Document:

Exhibit 10.13

 

DEVELOPMENT SERVICES
RIGHTS CONTRIBUTION AGREEMENT

(CITY CENTER)

 

THIS DEVELOPMENT SERVICES RIGHTS CONTRIBUTION AGREEMENT (the “Agreement”) is entered into as of this 23rd day
of September, 2005 between REPUBLIC PROPERTIES CORPORATION, a District of
Columbia corporation (“RPC”), and
REPUBLIC PROPERTY LIMITED PARTNERSHIP, a Delaware limited partnership (the “Operating Partnership”).

 

W I T N E S S E T H

 

WHEREAS, in connection with the initial public offering (the “IPO”) of the common shares of beneficial interest, par value
$.01 per share, of Republic Property Trust, a Maryland real estate investment
trust (the “REIT”), the REIT and the Operating
Partnership and their affiliates will complete a series of related transactions
(collectively with the IPO, the “IPO Transactions”);

 

WHEREAS, pursuant to that certain Professional Services Agreement (the “Professional Services Agreement”) made and entered into as
of October 26, 2004 between RPC (operating under the name “Republic-WPB
Corp.”) and West Palm Beach Community Redeployment Agency (“CRA”), RPC provides development services to CRA in
connection with the design and development of that certain public/private real
estate development project known as “City Center”, which such project is more
fully described in the Professional Services Agreement (the “Project”);

 

WHEREAS, in connection with the IPO Transactions, RPC
desires to contribute to the Operating Partnership, and the Operating
Partnership desires to acquire, RPC’s right, title and interest in and to the
Professional Services Agreement at the time of the Closing (as defined in Section 5.1
below) in exchange for Class A units of limited partnership interest (the “Units”) in the Operating Partnership, on the terms and
subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.                                      CONTRIBUTION

 

1.1                                 Contribution.  Subject
to the terms and conditions hereof, RPC agrees to contribute or otherwise
transfer to the Operating Partnership, and the Operating Partnership agrees to
acquire and accept from RPC, on the date of the Closing (as defined in Section 5.1
below), all of RPC’s right, title and interest in and to the Professional
Services Agreement.

 

1

 

1.2                                 Issuance of Units.

 

(a)                                  Subject to the terms and conditions of this
Agreement, in exchange for the Professional Services Agreement, the Operating
Partnership shall issue to RPC, and RPC shall receive, an aggregate of 100,234
Units, in a transaction intended to qualify for nonrecognition of gain to RPC pursuant
to Section 721 of the Internal Revenue Code of 1986, as amended (the “Code”).  The rights of
holders of the Units as of the Closing will be as set forth in the Amended and
Restated Agreement of Limited Partnership of the Operating Partnership (the “Partnership Agreement”).

 

(b)                                 The Operating Partnership shall issue the
Units to RPC (or, at the option of RPC, directly to RPC’s designees, in
accordance with written instructions provided to the Operating Partnership by
RPC setting forth the name and address of, and the number of Units received by,
each designee, provided that each such designee (i) makes each of the
representations and warranties set forth in Section 2.5, 2.9 and 2.11 hereof
(and provides the Operating
Partnership a certificate to that effect) and (ii) has executed and delivered the Limited Partner Acceptance
attached hereto as Exhibit A (the “Limited
Partner Acceptance”) pursuant to Section 1.3 hereof.  The name of RPC or, if applicable, each
designee, and the number of Units issued to RPC or, if applicable, each
designee, shall be recorded in the books and records of the Operating
Partnership.

 

1.3                                 Admission as a Limited
Partner.  Upon execution and delivery of the Limited Partner Acceptance by RPC and, if
their designees will receive the Units pursuant to Section 1.2(b) above,
each of such designees, at the Closing, and subject to the completion of the
Closing, RPC and if applicable, their designees, shall be admitted as limited
partners of the Operating Partnership and, as such, shall be subject to, and
bound by, the Partnership Agreement, including the power of attorney granted
therein and all the terms and conditions thereof.

 

1.4                                 Reimbursement for Prior Services or Expenses. 
Notwithstanding anything to the contrary herein, the parties hereto
acknowledge that any reimbursement for prior services performed or expenses
incurred by RPC in connection with the performance of its obligations under the
Professional Services Agreement that accrue prior to the date of Closing (as
defined below) shall be reimbursable by CRA (or other applicable party) to RPC,
notwithstanding that any such costs or expenses may be actually payable after
the date of Closing.

 

ARTICLE II:  REPRESENTATIONS AND WARRANTIES 

OF RPC

 

As a material inducement to the Operating Partnership to enter into
this Agreement and to consummate the transactions contemplated hereby, RPC

 

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hereby
makes to the Operating Partnership each of the representations, warranties and
covenants set forth in this Article II. 
Each Investor (as defined below), severally and not jointly, hereby
makes to the Operating Partnership, as to itself or himself, each of the
representations, warranties and covenants set forth in Section 2.5, 2.9
and 2.11 hereof.  The representations and
warranties set forth in this Article II are true and correct as of the
date hereof.

 

2.1                                 Organization and Standing.  RPC is
a corporation validly existing and in good standing under the law of its
jurisdiction of organization, and has the requisite corporate power and
authority to own and operate its assets, to carry on its business as currently
conducted, and to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.  RPC is
duly qualified to conduct business as a foreign corporation, where necessary
and is in good standing in the states in which it is so qualified.

 

2.2                                 Authority.  RPC has full right, authority,
power and capacity (a) to enter into this Agreement and each agreement,
document and instrument to be executed and delivered by or on behalf of RPC
pursuant to this Agreement; (b) to carry out the transactions contemplated
hereby and thereby; and (c) to transfer, sell and deliver all of its
right, title and interest in the Professional Services Agreement to the
Operating Partnership (or its designee) in accordance with this Agreement.  This Agreement and each agreement, document
and instrument executed and delivered by or on behalf of RPC pursuant to this
Agreement constitutes, or when executed and delivered will constitute, the
legal, valid and binding obligation of RPC, each enforceable in accordance with
its respective terms.

 

2.3                                 Noncontravention.  Neither the entry into nor the performance
of, or compliance with, this Agreement by RPC has resulted, or will result, in
any violation of, or default under, or result in the acceleration of, any
obligation under its charter, or any material mortgage, indenture, lien
agreement, note, contract, permit, judgment, decree, order, restrictive
covenant, statute, rule, or regulation applicable to RPC or under the
Professional Services Agreement.

 

2.4                                 Litigation.  There is no (a) litigation
or proceeding, either judicial or administrative, pending or, to RPC’s
knowledge, threatened, affecting all or any portion of the Professional
Services Agreement; (b) outstanding order, writ, injunction or decree of
any court, government, governmental entity or authority or arbitration against
or affecting all or any portion of the Professional Services Agreement, which
in the case of (a) and (b) hereof, would materially impair RPC’s
ability to enter into and perform all of RPC’s obligations under this
Agreement.

 

2.5                                 Status as a United States Person.  Each
of RPC and each of RPC’s designees who receive Units hereunder (RPC and its
designees are referred to collectively as the “Investors”)
is not a foreign person within the meaning of Section 1445 of the Code (“Section 1445”). 
RPC’s U.S. taxpayer identification

 

3

 

number
that has previously been provided to the Operating Partnership is correct.  RPC’s office address is that most recent
address previously provided to the Operating Partnership.  At the time of Closing, each Investor shall
provide to the Operating Partnership a certificate of non-foreign status
substantially in the form provided in Section 1.1445-5(b)(3)(D) of
the Treasury regulations.

 

2.6                                 No Insolvency Proceedings.  No
attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending or, to
RPC’s knowledge, threatened against RPC, nor are any such proceedings
contemplated by RPC.

 

2.7                                 No Brokers.  RPC has not entered into, and
covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of
the Operating Partnership to pay any finder’s fee, brokerage commission or
similar payment in connection with the transactions contemplated hereby (other
than underwriting fees paid in connection with the IPO).

 

2.8                                 Consents.  Except as may otherwise be set forth in this
Agreement, each consent, approval, authorization, order, license, certificate,
permit, registration, designation, or filing by or with any governmental agency
or third party, including lender consents, 
necessary for the execution, delivery, and performance of this Agreement
or the transactions contemplated hereby by RPC has been obtained or will be
obtained on or before the Closing.

 

2.9                                 Securities Law Matters; Transfer Restrictions.

 

(a)                                  Each Investor acknowledges that the Operating
Partnership intends for the offer and issuance of the Units to be exempt from
registration under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws.

 

(b)                                 Each Investor acknowledges that it is an “accredited
investor” within the meaning of the federal securities laws.

 

(c)                                  Each Investor will acquire the Units for its
own account and not with a view to, or for sale in connection with, any “distribution”
thereof within the meaning of the Securities Act.

 

(d)                                 Each Investor has sufficient knowledge and experience in financial, tax and
business matters to enable it to evaluate the merits and risks of investment in
the Units.  Each Investor has the ability
to bear the economic risk of acquiring the Units.  Each Investor acknowledges that (i) the
transactions contemplated by this Agreement involve complex tax consequences
for the Investor, and each Investor is relying solely on the advice of such
person’s own tax advisors in evaluating such consequences, (ii) the
Operating Partnership has not made (nor

 

4

 

shall
it be deemed to have made) any representations or warranties as to the tax consequences
of such transaction to the Investor, and (iii) references in this
Agreement to the intended tax effect of the transactions contemplated hereby
shall not be deemed to imply any representation by the Operating Partnership as
to a particular tax effect that may be obtained by the Investor.  The Investors remain solely responsible for
all tax matters relating to such persons.

 

(e)                                  Each Investor has been supplied with, or had
access to, information to which a reasonable investor would attach significance
in making an investment decision to acquire the Units and any other information
such Investor has requested.

 

(f)                                    Each Investor acknowledges that there are
substantial restrictions on the transferability of the Units and that the Units
will not be registered under the Securities Act or any state securities laws,
and the Investor has no right to require that they be so registered.  Each Investor agrees that any Units it
acquires will not be sold in the absence of registration unless such sale is
exempt from registration under the Securities Act and applicable state
securities laws.

 

(g)                                 Each Investor understands that no federal
agency (including the Securities and Exchange Commission) or state agency has
made or will make any finding or determination as to the fairness of an
investment in the Units (including as to the number of Units (or their value)
issued pursuant hereto).

 

(h)                                 Each Investor understands that there is no
established public, private or other market for the Units acquired by such
Investor hereunder and it is not anticipated that there will be any public,
private or other market for such Units in the foreseeable future.

 

(i)                                     Each Investor understands that Rule 144
promulgated under the Securities Act is not currently available with respect to
the sale of Units.

 

2.10                           Professional Services Agreement.  The
Professional Services Agreement is in full force and effect and to the
knowledge of RPC, neither it nor CRA is in default thereunder.  RPC shall timely perform all of its
obligations thereunder.

 

2.11                           Reliance.   RPC
acknowledges that the Operating Partnership may rely upon the representations
and warranties in this Article II in determining whether to enter into
this Agreement.  RPC agrees to indemnify,
defend and hold harmless the Operating Partnership and the officers, directors
and affiliates thereof, and any employees or agents of any of the foregoing,
against any and all loss, liability, claim, damage or expense whatsoever
(including, but not limited to, any and all expenses, including attorneys’
fees, reasonably incurred in

 

5

 

investigating,
preparing or defending against any claim or litigation commenced or threatened)
due to or arising out of a breach of any such representations or warranties.

 

Each
Investor agrees, severally and not jointly, to indemnify, defend and hold
harmless the Operating Partnership and the officers, directors and affiliates
thereof, and any employees or agents of any of the foregoing, against any and
all loss, liability, claim, damage or expense whatsoever (including, but not
limited to, any and all expenses, including attorneys’ fees, reasonably
incurred in investigating, preparing or defending against any claim or
litigation commenced or threatened) due to or arising out of a breach of such
Investor’s representations in Sections 2.5 and 2.9 hereof; provided, however,
the indemnification obligation of the Investor hereunder is limited in the case
of each Investor to the value of the Units such Investor will receive in
connection with this Agreement based on the initial public offering price in
the IPO.

 

ARTICLE III:  REPRESENTATIONS AND WARRANTIES

OF THE OPERATING PARTNERSHIP

 

As a material inducement to RPC to enter into this Agreement and to
consummate the transactions contemplated hereby, the Operating Partnership
hereby makes to RPC each of the representations, warranties and covenants set
forth in this Article III.  The
representations and warranties set forth in this Article III are true and
correct as of the date hereof.

 

3.1                                 Organization and Standing.  The
Operating Partnership is a limited partnership duly organized, validly existing
and in good standing under Delaware law, and has the requisite partnership
power and authority to own and operate its assets, to carry on its business as
currently conducted, to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.  The
Operating Partnership is duly qualified to conduct business as a foreign
partnership where necessary and is in good standing in the states in which it
is so qualified.

 

3.2                                 Authority.   The Operating Partnership has
full right, authority, power and capacity (a) to enter into this Agreement
and each agreement, document and instrument to be executed and delivered by or
on behalf of the Operating Partnership pursuant to this Agreement; (b) to
carry out the transactions contemplated hereby and thereby; and (c) to
transfer, sell and deliver the Units to RPC (or its designees) in accordance
with this Agreement.  This Agreement and
each agreement, document and instrument executed and delivered by or on behalf
of the Operating Partnership pursuant to this Agreement constitutes, or when
executed and delivered will constitute, the legal, valid and binding obligation
of the Operating Partnership, each enforceable in accordance with its
respective terms.

 

6

 

3.3                                 Noncontravention.   Neither the entry into nor the performance
of, or compliance with, this Agreement by the Operating Partnership has
resulted, or will result, in any violation of, or default under, or result in
the acceleration of, any obligation under its agreement of limited partnership,
or any material mortgage, indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule, or regulation
applicable to the Operating Partnership.

 

3.4.                              Litigation.  There is no litigation or
proceeding, either judicial or administrative, pending or, to the Operating
Partnership’s knowledge, threatened,
affecting all or any portion of the Units or the Operating Partnership’s ability to consummate the transactions
contemplated hereby.  There is no
outstanding order, writ, injunction or decree of any court, government,
governmental entity or authority or arbitration against or affecting all or any
portion of the Units, which in any such case would impair the Operating
Partnership’s ability to enter
into and perform all of the Operating Partnership’s obligations under this Agreement.

 

3.5                                 Units Validly
Issued.  The Units, when issued, will
have been duly and validly authorized and issued, free of any preemptive or
similar rights, without any obligation to restore capital except as required by
the Delaware Revised Uniform Limited Partnership Act (the “Limited Partnership Act”) or as agreed
between the Operating Partnership and any limited partner in the Operating
Partnership.

 

3.6                                 No Brokers.  The Operating Partnership has not entered into, and covenants that it
will not enter into, any agreement, arrangement or understanding with any
person or firm which will result in the obligation of RPC to pay any finder’s
fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby

 

3.7                                 Consents.  Except as may otherwise be set forth in this
Agreement, each consent, approval, authorization, order, license, certificate,
permit, registration, designation, or filing by or with any governmental agency
or body necessary for the execution, delivery, and performance of this Agreement
or the transactions contemplated hereby by the Operating Partnership has been
obtained or will be obtained on or before the Closing.

 

3.8                                 Reliance.   The Operating Partnership
acknowledges that RPC may rely upon the representations and warranties in this Article III
in determining whether to enter into this Agreement.  The Operating Partnership agrees to
indemnify, defend and hold harmless RPC and the officers, directors and
affiliates thereof, and any employees or agents of any of the foregoing,
against any and all loss, liability, claim, damage or expense whatsoever
(including, but not limited to, any and all expenses, including attorneys’
fees, reasonably incurred in investigating, preparing or defending against any
claim or litigation commenced or

 

7

 

threatened) due to or
arising out of a breach of any such representations or warranties.

 

ARTICLE IV:  CONDITIONS TO CLOSING

 

4.1                                 Conditions to the Operating Partnership’s
Obligation to Close.  The obligation of the Operating Partnership
to consummate the Closing is subject to the fulfillment, at or prior to the
Closing, of the following conditions (unless such conditions are waived in
writing by the Operating Partnership):

 

(a)                                  IPO Transactions.  The
IPO Transactions shall have occurred (or shall be occurring simultaneously with
the Closing).

 

(b)                                 Representations and Warranties.  The
representations and warranties made by RPC (and in the case of Sections 2.5 and
2.9, the Investors) pursuant to this Agreement shall be true and correct in all
material respects when made, and on and as of the Closing, as though such
representations and warranties were made on the Closing.

 

(c)                                  Performance.  RPC shall have performed and
complied with all agreements and covenants that it is required to perform or
comply with pursuant to this Agreement prior to the Closing in all material
respects.

 

(d)                                 Legal Proceedings.  No
order, statute, rule, regulation, executive order, injunction, stay, decree, or
restraining order shall have been enacted, entered, promulgated or enforced by
any court of competent jurisdiction or governmental entity that prohibits the
consummation of the transactions contemplated hereby, and no litigation or
governmental proceeding seeking such an order shall be pending or threatened.

 

(e)                                  Consents and Approvals.  All
necessary consents of governmental and private parties to effect the
transactions contemplated by this Agreement, including, without limitation,
consents of lenders and consent from CRA (which consent must include the
consent to allow the Operating Partnership to assign the rights and obligations
under the Professional Services Agreement to one or more affiliates of the
Operating Partnership, and that, upon such assignment the obligation to perform
any services under the Professional Services Agreement shall reside exclusively
with any such assignee) shall have been obtained.

 

(f)                                    Professional Services Agreement.  The
Professional Services Agreement shall be in full force and effect and neither
of the parties thereto shall be in default thereunder.

 

4.2                                 Conditions to RPC’s Obligation to Close.  The
obligation of RPC to consummate the Closing is subject to the fulfillment, at
or prior to the Closing, of the following conditions (unless such conditions are
waived in writing by RPC):

 

8

 

(a)                                  Representation and Warranties.  The
representations, warranties and covenants of the Operating Partnership
contained in this Agreement shall be true and correct as of the Closing.

 

(b)                                 Performance.  The Operating Partnership
shall have performed and complied with all agreements and covenants that it is
required to perform or comply with pursuant to this Agreement prior to the
Closing in all material respects.

 

(c)                                  Legal Proceedings.  No
order, statute, rule, regulation, executive order, injunction, stay, decree, or
restraining order shall have been enacted, entered, promulgated or enforced by
any court of competent jurisdiction or governmental entity that prohibits the
consummation of the transactions contemplated hereby, and no litigation or
governmental proceeding seeking such an order shall be pending or threatened.

 

(d)                                 Consents and Approvals.  All
necessary consents of governmental and private parties to effect the transactions
contemplated by this Agreement shall have been obtained.

 

4.3                                 Further Assurances.  Each
of the parties herein shall execute and deliver all such other and further
instruments and documents and take or cause to be taken all such other and
further actions that any other party may reasonably request in order to effect
the transactions contemplated by this Agreement.

 

ARTICLE V:  CLOSING; CLOSING DELIVERIES

 

5.1                                 Closing.  The closing hereunder (the “Closing”) shall occur on the same day as the closing of the
IPO, as close in time to the closing of the IPO as is reasonably practicable
under the circumstances.

 

5.2                                 Closing Deliveries by RPC.  At
the Closing, RPC shall deliver to the Operating Partnership:

 

(i)                                     a duly executed Assignment and Assumption Agreement,
substantially in the form attached hereto as Exhibit B (“Assignment Agreement”), pursuant to which RPC shall convey
to the Operating Partnership or its designee title to the Professional Services
Agreement;

 

(ii)                                  a duly executed Limited Partner Acceptance
executed by the appropriate Investor; and

 

9

 

(iii)                               a certificate of non-foreign status in a form
acceptable to the Operating Partnership.

 

5.3                                 Closing Deliveries by the Operating
Partnership.  At the Closing, the Operating Partnership
shall deliver to the RPC or, if applicable, the Investors, the following:

 

(i)                                     the Units; and

 

(ii)                                  a duly executed Assignment Agreement.

 

ARTICLE VI:  MISCELLANEOUS

 

6.1                                 Term of Agreement.  This Agreement may be terminated by the
mutual consent of the parties at any time before the Closing.  If the Closing does not occur by September 30,
2006, this Agreement shall be deemed terminated and shall be of no further
force and effect and neither the Operating Partnership nor RPC or any Investor
shall have any further obligations pursuant to this Agreement except as
specifically set forth in this Agreement.

 

6.2                                 Amendment; Waiver.  Any
amendment hereto shall be effective only if signed by all parties hereto.  No waiver of any provisions of this Agreement
shall be valid unless in writing and signed by the party against whom
enforcement is sought.

 

6.3                                 Entire Agreement; Counterparts; Applicable
Law.  This Agreement (a) shall, together with
the Partnership Agreement, constitute the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, (b) may be executed in one or
more counterparts, each of which will be deemed an original and all of which
shall constitute one and the same instrument, and (c) shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware without giving effect to the conflict of law provisions
thereof.

 

6.4                                 Assignability.  This
Agreement shall be binding upon, and shall be enforceable by and inure to the
benefit of, the parties hereto and their respective successors and assigns;
provided, however, that this Agreement may not be assigned (except by operation
of law) by any party without the prior written consent of the other party, and
any attempted assignment without such consent shall be void and of no effect;
provided further, that this Agreement may be assigned by the Operating
Partnership, without the prior written of RPC, to and among an affiliate of the
Operating Partnership, including, without limitation, Republic Property TRS,
LLC, a Delaware limited liability company and wholly owned subsidiary of the
Operating Partnership.  Upon any such
assignment, the assignee shall have the exclusive right and obligation to
perform the services hereunder.

 

10

 

6.5                                 Severability.  If
any provision of this Agreement, or the application thereof, is for any reason
held to any extent to be invalid or unenforceable, the remainder of this
Agreement and application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties
hereto.

 

6.6                                 Equitable Remedies.  The
parties hereto agree that irreparable damage would occur if any provision of
this Agreement was not performed in accordance with its specific terms or was
otherwise breached.  It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any federal or state court located in the State of
Delaware (as to which the parties agree to submit to jurisdiction for the
purposes of such action), this being in addition to any other remedy to which
they are entitled at law or in equity.

 

6.7                                 Survival.  It is the express intention
and agreement of the parties hereto that the representations, warranties and
covenants of the parties set forth in this Agreement shall survive the
consummation of the transactions contemplated hereby.

 

6.8                                 Third Party Beneficiary.   Except as specifically set forth in this
Agreement, no provision of this Agreement is intended, nor shall it be
interpreted, to provide or create any third party beneficiary rights or other
rights of any kind in any customer, affiliate, stockholder, partner, member,
director, officer, or employee of any party to this Agreement or any other
person or entity.

 

[Signature Page Follows]

 

11

 

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed, delivered and sealed in its name on its behalf,
all as of the day and year first above written.

 

 

	
   

  	
  RPC:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REPUBLIC PROPERTIES CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven A. Grigg

  	
   

  
	
   

  	
  Name: Steven A. Grigg

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPERATING PARTNERSHIP:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REPUBLIC PROPERTY LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  REPUBLIC PROPERTY TRUST,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark R. Keller

  	
   

  
	
   

  	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
						

 

 

[Signature Page to
City Center Contribution Agreement]

 

12Exhibit 4(b)

 

TARGET
RECEIVABLES CORPORATION,

 

Transferor

 

TARGET
NATIONAL BANK,

 

Servicer

 

and

 

WELLS FARGO
BANK, NATIONAL ASSOCIATION,

 

Trustee

 

on behalf of
the Collateral Certificateholder

 

 

SERIES
2005-1 SUPPLEMENT

 

Dated as of November    
, 2005

 

to

 

AMENDED AND
RESTATED

POOLING AND SERVICING AGREEMENT

 

Dated as of April 28,
2000

 

 

TARGET CREDIT
CARD MASTER TRUST

 

Series 2005-1

 

 

TABLE
OF CONTENTS

 

	
   

  	
  ARTICLE I CREATION OF THE COLLATERAL CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Designation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.2

  	
  Delivery of and Payment for the Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.3

  	
  Form of Delivery of the Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III SERVICER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Servicing Compensation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.2

  	
  Additional Covenant of the Servicer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV RIGHTS OF THE COLLATERAL CERTIFICATEHOLDER AND
  ALLOCATION AND APPLICATION OF COLLECTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Rights of the Collateral Certificateholder

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.2

  	
  Collections and Allocations; Payments on Transferor Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.3

  	
  Determination of Monthly Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.4

  	
  Determination of Principal Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.5

  	
  Shared Principal Collections and Shared Transferor Principal
  Collections

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.6

  	
  Application of Funds on Deposit in the Collection Account Allocable
  to the Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.7

  	
  Excess Finance Charge Collections; Excess Transferor Finance Charge
  Collections

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.8

  	
  Investor Defaulted Amount

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.9

  	
  Reallocated Principal Collections for the Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.10

  	
  Collateral Certificate Additional Amount

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.11

  	
  Establishment of the Principal Funding
  Account for the Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.12

  	
  Accumulation Period

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.13

  	
  Reserve Account

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V DISTRIBUTIONS AND REPORTS TO
  SERIES 2005-1 CERTIFICATEHOLDER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Distributions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.2

  	
  Reports and Statements to Collateral
  Certificateholder

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI EARLY AMORTIZATION EVENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Series 2005-1 Early Amortization
  Events

  	
   

  

 

i

 

	
   

  	
  ARTICLE VII OPTIONAL TERMINATION;
  SERIES TERMINATION; SALE OF SUBORDINATED INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Optional Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.2

  	
  Series 2005-1 Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.3

  	
  Special Reduction of the Invested Amount

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII FINAL DISTRIBUTION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Sale of Receivables or Collateral
  Certificateholder’s Interest pursuant to Section 2.6 or 10.1 of the
  Agreement and Section 7.1 or 7.2 of this Series Supplement

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Legend on Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.2

  	
  Ratification of Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.3

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.4

  	
  Required Additions to Series 2005-1

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.5

  	
  Transfer of the Collateral Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.6

  	
  Jurisdiction; Service

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.7

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.8

  	
  Article 8

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.9

  	
  No Petition

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.10

  	
  Instructions in Writing

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.11

  	
  Adjustments

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.12

  	
  Eligible Investments

  	
   

  

 

ii

 

EXHIBITS

 

	
  Form of Collateral Certificate

  	
   

  	
  Exhibit A

  
	
  Form of Monthly Collateral Certificateholder’s Statement

  	
   

  	
  Exhibit B

  
	
  Form of Monthly Servicer’s Certificate

  	
   

  	
  Exhibit C

  
	
  Form of Transferee Representation Letter

  	
   

  	
  Exhibit D

  

 

iii

 

SERIES 2005-1
SUPPLEMENT, dated as of November       ,
2005 (this “Series Supplement”) by and among TARGET RECEIVABLES
CORPORATION, a corporation organized and existing under the laws of the State
of Minnesota, as Transferor (the “Transferor”), TARGET NATIONAL BANK, a
national banking association organized and existing under the laws of the
United States, as Servicer (“Target National Bank” or the “Servicer”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States, as trustee
(together with its successors in trust thereunder as provided in the Agreement
referred to below, the “Trustee”) under the Amended and Restated Pooling
and Servicing Agreement dated as of April 28, 2000, as amended (the “Agreement”)
by and among the Transferor, the Servicer and the Trustee.

 

WHEREAS, Section 6.3
of the Agreement provides, among other things, that the Transferor and the
Trustee may at any time and from time to time enter into a supplement to the
Agreement for the purpose of authorizing the issuance by the Transferor, for
execution and redelivery to the Trustee for authentication, of one or more Series of
Certificates;

 

WHEREAS,
pursuant to this Series Supplement, the Transferor and the Trustee shall
create a new Series of Investor Certificates and shall specify the
Principal Terms thereof; and

 

WHEREAS, on
the Closing Date, the Investor Certificates created hereunder will be deposited
by the Transferor in Target Credit Card Owner Trust 2005-1 (the “Owner Trust”)
and pledged by the Owner Trust to an indenture trustee to secure $750,000,000
Floating Rate Class A Asset-Backed Notes and the $211,538,462 Subordinated
Interests to be issued by the Owner Trust pursuant to the Indenture (as defined
herein).

 

ARTICLE I

 

CREATION OF THE COLLATERAL CERTIFICATE

 

Section 1.1                                                Designation.

 

There is
hereby created a Series of Investor Certificates to be issued pursuant to
the Agreement and this Series Supplement to be known generally as the “Series 2005-1
Certificates.”  The Series 2005-1 Certificates
shall be issued in a single class evidenced by a single certificate and
designated generally as the Series 2005-1 Collateral Certificate (the “Collateral
Certificate”).  Series 2005-1
shall be a Principal Sharing Series and shall be included in Group I for
purposes of sharing Excess Finance Charge Collections.  The Collateral Certificate shall be entitled
to share Excess Transferor Finance Charge Collections as specified herein.  In addition, the Transferor, at its sole
option, may allow the Collateral Certificate to share Shared Transferor
Principal Collections and Excess Transferor Finance Charge Collections as
specified herein.

 

1

 

Section 1.2                                                Delivery of and Payment for the
Collateral Certificate.

 

The Transferor
shall execute and deliver the Collateral Certificate to the Trustee for
authentication in accordance with Section 6.1 of the Agreement.  The Trustee shall deliver the Collateral
Certificate to or upon the order of the Transferor when authenticated in
accordance with Section 6.2 of the Agreement.  The Collateral Certificate will be deposited
by the Transferor into the Owner Trust and pledged by the Owner Trust to an
indenture trustee to secure the Class A Notes and the Subordinated Interests.

 

Section 1.3                                                Form of Delivery of the
Collateral Certificate.

 

The Collateral
Certificate shall be delivered as a Registered Certificate as provided in Section 6.1
of the Agreement and shall be a Definitive Certificate as provided in Section 6.12
of the Agreement.  The Collateral
Certificate shall be substantially in the form of Exhibit A hereto.

 

ARTICLE II

 

DEFINITIONS

 

Section 2.1                                                Definitions.

 

In the event
that any term or provision contained herein shall conflict with or be
inconsistent with any provision contained in the Agreement, the terms and
provisions of this Series Supplement shall govern with respect to the
Collateral Certificate.  All Articles,
Sections, subsections and Exhibits references herein shall mean Articles,
Sections, subsections and Exhibits of this Series Supplement except as
otherwise provided herein.  All
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Agreement. 
Each capitalized term defined herein shall relate only to the Collateral
Certificate and to no other Series of Certificates issued by the
Trust.  Certain terms used herein are
defined by reference to the Indenture. 
If the Indenture should terminate prior to the termination of this Series Supplement,
then each term defined herein by reference to the Indenture shall be deemed a
reference to such term as defined in the Indenture immediately prior to the
termination thereof and shall have the same force and effect as if fully set
forth herein, notwithstanding the termination of the Indenture.

 

“Accumulation
Date” shall mean the first day of the October 2009 Monthly Period.

 

“Accumulation
Period” shall mean, the period commencing on the Accumulation Date, or such
later date as may be specified by the Servicer in accordance with Section 4.12,
and continuing to and ending on the earlier of (x) the calendar day immediately
prior to the Early Amortization Commencement Date and (y) the Series 2005-1
Termination Date.

 

“Accumulation
Period Length” shall have the meaning specified in Section 4.12.

 

“Additional
Class A Notes” shall have the meaning specified in the Indenture.

 

“Additional
Interest” shall mean, with respect to any Distribution Date, the sum of Class A
Additional Interest and Subordinated Additional Interest, if any.

 

2

 

“Adjusted
Invested Amount” shall mean, for any date of determination, an amount equal
to the Invested Amount minus the
principal amount on deposit in the Principal Funding Account on such date of
determination.

 

“Adjustment
Payment” shall mean any payment the Transferor is required to make into the
Special Funding Account pursuant to subsection 3.9(a) of the
Agreement.

 

“Amortization
Period Commencement Date” shall mean the earlier of (a) the first day
of the Accumulation Period and (b) an Early Amortization Commencement
Date.

 

“Available
Finance Charge Collections Shortfall Amount” shall have the meaning
specified in subsection 4.7(a).

 

“Available
Reserve Account Amount” shall mean, with respect to any Transfer Date, the
lesser of (a) the amount on deposit in the Reserve Account as of such date
(before giving effect to any deposit or withdrawal made or to be made pursuant
to subsections 4.6(a)(vi) and 4.13(d) to the
Reserve Account on such date) and (b) the Required Reserve Account Amount.

 

“Available Series 2005-1
Finance Charge Collections” shall have the meaning specified in subsection 4.6(a).

 

“Available Series 2005-1
Principal Collections” shall mean, with respect to any Distribution Date,
the sum of (a) the Principal Allocation Percentage of Collections of
Principal Receivables collected during the preceding Monthly Period minus Reallocated Principal Collections
with respect to such Distribution Date, and (b) the sum of the amounts
designated to be treated as Available Series 2005-1 Principal Collections
pursuant to subsections 4.6(a)(iii) and (iv) with
respect to such Distribution Date.

 

“Available
Shared Principal Collections” shall mean, with respect to any Monthly
Period, Shared Principal Collections available to be allocated to the
Collateral Certificate from each other Series that has a controlled or
scheduled amortization or accumulation period beginning after the October 2010 Distribution
Date.

 

“Base Rate”
shall mean, with respect to any Monthly Period, the sum of (i) the
annualized percentage equivalent of the weighted average of the Class A
Interest Rate and the Subordinated Interest Rate, both for the related Interest
Accrual Period (weighted by the outstanding principal amount of the Class A
Notes and the Subordinated Interests, respectively, both at the end of the last
day of such Monthly Period) and (ii) the Servicing Fee Rate.

 

“Business
Day” shall (a) for the purpose of determining LIBOR, have the meaning
provided in the Agreement; provided,
however, that for such purpose, a
Business Day shall not include any 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 and (b) for
all other purposes, have the meaning provided in the Agreement.

 

3

 

“Carryover
Interest” shall mean, with respect to any Distribution Date, the sum of Class A
Carryover Interest and Subordinated Carryover Interest.

 

“Class A
Additional Interest” shall have the meaning specified in subsection 4.3(a).

 

“Class A
Carryover Interest” shall mean, with respect to any Distribution Date, (a) any
Class A Monthly Interest due but not paid to the Collateral
Certificateholder on any previous Distribution Date plus (b) any Class A Additional Interest due with
respect to such Distribution Date.

 

“Class A
Controlled Accumulation Amount” shall mean (a) for any Distribution
Date with respect to the Accumulation Period on or prior to the Class A
Expected Final Payment Date, $62,500,000, provided
that such amount shall be increased pursuant to Section 4.10 as a
result of the issuance of Additional Class A Notes; provided, further, that, if the Accumulation
Period is modified pursuant to Section 4.12, (i) the Class A
Controlled Accumulation Amount for each Distribution Date with respect to the
Accumulation Period shall mean the amount determined in accordance with Section 4.12
on the date on which the Accumulation Period has most recently been modified
and (ii) the sum of the Class A Controlled Accumulation Amounts for
all Distribution Dates with respect to the modified Accumulation Period shall
not be less than the outstanding principal of the Class A Notes and (b) for
any other Distribution Date, zero.

 

“Class A
Controlled Deposit Amount” shall mean, for any Distribution Date with
respect to the Accumulation Period, an amount equal to the Class A
Controlled Accumulation Amount plus
the Class A Deficit Controlled Accumulation Amount for the preceding
Distribution Date, if any.

 

“Class A
Covered Amount” shall mean, with respect to any Interest Accrual Period
prior to the payment in full of the Class A Notes, the product of (a) the
Class A Interest Rate in effect with respect to such Interest Accrual
Period, (b) a fraction the numerator of which is the actual number of days
in such Interest Accrual Period and the denominator of which is 360, and (c) the
Principal Funding Account Balance as of the first day of such Interest Accrual
Period.

 

“Class A
Deficit Controlled Accumulation Amount” shall mean, on each Distribution
Date with respect to the Accumulation Period, the excess, if any, of the Class A
Controlled Deposit Amount for such Distribution Date over the amount withdrawn
from the Collection Account and deposited into the Principal Funding Account as
Series 2005-1 Principal for such Distribution Date.

 

“Class A
Expected Final Payment Date” shall have the meaning specified in the
Indenture.

 

“Class A
Interest Rate” shall have the meaning specified in the Indenture.

 

“Class A
Monthly Interest” shall have the meaning specified in subsection 4.3(a).

 

4

 

“Class A
Monthly Interest Shortfall” shall have the meaning specified in subsection 4.3(a).

 

“Class A
Noteholder” shall have the meaning specified in the Indenture.

 

“Class A
Note Initial Principal Balance” shall have the meaning specified in the
Indenture.

 

“Class A
Notes” shall have the meaning specified in the Indenture.

 

“Closing
Date” shall mean November    , 2005.

 

“Collateral
Certificate” shall have the meaning specified in Section 1.1.

 

“Collateral
Certificate Addition Date” shall have the meaning specified in subsection 4.10(a).

 

“Collateral
Certificate Additional Amount” shall have the meaning specified in subsection 4.10(a).

 

“Collateral
Certificateholder” shall mean the holder of record of the Collateral
Certificate.

 

“Collateral
Certificateholder’s Interest” shall have the meaning specified in Section 4.1.

 

“Distribution
Date” shall mean December 27, 2005, and the 25th day of
each month thereafter, or if such day is not a Business Day, the next
succeeding Business Day.

 

“Early
Amortization Commencement Date” shall mean the initial date on which an
Early Amortization Event or a Series 2005-1 Early Amortization Event
occurs or is deemed to have occurred.

 

“Early
Amortization Event” shall mean any of the events specified in Section 9.1
of the Agreement.

 

“Early
Amortization Period” shall mean the period beginning on an Early
Amortization Commencement Date and ending on the Series 2005-1 Termination
Date.

 

“Event of
Default” shall have the meaning specified in the Indenture.

 

“Excess
Finance Charge Collections” shall mean, with respect to any Distribution
Date, as the context requires, either (x) the amount described in subsection 4.6(a)(viii) allocated
to the Collateral Certificate but available to cover shortfalls in amounts paid
from Collections of Finance Charge Receivables for other Series in Group
I, if any, or (y) the aggregate amount of Collections of Finance Charge
Receivables allocable to other Series in Group I in excess of the amounts
necessary to make required payments with respect to such Series, if any, and
available to cover shortfalls with respect to the Collateral Certificate.

 

5

 

“Excess
Spread Percentage” shall mean, with respect to any Distribution Date, the
amount, if any, by which the Portfolio Yield for the preceding Monthly Period
exceeds the Base Rate for the preceding Monthly Period.

 

“Excess
Transferor Finance Charge Collections” shall have the meaning specified in subsection 4.2(d).

 

“Floating
Allocation Percentage” shall mean, with respect to any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is the Adjusted
Invested Amount as of (x) during the Revolving Period or the Accumulation
Period with respect to Collections of Finance Charge Receivables and at all
times with respect to the Defaulted Amount, 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 (y) during an Early Amortization Period with
respect to Collections of Finance Charge Receivables, the end of the last day
of the Monthly Period immediately preceding an Early Amortization Commencement
Date and the denominator of which is (i) with respect to the Defaulted
Amount, the sum of (a) the total amount of Principal Receivables in the
Trust plus (b) the amounts on deposit in
the Special Funding Account, in each case calculated as of  the end of the last day of the Monthly Period
used to determine the numerator and (ii) with respect to Collections of
Finance Charge Receivables, the greater of (a) the sum of (I) the total
amount of Principal Receivables in the Trust plus
(II) the amounts on deposit in the Special Funding Account, in each case
calculated as of the end of the last day of the Monthly Period used to
determine the numerator 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; provided that such
calculations are subject to adjustment upon the direction of the Transferor, in
accordance with subsection 2.9(g) of the Agreement, to give effect to
additions of Additional Accounts.

 

“Group I”
shall mean, the Group in which Series 2005-1 is to be included for the
purpose of sharing Excess Finance Charge Collections.

 

“Indenture”
shall mean that certain indenture, dated as of November    ,
2005, by and between the Owner Trust and Wells Fargo Bank, National
Association, as indenture trustee.

 

“Initial
Invested Amount” shall mean $961,538,462.

 

“Interest
Accrual Period” shall mean, with respect to any Distribution Date, the
period from and including the preceding Distribution Date to but excluding such
Distribution Date; provided, however,
that the initial Interest Accrual Period shall begin on and include the Closing
Date and end on but exclude the first Distribution Date.

 

“Invested
Amount” shall mean, for any date of determination, an amount equal to the
sum of (a) the Initial Invested Amount, plus
(b) the amount of any increase in the principal amount of the
Collateral Certificate after the Closing Date pursuant to Section 4.10,
plus (c) the sum of the
aggregate amounts allocated with respect to the reimbursement of Investor
Charge-Offs and available on all prior Distribution Dates pursuant to subsections
4.6(a)(iv) and 4.7(a), minus
(d) the aggregate amount of principal payments made to the Collateral
Certificateholder 

 

6

 

prior to such
date, including the amount of any reduction pursuant to subsection 7.3(a),
minus (e) the aggregate
amount of Investor Charge-Offs for all prior Distribution Dates, and minus (f) the amount of any reduction
in the Invested Amount as a result of the purchase by the Transferor and
subsequent cancellation of a portion of the Collateral Certificate pursuant to subsection 7.3(b).

 

“Investor
Charge-Off” shall mean, with respect to any Distribution Date, the
aggregate amount of (a) any reduction in the Invested Amount as a result
of the application of Reallocated Principal Collections pursuant to Section 4.9
and (b) any reduction in the Invested Amount pursuant to Section 4.8.

 

“Investor
Defaulted Amount” shall mean, with respect to any Monthly Period, an amount
equal to the product of the Defaulted Amount and the Floating Allocation
Percentage with respect to such Monthly Period.

 

“Investor
Percentage” shall mean, with respect to Principal Receivables, the
Principal Allocation Percentage and, with respect to Finance Charge Receivables
and the Defaulted Amount, the Floating Allocation Percentage.

 

“Legal
Maturity Date” shall mean the October 2014 Distribution Date.

 

“LIBOR”
shall have the meaning specified in the Indenture.

 

“LIBOR
Determination Date” shall have the meaning specified in the Indenture.

 

“Monthly
Period” shall mean, with respect to each Distribution Date, the immediately
preceding fiscal month of the Transferor; provided
that the first Monthly Period shall begin on the first day of the fiscal month
of the Transferor during which the Closing Date occurs and end on the last day
of the fiscal month of the Transferor during which the Closing Date occurs.

 

“Monthly
Servicing Fee” shall have the meaning specified in Section 3.1.

 

“Owner
Trust” shall have the meaning specified in the recitals.

 

“Percentage
Allocation” shall have the meaning specified in subsection 4.2(b)(i)(y).

 

“Portfolio
Yield” shall mean, for the Collateral Certificate, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction, the
numerator of which is an amount equal to 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 in accordance with subsection 4.13(d), minus the Investor Defaulted Amount for
that Monthly Period, and the denominator of which is the Adjusted Invested
Amount at the end of the last day of the preceding Monthly Period, or, in the
case of the first Monthly Period, the Closing Date.

 

7

 

“Principal
Allocation Percentage” shall mean, with respect to any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is (a) 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), (b) 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, at the option of the
Transferor, upon satisfaction of the Rating Agency Condition, such amount may
be reduced to an amount not less than the greater of (x) the Adjusted Invested
Amount on such date and (y) the amount which would result in a Principal
Allocation Percentage which when multiplied by the amount of Collections of
Principal Receivables for the preceding Monthly Period would equal (I) the Class A
Controlled Deposit Amount for such Monthly Period plus 10% of the Class A Controlled Accumulation Amount
or, if such date is on or after the Class A Expected Final Payment Date
and the Class A Notes have been paid in full, the Subordinated Amount minus (II) the amount of any Available
Shared Principal Collections with respect to such Monthly Period, and (c) 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 the
denominator of which is the greater of (a) the sum of the total amount of
Principal Receivables in the Trust and the principal amount on deposit in the
Special Funding Account each as of 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 as to which such determination is being made; provided, further, that such calculations
are subject to adjustment upon the direction of the Transferor, in accordance
with subsection 2.9(g) of the Agreement, to give effect to additions
of Additional Accounts.

 

“Principal
Funding Account” shall have the meaning specified in subsection 4.11(a).

 

“Principal
Funding Account Balance” shall mean, for any date of determination during
the Accumulation Period, the principal amount, if any, on deposit in the
Principal Funding Account on such date of determination.

 

“Principal
Funding Investment Proceeds” shall mean, with respect to each Distribution
Date during the Accumulation Period and on the first Special Payment Date, the
investment earnings on funds on deposit in the Principal Funding Account (net
of investment expenses and losses) for the related Interest Accrual Period.

 

“Principal
Funding Investment Shortfall” shall mean, with respect to 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 Accrual Period.

 

“Principal
Shortfall” shall mean, with respect to any Distribution Date (x) for Series 2005-1,
(i) during the Accumulation Period on and prior to the Class A
Expected Final Payment Date, the excess of the Class A Controlled Deposit
Amount for such Distribution Date over the
aggregate amount applied with respect thereto on such Distribution Date, and (ii) during

 

8

 

the
Accumulation Period following the Class A Expected Final Payment Date or
during an Early Amortization Period, the Invested Amount after the application
of Collections of Principal Receivables on such Distribution Date or (y) for
any other Series, the amounts specified as such in the Supplement for such
other Series.

 

“Rating
Agency” shall have the meaning specified in the Indenture.

 

“Rating Agency Condition” shall
have the meaning specified in the Indenture.

 

“Reallocated
Principal Collections” shall have the meaning specified in Section 4.9.

 

“Reassignment
Amount” shall mean, with respect to any Distribution Date, after giving
effect to any deposits and distributions otherwise to be made on such
Distribution Date, the sum of (i) the Adjusted Invested Amount on such
Distribution Date plus (ii) the
sum of the Class A Monthly Interest and the Subordinated Monthly Interest,
if any, for such Distribution Date and the Carryover Interest, if any, for such
Distribution Date.

 

“Record
Date” shall mean, with respect to any Distribution Date, the last Business
Day of the calendar month preceding the month in which such Distribution Date
occurs.

 

“Reference
Banks” shall mean four major banks in the London interbank market selected
by the Servicer.

 

“Required
Amount” shall mean, with respect to each Distribution Date, the amount
determined by the Servicer equal to the excess, if any, of (x) the sum of (i) Class A
Monthly Interest for such Distribution Date, (ii) any Class A
Carryover Interest for such Distribution Date and (iii) the Monthly
Servicing Fee for such Distribution Date, over (y) the
sum of the Available Series 2005-1 Finance Charge Collections applied with
respect to such amounts pursuant to subsection 4.6(a) plus any Excess Finance Charge Collections from other Series in
Group I allocable to Series 2005-1 and applied with respect to such
amounts pursuant to subsection 4.7(a).

 

“Required
Reserve Account Amount” shall mean, with respect to any Distribution Date
on or after the Reserve Account Funding Date, an amount specified by the
Transferor.

 

“Required
Retained Transferor’s Percentage” shall mean 2%; provided, however, that such percentage may be adjusted from
time to time upon written notice from the Transferor to the Trustee if each
Rating Agency initially contracted to rate the Class A Notes shall have
been notified of such adjustment and shall have provided notice to the Trustee
or the Servicer that the Rating Agency Condition shall be satisfied in
connection with such action and such action shall not, as evidenced by a Tax
Opinion, cause the Trust to be characterized for Federal income tax purposes as
an association or publicly traded partnership taxable as a corporation or otherwise
have any material adverse effect on the Federal income taxation of any
outstanding Series of Certificates or any Certificate Owner.

 

“Reserve
Account” shall have the meaning specified in subsection 4.13(a).

 

9

 

“Reserve
Account Funding Date” shall mean the date, if any, specified by the
Transferor for the commencement of the funding of the Reserve Account.

 

“Reserve
Account Surplus” shall mean, as of any Transfer Date following the Reserve
Account Funding Date, the amount, if any, by which the amount on deposit in the
Reserve Account exceeds the Required Reserve Account Amount.

 

“Reserve
Draw Amount” shall have the meaning specified in subsection 4.13(c).

 

“Revolving
Period” shall mean the period from and including the Closing Date to, but
not including, the Amortization Period Commencement Date.

 

“Senior
Percentage” shall mean, for any date of determination, a fraction,
expressed as a percentage, the numerator of which is the Adjusted Invested
Amount minus the Subordinated Amount and the
denominator of which is the Adjusted Invested Amount, in each case as of the
end of the last day of the immediately preceding Monthly Period (or, in the
case of the first Monthly Period, the Closing Date).

 

“Series Accounts”
shall mean the Principal Funding Account and the Reserve Account.

 

“Series Invested
Amount” shall mean, for Series 2005-1, for any date of determination,
an amount equal to the Adjusted Invested Amount as of such date.

 

“Series 2005-1”
shall mean the Series of the Target Credit Card Master Trust represented
by the Collateral Certificate.

 

“Series 2005-1
Allocation Percentage” shall mean, on any date of determination, the
percentage equivalent of a fraction the numerator of which is the Adjusted
Invested Amount and the denominator of which is the sum of the invested amounts
(or adjusted invested amounts, as applicable) of all then outstanding Series.

 

“Series 2005-1
Certificates” shall have the meaning specified in Section 1.1.

 

“Series 2005-1
Early Amortization Event” shall have the meaning specified in Section 6.1.

 

“Series 2005-1
Principal” shall have the meaning specified in Section 4.4.

 

“Series 2005-1
Required Designation Date” shall have the meaning specified in Section 9.4.

 

“Series 2005-1
Termination Date” shall mean the earlier to occur of (i) the date on
which the Invested Amount is reduced to zero, and (ii) the Legal Maturity
Date.

 

“Servicing
Fee Rate” shall mean 2.00% per annum.

 

10

 

“Shared Principal
Collections” shall mean, as the context requires, either (a) the
amount allocated to the Collateral Certificate which, in accordance with subsections
4.6(b) and 4.6(c)(ii), may be applied in accordance with Section 4.4
of the Agreement or (b) the amounts allocated to the Investor Certificates
of other Series which the applicable Supplements for such Series specify
are to be treated as “Shared Principal Collections” plus
amounts specified in any Participation Supplement with respect to any
Participation to be treated as Shared Principal Collections which may be
applied to cover Principal Shortfalls with respect to the Collateral
Certificate.

 

“Shared
Transferor Principal Collections” shall have the meaning specified in subsection 4.2(d).

 

“Special
Payment Date” shall mean each Distribution Date following the Monthly
Period in which an Early Amortization Commencement Date occurs.

 

“Specified
Investor Default Amount” shall mean, with respect to any Distribution Date,
the sum of (a) the product of (i) 1.5 and (ii) the average of
the Investor Defaulted Amounts for the three preceding Monthly Periods, and (b) the
amount of unreimbursed Investor Charge-Offs allocated to reduce the Invested
Amount for the preceding Monthly Period.

 

“Specified
Transferor Amount” shall mean, as of any date of determination, the product
of (i) the sum of (a) the aggregate Principal Receivables as of such
date and (b) the amount on deposit in the Special Funding Account as of
such date and (ii) 17%, provided,
however, that such percentage may be adjusted from time to time upon
written notice from the Transferor to the Trustee if Standard & Poor’s
shall have been notified of such adjustment and shall have provided written notice
to the Trustee or the Servicer that such action will not result in reduction or
withdrawal of the then outstanding rating of any (x) Outstanding Notes (each
term as defined in the Indenture) or (y) outstanding securities collateralized
by Subordinated Interests.

 

“Subordinated
Additional Interest” shall mean the amount, if any, distributable in
respect of the Subordinated Interests as calculated pursuant to subsection 4.3(b).

 

“Subordinated
Amount” shall mean, for any date, an amount equal to the greater of (a) the
Invested Amount minus the outstanding principal
amount of the Class A Notes, and (b) zero.

 

“Subordinated
Carryover Interest” shall mean, with respect to any Distribution Date, (a) any
Subordinated Monthly Interest due but not paid (or not deemed to be paid) to
the Collateral Certificateholder on any previous Distribution Date plus (b) any Subordinated Additional Interest due with
respect to such Distribution Date.

 

“Subordinated
Interest Rate” shall have the meaning specified in the Indenture.

 

“Subordinated
Interests” shall have the meaning specified in the Indenture.

 

“Subordinated
Monthly Interest” shall have the meaning specified in subsection 4.3(b).

 

11

 

“Subordinated
Monthly Interest Shortfall” shall have the meaning specified in subsection 4.3(b).

 

“Targeted
Holder” shall mean each holder of (i) a right to receive interest or
principal with respect to the Collateral Certificate, (ii) any interest in
the Trust with respect to which an Opinion of Counsel has not been rendered to
the effect that such interest will be treated as debt for federal income tax
purposes, and (iii) any holder of a right to receive any amount in respect
of the Transferor’s Interest; provided that
any Person holding more than one right or interest each of which would cause
such Person to be a Targeted Holder shall be treated as a single Targeted
Holder.

 

“Telerate Page 3750”
shall mean 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).

 

“Transferor
Retained Certificates” shall mean Investor Certificates of any Series,
which the Transferor retains or any interest in a trust or other entity that
holds Investor Certificates, such as the Subordinated Interests, that is
retained by the Transferor, but only to the extent that and for so long as the
Transferor is the Holder of such Certificates or interest in a trust that holds
Investor Certificates.

 

12

 

ARTICLE III

 

SERVICER

 

Section 3.1                                                Servicing
Compensation.  The share of the
Servicing Fee allocable to the Collateral Certificateholder with respect to any
Distribution Date shall be equal to one-twelfth of the product of (a) the
Servicing Fee Rate and (b) (i) the Adjusted Invested Amount at the
end of the last day of the Monthly Period second preceding such Distribution
Date, minus (ii) 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 such Distribution Date and
the Floating Allocation Percentage (as defined with respect to the Defaulted
Amount) with respect to such Monthly Period (this amount, together with any
such amounts unpaid from prior Distribution Dates, the “Monthly Servicing
Fee”); provided, however,
that with respect to the first Distribution Date, the Monthly Servicing Fee
shall be $         .  The remainder of the Servicing Fee for each
Distribution Date shall be paid from amounts allocable to the Holder of the
Transferor Certificate, holders of Participations or the Certificateholders of
other Series (as provided in the related Supplements) and in no event
shall the Trust, the Trustee or the Collateral Certificateholder 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.  The Monthly Servicing Fee shall be payable to
the Servicer on any Distribution Date solely to the extent amounts are
available for distribution in respect thereof pursuant to subsection 4.6(a)(ii).

 

Section 3.2                                                Additional Covenant of the Servicer.

 

The Servicer
covenants and agrees that if on any Determination Date the Transferor Amount (excluding
the interest represented by any Supplemental Certificate) as of the end of the last
day of the immediately preceding Monthly Period is less than or equal to the Specified
Transferor Amount as of such last day, then, on the next Business Day, the Servicer
shall determine whether the Transferor Amount (excluding the interest
represented by any Supplemental Certificate) for the second preceding day is greater
than the Required Retained Transferor Amount and the Specified Transferor
Amount, both for such second preceding day.  The Servicer shall continue to make such
determination on each Business Day thereafter until the expiration of 90
consecutive days during which the Transferor Amount as of the second preceding
day is greater than the Specified Transferor Amount as of such second preceding
day.

 

ARTICLE IV

 

RIGHTS OF THE COLLATERAL CERTIFICATEHOLDER
AND

ALLOCATION AND APPLICATION OF COLLECTIONS

 

Section 4.1                                                Rights of the Collateral
Certificateholder.

 

The Collateral
Certificate shall represent an undivided interest in the Trust (the “Collateral
Certificateholder’s Interest”), consisting of the right to receive, to the
extent necessary to make the required payments with respect to such Collateral
Certificate at the times 

 

13

 

and in the amounts specified in this Series Supplement, (a) the
Floating Allocation Percentage and the Principal Allocation Percentage (as
applicable from time to time) of Collections, (b) funds on deposit in the
Special Funding Account and distributable to the Collateral Certificate
pursuant to Section 4.2 of the Agreement, (c) funds on deposit in the
Principal Funding Account and (d) if the Transferor, at its option,
designates a Reserve Account Funding Date, funds on deposit in the Reserve
Account.  The Investor Certificates of Series 2005-1
shall not be subordinated to any other Series.

 

Section 4.2                                                Collections and Allocations;
Payments on Transferor Certificate.

 

(a)                      Collections. 
The Servicer shall apply or shall instruct the Trustee to apply all
funds on deposit in the Collection Account, the Special Funding Account, the
Principal Funding Account and the Reserve Account allocable to the Collateral
Certificate as described in this Article IV and Article IV of
the Agreement.

 

(b)                     Allocations. 
The Servicer shall apply, or shall instruct the Trustee to apply, all
Collections and other funds that are allocated to the Collateral Certificate as
follows:

 

(i)                  Daily Allocations During the
Revolving Period.  During the Revolving Period, if the
conditions specified in the last sentence of subsection 4.3(a) of the
Agreement are no longer satisfied, the Servicer shall, prior to the close of
business on any Date of Processing, allocate the following amounts as set forth
below:

 

(x) 
Allocate to the Collateral Certificateholder and deposit in the
Collection Account no later than the second Business Day following the Date of
Processing an amount equal to the product of (A) the Floating Allocation
Percentage with respect to the current Monthly Period and (B) the
aggregate amount of Collections of Finance Charge Receivables on such Date of
Processing; provided, however,
that, with respect to each Monthly Period, such amount shall only be deposited
until such time as the amount of Collections of Finance Charge Receivables
allocable to Series 2005-1 deposited in the Collection Account equals the
amount of Class A Monthly Interest, Subordinated Monthly Interest, if any,
Carryover Interest, if any, and, at any time that Target National Bank is not
the Servicer, the Monthly Servicing Fee, in each case due on the Distribution
Date in the following Monthly Period, and, if on the Distribution Date in the
preceding Monthly Period the Excess Spread Percentage was less than 4% or if
there were unreimbursed Investor Charge-Offs, the Specified Investor Default
Amount determined for the Distribution Date in the preceding Monthly Period.

 

(y) 
Allocate to the Collateral Certificateholder and deposit in the
Collection Account no later than the second Business Day following the Date of
Processing an amount equal to the least of (A) the product of (I) the
Principal Allocation Percentage with respect to the current Monthly Period and
(II) the aggregate amount of Collections of Principal Receivables on such Date
of Processing (for any such date, a “Percentage Allocation”), (B) an
amount not to 

 

14

 

exceed the Subordinated Amount minus the aggregate amount previously
deposited in the Collection Account under this subsection 4.2(b)(i)(y)
with respect to the current Monthly Period, and (C) the excess of (1) the
sum of the Class A Monthly Interest, the Class A Carryover Interest,
the Monthly Servicing Fee, if Target National Bank is not the Servicer, and the
Senior Percentage of the Specified Investor Default Amount determined for the
Distribution Date in the preceding Monthly Period if on the Distribution Date
in the preceding Monthly Period the Excess Spread Percentage was less than 4%
or if there were unreimbursed Investor Charge-Offs over (2) the amount of Collections of Finance Charge
Receivables deposited in the Collection Account on that Date of Processing and
on each preceding Date of Processing in that Monthly Period pursuant to subsection 4.2(b)(i)(x).

 

These Collections of Principal Receivables
shall only be retained or deposited in the Collection Account pursuant to this subsection 4.2(b)(i)(y)
to the extent that the sum of the Collections of Principal Receivables and the
Collections of Finance Charge Receivables retained in the Collection Account
pursuant to subsection 4.2(b)(i)(x) and this subsection 4.2(b)(i)(y)
do not exceed the sum of the Class A Monthly Interest, the Class A
Carryover Interest, the Monthly Servicing Fee, if Target National Bank is not
the Servicer, and the Senior Percentage of the Specified Investor Default
Amount determined for the Distribution Date in the preceding Monthly Period if
the conditions requiring that deposit exist. 
The excess of the amount of Collections of Principal Receivables on
deposit in the Collection Account over the amount
required to be retained in the Collection Account and the remainder of the
Principal Allocation Percentage of the amount of Collections of Principal
Receivables on that Date of Processing shall be paid to the Holder of the
Transferor Certificate; provided, however,
that the amount to be paid to the Holder of the Transferor Certificate pursuant
to this subsection 4.2(b)(i)(y) on any Date of Processing shall be first, if the Rating Agency Condition is
satisfied in connection with a request of the Transferor to reduce the Invested
Amount, used to reduce the Invested Amount pursuant to subsection 7.3(a),
second, if any other Principal
Sharing Series is outstanding and in its Amortization Period, deposited in
the Collection Account for application, to the extent necessary, as Shared
Principal Collections on the Distribution Date in the following Monthly Period
and, third, shall be paid to the
Holder of the Transferor Certificate only if on such Date of Processing the
Transferor Amount (excluding the interest represented by the Supplemental
Certificate) is greater than the Required Retained Transferor Amount (after
giving effect to all Receivables transferred to the Trust on such day) and
otherwise shall be deposited in the Special Funding Account; provided, further, that such amounts will
be paid to the Holder of the Transferor Certificate subject to the obligation
of the Transferor to make an amount equal to the Reallocated Principal Collections
for each Monthly Period available on the Distribution Date in the following
Monthly Period for application in accordance with Section 4.9.

 

15

 

(ii)               Daily Allocations During the
Accumulation Period.  During the Accumulation Period, if the
conditions specified in the last sentence of subsection 4.3(a) of the
Agreement are not satisfied, the Servicer shall, prior to the close of business
on any Date of Processing, allocate the following amounts as set forth below:

 

(x) 
Allocate to the Collateral Certificateholder and deposit in the
Collection Account no later than the second Business Day following the Date of
Processing an amount equal to the product of (A) the Floating Allocation
Percentage with respect to the current Monthly Period and (B) the
aggregate amount of Collections of Finance Charge Receivables on such Date of
Processing; provided, however,
that, with respect to each Monthly Period, such amount shall only be deposited
until such time as the amount of Collections of Finance Charge Receivables
allocable to Series 2005-1 on deposit in the Collection Account equals the
amount of Class A Monthly Interest, Subordinated Monthly Interest, if any,
Carryover Interest, if any, and, at any time that Target National Bank is not
the Servicer, the Monthly Servicing Fee, in each case due on the Distribution
Date in the following Monthly Period, and, if on the Distribution Date in the
preceding Monthly Period the Excess Spread Percentage was less than 4% or if
there were unreimbursed Investor Charge-Offs, the Specified Investor Default
Amount determined for the Distribution Date in the preceding Monthly Period.

 

(y) 
Allocate to the Collateral Certificateholder and deposit in the
Collection Account no later than the second Business Day following the Date of
Processing an amount equal to the sum of (I) the Percentage Allocation and (II)
at the option of the Transferor, the product of (x) the aggregate amount of
Shared Transferor Principal Collections for such Date of Processing and (y) a
fraction, the numerator of which is the excess of the Class A Controlled
Deposit Amount for the Distribution Date in the following Monthly Period over the amount on deposit in the Collection Account with
respect to principal for the benefit of Series 2005-1 for payment or
deposit to the Principal Funding Account on the Distribution Date in the
following Monthly Period and the denominator of which is the equivalent amount
for all Series for such date; provided,
however, that with respect to each Monthly Period, such amount shall
only be deposited in the Collection Account until such time as the amount
deposited in the Collection Account with respect to principal for the benefit
of Series 2005-1 equals the sum of (i) (A) during each Monthly
Period prior to the Monthly Period in which the Class A Notes are paid in
full, the lesser of the Class A Controlled Deposit Amount for the
Distribution Date in the following Monthly Period and the Adjusted Invested
Amount on the applicable date of deposit, and (B) during each Monthly
Period beginning with the Monthly Period in which the Class A Notes are
paid in full, the Subordinated Amount on the applicable date of deposit, and (ii) the
lesser of (1) the amount by which (A) the sum of the Class A
Monthly Interest, the Class A Carryover Interest, the Monthly Servicing
Fee, if Target National Bank is not the Servicer, and, if on the Distribution
Date in the preceding Monthly Period the Excess Spread Percentage was less than
4% or if there were unreimbursed Investor Charge-Offs, the Senior Percentage of
the Specified Investor Default Amount determined for the Distribution Date in
the preceding 

 

16

 

Monthly Period, is greater than
(B) the amount of Collections of Finance Charge Receivables deposited in
the Collection Account on that Date of Processing and on each preceding Date of
Processing in that Monthly Period pursuant to subsection 4.2(b)(ii)(x),
and (2) the Subordinated Amount.

 

Collections of Principal Receivables
allocable to Series 2005-1 will only be retained or deposited in the
Collection Account in excess of:  (I)
during each Monthly Period prior to the Monthly Period in which the Class A
Notes are paid in full, the lesser of the Class A Controlled Deposit
Amount and the Adjusted Invested Amount, and (II) during each Monthly Period
beginning with the Monthly Period in which the Class A Notes are paid in
full, the Subordinated Amount, to the extent that the Collections of Principal
Receivables and Collections of Finance Charge Receivables retained in the
Collection Account pursuant to subsection 4.2(b)(ii)(x) and this subsection 4.2(b)(ii)(y)
do not exceed the sum of the Class A Monthly Interest, the Class A
Carryover Interest, the Monthly Servicing Fee, if Target National Bank is not
the Servicer, and the Senior Percentage of the Specified Investor Default
Amount determined for the Distribution Date in the preceding Monthly Period if
the conditions requiring that deposit exist. 
The excess of the amount of Collections of Principal Receivables on
deposit in the Collection Account over the amount
required to be retained in the Collection Account and the remainder of the
Principal Allocation Percentage of the amount of Collections of Principal
Receivables on that Date of Processing, first,
if any other Principal Sharing Series is outstanding and in its
Amortization Period, shall be deposited in the Collection Account for
application, to the extent necessary, as Shared Principal Collections on the
Distribution Date in the following Monthly Period and, second, shall not be treated as a
Percentage Allocation and shall be paid to the Holder of the Transferor
Certificate only if on such Date of Processing the Transferor Amount (excluding
the interest represented by any Supplemental Certificate) on such Date of
Processing is greater than the Required Retained Transferor Amount (after
giving effect to all Principal Receivables transferred to the Trust on such
day) and otherwise shall be deposited in the Special Funding Account; provided that such amounts will be paid to
the Holder of the Transferor Certificate subject to the obligation of the
Transferor to make an amount equal to the Reallocated Principal Collections for
each Monthly Period available on the Distribution Date in the following Monthly
Period for application in accordance with Section 4.9.

 

(iii)            Daily Allocations During the Early Amortization Period. 
During the Early Amortization Period, if the conditions specified in the
last sentence of subsection 4.3(a) of the Agreement are not
satisfied, the Servicer shall, prior to the close of business on any Date of
Processing, allocate the following amounts as set forth below:

 

(x) 
Allocate to the Collateral Certificateholder and deposit in the
Collection Account no later than the second Business Day following the Date of
Processing an amount equal to the product of (A) the Floating Allocation 

 

17

 

Percentage with respect to the
current Monthly Period and (B) the aggregate amount of Collections of
Finance Charge Receivables on such Date of Processing.

 

(y) 
Allocate to the Collateral Certificateholder and deposit in the
Collection Account no later than the second Business Day following the Date of
Processing an amount equal to the Percentage Allocation; provided, however, that after the date on
which an amount of such Collections equal to the Invested Amount has been
deposited into the Collection Account and allocated to the Collateral
Certificateholder, any excess of the amount determined in accordance with this
subparagraph (y) first, if any
other Principal Sharing Series is outstanding and in its Amortization
Period, shall be deposited in the Collection Account for application, to the
extent necessary, as Shared Principal Collections on the Distribution Date in
the following Monthly Period and, second,
shall be paid to the Holder of the Transferor Certificate only if on such Date
of Processing the Transferor Amount (excluding the interest represented by any
Supplemental Certificate) is greater than the Required Retained Transferor
Amount (after giving effect to all Principal Receivables transferred to the
Trust on such day) and otherwise shall be deposited in the Special Funding
Account.

 

(iv)           Monthly Allocations. 
At all times, the Servicer shall, prior to the close of business on any
Transfer Date, allocate to the Collateral Certificateholder and deposit in the
Collection Account an amount equal to the sum of (I) (A) the lesser of (1) the
sum of (a) the product of (x) the Floating Allocation Percentage with
respect to the preceding Monthly Period and (y) the aggregate amount of
Collections of Finance Charge Receivables for the preceding Monthly Period, (b) the
amount of Excess Finance Charge Collections allocated to Series 2005-1 for
the preceding Monthly Period and (c) the amount of Excess Transferor
Finance Charge Collections allocated to Series 2005-1 for the preceding
Monthly Period and (2) the aggregate of (a) the amounts described
pursuant to subclause (y) of each of clauses (i) through (v) and (vii) of
subsection 4.6(a) with respect to the related Distribution
Date and (b) the amount described in subsection 4.6(a)(vi) with
respect to the related Distribution Date, less (B) the daily amounts
deposited in the Collection Account during the preceding Monthly Period
pursuant to subsections 4.2(b)(i)(x), 4.2(b)(ii)(x) and 4.2(b)(iii)(x)
with respect to the Revolving Period, the Accumulation Period and the Early
Amortization Period, respectively, if any, (II) (A) the lesser of (1) the
product of (a) the Principal Allocation Percentage with respect to the
preceding Monthly Period and (b) the aggregate amount of Collections of
Principal Receivables for the preceding Monthly Period and (2) (w) for
each Monthly Period during the Revolving Period, zero, (x) for each Monthly
Period during the Accumulation Period prior to the Monthly Period in which the Class A
Notes are paid in full, the lesser of the Class A Controlled Deposit
Amount and the Adjusted Invested Amount, (y) for each Monthly Period during the
Accumulation Period beginning with
the Monthly Period in which the Class A Notes are paid in full, the
Subordinated Amount, and (z) for each Monthly Period during the Early
Amortization Period, the Invested Amount, less (B) the daily amounts
deposited in the Collection Account during the preceding Monthly Period
pursuant to 

 

18

 

subsections
4.2(b)(i)(y),
4.2(b)(ii)(y) and 4.2(b)(iii)(y) with respect to the Revolving
Period, the Accumulation Period and the Early Amortization Period,
respectively, if any, (III) the excess of the amount of Reallocated Principal
Collections over the amount retained in the
Collection Account pursuant to subsections 4.2(b)(i)(y) and 4.2(b)(ii)(y)
with respect to the Revolving Period and the Accumulation Period, respectively,
(IV) an amount equal to the pro rata
portion of Finance Charge Shortfalls, if any, for Group I allocated to Series 2005-1
pursuant to Section 4.5 of the Agreement, not to exceed Excess Finance
Charge Collections pursuant to subsection 4.6(a)(viii) available
on the related Distribution Date, (V) an amount equal to (A) the amount of
Shared Principal Collections to be applied for the benefit of other Principal
Sharing Series pursuant to Section 4.4 of the Agreement from amounts
that were originally allocated to Series 2005-1, not to exceed (a) during
the Revolving Period, the Principal Allocation Percentage of Collections of
Principal Receivables for the preceding Monthly Period or (b) during the
Accumulation Period and the Early Amortization Period, the Principal Allocation
Percentage of Collections of Principal Receivables for the preceding Monthly
Period less the amount thereof applied to pay Series 2005-1 Principal on
the related Distribution Date, less (B) the daily amounts deposited in the
Collection Account during the preceding Monthly Period pursuant to subsections
4.2(b)(i), 4.2(b)(ii) and 4.2(b)(iii) with respect
to the Revolving Period, the Accumulation Period and the Early Amortization
Period, respectively, if any, and (VI) at the option of the Transferor, the
amount of Shared Transferor Principal Collections to be applied to make
payments of Series 2005-1 Principal on the related Distribution Date, less
the daily amounts deposited in the Collection Account during the preceding
Monthly Period pursuant to subsection 4.2(b)(ii)(y) with respect to
the Accumulation Period, if any.

 

Notwithstanding
the foregoing or any other provision of this Series Supplement, in
accordance with subsection 4.3(c) of the Agreement and subsection 5.1(e),
the Servicer need not deposit in the Collection Account any amounts payable to Target
Receivables Corporation, in any capacity, pursuant to this Series Supplement
or the Indenture.

 

(c)                      The allocations to be made pursuant
to this Section 4.2 also apply to deposits into the Collection
Account that are treated as Collections (including adjustment payments made in
accordance with Section 3.9 of the Agreement), payment of the reassignment
price pursuant to subsection 2.5(b) of the Agreement and proceeds
from the sale, disposition or liquidation of the Receivables pursuant to Section 2.6,
10.1, or 12.2 of the Agreement and Section 8.1.  Such deposits to be treated as Collections
will be allocated as Finance Charge Receivables or Principal Receivables as
provided in the Agreement.

 

(d)                     Notwithstanding anything herein or
in the Agreement, the Supplement for any other Series or any Enhancement
Agreement for any Series to the contrary, amounts designated to be applied
as Excess Transferor Finance Charge Collections, including amounts so
designated pursuant to subsection 4.6(a)(viii) and all amounts
designated to be paid to the Transferor or any Holder of a Transferor
Certificate in such documents, other than amounts allocated to be paid to the
holder of any Supplemental Certificate, instead, to the extent 

 

19

 

that such amounts are derived from
Collections of Finance Charge Receivables and other amounts applied like
Collections of Finance Charge Receivables, including any amounts constituting
Excess Finance Charge Collections remaining after application thereof to all Series but
prior to payment thereof to the Transferor, shall be deemed to be “Excess
Transferor Finance Charge Collections.” 
Excess Transferor Finance Charge Collections shall be used to cover
Principal Funding Investment Shortfalls, if any, and, if the Transferor elects
to do so, applied with respect to the Required Amount, if any, and will be
deposited in the Collection Account on each Transfer Date to be applied as
Available Series 2005-1 Finance Charge Collections pursuant to subsection 4.7(b).  The sum of (x) any Excess Transferor Finance
Charge Collections remaining after application thereof to each Series designated
to be entitled thereto, and (y) Collections of Principal Receivables and other
amounts treated like Collections of Principal Receivables, for any Monthly
Period (A) allocated to the Transferor’s Interest remaining after payments
to the holders of any Supplemental Certificate and (B) initially allocated
to any Series and not applied to make principal deposits or payments for
such Series or reallocated as Shared Principal Collections to make
principal deposits or payments for any other Series, shall be deemed to be “Shared
Transferor Principal Collections” and available for payments to Series 2005-1
at the option of the Transferor.  On or
prior to the July 2009 Distribution Date, the Transferor shall notify the
Servicer and the Trustee in writing whether the Transferor elects to make
Shared Transferor Principal Collections available to Series 2005-1 during
the Accumulation Period.  If the
Transferor elects to make Shared Transferor Principal Collections available to
fund Series 2005-1 Principal during the Accumulation Period, those amounts
allocated to the Collateral Certificate pursuant to subsection 4.5(b) shall
be applied to cover any Principal Shortfalls not covered by Shared Principal
Collections allocated to the Collateral Certificate pursuant to subsection 4.5(a) during
the Accumulation Period.  In addition, at
the option of the Transferor, Shared Transferor Principal Collections may be
applied for the benefit of Series 2005-1 pursuant to subsection 4.5(b) during
the Early Amortization Period to cover any Principal Shortfalls not covered by
Shared Principal Collections allocated to the Collateral Certificate pursuant
to subsection 4.5(a).

 

Section 4.3                                                Determination of Monthly Interest.

 

(a)                      On the Determination Date preceding
each Distribution Date, the Servicer shall determine an amount of monthly
interest (the “Class A Monthly Interest”) with respect to such
Distribution Date equal to the product of (i) the Class A Interest
Rate for the related Interest Accrual Period, (ii) the outstanding
principal balance of the Class A Notes at the end of the last day of the
preceding Monthly Period, and (iii) a fraction the numerator of which is
the actual number of days in the related Interest Accrual Period and the
denominator of which is 360; provided,
however, that with respect to the first Distribution Date after the
Closing Date the Class A Monthly Interest shall be an amount equal to $         .

 

On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the “Class A Monthly Interest
Shortfall”) equal to the excess, if any, of (x) the Class A Monthly
Interest for the Interest Accrual Period applicable to such Distribution Date over (y) the amount available to be paid
to the Collateral Certificateholder in respect of interest on such Distribution
Date.  If there is a Class A Monthly
Interest Shortfall with respect to any Distribution Date, an additional amount
(“Class A Additional Interest”) shall be payable as provided herein
with respect to the Collateral Certificate on each Distribution Date 

 

20

 

following such
Distribution Date, to and including the Distribution Date on which such Class A
Monthly Interest Shortfall is paid to the Collateral Certificateholder, equal
to the product of (i) the Class A Interest Rate plus
2% per annum, (ii) such Class A Monthly Interest Shortfall remaining
unpaid, and (iii) a fraction the numerator of which is the actual number
of days in the related Interest Accrual Period and the denominator of which is
360.  Notwithstanding anything to the
contrary herein, Class A Additional Interest shall be payable or
distributed to Collateral Certificateholder only to the extent permitted by
applicable law.

 

(b)                     On the Determination Date preceding
each Distribution Date, the Servicer shall determine an amount of monthly
interest (the “Subordinated Monthly Interest”) with respect to such
Distribution Date equal to the product of (i) the Subordinated Interest
Rate for the related Interest Accrual Period, (ii) the outstanding
principal balance of the Subordinated Interests at the end of the last day of
the preceding Monthly Period, and (iii) a fraction the numerator of which
is the actual number of days in the related Interest Accrual Period and the
denominator of which is 360.  The
Subordinated Interest Rate shall initially be 0%, but may be increased in
accordance with the provisions of the Indenture.

 

On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the “Subordinated Monthly Interest
Shortfall”) equal to the excess, if any, of (x) the Subordinated Monthly
Interest for the Interest Accrual Period applicable to such Distribution Date over (y) the amount available to be paid
to the Collateral Certificateholder in respect of such Subordinated Monthly Interest
on such Distribution Date.  If there is a
Subordinated Monthly Interest Shortfall with respect to any Distribution Date,
an additional amount (“Subordinated Additional Interest”) shall be payable
as provided herein with respect to the Collateral Certificate on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Subordinated Monthly Interest Shortfall is paid
to Collateral Certificateholder, equal to the product of (i) the
Subordinated Interest Rate plus 2% per
annum, (ii) such Subordinated Monthly Interest Shortfall remaining unpaid,
and (iii) a fraction the numerator of which is the actual number of days
in the related Interest Accrual Period and the denominator of which is
360.  Notwithstanding anything to the
contrary herein, Subordinated Additional Interest shall be payable or
distributed to the Collateral Certificateholder only to the extent permitted by
applicable law.

 

Section 4.4                                                Determination
of Principal Amounts.  The amount of
principal (the “Series 2005-1 Principal”) distributable from the
Collection Account with respect to the Collateral Certificate on each
Distribution Date with respect to the Amortization Period shall be equal to an
amount calculated as follows:  the sum of
(a) the Available Series 2005-1 Principal Collections with respect to
such Distribution Date, (b) any amount on deposit in the Special Funding
Account that is distributable to the Collateral Certificateholder pursuant to subsection 4.6(d) with
respect to the preceding Monthly Period, (c) the amount of Shared
Principal Collections allocated to Series 2005-1 with respect to the
preceding Monthly Period pursuant to Section 4.4 of the Agreement and (d) at
the option of the Transferor, the amount of Shared Transferor Principal
Collections allocated to Series 2005-1 with respect to the preceding
Monthly Period pursuant to subsection 4.5(b); provided, however, that (a) with
respect to any Distribution Date during the Accumulation Period prior to the Class A
Expected Final Payment Date, Series 2005-1 Principal may not exceed the Class A
Controlled Deposit Amount for such 

 

21

 

Distribution Date and (b) with respect to any Distribution Date, Series 2005-1
Principal may not exceed the Adjusted Invested Amount.

 

Section 4.5                                                Shared Principal Collections and
Shared Transferor Principal Collections.

 

(a)                      Shared Principal Collections
allocated to the Collateral Certificate and to be applied pursuant to clause (c) of
Section 4.4 for any Distribution Date with respect to the
Amortization Period shall mean an amount equal to the product of (x) Shared
Principal Collections for all Principal Sharing Series for such date and
(y) a fraction, the numerator of which is the Principal Shortfall for the
Collateral Certificate for such date and the denominator of which is the
aggregate amount of Principal Shortfalls for all Principal Sharing Series for
such date.  For any Distribution Date with
respect to the Revolving Period, Shared Principal Collections allocated to the
Collateral Certificate shall be zero.

 

(b)                     If the Transferor elects to make
Shared Transferor Principal Collections available, Shared Transferor Principal
Collections allocated to the Collateral Certificate and to be applied pursuant
to clause (d) of Section 4.4 for any Distribution Date with
respect to the Amortization Period shall mean an amount equal to the product of
(x) the aggregate amount of Shared Transferor Principal Collections for such
date and (y) a fraction, the numerator of which is the Principal Shortfall for
the Collateral Certificate for such date and the denominator of which is the
aggregate amount of Principal Shortfalls for all Series for such
date.  For any Distribution Date with
respect to the Revolving Period, Shared Transferor Principal Collections
allocated to the Collateral Certificate shall be zero.

 

Section 4.6                                                Application of Funds on Deposit in
the Collection Account Allocable to the Collateral Certificate.

 

(a)                      On each Distribution Date, the
Servicer shall instruct the Trustee to withdraw, and the Trustee, acting in
accordance with such instructions set forth in the Monthly Report,
substantially in the form of Exhibit B, shall withdraw from the
Collection Account, or retain therein, as applicable, to the extent of the sum
of (w) the Floating Allocation Percentage of Collections of Finance Charge
Receivables collected during the preceding Monthly Period plus (x) any Principal Funding Investment
Proceeds deposited in the Collection Account pursuant to subsection 4.11(c) and
any investment earnings on amounts on deposit in the Reserve Account deposited
in the Collection Account pursuant to subsection 4.13(b) plus (y) the Reserve Draw Amount, if any,
deposited into the Collection Account pursuant to subsection 4.13(d) plus (z) the amount of Excess Transferor
Finance Charge Collections applied to cover Principal Funding Investment
Shortfalls, if any (such sum, the “Available Series 2005-1 Finance
Charge Collections”), the following amounts, and apply such amounts as
follows and in the following priority:

 

(i)                  Class A Monthly Interest. 
An amount equal to the lesser of (x) the Available Series 2005-1
Finance Charge Collections for such date and (y) the sum of Class A
Monthly Interest and Class A Carryover Interest shall be paid to the
Collateral Certificateholder in accordance with Section 5.1.

 

22

 

(ii)               Servicing Fee. 
An amount equal to the lesser of (x) any Available Series 2005-1
Finance Charge Collections remaining after giving effect to the withdrawal
pursuant to subsection 4.6(a)(i) and (y) the Monthly
Servicing Fee for such Monthly Period shall be paid to the Servicer.

 

(iii)            Investor Defaulted Amount. 
An amount equal to the lesser of (x) any Available Series 2005-1
Finance Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) and (ii) and (y) the
aggregate Investor Defaulted Amount for such Distribution Date, shall be
treated as Available Series 2005-1 Principal Collections.

 

(iv)           Reimbursement of Investor Charge-Offs. 
An amount equal to the lesser of (x) any Available Series 2005-1
Finance Charge Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.6(a)(i) through (iii) and (y) the
amount by which the aggregate amount of Investor Charge-Offs for all prior
Distribution Dates exceeds the aggregate amount previously applied pursuant to
this subsection 4.6(a)(iv) and, with respect to this
subsection, pursuant to subsection 4.7(a) on prior
Distribution Dates, if any, will be applied to reinstate prior reductions of
the Invested Amount, and shall be treated as Available Series 2005-1
Principal Collections.

 

(v)              Subordinated Monthly Interest. 
An amount equal to the lesser of (x) any Available Series 2005-1
Finance Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (iv) and (y)
the sum of the Subordinated Monthly Interest and Subordinated Carryover
Interest, if any, shall be paid to the Collateral Certificateholder in
accordance with Section 5.1.

 

(vi)           Reserve Account.  On each
Distribution Date from and after the Reserve Account Funding Date, if such date
is designated by the Transferor at its option, but prior to the date of
termination of the Reserve Account as described in subsection 4.13(f),
an amount up to the excess, if any, of the Required Reserve Account Amount over the Available Reserve Account Amount shall be deposited
into the Reserve Account.

 

(vii)        Additional Amounts.  An amount
equal to the lesser of (x) any Available Series 2005-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant to subsections
4.6(a)(i) through (vi) and (y) any amounts specified to be
paid pursuant to the Indenture or any supplement thereto to the extent not
previously paid pursuant to the preceding subsections shall be paid to the
Collateral Certificateholder in accordance with Section 5.1.

 

(viii)     Excess Finance Charge Collections. 
Any Available Series 2005-1 Finance Charge Collections after giving
effect to the withdrawals pursuant to subsections 4.6(a)(i) through
(vii) shall be treated as Excess Finance Charge Collections, and
the Servicer shall direct the Trustee in writing on each Distribution Date to
withdraw such amounts from the Collection Account and to 

 

23

 

first
make such amounts available to pay to Certificateholders of other Series in
Group I to the extent of shortfalls, if any, in amounts payable to such
Certificateholders from Collections of Finance Charge Receivables allocated to
such other Series in Group I, and then to pay any unpaid expenses or
liabilities of the Trust, then to treat the remaining amount as Excess
Transferor Finance Charge Collections if there are shortfalls or other amounts
with respect to any Series payable from Excess Transferor Finance Charge
Collections or Shared Transferor Principal Collections for such Distribution
Date, or, if there are no such shortfalls or other amounts, then to pay such
remaining amount to the Collateral Certificateholder in accordance with Section 5.1.

 

(b)                     For each Distribution Date with
respect to the Revolving Period, the Available Series 2005-1 Principal
Collections will be treated as Shared Principal Collections and applied, for
such Distribution Date, as provided in Section 4.4 of the Agreement; provided, however, that if the Invested
Amount is reduced in accordance with subsection 7.3(a), the amount
specified above may be distributed to the Collateral Certificateholder in an
amount not to exceed such reduction.

 

(c)                      For each Distribution Date on and
after the Amortization Period Commencement Date, the Trustee, acting pursuant
to the Servicer’s instructions, will distribute the amount of funds on deposit
in the Collection Account available for payment of principal to the Collateral
Certificateholder in accordance with Section 4.4 in the following
priority:

 

(i)                  an amount equal to Series 2005-1
Principal, (x) with respect to the Accumulation Period, on or prior to the Class A
Expected Final Payment Date, to the Principal Funding Account for payment to
the Collateral Certificateholder on the earlier of the Class A Expected
Final Payment Date and, if an Early Amortization Commencement Date occurs prior
to the Class A Expected Final Payment Date, the first Special Payment Date
and after the Class A Expected Final Payment Date to the Collateral
Certificateholder or (y) with respect to the Early Amortization Period, to the
Collateral Certificateholder; and

 

(ii)               an amount equal to the excess, if any, of (A) the
sum of the amounts described in Section 4.4  over
(B) the Series 2005-1 Principal will be treated as Shared Principal
Collections and applied as provided in Section 4.4 of the Agreement.

 

(d)                     On each Distribution Date during the
Amortization Period, funds on deposit in the Special Funding Account and
distributable to Series 2005-1 as provided in Section 4.2 of the
Agreement will be deposited in the Collection Account and allocated to the
Collateral Certificateholder in an amount equal to the lesser of the Principal
Shortfalls and the amount allocated with respect thereto pursuant to Section 4.2
of the Agreement; provided, however,
such amount shall not exceed the Series 2005-1 Principal after subtracting
therefrom any amounts to be deposited in the Collection Account with respect
thereto pursuant to Section 4.4; and provided, further that during the Accumulation Period on or
prior to the Class A Expected Final Payment Date such amount shall be
deposited in the Principal Funding Account.

 

24

 

Section 4.7                                                Excess Finance Charge Collections;
Excess Transferor Finance Charge Collections.

 

(a)                      To the extent that on any
Distribution Date payments are being made pursuant to any of subsections
4.6(a)(i) through (vii) and the full amount to be paid
pursuant to any such subsection on such Distribution Date is not paid in
full on such Distribution Date, the Servicer shall apply all or a portion of
the Excess Finance Charge Collections from other Series with respect to
such Distribution Date allocable to the Collateral Certificate in an amount
equal to the excess of the full amount to be allocated or paid pursuant to the
applicable subsection over the amount
applied with respect thereto from Available Series 2005-1 Finance Charge
Collections on such Distribution Date (the “Available Finance Charge
Collections Shortfall Amount”). 
Excess Finance Charge Collections allocated to the Collateral
Certificate for any Distribution Date shall mean an amount equal to the product
of (x) Excess Finance Charge Collections available from all other Series in
Group I for such Distribution Date and (y) a fraction, the numerator of which
is the Available Finance Charge Collections Shortfall Amount for such
Distribution Date and the denominator of which is the aggregate amount of
shortfalls in available Collections of Finance Charge Receivables for all Series in
Group I for such Distribution Date.

 

(b)                     On each Transfer Date with respect
to the Accumulation Period on which Excess Transferor Finance Charge
Collections, to the extent available as described below, are deposited to the
Collection Account, the Servicer shall apply all or a portion of such Excess
Transferor Finance Charge Collections as Available Series 2005-1 Finance
Charge Collections with respect to the related Distribution Date in an amount
equal to the Principal Funding Investment Shortfall, if any.  In addition, if on any Distribution Date, the
Required Amount is greater than zero, the Transferor may elect, by notifying
the Servicer and the Trustee in writing on or prior to such
Distribution Date, to apply Excess Transferor Finance Charge Collections
with respect to the Required Amount.  Excess Transferor Finance Charge
Collections allocated to the Collateral Certificate for any Distribution Date
shall mean an amount equal to the product of (x) Excess Transferor Finance
Charge Collections available for such Distribution Date and (y) a fraction, the
numerator of which is equal to the sum of (i) the Principal Funding
Investment Shortfall, if any, for the related Interest Accrual Period and (ii) if
the Transferor has elected to apply Excess Transferor Finance Charge
Collections with respect to the Required Amount, the amount of Excess
Transferor Finance Charge Collections the Transferor has elected to apply, and
the denominator of which is the aggregate amount of shortfalls for such
Distribution Date in amounts for all Series which are designated pursuant
to the applicable Supplement for such Series to be entitled to share
Excess Transferor Finance Charge Collections.

 

Section 4.8                                                Investor Defaulted Amount.

 

If, on any
Distribution Date, (a) the aggregate Investor Defaulted Amount for the preceding
Monthly Period exceeds (x) the Available Series 2005-1 Finance Charge
Collections applied to the payment thereof pursuant to subsection 4.6(a)(iii) plus (y) the amount of Excess Finance Charge Collections
allocated thereto pursuant to subsection 4.7(a), or (b) the
Transferor Amount has been reduced to zero and the Transferor fails to make an
Adjustment Payment, if any, required to be made by the Transferor on such
Distribution Date, the Invested Amount shall be reduced by the sum of (i) the
amount by which the aggregate Investor Defaulted Amount 

 

25

 

exceeds the amount applied with respect thereto during such preceding
Monthly Period and (ii) the Series 2005-1 Allocation Percentage of
unpaid Adjustment Payments required to be made by the Transferor when the
Transferor Amount has been reduced to zero on such Distribution Date, and the
amount of such reduction shall be an Investor Charge-Off.

 

Section 4.9                                                Reallocated Principal Collections
for the Collateral Certificate.

 

On each
Distribution Date, if, pursuant to subsection 4.7(b), the
Transferor does not elect to apply Excess Transferor Finance Charge Collections
to the Required Amount, if any, or the amount of Excess Transferor Finance
Charge Collections applied is insufficient to cover the Required Amount, the
Servicer will apply or cause the Trustee to apply from amounts on deposit in
the Collection Account an amount (the “Reallocated Principal Collections”)
equal to the least of (i) the Subordinated Amount, (ii) the Principal
Allocation Percentage of Collections of Principal Receivables collected during
the preceding Monthly Period and (iii) the Required Amount for such
Distribution Date minus the
amount, if any, applied pursuant to subsection 4.7(b) to the
components of the Required Amount in the same priority as amounts are applied
to such components from Available Series 2005-1 Finance Charge Collections
pursuant to subsection 4.6(a). 
On each Distribution Date, the Invested Amount shall be reduced by the
amount of Reallocated Principal Collections, if any, and the amount of such
reduction shall be an Investor Charge-Off.

 

Section 4.10                                          Collateral Certificate Additional
Amount.

 

(a)                      During the Revolving Period, the
Transferor may, at its discretion and subject to the terms of subsection 4.10(b),
request the Trustee to increase the outstanding principal amount of the
Collateral Certificate by an amount (the “Collateral Certificate Additional
Amount”) and on a date (the “Collateral Certificate Addition Date”)
determined by the Transferor.  Upon
issuance, the Collateral Certificate Additional Amount shall be equally and
ratably entitled to the benefits of this Series Supplement and the
Agreement.  As a result of such issuance,
the Invested Amount shall be increased by a corresponding amount and all the
calculations required pursuant to this Series Supplement shall, from and
after the Collateral Certificate Addition Date, be computed using such
increased Invested Amount.

 

(b)                     The Invested Amount shall only be increased
pursuant to subsection 4.10(a) upon satisfaction of all of the
following conditions:

 

(i)                  on or before the fifth Business Day
immediately preceding the Collateral Certificate Addition Date, the Transferor
shall give notice to the Trustee, the Servicer and each Rating Agency of such
issuance and the date upon which it is to occur;

 

(ii)               after giving effect to the Collateral Certificate
Additional Amount, the total amount of Principal Receivables in the Trust shall
be greater than or equal to the Required Principal Balance;

 

(iii)            on or before the Collateral Certificate Addition Date,
the Rating Agency Condition shall have been satisfied;

 

26

 

(iv)           the Transferor shall have delivered to the Trustee an
Officer’s Certificate dated as of the Collateral Certificate Addition Date,
stating that the Transferor reasonably believes that the increase of the
Invested Amount will not have a material adverse effect on the Collateral
Certificate; however, a dilution of voting rights shall not constitute a
material adverse effect for the purposes of this Section 4.10;

 

(v)              no Series 2005-1 Early Amortization Event or Early
Amortization Event shall have occurred, or been deemed to have occurred, and be
continuing as of the date of the Collateral Certificate Addition Date and the
increase in the outstanding principal amount and the Invested Amount of the
Collateral Certificate shall not result in the occurrence (or deemed
occurrence) of a Series 2005-1 Early Amortization Event or an Early
Amortization Event;

 

(vi)           the Class A Controlled Accumulation Amount shall
have been increased to reflect any increase in the aggregate outstanding
principal amount of the Class A Notes to be effected by the issuance of
Additional Class A Notes under the Indenture;

 

(vii)        as of the Collateral Certificate Addition Date, the
amount of unreimbursed Investor Charge-Offs shall be zero;

 

(viii)     after giving effect to the increase of the Invested
Amount, the Transferor Amount (excluding the interest represented by any
Supplemental Certificate) shall be greater than the Required Retained
Transferor Amount (after giving effect to all Receivables transferred to the
Trust on such day); and

 

(ix)             the Transferor shall have delivered to the Trustee a
Tax Opinion with respect to such issuance.

 

Section 4.11                                          Establishment of the Principal
Funding Account for the Collateral Certificate.

 

(a)                      The Trustee, for the benefit of the
Collateral Certificateholder, shall establish and maintain in the name of the
Trustee, on behalf of the Trust, an Eligible Deposit Account bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Collateral Certificateholder (the “Principal Funding
Account”).  The Principal Funding
Account shall initially be established with the Trustee.  The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Principal Funding
Account and in all proceeds thereof for the benefit of the Collateral
Certificateholder.  For purposes of the
definition of “Required Retained Transferor Amount” in Section 1.1 of the
Agreement the Principal Funding Account shall be an account specified in clause
(i)(b) of the definition thereof. 
Except as provided in subsection 4.11(d), the Principal
Funding Account shall be under the sole dominion and control of the Trustee for
the benefit of the Collateral Certificateholder.  If, at any time, the Principal Funding
Account ceases to be an Eligible Deposit Account, the Trustee (or the Servicer
on its behalf) shall within 10 Business Days establish a new Principal Funding 

 

27

 

Account meeting the conditions specified
above, transfer any cash and/or any investments to such new Principal Funding
Account and from the date such new Principal Funding Account is established, it
shall be, for the Collateral Certificate, the “Principal Funding Account.”

 

(b)                     Funds on deposit in the Principal
Funding Account prior to the Class A Expected Final Payment Date shall be
invested until the following Distribution Date at the direction of the
Transferor by the Trustee in Eligible Investments.  Any such investment shall (i) convert or
be convertible into cash so that such funds shall be made available for
withdrawal on or prior to each Distribution Date and (ii) be held until
maturity.  Any request to the Trustee
from the Transferor to invest funds on deposit in the Principal Funding Account
shall be in writing and shall certify that the requested investment is an
Eligible Investment.

 

(c)                      On each Distribution Date with
respect to the Accumulation Period and the first Special Payment Date, the
Servicer shall instruct the Trustee to withdraw from the Principal Funding
Account and deposit in the Collection Account the Principal Funding Investment
Proceeds for such Distribution Date or Special Payment Date.  Principal Funding Investment Proceeds shall
not be considered to be principal amounts on deposit in the Principal Funding
Account for purposes hereof, and shall be treated as Available Series 2005-1
Finance Charge Collections with respect to each Monthly Period.

 

(d)                     Pursuant to the authority granted to
the Servicer in subsection 3.1(b) of the Agreement, the Servicer
shall have the power, revocable by the Trustee, to make withdrawals and
payments or to instruct the Trustee to make withdrawals and payments from the
Principal Funding Account for the purposes of carrying out the Servicer’s or
the Trustee’s duties hereunder.  Pursuant
to the authority granted to the Paying Agent in Section 6.7 of the
Agreement and Section 5.1, the Paying Agent shall have the power,
revocable by the Trustee, to withdraw funds from the Principal Funding Account
for the purpose of making distributions to the Certificateholders.

 

Section 4.12                                          Accumulation Period.

 

The Accumulation Period is scheduled to commence on the Accumulation
Date; provided, however, that if
the Accumulation Period Length (determined as described below) on any
Determination Date is less than 12 months, upon written notice to the Trustee,
the Transferor and each Rating Agency, the Servicer, at its option, may elect
to modify the date on which the Accumulation Period actually commences to the
first day of the month that is a number of months prior to the month in which
the Class A Expected Final Payment Date occurs at least equal to the
Accumulation Period Length (so that, as a result of such election, the number
of Monthly Periods in the Accumulation Period will at least equal the
Accumulation Period Length); provided,
however, that (i) the Accumulation Period Length will not be
less than one month; (ii) such determination of the Accumulation Period
Length shall be made on the third Business Day before each Distribution Date
beginning in July 2009 but prior to the commencement of the Accumulation
Period, and any election to shorten the Accumulation Period shall be subject to
the subsequent lengthening of the Accumulation Period to the Accumulation
Period Length determined on any subsequent Determination Date, but the
Accumulation Period shall in no event commence prior to the Accumulation Date;
and (iii) notwithstanding any other provision of this Series Supplement
to the contrary, no election to 

 

28

 

postpone the commencement of the Accumulation
Period shall be made after the commencement of an Early Amortization Period (as
defined in the related Supplement) for any other Series.  The “Accumulation Period Length” will
mean a number of months such that the amount available for distribution of
principal on the Collateral Certificate on the Class A Expected Final
Payment Date is expected to equal or exceed the outstanding principal amount of
the Class A Notes, assuming for this purpose that (1) the payment
rate with respect to Collections of Principal Receivables remains constant at
the lowest level of such payment rate during the 12 preceding Monthly Periods
(or such lower payment rate as the Servicer may select), (2) the total
amount of Principal Receivables in the Trust (and the principal amount on
deposit in the Special Funding Account, if any) remains constant at the level
on such date of determination, (3) no Early Amortization Event with
respect to any Series will subsequently occur and (4) no additional Series (other
than any Series being issued on such date of determination) will be
subsequently issued.  The Servicer shall
determine the Accumulation Period Length on the basis of the monthly
Collections of Principal Receivables expected to be allocated to all Principal
Sharing Series during the Accumulation Period for Series 2005-1, and
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 Period or Amortization Period during the Accumulation Period
for Series 2005-1.  Any notice by
the Servicer electing to modify the commencement of the Accumulation Period
pursuant to this Section 4.12 shall specify (i) the most
recently determined Accumulation Period Length, (ii) the commencement date
of the Accumulation Period and (iii) the Class A Controlled
Accumulation Amount with respect to each Monthly Period during the Accumulation
Period.

 

In addition,
prior to the Servicer making its initial determination of the Accumulation
Period Length, the Transferor shall determine whether or not it shall utilize
Shared Transferor Principal Collections to fund the Principal Funding Account.  If, at its option, the Transferor elects to
utilize Shared Transferor Principal Collections to fund the Principal Funding
Account, such determination shall be irrevocable and the Servicer shall include
Shared Transferor Principal Collections expected to be available for Series 2005-1
in its determination of the Accumulation Period Length.

 

Section 4.13                                          Reserve Account.

 

(a)                      Upon designation by the Transferor
of a Reserve Account Funding Date, the Trustee shall establish and maintain
with an Eligible Institution, in the name of the Trustee, on behalf of the
Trust, for the benefit of the Collateral Certificateholder, a segregated trust
account with the corporate trust department of such Eligible Institution (the “Reserve
Account”), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Collateral
Certificateholder.  The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Reserve Account and in all proceeds thereof.  The Reserve Account shall be under the sole
dominion and control of the Trustee for the benefit of the Collateral
Certificateholder.  If at any time the
institution holding the Reserve Account ceases to be an Eligible Institution
the Transferor shall notify the Trustee, and the Trustee upon being notified
(or the Servicer on its behalf) shall, within 10 Business Days, establish a new
Reserve Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new Reserve
Account.  The Trustee, at the written
direction of the Servicer, shall (i) make withdrawals from the Reserve 

 

29

 

Account from time to time in an amount up to
the Available Reserve Account Amount at such time, for the purposes set forth
in this Series Supplement, and (ii) on each Distribution Date (from
and after the Reserve Account Funding Date) prior to termination of the Reserve
Account make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.6(a)(vi).

 

(b)                     Funds on deposit in the Reserve
Account shall be invested by the Transferor (or, at the direction of the
Transferor, by the Servicer or the Trustee on behalf of the Transferor) in
Eligible Investments.  Funds on deposit
in the Reserve Account on any Transfer Date, after giving effect to any
withdrawals from the Reserve Account on such Transfer Date, shall be invested
in such investments that will convert or be convertible into cash so that such
funds will be available for withdrawal on or prior to the following Transfer
Date.  The Trustee shall maintain for the
benefit of the Collateral Certificateholder possession of the negotiable
instruments or certificated securities, if any, evidencing such Eligible
Investments.  No Eligible Investment
shall be disposed of prior to its maturity. 
On each Transfer Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Transfer Date on funds on
deposit in the Reserve Account shall be retained in the Reserve Account to the
extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount and the balance, if any, shall be deposited into the
Collection Account for application as Available Series 2005-1 Finance
Charge Collections on the following Distribution Date.  For purposes of determining the availability
of funds or the balance in the Reserve Account for any reason under this Series Supplement,
except as otherwise provided in the preceding sentence, investment earnings on
such funds shall be deemed not to be available or on deposit.

 

(c)                      On each Transfer Date with respect
to the Accumulation Period prior to the Class A Expected Final Payment
Date and the first Transfer Date with respect to the Early Amortization Period,
the Servicer shall calculate the “Reserve Draw Amount” which shall be
equal to the Principal Funding Investment Shortfall with respect to each
Transfer Date with respect to the Accumulation Period or the first Transfer
Date with respect to the Early Amortization Period.

 

(d)                     In the event that for any Transfer
Date the Reserve Draw Amount is greater than zero, the Reserve Draw Amount, up
to the Available Reserve Account Amount, shall be withdrawn from the Reserve
Account on such Transfer Date by the Trustee (acting in accordance with the
written instructions of the Servicer), deposited into the Collection Account
and included in Available Series 2005-1 Finance Charge Collections for
such Transfer Date.

 

(e)                      In the event that the Reserve
Account Surplus on any Distribution Date, after giving effect to all deposits
to and withdrawals from the Reserve Account on and prior to such Distribution
Date, is greater than zero, the Trustee, acting in accordance with the written
instructions of the Servicer, shall withdraw from the Reserve Account, and
apply as Excess Finance Charge Collections, an amount equal to such Reserve
Account Surplus.

 

(f)                        Upon the earliest to occur of (i) the
first Transfer Date with respect to the Early Amortization Period and (ii) the
Class A Expected Final Payment Date, the Trustee, acting in accordance
with the written instructions of the Servicer, shall withdraw from the Reserve
Account and apply as Available Series 2005-1 Finance Charge Collections,
all amounts, 

 

30

 

if any, on deposit in the Reserve Account and
the Reserve Account shall be deemed to have terminated for purposes of this Series Supplement.

 

ARTICLE V

 

DISTRIBUTIONS AND REPORTS TO SERIES 2005-1

CERTIFICATEHOLDER

 

Section 5.1                                                Distributions.

 

(a)                      On each Distribution Date, the
Paying Agent shall distribute to the Collateral Certificateholder of record on
the related Record Date (other than as provided in Section 12.2 of the
Agreement) the amounts that are available on such Distribution Date to make
payments pursuant to subsections 4.6(a)(i), 4.6(a)(v), 4.6(a)(vii) and
4.6(a)(viii) of this Series Supplement.

 

(b)                     On each Distribution Date during the
Revolving Period, on the Class A Expected Final Payment Date and each
Distribution Date thereafter, and on each Distribution Date during an Early
Amortization Period, the Paying Agent shall distribute to the Collateral
Certificateholder of record on the related Record Date (other than as provided
in Section 12.2 of the Agreement) the amounts that are available in the
Principal Funding Account and the Collection Account on such date to pay
principal of the Collateral Certificate pursuant to this Series Supplement
up to a maximum amount on any such date equal to the Invested Amount on such
date; provided that the principal amounts
payable during the Revolving Period shall be limited to amounts available under
subsection 4.6(b) in connection with a reduction in the
Invested Amount.

 

(c)                      The distributions to be made
pursuant to this Section 5.1 are subject to the provisions of
Sections 2.6, 10.1 and 12.2 of the Agreement and Section 8.1.

 

(d)                     Except as provided in Section 12.2
of the Agreement with respect to a final distribution, distributions to the
Collateral Certificateholder hereunder shall be made by wire transfers in
immediately available funds to the account specified by such Holder; provided that if no account is so
specified, such payments shall be made by check mailed to such Holder at such
Collateral Certificateholder’s address appearing in the Certificate Register
without presentation or surrender of any Collateral Certificate or the making
of any notation thereon; provided, however,
that the final payment in retirement of the Collateral Certificate will be made
only upon presentation and surrender of the Collateral Certificate at the
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.2 of the Agreement.

 

(e)                      Notwithstanding anything in this Series Supplement
to the contrary, the Paying Agent need not distribute to the Collateral
Certificateholder, by deposit into the Note Distribution Account (as defined in
the Indenture) or otherwise, any amounts distributable under this Section 5.1
and allocable under the Indenture to the Depositor (as defined in the
Indenture), as a holder of Subordinated Interests or the owner of the
beneficial interest in the Owner Trust, 

 

31

 

but may pay such amounts directly to the
Depositor, which amounts so paid shall be deemed to have been paid to the
Collateral Certificateholder as provided above.

 

Section 5.2                                                Reports and Statements to Collateral
Certificateholder.

 

(a)                      On each Distribution Date, the
Paying Agent, on behalf of the Trustee, shall forward to each Collateral
Certificateholder a statement substantially in the form of Exhibit B
prepared by the Servicer.

 

(b)                     Not later than each Determination
Date, the Servicer shall deliver to the Trustee, the Paying Agent and each
Rating Agency (i) statements substantially in the form of Exhibit B
prepared by the Servicer and (ii) a certificate of a Servicing Officer
substantially in the form of Exhibit C.

 

(c)                      On or before January 31 of each
calendar year, beginning with calendar year 2006, the Paying Agent, on behalf
of the Trustee, shall furnish or cause to be furnished to each Person who at
any time during the preceding calendar year was a Collateral Certificateholder,
a statement prepared by the Servicer containing the information which is
required to be contained in the statement to the Collateral Certificateholder,
as set forth in paragraph (a) or (b) above, as applicable, aggregated
for such calendar year or the applicable portion thereof during which such
Person was a Collateral Certificateholder, together with other information as
is required to be provided by an issuer of indebtedness under the Code.  Such obligation of the Servicer shall be
deemed to have been satisfied to the extent that substantially comparable information
shall be provided by the Paying Agent pursuant to any requirements of the Code
as from time to time in effect.

 

ARTICLE VI

 

EARLY AMORTIZATION EVENTS

 

Section 6.1                                                Series 2005-1 Early
Amortization Events.

 

If any one of
the following events shall occur with respect to the Collateral Certificate:

 

(a)                      failure on the part of (i) Target
National Bank duly to observe or perform in any material respect any covenants
or agreements of Target National Bank set forth in the Bank Purchase Agreement,
(ii) TCC duly to observe or perform in any material respect any covenants
or agreements of TCC set forth in the Receivables Purchase Agreement or (iii) the
Transferor (A) to make any payment or deposit required to be made by the
Transferor by the terms of (I) the Agreement or (II) this Series Supplement,
on or before the date occurring five Business Days after the date such payment
or deposit is required to be made herein, (B) to perform in all material
respects the Transferor’s covenant not to sell, pledge, assign, or transfer to
any Person, or grant any impermissible lien on, any Receivable, or (C) duly
to observe or perform in any material respect any covenants or agreements of
the Transferor set forth in the Agreement or this Series Supplement, which
failure under clause (i), (ii) or (iii) has a material adverse effect
on the Collateral Certificateholder and which continues unremedied for a period
of 

 

32

 

60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Transferor by the Trustee, or to the Transferor and the Trustee by
any Collateral Certificateholder;

 

(b)                     any representation or warranty made
by Target National Bank in the Bank Purchase Agreement, TCC in the Receivables
Purchase Agreement or the Transferor in the Agreement or this Series Supplement
(i) shall prove to have been incorrect in any material respect when made,
which continues to be incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by any Collateral Certificateholder, and (ii) as
a result of which the interests of the Collateral Certificateholder are
materially and adversely affected; provided,
however, that a Series 2005-1 Early Amortization Event pursuant
to this subsection 6.1(b) shall not be deemed to have occurred
hereunder if the Transferor has accepted designation of the related Receivable
as an Ineligible Receivable during such period in accordance with the
provisions of the Agreement;

 

(c)                      the average of the Portfolio Yields
for any three consecutive Monthly Periods is reduced to a rate which is less
than the average of the Base Rates for such three consecutive Monthly Periods;

 

(d)                     a failure by TCC or the Transferor
to make an Addition within five Business Days after the Series 2005-1 Required
Designation Date;

 

(e)                      any Servicer Default shall occur
which would have a material adverse effect on the Collateral Certificateholder;

 

(f)                        the outstanding principal balance of
the Class A Notes is not paid in full on the Class A Expected Final
Payment Date; or

 

(g)                     an Event of Default and the acceleration
of the Class A Notes pursuant to the Indenture;

 

then, the Trustee shall within five days publish a notice of such early
amortization event and in the case of any event described in subparagraph (a), (b) or
(e), after the applicable grace period, if any, set forth in such
subparagraphs, the Collateral Certificateholder evidencing undivided interests
aggregating more than 50% of the Invested Amount by notice then given in
writing to the Trustee, the Transferor and the Servicer may declare that an early
amortization event (a “Series 2005-1 Early Amortization Event”) has
occurred as of the date of such notice, and in the case of any event described
in subparagraphs (c), (d), (f) or (g), a Series 2005-1 Early
Amortization Event shall occur without any notice or other action on the part
of the Trustee or the Collateral Certificateholder immediately upon the
occurrence of such event.  The Trustee
shall provide to the Transferor a copy of any notice received from any Collateral
Certificateholder and the Transferor shall provide to Target National Bank or
TCC, as applicable, a copy of any notice received from the Trustee or any
Collateral Certificateholder under subparagraphs (a) and (b) above if
such notice shall relate to a covenant, agreement, representation or warranty
by Target National Bank or TCC, respectively.

 

33

 

ARTICLE VII

 

OPTIONAL TERMINATION; SERIES TERMINATION;

SALE OF SUBORDINATED INTERESTS

 

Section 7.1                                                Optional Termination.

 

The Collateral
Certificate shall be subject to repurchase by the Transferor at its option on
any Distribution Date on or after the Distribution Date on which the
outstanding principal amount of the Class A Notes is reduced to an amount
less than or equal to 10% of the highest outstanding principal amount of the Class A
Notes at any time.  The deposit to the
Collection Account required in connection with any such repurchase and final
distribution shall be equal to the outstanding principal balance of the
Collateral Certificate plus any
accrued and unpaid interest payable to the Collateral Certificateholder for
further payment to Noteholders through the day prior to the Distribution Date
on which the repurchase occurs determined as set forth in subsections 4.6(a)(i) and
4.6(a)(v).

 

Section 7.2                                                Series 2005-1 Termination.

 

(a)                      If, on the second Distribution Date
prior to the Legal Maturity Date, the Invested Amount (after giving effect to
all changes therein on such date) would be greater than zero, the Servicer, on
behalf of the Trustee, shall, within 45 days, solicit bids for the sale of
Principal Receivables and the related Finance Charge Receivables (or interests
therein) in the amount specified in subsection 12.2(c) of the
Agreement.  Such bids shall require that
such sale shall (subject to subsection 7.2(b)) occur on the Legal
Maturity Date.  The Transferor shall be
entitled to participate in, and to receive from the Trustee a copy of each
other bid submitted in connection with, such bidding process.

 

(b)                     The Servicer, on behalf of the
Trustee, shall sell such Receivables (or interests therein) on the Legal
Maturity Date to the bidder who made the highest cash purchase offer.  The proceeds of any such sale shall be
treated as Collections on the Receivables and deposited in the Collection
Account to be allocated to the Collateral Certificateholder pursuant to the
Agreement and this Series Supplement; provided,
however, that the Servicer shall determine conclusively the amount
of such proceeds which are allocable to Finance Charge Receivables and the
amount of such proceeds which are allocable to Principal Receivables.  During the period from the second
Distribution Date prior to the Legal Maturity Date to the Legal Maturity Date,
the Servicer shall continue to collect payments on the Receivables and allocate
and deposit such Collections in accordance with the provisions of the Agreement
and this Series Supplement.

 

Section 7.3                                                Special Reduction of the Invested
Amount.

 

(a)                      The Invested Amount may be reduced
during the Revolving Period by distributing Collections of Principal
Receivables to the Collateral Certificateholder in accordance with subsection 4.6(b);
provided that (i) the Rating
Agency Condition shall have been satisfied with respect to such reduction and (ii) the
Transferor shall have delivered to the Trustee an Officer’s Certificate stating
that the Transferor reasonably believes that such 

 

34

 

reduction will not, based on the facts known
to such officer at the time of such certification, cause an Early Amortization
Commencement Date to occur.

 

(b)                     Pursuant to Section 2.8 of the
Indenture, the Owner Trust or the Transferor, as depositor of the Owner Trust,
may, from time to time, surrender for cancellation Class A Notes and Subordinated
Interests acquired by it for its own account by whatever means.  Whenever any Class A Notes or
Subordinated Interests are so delivered for cancellation and are cancelled in
accordance with the Indenture, the Invested Amount and the Collateral Certificate
principal balance shall each be reduced by the aggregate principal amount of Class A
Notes and Subordinated Interests so cancelled. 
The Transferor shall notify the Trustee whenever Class A Notes or
Subordinated Interests are so delivered for cancellation under the Indenture.

 

ARTICLE VIII

 

FINAL DISTRIBUTION

 

Section 8.1                                                Sale of Receivables or Collateral
Certificateholder’s Interest pursuant to Section 2.6 or 10.1 of the
Agreement and Section 7.1 or 7.2 of this Series Supplement.

 

(a)                      The amount to be paid by the
Transferor with respect to Series 2005-1 in connection with a reassignment
of Receivables to the Transferor pursuant to Section 2.6 of the Agreement
or a repurchase of the Collateral Certificateholder’s Interest pursuant to Section 10.1
of the Agreement shall equal the Reassignment Amount for the first Distribution
Date following the Monthly Period in which the reassignment obligation arises
under the Agreement.

 

(b)                     With respect to the Reassignment
Amount deposited into the Collection Account pursuant to Section 7.1
or to subsection 8.1(a) or any amounts allocable to the
Collateral Certificateholder’s Interest deposited into the Collection Account
pursuant to Section 7.2, the Trustee shall, not later than 10:00 a.m.,
New York City time, on the applicable Distribution Date, make deposits or
distributions of the following amounts (in the priority set forth below and, in
each case after giving effect to any deposits and distributions otherwise to be
made on such date) in immediately available funds:  (i) (x) the Invested Amount on such
Distribution Date will be distributed to the Paying Agent for payment to the
Collateral Certificateholder and (y) an amount equal to the sum of (A) Class A
Monthly Interest for such Distribution Date, (B) any Class A Monthly
Interest previously due but not distributed to the Collateral Certificateholder
on a prior Distribution Date and (C) the amount of Class A Additional
Interest, if any, for such Distribution Date and any Class A Additional
Interest previously due but not distributed to the Collateral Certificateholder
on any prior Distribution Date, will be distributed to the Paying Agent for
payment to the Collateral Certificateholder, and (z) an amount equal to the sum
of (A) Subordinated Monthly Interest for such Distribution Date, (B) any
Subordinated Monthly Interest previously due but not distributed to the
Collateral Certificateholder on a prior Distribution Date and (C) the
amount of Subordinated Additional Interest, if any, for such Distribution Date
and any Subordinated Additional Interest previously due but not distributed to
the Collateral Certificateholder on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Collateral
Certificateholder, (ii) any other 

 

35

 

amounts payable pursuant to subsection 4.6(a) shall
be paid in accordance therewith and (iii) the balance, if any, will be
distributed to the Holder of the Transferor Certificate.

 

(c)                      Notwithstanding anything to the
contrary in this Series Supplement or the Agreement, all amounts
distributed to the Paying Agent pursuant to subsection 8.1(b) for
payment to the Collateral Certificateholder shall be deemed distributed in full
to the Collateral Certificateholder on the date on which such funds are
distributed to the Paying Agent pursuant to this Section and shall be
deemed to be a final distribution pursuant to Section 12.2 of the
Agreement.

 

ARTICLE IX

 

MISCELLANEOUS PROVISIONS

 

Section 9.1                                                Legend on Collateral Certificate.

 

Each
Collateral Certificate will bear a legend or legends substantially in the
following form:

 

EACH PURCHASER OR HOLDER REPRESENTS AND
WARRANTS FOR THE BENEFIT OF TARGET RECEIVABLES CORPORATION AND THE TRUSTEE THAT
SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT
IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV)
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING “PLAN ASSETS” OF ANY SUCH
PLAN (INCLUDING FOR PURPOSES OF CLAUSES (IV) AND (V) ANY INSURANCE COMPANY
GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
NEITHER THIS COLLATERAL CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED, EXCEPT IN
ACCORDANCE WITH THE POOLING AND SERVICING AGREEMENT AND RELATED SUPPLEMENT
REFERRED TO HEREIN.

 

36

 

Each Collateral Certificateholder by virtue of its beneficial interest
in the Collateral Certificate shall be deemed to have made the representations
and warranties stated in such legend.

 

Section 9.2                                                Ratification of Agreement.

 

As
supplemented by this Series Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement as so supplemented by this Series Supplement
shall be read, taken, and construed as one and the same instrument.

 

Section 9.3                                                Counterparts.

 

This Series Supplement
may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.

 

Section 9.4                                                Required Additions to Series 2005-1.

 

In addition to
the requirements set forth in subsection 2.9(a) of the Agreement, if,
as of the close of business on any Business Day on which pursuant to Section 3.2,
the Servicer is performing daily testing, either (x) the Transferor Amount
(excluding the interest represented by any Supplemental Certificate) is less
than the Required Retained Transferor Amount on such Business Day or (y) the
aggregate amount of Principal Receivables is less than the Required Principal
Balance on such Business Day, the Transferor shall, on or prior to the close of
business on the 10th Business Day following such Business Day (the “Series 2005-1
Required Designation Date”), unless the Transferor Amount (excluding the
interest represented by any Supplemental Certificate) equals or exceeds the
Required Retained Transferor Amount or the aggregate amount of Principal
Receivables equals or exceeds the Required Principal Balance, as the case may
be, in either case as of the close of business on any day after such Business
Day and prior to the Series 2005-1 Required Designation Date, designate
additional Eligible Accounts to be included as Accounts as of the Series 2005-1
Required Designation Date or any earlier date in a sufficient amount such that,
after giving effect to such addition, the Transferor Amount (excluding the
interest represented by any Supplemental Certificate) as of the close of
business on the Addition Date is at least equal to the Required Retained
Transferor Amount on such date and the aggregate amount of Principal
Receivables equals or exceeds the Required Principal Balance on such date.  The failure of any condition set forth in subsections
2.9(c) or (d) of the Agreement, as the case may be, shall not relieve
the Transferor of its obligation pursuant to this paragraph; provided, however, that the failure of the Transferor to
transfer Receivables to the Trust as provided in this paragraph solely as a
result of the unavailability of a sufficient amount of Eligible Receivables
shall not constitute a breach of the Agreement; provided, further, that any
such failure which has not been timely cured will nevertheless result in the
occurrence of a Series 2005-1 Early Amortization Event.

 

Section 9.5                                                Transfer of the Collateral
Certificate.

 

After the
Closing Date, the Collateral Certificate may not be sold, participated,
transferred, assigned, exchanged or otherwise pledged or conveyed in whole or
in part except 

 

37

 

upon the prior delivery to the Trustee of (i) a Tax Opinion and (ii) a
transferee representation letter (substantially in the form of Exhibit D).

 

Section 9.6                                                Jurisdiction; Service.

 

Solely with
respect to the Agreement (as supplemented hereby and as further amended,
modified or supplemented from time to time) and the transactions and other
matters contemplated thereby or relating thereto, each of the parties hereto hereby
irrevocably and unconditionally agrees (a) to be subject to the
jurisdiction of the courts of the State of Delaware and of the federal courts
sitting in the State of Delaware, and (b)(i) to the extent such party is
not otherwise subject to service of process in the State of Delaware, to
appoint and maintain an agent in the State of Delaware as such party’s agent
for acceptance of legal process, and (ii) that service of process may also
be made on such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service constituting evidence of valid
service, and that service made pursuant to (b)(i) or (ii) above shall
have the same legal force and effect as if served upon such party personally
within the State of Delaware.  For
purposes of implementing the parties’ foregoing agreement to appoint and
maintain an agent for service of process in the State of Delaware solely in
respect of the Agreement and the transactions and other matters contemplated
thereby or relating thereto, each such party that has not as of the date hereof
already duly appointed such an agent does hereby appoint RL&F Service
Corp., One Rodney Square, 10th Floor, Wilmington, Delaware 19801, as
such agent.

 

Section 9.7                                             GOVERNING LAW.

 

THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 9.8                                                Article 8.

 

The Collateral
Certificate shall be a security governed by Article 8 of the Delaware
Uniform Commercial Code, as amended from time to time and the Uniform
Commercial Code of any other applicable jurisdiction that currently or hereafter
substantially includes the 1994 revisions to Article 8 thereof as adopted
by the American Law Institute and the National Conference of Commissioners on
Uniform State Laws and approved by the American Bar Association on February 14,
1995.  The foregoing declaration shall
not be amended, modified, revoked or otherwise changed during the effectiveness
of this Agreement without the prior written consent of the Collateral
Certificateholder.

 

Section 9.9                                                No
Petition.

 

The
Transferor, the Servicer and the Trustee, by entering into this Series Supplement,
and each Collateral Certificateholder, by accepting the Collateral Certificate,
hereby covenant and agree that they will not at any time institute against the
Trust or the Owner Trust, or join in any institution against the Trust or the
Owner Trust of, any bankruptcy proceedings 

 

38

 

under any United States Federal or state bankruptcy or similar law in
connection with any obligations relating to the Collateral Certificate, the
Agreement or this Series Supplement.

 

Section 9.10                                          Instructions in Writing.

 

All
instructions or other communications given by the Servicer or any other person
to the Trustee pursuant to this Series Supplement shall be in writing.

 

Section 9.11                                          Adjustments.

 

Any adjustment
to the amount of Receivables and Principal Receivables pursuant to Section 3.9
of the Agreement shall be made within two Business Days of the Business Day on
which such adjustment obligation arises.

 

Section 9.12                                          Eligible Investments.

 

In addition to
the Eligible Investments identified in Section 1.1 of the Agreement,
amounts held in the accounts established for the benefit of the Collateral
Certificateholder may be invested in investments in money market funds having,
at the time of the Trust’s investment, a rating in the highest rating category
from each Rating Agency or otherwise approved in writing by each Rating
Agency.  In order to qualify as an “Eligible
Investment,” each type of investment described in clauses (b), (c), (d) and
(f) of the definition of “Eligible Investments” in Section 1.1 of the
Agreement must be rated “A-1+” by Standard & Poor’s.

 

39

 

IN WITNESS
WHEREOF, the Transferor, the Servicer and the Trustee have caused this Series Supplement
to be duly executed by their respective officers as of the day and year first
above written.

 

 

	
   

  	
   

  	
  TARGET RECEIVABLES CORPORATION,

  
	
   

  	
   

  	
   Transferor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TARGET NATIONAL BANK,

  
	
   

  	
   

  	
   Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
   

  	
  NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
   Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

Series 2005-1 Supplement

Signature Page

 

 

Exhibit A

 

FORM OF
COLLATERAL CERTIFICATE

 

	
  REGISTERED

  	
   

  	
  $ 

  	
   

  
	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
   

  	
   

  	
  CUSIP NO. 

  	
   

  
							

 

EACH PURCHASER REPRESENTS AND WARRANTS FOR
THE BENEFIT OF TARGET RECEIVABLES CORPORATION AND THE TRUSTEE THAT SUCH
PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT
IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) A
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV)
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING “PLAN ASSETS” OF ANY SUCH
PLAN (INCLUDING FOR PURPOSES OF CLAUSES (IV) AND (V) ANY INSURANCE COMPANY
GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
NEITHER THIS COLLATERAL CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED, EXCEPT IN
ACCORDANCE WITH THE POOLING AND SERVICING AGREEMENT AND RELATED SUPPLEMENT
REFERRED TO HEREIN.

 

TARGET
CREDIT CARD MASTER TRUST

 

COLLATERAL
CERTIFICATE

 

Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated from time to time in the ordinary course of
business from a portfolio of consumer open-end credit card accounts generated
or to be generated by Target National Bank (“Target National Bank” or
the “Servicer”) and other assets and interests constituting the Trust
under the Agreement described below.

 

1

 

Not an interest in or a recourse obligation
of Target Corporation, Target National Bank, Target Capital Corporation or
Target Receivables Corporation or any affiliate of any of them.

 

This Investor
Certificate certifies that Target Credit Card Owner Trust 2005-1 (the “Certificateholder”)
is the registered owner of a fractional undivided interest in the Target Credit
Card Master Trust (the “Trust”) issued pursuant to the Amended and
Restated Pooling and Servicing Agreement, dated as of April 28, 2000, as
amended (the “Pooling and Servicing Agreement,” such term to include any
amendment thereto), by and among Target Receivables Corporation, as Transferor
(the “Transferor”), Target National Bank, as the Servicer, and Wells
Fargo Bank, National Association, as Trustee (the “Trustee”), and the Series 2005-1
Supplement, dated as of November    ,
2005 (the “Series Supplement”), by and among the Transferor, the
Servicer and the Trustee.  The Pooling
and Servicing Agreement, as supplemented by the Series  Supplement, is
herein referred to as the “Agreement.” 
The corpus of the Trust consists of all of the Transferor’s right, title
and interest in, to and under the Trust Assets (as defined in the Agreement).

 

To the extent
not defined herein, capitalized terms used herein have the respective meanings
assigned to them in the Agreement.

 

Although a
summary of certain provisions of the Agreement is set forth below, this
Investor Certificate is qualified in its entirety by the terms and provisions
of the Agreement and reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of the Trustee.

 

This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to time,
the Certificateholder by virtue of the acceptance hereof assents and by which
the Certificateholder is bound.  This
Certificate is a duly authorized Investor Certificate entitled “Collateral
Certificate” (the “Collateral Certificate”), which represents an undivided
interest in the Trust, including the right to receive the Collections and other
amounts allocated to the Collateral Certificate at the times and in the amounts
specified in the Agreement and to be deposited in the Collection Account, the
Principal Funding Account and the Reserve Account or paid to the Collateral
Certificateholder.

 

The aggregate
interest represented by the Collateral Certificate at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Invested
Amount at such time.  As of the Closing
Date, the Initial Invested Amount is $[961,538,462].

 

The Invested
Amount on any date of determination will be an amount equal to the sum of (a) the
Initial Invested Amount, plus (b) the
amount of any increase in the principal amount of the Collateral Certificate
after the Closing Date, plus (c) the
sum of the aggregate amounts allocated with respect to the reimbursement of
Investor Charge-Offs and available on all prior Distribution Dates for the
purpose of reinstating amounts reduced pursuant to clause (e) below, minus (d) the aggregate amount of
principal payments made to the Collateral Certificateholder prior to such date,
minus (e) the aggregate
amount of Investor Charge-Offs for all prior Distribution Dates, and minus (f) the amount of any reduction
in the Invested Amount as 

 

2

 

a result of the
purchase by the Transferor and subsequent cancellation of a portion of the
Collateral Certificate.

 

The Transferor
will retain an undivided interest in the Trust pursuant to the Agreement.  The Transferor’s Interest is the interest in
the Principal Receivables not represented by any of the Investor Certificates
or Participations issued by the Trust. 
The Transferor’s Interest may be exchanged by the Transferor pursuant to
the Agreement for a newly issued Series of Investor Certificates and a
reduced Transferor’s Interest upon the conditions set forth in the Agreement.

 

Beginning on December 27,
2005 and on each Distribution Date thereafter, the Trustee shall distribute to
the Collateral Certificateholder of record as of the last Business Day of the
calendar month preceding such Distribution Date such amounts as are payable
pursuant to the Agreement.   The Series 2005-1
Termination Date is the earlier to occur of (i) the day on which the
Invested Amount is reduced to zero, and (ii) the Legal Maturity Date.  Principal with respect to the Collateral
Certificate will be paid under the circumstances described in the Agreement.

 

Unless the
certificate of authentication hereon has been executed by or on behalf of the
Trustee, by manual signature, this Collateral Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any purpose.

 

This
Collateral Certificate shall constitute a “security” within the meaning of (i) Article 8
of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as
in effect from time to time in the State of Delaware and (ii) the Uniform
Commercial Code of any other applicable jurisdiction that currently or
hereafter substantially includes the 1994 revisions to Article 8 thereof
as adopted by the American Law Institute and the National Conference of
Commissioners on Uniform State Laws and approved by the American Bar
Association on February 14, 1995.

 

This
Collateral Certificate shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof.

 

3

 

IN WITNESS
WHEREOF, the Transferor has caused this Collateral Certificate to be duly
executed under its official seal.

 

	
   

  	
   

  	
  TARGET RECEIVABLES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

 

CERTIFICATE
OF AUTHENTICATION

 

This is the
Collateral Certificate of Target Credit Card Master Trust, Series 2005-1
referred to in the within-mentioned Agreement.

 

 

	
   

  	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
   

  	
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

4

 

Exhibit B

 

FORM OF
MONTHLY COLLATERAL CERTIFICATEHOLDERS’ STATEMENT

 

[To Come]

 

1

 

Exhibit C

 

FORM OF
MONTHLY SERVICER’S CERTIFICATE

 

TARGET
NATIONAL BANK

TARGET CREDIT
CARD MASTER TRUST

SERIES 2005-1

 

The
undersigned, a duly authorized representative of Target National Bank, as
Servicer (“Target National Bank” or the “Servicer”), pursuant to
the Amended and Restated Pooling and Servicing Agreement, dated as of April 28,
2000 (as may be amended, from time to time, the “Agreement”), as
supplemented by the Series 2005-1 Supplement (as amended and supplemented,
the “Series Supplement”), dated as of November [    ], 2005, by and among Target National Bank,
Target Receivables Corporation and Wells Fargo Bank, National Association, does
hereby certify as follows:

 

1.  Capitalized terms used in this Certificate
have their respective meanings as set forth in the Agreement or the Series Supplement,
as applicable.

 

2.  Target National Bank is, as of the date
hereof, the Servicer under the Agreement.

 

3.  The undersigned is a Servicing Officer.

 

4.  This Certificate relates to the Distribution
Date occurring on                
   ,        (the “            
    Distribution Date”).

 

5.  As of the date hereof, to the best knowledge
of the undersigned, the Servicer has performed in all material respects all its
obligations under the Agreement through the Monthly Period preceding such
Distribution Date [or, if there has been a default in the performance of any
such obligation, set forth in detail the (i) nature of such default, (ii) the
action taken by the Servicer, if any, to remedy such default and (iii) the
current status of each such default; if applicable, insert “None.”]

 

6.  As of the date hereof, to the best knowledge
of the undersigned, no Early Amortization Commencement Date occurred on or
prior to such Distribution Date.

 

1

 

IN WITNESS
WHEREOF, the undersigned has duly executed and delivered this Certificate this       
day of                  
      .

 

 

	
   

  	
   

  	
  TARGET
  NATIONAL BANK,

  
	
   

  	
   

  	
    as
  Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

2

 

Exhibit D

 

FORM OF TRANSFEREE
REPRESENTATION LETTER

 

[DATE]

 

Target Receivables Corporation

1000 Nicollet Mall

Minneapolis, Minnesota 55403

 

Wells Fargo Bank, National Association

6th & Marquette, MAC N9311-161

Minneapolis, Minnesota  55479

 

Re:  Target Credit Card Master Trust, Series 2005-1

 

Ladies and Gentlemen:

 

In connection
with the proposed purchase of $[                    ] in principal amount of
the Target Credit Card Master Trust, Series 2005-1 Collateral Certificate
(the “Collateral Certificate”), the undersigned (the “Purchaser”)
confirms in this letter (the “Transferee Representation Letter”) that:

 

I.                                         The
Purchaser has received such information and documentation as the Purchaser
deems necessary in order to make its investment decision.  The Purchaser understands that such
information and documentation speaks only as of its date and that the
information contained therein may not be correct or complete as of any time
subsequent to such date.

 

II.                                     The
Purchaser agrees to be bound by the restrictions and conditions relating to the
Collateral Certificate set forth in the Amended and Restated Pooling and
Servicing Agreement, dated as of April 28, 2000, as amended (the “Pooling
and Servicing Agreement,” such term to include any amendment thereto), by
and among Target Receivables Corporation, as Transferor (the “Transferor”),
Target National Bank, as the Servicer, and Wells Fargo Bank, National
Association, as Trustee (the “Trustee”), and the Series 2005-1
Supplement, dated as of November [  
], 2005 (the “Series Supplement”), by and among the
Transferor, the Servicer and the Trustee. 
The Pooling and Servicing Agreement, as supplemented by the Series Supplement,
is herein referred to as the “Agreement.”  The Purchaser agrees to be bound by, and not
to reoffer, resell, pledge or otherwise transfer (any such act, a “Transfer”)
the Collateral Certificate except in compliance with such restrictions and
conditions including but not limited to those in Section 9.5 of the
Series Supplement.

 

1

 

III.                                 The
Purchaser agrees that the Collateral Certificate may be reoffered, resold,
pledged or otherwise transferred only in compliance with the Securities Act of
1933, as amended (the “Securities Act”) and other applicable laws and
only (i) to the Transferor or (ii) to a limited number of
institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and in a transaction exempt
from the registration requirements of the Securities Act (upon delivery of the
documentation required by the Pooling and Servicing Agreement and, if the
Trustee so requires, an opinion of counsel satisfactory to the Trustee).

 

IV.                                 The
Purchaser certifies that this Transferee Representation Letter has been duly
executed and delivered and constitutes the legal, valid and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles affecting
the enforcement of creditors’ rights generally and general principles of
equity.

 

V.                                     The
Purchaser is, for federal income tax purposes, either (i) a citizen or
resident of the United States, (ii) a corporation or partnership organized
in or under the laws of the United States or any state thereof or the District
of Columbia which, if such entity is a tax-exempt entity, recognizes that
payments with respect to the Collateral Certificate may constitute unrelated
business taxable income, (iii) an estate the income of which is includible
in gross income for U.S. federal income tax purposes regardless of its source,
or (iv) either (x) a trust for which a court within the United States is
able to exercise primary supervision over its administration and for which one
or more persons described in this paragraph are able to control all substantial
decisions or (y) a trust for which a valid election has been made to be treated
as a United States person.  The Purchaser
will furnish to the Person from whom it is acquiring any interest in the
Collateral Certificate, the Servicer and the Indenture Trustee, a properly
executed U.S. Internal Revenue Service Form W-9 (and will furnish a new Form W-9,
or any successor applicable form, upon the expiration or obsolescence of any
previously delivered form) and such other certifications, representations or
Opinions of Counsel as may be requested by the Indenture Trustee.

 

VI.                                 The
Purchaser has not acquired and it will not Transfer any interest in the
Collateral Certificate, or cause an interest in the Collateral Certificate to
be marketed, on or through an “established securities market” within the
meaning of Section 7704(b)(1) of the Code and any Treasury
regulations thereunder, including, without limitation, an over the counter
market or an interdealer quotation system that regularly disseminates firm buy
or sell quotations.  In addition, (i) the
Purchaser is not and will not become (and, if it is disregarded as an entity
separate from its owner within the meaning of Treasury Regulations Section 301.7701-3(a) (a
“DRE”), its owner is not and will not become), for so long as the
Purchaser holds an interest in the Collateral Certificate, a partnership,
Subchapter S corporation or grantor trust for U.S. federal income tax purposes
(a “Flow-Thru Entity”) or (ii) that if the Purchaser (or, if the assignee
is a DRE, its owner) is, or becomes, a Flow-Thru Entity, for so long as the
Purchaser (or, if the Purchaser is a DRE, its owner) is a Flow-Thru Entity and
the Purchaser holds an interest in the Collateral Certificate, not more than
50% of the value of any interests in the 

 

2

 

Purchaser (or,
if the Purchaser is a DRE, its owner) will be attributable to interests in the
Trust held by the Purchaser.  The opinion
of tax counsel to the effect that the Trust will not be treated as an
association or as a publicly traded partnership taxable as a corporation is
dependent in part on the accuracy of the Purchaser’s certifications described
in this paragraph.

 

VII.                             The
Purchaser understands that a subsequent Transfer of the Collateral Certificate
will be void if such Transfer would cause the number of Targeted Holders (as
defined in the Series Supplement) to exceed ninety-five.

 

VIII.                         The
Purchaser understands that the opinion of tax counsel that the Trust is not a
publicly traded partnership taxable as a corporation is dependent in part on
the accuracy of the representations in paragraphs V and VI.

 

IX.                                The
Purchaser is an institutional “accredited investor” (as defined in Rule 501(a)(1),
(2), (3), or (7) of Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Collateral
Certificate, and the Purchaser and any account for which the Purchaser is
acting are each able to bear the economic risk of its investment.

 

X.                                    The
Purchaser is acquiring the Collateral Certificate purchased by it for its own
account or for a single account (each of which is an institutional accredited
investor) as to which the Purchaser exercises sole investment discretion.

 

XI.                                The
Purchaser represents and warrants for the benefit of Target Receivables
Corporation and the Trustee that such Purchaser is not (i) an employee
benefit plan (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) that is subject to
the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended (the “Code”), (iii) a
Governmental Plan, as defined in section 3(32) of ERISA, subject to any
federal, state or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (iv) an
entity whose underlying assets include plan assets by reason of a Plan’s
investment in the entity or (v) a Person investing “plan assets” of any
such Plan (including for purposes of clauses (iv) and (v) any
insurance company general account, but excluding any entity registered under
the Investment Company Act of 1940, as amended).

 

XII.                            The
Purchaser understands that any purported Transfer of any portion of the
Collateral Certificate in contravention of the restrictions and conditions in
paragraphs I through XI above (including any violation of the representation in
paragraph V by an investor who continues to hold an interest in the Collateral
Certificate occurring any time after the Transfer in which it acquired such
Collateral Certificate) shall be null and void and the purported Purchaser
shall not be recognized by the Trust or any other person as a Collateral Certificateholder
for any purpose.

 

3

 

XIII.                        The
Purchaser further understands that, on any proposed resale, pledge or transfer
of the Collateral Certificate, the Purchaser will be required to furnish to the
Trustee and the Transfer Agent and Registrar, such certifications and other
information as the Trustee or the Transfer Agent and Registrar may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions and with the restrictions and conditions of the Collateral
Certificate and the Agreement pursuant to which the Collateral Certificate was
issued and the Purchaser agrees that if the Purchaser determines to Transfer
the Collateral Certificate, the Purchaser will cause its proposed Purchaser to
provide the Transferor, the Servicer and the Trustee with a letter
substantially in the form of this Transferee Representation Letter.  The Purchaser further understands that the
Collateral Certificate purchased by it will bear a legend to the foregoing
effect.

 

XIV.                        The person
signing this Transferee Representation Letter on behalf of the ultimate
beneficial purchaser of the Collateral Certificate has been duly authorized by
such beneficial purchaser of the Collateral Certificate to do so.

 

You are
entitled to rely upon this Transferee Representation Letter and are irrevocably
authorized to produce this Transferee Representation Letter or a copy hereof to
any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.

 

	
   

  	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Full Legal
  Name of Purchaser]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

4

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