As filed with the Securities and Exchange Commission on September 22, 2003
Registration No. 333 -103371
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Amendment No. 1
to
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(2)
--------------------------- ---------- ----------- -------- -------------------
Asset Backed Certificates.............. $3,000,000,000 100% $3,000,000,000 $242,700
(1) Estimated solely for the purpose of calculating the Registration Fee.
(2) $92 of which has previously been paid.
_______________
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 Competition in the Credit Card
Presented in this Prospectus Industry Could Impact RNB's
Supplement and the Attached Ability to Generate New
Prospectus........................................S-4 Accounts and Receivables and
Might Also Affect Payment
Summary of Terms..................................S-5 Patterns on the Existing
Receivables Which Could Result
Structural Summary................................S-6 in Accelerated, Delayed or
Reduced Payments to You................S-15
Transaction Flow Chart...........................S-12
Fluctuations in the Rate of
Risk Factors.....................................S-13 Receivables Growth and
Principal Payment Rates Due to
Reduced Collections of Finance the Dependence on the Target
Charge Receivables or Corporation Stores Could
Increased Defaulted Result in Accelerated, Delayed
Receivables Could Result in Reduced Payments to You................S-15
Accelerated, Delayed or
Reduced Payments to You................S-13 TRC May Not be Able to Add
Accounts to the Trust. This
Reduced Collections of Principal Could Result in Accelerated,
Receivables or an Inadequate Delayed or Reduced
Amount of Principal Payments to You........................S-15
Receivables Could Result in
Accelerated, Delayed or Currently All New Accounts are
Reduced Payments to You................S-13 Automatically Designated as
Additional Accounts. These
Allocations of Defaulted Additional Accounts May Have
Receivables Could Result in Different Terms and Conditions
Reduced Payments to You................S-13 and May Be of Lower Credit
Quality than Existing
Limited Credit Enhancement Provided Accounts. This Could Result in
by the Collateral Interest Accelerated, Delayed or
Could Result in Reduced Reduced Payments to You................S-15
Payments to You .......................S-14
If any Rating of the Class A
A Change in the Terms and Certificates is Lowered or
Conditions of the Accounts May Withdrawn, the Market Value of
Reduce the Amount of the Class A Certificates Could
Receivables Arising Under the Decrease...............................S-16
Accounts, Reduce the Portfolio
Yield, Reduce the Amount of You May Not Be Able to Resell Your
Collections on Those Class A Certificates...................S-16
Receivables or Otherwise Alter
Payment Patterns and Could If RNB, TCC or TRC Breaches
Result in Accelerated, Delayed, Representations and Warranties
or Reduced Payments to You.............S-14 Relating to the Receivables,
It Could Result in
Introduction of Target VISA has Accelerated, Delayed or
Caused Trust Performance to Reduced Payments to You................S-17
Change, Including Increased
Account Balances, Lower Trust Changes to Consumer Protection Laws
Portfolio Yield, and Lower May Impede RNB's Collection
Principal Payment Rates Which Efforts or Alter the Timing or
Could Result in Accelerated, Amount of Collections. This
Delayed or Reduced Payments Could Result in Accelerated,
to You.................................S-14 Delayed or Reduced Payments
to You.................................S-17
Regulatory Action Could Result in Characteristics of the Trust Portfolio......S-28
Delayed or Reduced Payments
to You.................................S-17 Use of Proceeds..................................S-30
Insolvency or Bankruptcy of RNB, Description of the Class A Certificates..........S-30
TCC or TRC Could Result in
Accelerated, Delayed or General.....................................S-30
Reduced Payments to You................S-17
Interest Payments...........................S-31
Early Amortization of a Paired
Series May Reduce or Delay Principal Payments..........................S-32
Payments to You........................S-19
Subordination...............................S-32
Issuance of Additional Series by
the Trust May Result in Allocation Percentages......................S-33
Delayed or Reduced Payments to
to You.................................S-19 Application of Collections..................S-34
Shortfalls in Investment Earnings Postponement of Accumulation Period.........S-40
on Amounts Deposited in the
Special Funding Account and Sharing of Excess Finance Charge
the Principal Funding Account Collections..............................S-40
Could Result in Accelerated or
Reduced Payments to You................S-20 Shared Principal Collections................S-41
You Will Have Limited Control of Excess Transferor Finance Charge
Trust Actions..........................S-20 Collections and Shared
Transferor Principal
Retailers National Bank's Credit Card Business...S-21 Collections............................S-41
Target VISA.................................S-21 Reallocation of Cash Flows;
Defaulted Receivables;
Private Label Credit Card Business..........S-21 Investor Charge-Offs...................S-42
Marketing Programs and Account Origination..S-22 Principal Funding Account...................S-43
RNB's Underwriting Processes and Reserve Account.............................S-43
Authorizations...........................S-22
Transfer of the Collateral Interest.........S-44
Servicing of Accounts.......................S-23
Issuance of Additional Certificates.........S-44
Terms of Accounts...........................S-24
Paired Series...............................S-45
Delinquency and Collections Procedures
for RNB Credit Cards.....................S-24 Early Amortization Events...................S-45
The Trust Portfolio..............................S-25 Servicing Fees and Expenses.................S-47
General.....................................S-25 Defeasance..................................S-47
Principal Receivables Outstanding...........S-25 Optional Termination........................S-48
Delinquency Experience......................S-25 Purchase of Class A Certificates by
the Transferor.........................S-48
Charge-Off Rate Experience..................S-26
Series Termination..........................S-48
Principal Payment Rate Experience...........S-27
[Luxembourg Listing And] General Information.....S-48
Trust Portfolio Yield Experience............S-27
Underwriting.....................................S-50
Other Series Issued and Outstanding..............S-51
Glossary of Terms for Prospectus Supplement......S-53
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-53 in this prospectus supplement or under the caption
"Glossary of Terms for Prospectus" beginning on page 63 in the attached
prospectus.
---------------------------------------------------------------------------
| To understand the structure and terms of these securities, |
| you must read carefully this prospectus supplement and |
| the attached prospectus in their entirety. |
---------------------------------------------------------------------------
Summary of Terms
-------------------------------------------------------------------------------------
| |
| 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. |
-------------------------------------------------------------------------------------
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 outstanding actual number of Class A certificate
principal balance at days in interest rate for interest
end of prior month period period
x ________________ x
360
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 day before 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
reductions in the invested amount of your series, 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 repurchase
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
------------------------ ---------------------------------
| Retailers | | Originates credit cards and |
|------------> | National |<---------------| services accounts; holder of |
| | Bank | | participation in trust assets |
| | (RNB) | | |
| ------------------------ --------------------------------
| |
| |
| |
| \/
| ------------------------ ---------------------------------
| | Target | | Purchases receivables arising |
| | Capital Corporation |<--------------- | under credit card accounts |
| | (TCC) | | originated by RNB |
| ------------------------ ----------------------------------
| |
Participation | |
| |
| \/
| ----------------------- ---------------------------------
| | | | Purchases receivables from |
| | Target Receivables | | TCC and transfers them to the |
| | Corporation |<--------------- | trust; retains transferor |
| | (TRC) | | certificate and collateral |
| | | | interest |
| ----------------------- ---------------------------------
| |
| |
| |
| \/
| -----------------------
| | |
| | Target Credit Card |
-------------- | Master Trust |
| |
-----------------------
/ |
/ |
/ |
\/_ \/
----------------------- -----------------------
| | | |
| Other | | Your |
| Series | | Series |
| | | |
----------------------- -----------------------
|
|
|
-------------------------------------------
| |
| |
----------------- -----------------
| Class A | | Collateral |
| Certificates | | Interest |
------------------ ------------------
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 defaultedreceivables, for any
Receivables Could Result in Accelerated, three consecutive months is less than the
Delayed or Reduced Payments to You. 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 to
Principal Receivables Could Result in repay your Class A certificates to go beyond
Accelerated, Delayed or Reduced the Class A expected final payment date. In
Payments to You. 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 RNB will write off defaulted receivables
Could Result in Reduced Payments to arising in accounts in the trust portfolio.
You. 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 "--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 The credit enhancement provided for your
by the Collateral Interest Could Result Class A certificates from the subordination
in 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 and
Reduced Payments to You. 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, rollout of Target VISA began in the fall of
Lower Trust Portfolio Yield, 2001. Prior to the national rollout, the
and Lower Principal Payment Rates trust portfolio did not include a significant
Which Could Result in Accelerated, amount of receivables arising in Target VISA
Delayed or Reduced Payments to You. 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 Corporation and its subsidiaries compete not
Due to the Dependence on the Target only with other discount and traditional
Corporation Stores Could Result in department stores in the area in which they
Accelerated, Delayed or Reduced operate but also with direct marketers and
Payments to You. 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 principal
to the Trust. This Could Result in receivables and certain trust accounts in the
Accelerated, Delayed or Reduced trust falls to a minimum level, currently set
Payments to You. 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 designate all new accounts as additional
May Have Different Terms and accounts transfer the receivables in those
Conditions and May Be of Lower Credit accounts to the trust. Credit and card
Quality than Existing Accounts. This accounts purchased by RNB and originated by
Could Result in Accelerated, Delayed or other credit card originators may also be
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 Any rating of the Class A certificates by a
is Lowered or Withdrawn, the Market rating agency will indicate:
Value of 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 The underwriters may assist in resales of
Class A Certificates. your 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 RNB represents and warrants to TCC, TCC
Representations and Warranties Relating represents and warrants to TRC and TRC
to the Receivables, It Could Result represents and warrants to the trust, the
in Accelerated, Delayed or eligibility, validity and enforceability of
Reduced Payments to You. 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 or regulate the creation and enforcement of
Alter the Timing or Amount of consumer loans, including credit card
Collections. This Could Result in accounts and receivables. Changes or
Accelerated, Delayed or Reduced additions to those laws or failure to comply
Payments to You. with those laws could 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.
Regulatory Action Could Result in Federal and state banking agencies have broad
Delayed or Reduced Payments to You. enforcement powers over RNB. If the
appropriate banking agency were to find that
any securitization agreement of RNB or the
trust, or the performance of any obligation
under such an agreement, constitutes an
unsafe or unsound practice or violates any
law, rule, regulation, or written condition
or agreement applicable to RNB, that banking
agency has the power to order RNB, among
other things, to rescind that agreement,
refuse to perform that obligation, terminate
that activity, or take such other action as
that banking agency determines to be
appropriate. If an appropriate banking agency
did reach such a conclusion, and ordered RNB
to rescind or amend its securitization
agreements, payments to you could be delayed
or reduced, and RNB may not be liable to you
for contractual damages for complying with
such an order and you may not have any legal
recourse against the appropriate banking
agency. See "Legal Aspects of the
Receivables--Certain Regulatory Matters" in
the attached prospectus.
Insolvency or Bankruptcy of RNB, TCC RNB owns the credit card accounts under which
or TRC Could Result in Accelerated, the receivables arise. If RNB becomes
Delayed or Reduced Payments to You. insolvent 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 Series The transferor may cause the trust to issue
May Reduce or Delay Payments to You. another series that will be paired with your
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 The trust has issued other series of
May Result in Delayed or Reduced certificates and is expected to issue
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
Funding Account Could Result in rate that is likely to be less than the yield
Accelerated or Reduced Payments to You. from collections of finance charge
receivables and 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
Actions. to 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. See "Description of the Class
A Certificates--Issuance of Additional
Certificates" in this prospectus supplement.
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
Receivables in RNB
Retailers National Bank Credit 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 __% of the total sales of Target Corporation Stores in
2002. 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 __% of all new account originations in 2002 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 ranging from $15 to $35-- 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
Days Delinquent Delinquent Delinquent
Delinquent Amount % Amount % Amount %
------------------------- ---------- ---- ----- ---- -------- ----
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
Percentage Percentage
of Total of Total
Number of Number Receivable Receivables
Credit Limit Range 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 Monthly Period 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 immediately preceding the Monthly Period in
which 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, or in the
case of the first Monthly Period, the Closing Date, 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, or in the case of the first Monthly Period,
the Closing Date, 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
GRAPHIC OMITTED]
-------------------------------------
| 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 day before 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
--------------------------
| Available |
| Series 2003-__ |
| Principal Collections |
--------------------------
|
|
|
|
|
|
\/
-------------------------------- ----------------------------------------
Shared Principal Collections | ---------> |During the Accumulation Period or | --------------------------
from other series, if necessary | |Early Amortization Period: | <---------| Amounts from the Special|
-------------------------------- |1. Deposited in the Principal Funding | | Funding Account |
| Account up to Class A Controlled | ---------------------------
-------------------------------- | Deposit Amount or paid to Class A |
At the option of TRC, Shared | ---------> | Certificateholders until the Class A |
Transferor Principal Collections| | Invested Amount is paid in full |
-------------------------------- |2. Paid to the holders of the Collateral |
| Interest until the Collateral Invested|
| Amount is paid in full |
-----------------------------------------
|
|
|
|
\/
---------------------------------------
| During the Revolving Period or |
| excess during Accumulation Period |
| or Early Amortization Period |
| treated as Shared Principal |
| Collections allocated to other |
| series, if necessary |
---------------------------------------
|
|
|
\/
--------------------------------------
| Paid to the transferor or deposited |
| in the Special Funding Account |
--------------------------------------
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
on ________ 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 and the principal amount
on deposit in the Special Funding Account, if any, 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. In addition, if on
any Distribution Date TRC is obligated but fails to make an Adjustment Payment,
then the Collateral Invested Amount will be reduced by the Series 2003-__
Allocation Percentage of the unpaid Adjustment Payment.
If a reduction as a result of an unfunded Investor Defaulted Amount or
unpaid Adjustment Payment 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 and unpaid Adjustment Payment 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 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,
o the Transferor Amount, excluding the interest represented by any
Supplemental Certificate, is greater than the Required Retained
Transferor Amount after the additional issuance, 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.
Requires a Automatically Automatically
Majority Vote of Causes an Early Causes an Early
Certificateholders Amortization of Amortization for all
Early Amortization Events or the Trustee Series 2003-__ Series Outstanding
------------------------- ----------------- --------------- ---------------------
1. The transferor fails to make a payment or deposit |X|
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 the |X|
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 representation |X|
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 Transferor |X| |X|
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.
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 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 such deposit occurs before an Early Amortization Period and
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 two 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 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................. $125,000,000 (subject to adjustment)
Commencement of Accumulation Period.................... January 4, 2004 (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 date of determination, an amount
equal to:
o the Class A Adjusted Invested Amount on that day, plus
o the Collateral Invested Amount on that day.
"Adjustment Payment" means any payment TRC must make into the Special
Funding Account equal to the amount by which the servicer adjusts downward the
Principal Receivables:
o for which it received no collections and no charge-off has occurred,
and
o which causes the Required Retained Transferor Amount to exceed the
Transferor Amount, excluding the interest represented by any
Supplemental Certificate.
"Available Reserve Account Amount" equals for any Transfer Date, the lesser
of:
o the amount on deposit in the Reserve Account, before any deposit or
withdrawals made or to be made 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 the first 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 with respect to that Distribution
Date, 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 sum of the annualized
percentage equivalent 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 the Servicing Fee Rate.
"Class A Adjusted Invested Amount" means for any date of determination, 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
Series 2003-__ Supplement, 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 prior to the payment
in full of the Class A Invested Amount, 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 at the
end of the last 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 due on that day.
"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, but may be increased
by TRC after the Closing Date without the consent of Class A Certificateholders.
"Distribution Date" means _____________, and the 25th day of each month
thereafter, 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 for the purpose of sharing Excess Finance Charge
Collections.
"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 Distribution Date, 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
for that Monthly Period.
"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 on each Distribution Date
during the Accumulation Period, the amount, if any, by which 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 any Distribution
Date, collections of Principal Receivables allocable to your series for the
related 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 for any Distribution Date, the last business day of the
calendar month preceding the month in which that Distribution Date occurs 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 for any Distribution Date, 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-__ Allocation Percentage" means on any date of determination,
the percentage equivalent of a fraction:
o whose numerator is the sum of the Class A Adjusted Invested Amount
and the Collateral Invested Amount, and
o whose denominator is the sum of the invested amounts, or adjusted
invested amounts, as applicable, of all then outstanding series.
"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 the Monthly
Period in which an Early Amortization Event is deemed to occur.
"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 the and will be
| accompanied by the prospectus supplement | paid only from the 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 Clearstream...................................19
Presented in this Prospectus and the
Related Prospectus Supplement.......................4 Euroclear.....................................19
The Target Credit Card Master Trust.................5 Book-Entry Registration.......................20
Target Corporation..................................5 Definitive Certificates.......................23
Retailers National Bank.............................5 Secondary Market Trading......................24
Target Financial Services...........................6 Enhancement........................................25
Target Capital Corporation..........................6 Specific Forms of Enhancement.................25
Target Receivables Corporation......................6 The Pooling and Servicing Agreement................27
The Trustee.........................................6 Conveyance of Receivables.....................27
Description of the Certificates.....................7 Addition of Trust Assets......................27
General........................................7 Removal of Accounts...........................30
Allocation of Trust Assets.....................8 Eligible Accounts and Eligible Receivable.....31
The Transferor Certificate.....................8 Representations and Warranties................32
Supplemental Certificates......................9 Discount Option Receivables...................34
Participations.................................9 Indemnification...............................34
Interest.......................................9 Collection and Other Servicing Procedures.....35
Principal.....................................10 Servicing Compensation and Payment of
Expenses...................................36
Early Amortization Events.....................11
Servicer Covenants............................36
Defaulted Receivables and the Defaulted
Amount.....................................11 Certain Matters Regarding the Servicer........37
Dilution......................................11 Servicer Default..............................37
Sharing of Excess Finance Charge Evidence as to Compliance.....................38
Collections and Excess Transferor
Finance Charge Collections..................12 Amendments....................................39
Shared Principal Collections and Shared Termination of the Trust......................40
Transferor Principal Collections............12
The Bank Receivables Purchase Agreement
New Issuances..................................13 and the Receivables Purchase Agreement.............40
Collection Account.............................15 Sale of the Receivables.......................40
Deposits in the Collection Account.............16 Representations and Warranties................41
Special Funding Account........................17 Covenants.....................................42
Paired Series..................................17 Transfer of Accounts and Assumption of
RNB's, TCC's and TRC's Obligations.........43
Funding Period.................................17
Amendment.....................................43
Defeasance.....................................17
Termination...................................43
List of Certificateholders.....................17
Legal Aspects of the Receivables...................43
Form of Your Certificates......................18
Transfer of Receivables.......................43
DTC............................................18
Matters Relating to Bankruptcy or Regulation Under ERISA and the Tax Code.......56
Receivership...............................44
Final Regulation Issued by the DOL............56
Certain Regulatory Matters....................46
Exemptions to Prohibited Transactions.........57
Consumer Protection Laws......................47
Special Considerations for Insurance Companies57
Claims and Defenses of Cardholders
Against the Trust..........................48 General Investment Considerations.............58
Industry Litigation...........................48 Plan of Distribution for the Offered Certificates..59
Federal Income Tax Consequences....................50 Legal Matters......................................59
Tax Characterization of the Trust.............50 Reports to Certificateholders......................60
Tax Considerations Relating to Forward-Looking Statements.........................61
Certificateholders.........................51
Where You Can Find More Information................62
Non-U.S. Certificate Owners...................53
Glossary of Terms for Prospectus...................63
Information Reporting and Backup Withholding..55
Tax Return Disclosure and Investor
List Requirements..........................55
Employee Benefit Plan Considerations...............56
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 63 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 1,475 stores in 47 states as of February 1, 2003. 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......................... $43,917 $39,826 $36,851
Net Earnings..................... $1,654 $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 Principal Shortfalls of each series for that
date.
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.
Certain Regulatory Matters
The operations and financial condition of RNB are subject to extensive
regulation and supervision and to various requirements and restrictions under
federal and state law. The appropriate banking agencies have broad enforcement
powers over RNB. These enforcement powers may adversely affect the operation of
the trust and your rights under the securitization agreements prior to the
appointment of a receiver or conservator.
If the appropriate banking agency were to find that any securitization
agreement of RNB or the trust, or the performance of any obligation under such
an agreement, or any activity of RNB that is related to the operation of its
credit card business or its obligations under the related securitization
agreements, constitutes an unsafe or unsound practice or violates any law, rule,
regulation, or written condition or agreement, that banking agency has the power
to order RNB, among other things, to rescind that agreement, refuse to perform
that obligation, terminate that activity, or take such other action as such
agency determines to be appropriate. RNB may not be liable to you for
contractual damages for complying with such an order and you may not have any
legal recourse against the appropriate banking agency.
Recently, the OCC, which is the primary federal regulator for RNB, issued a
temporary cease and desist order against a national banking association in
connection with a securitization of that bank's consumer credit card receivables
that directed that bank to, among other things,
- immediately withhold funds from collections - notwithstanding the trust's
perfected security interest in those funds - in an amount sufficient to
compensate that bank for its actual costs and expenses of servicing the
receivables;
- rescind all relevant securitization agreements and immediately cease to
act as servicer if those agreements were not amended to increase the
amount and priority of the servicing fee within 30 days; and
- in any case, continue to act as servicer for no longer than 120 days.
The OCC also issued a notice of charges for a permanent cease and desist order
asserting that the 2% per annum servicing fee that such bank was entitled to
receive under the securitization documents was inadequate compensation, and
therefore contrary to safe and sound banking practices, because (i) that bank's
actual cost of servicing exceeded 2% per annum and (ii) as a result of the
subordination of the servicing fee that bank was receiving reduced or no
payments for certain services. In addition, the OCC separately ordered that bank
to cease extending new credit on its credit cards, effectively shutting down
that bank's credit card business and depriving the related securitization trust
of additional receivables.
In the event that RNB were in economic or regulatory difficulty and
servicing fees payable under the securitization documents were determined to not
fully compensate RNB for its actual servicing costs, a banking agency might
order RNB to amend or rescind its securitization agreements, or to withhold
amounts equal to its actual servicing costs. In addition, that banking agency
would have the power to order RNB to cease extending new credit to its credit
card customers. While RNB does not believe that any banking agency would
currently consider provisions relating to RNB under its securitization
agreements to be unsafe or unsound or violative of any law, rule or regulation
applicable to it, there can be no assurance that a banking agency in the future
would not conclude otherwise. If a banking agency did reach such a conclusion,
and ordered RNB to rescind or amend its securitization agreements, payments to
you could be delayed or reduced.
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 the associations regarding the
uniform acceptance of all VISA and MasterCard cards, including debit VISA and
MasterCard cards, constitute an illegal tying arrangement. In April 2003,
MasterCard International Incorporated and VISA U.S.A. Inc. each agreed to
settle the suit before the U.S. District Court. MasterCard International
Incorporated agreed to pay into a settlement fund approximately $1 billion
over ten years and VISA U.S.A. Inc. agreed to pay approximately $2 billion
over ten years. The associations also agreed to certain reductions in the
interchange rate for debit cards and agreed to change their rules to allow
merchants who accept their credit cards for payment to not accept their debit
cards. In June 2003, the U.S. District Court granted preliminary approval of
the settlements and a fairness hearing is scheduled for September 25, 2003.
Certain merchants, however, have opted out of the settlements. RNB cannot
predict the effect of this suit or the proposed settlement on the competitive
environment in the credit card industry.
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 AND THE UNDERWRITERS
as to United States Law as to United States Law
James T. Hale Skadden, Arps, Slate, Meagher & Flom LLP
Executive Vice President, Four Times Square
Corporate Secretary and General Counsel New York, New York 10036
Target Corporation
1000 Nicollet Mall
Minneapolis, Minnesota 55403-2467
PAYING AGENT LUXEMBOURG PAYING AGENT
Wells Fargo Bank Minnesota, National Association [Name and address to
Sixth & Marquette be added]
MAC N9311-161
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........................................ $ 242,700
Printing and Engraving.................................. 150,000
Trustee's Fees.......................................... 60,000
Legal Fees and Expenses................................. 700,000
Blue Sky Fees and Expenses.............................. 30,000
Accountants' Fees and Expenses.......................... 200,000
Rating Agency Fees...................................... 700,000
Miscellaneous Fees...................................... 17,300
-------------
Total................................................ $ 2,100,000
=============
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*
_________________
* Previously filed.
(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:
(1) 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 paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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 such issue.
(7) That, for purposes of determining any liability under the Securities
Act of 1933:
(i) 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.
(ii) 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
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on September 22, 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
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 September 22, 2003.
TARGET RECEIVABLES CORPORATION
Signature Title
Principal Executive Officer:
/s/ Douglas A. Scovanner President
-------------------------------
Douglas A. Scovanner
Principal Financial Officer:
Stephen C. Kowalke* Vice President and Treasurer
-------------------------------
Stephen C. Kowalke
Principal Accounting Officer:
Terrence J. Scully* Vice President
-------------------------------
Terrence J. Scully
Directors:
Stephen C. Kowalke* Director
-------------------------------
Stephen C. Kowalke
Martin R. Rosenbaum* Director
-------------------------------
Martin R. Rosenbaum
Douglas A. Scovanner* Director
-------------------------------
Douglas A. Scovanner
Sandra Sponem* Director
-------------------------------
Sandra Sponem
Terrence J. Scully* Director
-------------------------------
Terrence J. Scully
* By: /s/ Douglas A. Scovanner
------------------------
Douglas A. Scovanner, Attorney-in-fact
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*
_________________
* Previously filed.