees,
o the amount of any Discount Option Receivables, and
o other amounts billed for receivables that are not Eligible Receivables.
"Floating Allocation Percentage" means for each Monthly Period, the
percentage used to allocate to your series the Defaulted Amount and
collections of Finance Charge Receivables as described in the related
prospectus supplement.
"Ineligible Receivables" means receivables not satisfying the
requirements of Eligible Receivables.
"Invested Amount" means with respect to any series, the outstanding
principal balance of that series minus the amount of any unreimbursed investor
charge-offs for that series, subject to any additional adjustments as
specified in the applicable Supplement for that series.
"IRS" means the United States Internal Revenue Service.
"Merchant Fees" means the fees paid with respect to the private label
credit card accounts by Target Corporation Stores, and with respect to the
Target VISA accounts by merchants accepting Target VISA, to Retailers National
Bank, in its capacity as Credit Card Originator, in connection with obligor
charges for goods and services.
"Monthly Period" means a fiscal month of TRC.
"Non-U.S. Certificate Owner" means a beneficial owner of a certificate
that is not a U.S. Certificate Owner.
"Participation" means an interest in the assets of the trust entitling
its holder to a specified percentage of collections of Principal Receivables
and Finance Charge Receivables and any other assets of the trust.
"Participation Interest" means any participation or certificate
representing an undivided interest in a pool of assets primarily consisting of
open-end credit card receivables originated by RNB or another Credit Card
Originator and collections on those receivables and other assets.
"Pooling and Servicing Agreement" means the Amended and Restated Pooling
and Servicing Agreement, dated as of April 28, 2000, among TRC, as transferor
of the receivables to the trust, RNB, as servicer and originator of the
receivables, and Wells Fargo Bank Minnesota, National Association, as trustee,
as may be amended from time to time.
"Portfolio Reassignment Price" means the amount TRC deposits into the
Collection Account to satisfy its reassignment obligations equal to:
o the total Invested Amount for all outstanding series,
o outstanding amounts invested by enhancement providers, if any, of all
series,
o interest payable to each series or class on that distribution date,
o any interest amounts that were due but not paid on an earlier
distribution date, and
o interest on the overdue interest amounts, if the applicable Supplement
so provides, at the applicable certificate rates through the day before
that distribution date.
"Principal Allocation Percentage" means for each Monthly Period, and for
each series, the percentage used to allocate collections of Principal
Receivables to that series as described in the related prospectus supplement.
"Principal Receivables" means all Eligible Receivables that are not
Finance Charge Receivables or Defaulted Receivables, reduced by the aggregate
amount of credit balances in the accounts on the date of determination.
"Principal Shortfall" means for any series, the deficiency that occurs
when collections of Principal Receivables allocated to each class of that
series and other amounts are insufficient to cover required principal deposits
or payments.
"Purchase Agreement" means individually, the Bank Receivables Purchase
Agreement and the Receivables Purchase Agreement and in the plural, means both
the Bank Receivables Purchase Agreement and the Receivables Purchase
Agreement.
"Rating Agency Condition" means, for any action requiring rating agency
approval or consent, that each rating agency notifies TRC, RNB and the trustee
in writing that such action will not result in a reduction or withdrawal of
the rating of the investor certificates of any outstanding series or class for
which it is a rating agency.
"Receivables Purchase Agreement" means the Amended and Restated
Receivables Purchase Agreement, dated as of April 28, 2000, between TRC, as
purchaser of the receivables, and TCC, as seller of the receivables, as may be
amended from time to time.
"Record Date" means with respect to any payment to certificateholders,
the date specified in the related prospectus supplement as of which a
certificateholder must be the registered holder of a certificate to receive a
payment on the following distribution date.
"Removed Accounts" means accounts designated by TRC to have their
receivables conveyed from the trust to TRC and which will no longer constitute
trust accounts if TRC satisfies the conditions specified in the Pooling and
Servicing Agreement.
"Required Principal Balance" means on any date of determination, an
amount equal to:
o the sum of the numerators used to calculate:
-- the Principal Allocation Percentages with respect to Principal
Receivables for all series then outstanding, and
-- the amount, equal to a percentage of all collections, that each
holder of a Participation is entitled to for all Participations then
outstanding, minus
o the amount on deposit in the Special Funding Account as of that date.
"Required Retained Transferor Amount" means on any date of determination,
the product of:
o the sum of:
-- the total amount of Principal Receivables, and
-- the amount on deposit in the Special Funding Account and the amount
of other specified trust assets, including any other accounts
specified in the related prospectus supplement, and
o the highest of the Required Retained Transferor's Percentages specified
in the related prospectus supplement for each series outstanding.
"Restart Date" means the date TRC specifies in a written notice to the
trustee that it will start redesignating Automatic Additional Accounts to the
trust only if:
o the conditions described under "The Pooling and Servicing
Agreement--Addition of Trust Assets" are satisfied, and
o all accounts of the Credit Card Originators have been designated either
as Automatic Additional Accounts or as Supplemental Accounts.
"Servicer Default" means any failure of the servicer under the Pooling
and Servicing Agreement and any Supplement:
o to perform its duties or fulfill its obligations (each, a "breach")
which has a material adverse impact on certificateholders, and o to cure
the breach within a specified period of time, including any grace
period, after discovery or notice of the breach,
and certain events of bankruptcy and insolvency. See "The Pooling and
Servicing Agreement--Servicer Default" for a description of the specific
events that could result in a Servicer Default.
"Shared Principal Collections" means those collections of Principal
Receivables and other amounts treated as collections of Principal Receivables
described under "Description of the Certificates--Shared Principal Collections
and Shared Transferor Principal Collections."
"Shared Transferor Principal Collections" means those collections of
Principal Receivables and other amounts (and, in specified circumstances,
Excess Transferor Finance Charge Collections) described under "Description of
the Certificates--Shared Principal Collections and Shared Transferor Principal
Collections."
"Special Funding Account" means the Eligible Deposit Account for the
benefit of each series or class in which collections of Principal Receivables,
and other amounts treated as collections of Principal Receivables, are held as
collateral if the Transferor Amount, excluding the interest representing any
Supplemental Certificate, is less than the Required Retained Transferor
Amount.
"Supplement" means the supplement to the Pooling and Servicing Agreement
relating to a particular series.
"Supplemental Accounts" means after the Cut-Off Date, those accounts
(other than Automatic Additional Accounts) TRC designates to be added to the
trust only if they are eligible accounts.
"Supplemental Certificate" means a certificate evidencing the interest in
the Transferor's Interest not represented by the Transferor Certificate.
"Target Corporation Stores" means the three retail divisions through
which Target Corporation operates, namely Target stores, Marshall Field's and
Mervyn's, each a Target Corporation Store.
"Transferor Amount" means, on any date of determination, the sum of:
o the aggregate amount of Principal Receivables in the trust, plus
o the amounts on deposit in the Special Funding Account and other trust
accounts specified in any Supplement, minus
o the Invested Amount of each outstanding series, minus
o the amount of any Participation.
"Transferor Certificate" means a certificate evidencing the interest in
the Transferor's Interest not represented by any Supplemental Certificate.
"Transferor's Interest" means the ownership interest of TRC, its
transferees and any holder of a Supplemental Certificate in the trust.
"Trust Portfolio Yield" means with respect to any series for any Monthly
Period, the annualized percentage equivalent of a fraction:
o whose numerator equals the total collections of Finance Charge
Receivables for that Monthly Period, and
o whose denominator is the total amount of Principal Receivables in the
trust as of the first day of that Monthly Period.
"U.S. Certificate Owner" means a beneficial owner of a certificate that
is, for U.S. federal income tax purposes:
o a citizen or resident of the United States,
o a corporation created or organized in the United States or under the
laws of the United States, any state or the District of Columbia,
o an estate whose income is subject to United States federal income
taxation regardless of its source, or
o a trust:
-- the primary supervision over the administration of which is
exercisable by a court within the United States, and
-- all substantial decisions of which are subject to the control of one
or more United States persons as described in section 7701(a)(30) of
the Code, or
-- that has a valid election in effect under applicable Treasury
regulations to be treated as a United States person.
[PRINCIPAL OFFICE OF THE ORIGINATOR AND BENEFICIARY
Target Receivables Corporation
1000 Nicollet Mall
Suite 3136
Minneapolis, Minnesota 55403
MASTER OWNER TRUST TRUSTEE
Wells Fargo Bank Minnesota, National Association
Sixth & Marquette
MAC N9311-161
Minneapolis, Minnesota 55479
LEGAL ADVISOR TO LEGAL ADVISOR TO
TARGET CORPORATION TARGET CORPORATION
as to United States Law AND THE UNDERWRITERS
as to United States Law
James T. Hale
Executive Vice President, Skadden, Arps, Slate, Meagher & Flom LLP
Corporate Secretary and General Counsel Four Times Square
Target Corporation New York, New York 10036
1000 Nicollet Mall
Minneapolis, Minnesota 55403-2467
PAYING AGENT
Wells Fargo Bank Minnesota, National Association LUXEMBOURG PAYING AGENT
Sixth & Marquette [Name and address to
MAC N9311-161 be added]
Minneapolis, Minnesota 55479
LISTING AGENT
[Name and address to
be added]
INDEPENDENT ACCOUNTANTS TO TARGET CORPORATION
Ernst & Young LLP
1400 Pillsbury Center
Minneapolis, Minnesota 55402]
SERIES 2003-__
$__________
Floating Rate Class A
Asset Backed Certificates
TARGET CREDIT CARD MASTER TRUST
Issuer
TARGET RECEIVABLES CORPORATION
Transferor
RETAILERS NATIONAL BANK
Servicer
________________________
PROSPECTUS SUPPLEMENT
________________________
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering these certificates in any state where the offer is
not permitted.
Dealers will deliver a prospectus supplement and prospectus when acting
as underwriters of these certificates and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling these
certificates will deliver a prospectus supplement and prospectus until
__________.
PART II
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee........................................ $ *
Printing and Engraving.................................. *
Trustee's Fees.......................................... *
Legal Fees and Expenses................................. *
Blue Sky Fees and Expenses.............................. *
Accountants' Fees and Expenses.......................... *
Rating Agency Fees...................................... *
Miscellaneous Fees...................................... *
Total................................................ $ *
_______________
* To be provided by amendment.
Item 15. Indemnification of Directors and Officers
Article VII of the By-laws of Target Receivables Corporation, a Minnesota
corporation, provides for indemnification of all persons who are serving or
have served at the request of Target Receivables Corporation to the extent
permitted under Minnesota law. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
Pursuant to agreements which the Transferor may enter into with
underwriters or agents (forms of which are included as exhibits to this
Registration Statement), officers and directors of the Transferor, and
affiliates thereof, may be entitled to indemnification by such underwriters or
agents against certain liabilities, including liabilities under the Securities
Act of 1933, arising from information which has been furnished to the
Transferor by such underwriters or agents that appears in the Registration
Statement or any Prospectus.
Item 16. Exhibits
(a) Exhibits
1 Form of Underwriting Agreement (incorporated herein by reference
to Registration Statement No. 333-95585)
4(a) Amended and Restated Pooling and Servicing Agreement
(incorporated herein by reference to Registration Statement No.
333-95585)
4(b) Form of Series Supplement*
4(c) Amended and Restated Bank Receivables Purchase Agreement
(incorporated herein by reference to Registration Statement No.
333-95585)
4(d) Amended and Restated Receivables Purchase Agreement
(incorporated herein by reference to Registration Statement No.
333-95585)
5 Opinion of James T. Hale, with respect to legality*
8 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect
to tax matters*
23(a) Consent of James T. Hale (included in his opinion to be filed as
Exhibit 5)*
23(b) Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
its opinion filed as Exhibit 8)*
24 Power of Attorney (included on signature page)
--------
* To be filed by amendment.
(b) Financial Statements
All financial statements, schedules and historical financial information
have been omitted as they are not applicable.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement; (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement; provided, however, that (a)(i)
and (a)(ii) will not apply if the information required to be included in a
post-effective amendment by those sub-paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(d) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(e) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.
(f) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of each issue.
(g) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(h) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on
February 20, 2003.
TARGET CREDIT CARD MASTER TRUST
By: TARGET RECEIVABLES CORPORATION
as originator of the Trust
By: /s/ Douglas A. Scovanner
----------------------------------
Douglas A. Scovanner, President
TARGET RECEIVABLES CORPORATION
as Co-Registrant
By: /s/ Douglas A. Scovanner
----------------------------------
Douglas A. Scovanner, President
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned does hereby
constitute and appoint each of Douglas A. Scovanner and Stephen C. Kowalke,
individually, his or her true and lawful attorney-in-fact and agent, with full
power of substitution, for him or her and on his or her behalf to sign,
execute and file this Registration Statement and any or all amendments
(including, without limitation, post-effective amendments and any amendment or
amendments increasing the amount of securities for which registration is being
sought) to this Registration Statement, with all exhibits and any all
documents required to be filed with respect thereto, with the Securities and
Exchange Commission or any regulatory authority, granting unto each such
attorney-in-fact and agent individually full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises in order to effectuate the same as fully to all intents and
purposes as he or she might or could do if personally present hereby ratifying
and confirming all that each such attorney-in-fact and agent may lawfully do
or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 2003.
TARGET RECEIVABLES CORPORATION
Signature Title
Principal Executive Officer:
/s/ Douglas A. Scovanner President
------------------------------
Douglas A. Scovanner
Principal Financial Officer:
/s/ Stephen C. Kowalke Vice President and Treasurer
------------------------------
Stephen C. Kowalke
Principal Accounting Officer:
/s/ Terrence J. Scully Vice President
------------------------------
Terrence J. Scully
Directors:
/s/ Stephen C. Kowalke Director
------------------------------
Stephen C. Kowalke
/s/ Martin R. Rosenbaum Director
------------------------------
Martin R. Rosenbaum
/s/ Douglas A. Scovanner Director
------------------------------
Douglas A. Scovanner
/s/ Sandra Sponem Director
------------------------------
Sandra Sponem
/s/ Terrence J. Scully Director
------------------------------
Terrence J. Scully
EXHIBIT INDEX
Exhibits
1 Form of Underwriting Agreement (incorporated herein by reference
to Registration Statement No. 333-95585)
4(a) Amended and Restated Pooling and Servicing Agreement
(incorporated herein by reference to Registration Statement No.
333-95585)
4(b) Form of Series Supplement*
4(c) Amended and Restated Bank Receivables Purchase Agreement
(incorporated herein by reference to Registration Statement No.
333-95585)
4(d) Amended and Restated Receivables Purchase Agreement
(incorporated herein by reference to Registration Statement No.
333-95585)
5 Opinion of James T. Hale, with respect to legality*
8 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect
to tax matters*
23(a) Consent of James T. Hale (included in his opinion to be filed as
Exhibit 5)*
23(b) Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
its opinion filed as Exhibit 8)*
24 Power of Attorney (included on signature page)
_______________
* To be filed by amendment.